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 March 31, 2018

[   ]         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 001-14793

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, a smaller reporting company, or emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☑	Accelerated filero
Non-accelerated filer  ☐  (Do not check if a smaller reporting company)	Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registered has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the 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: 216,406,013 shares outstanding as of April 30, 2018.

FIRST BANCORP.

INDEX PAGE

PART I. FINANCIAL INFORMATION	PAGE
Item 1. Financial Statements:
Consolidated Statements of Financial Condition (Unaudited) as of March 31, 2018 and December 31, 2017	6
Consolidated Statements of  Income  (Unaudited) – Quarters ended March 31, 2018 and 2017	7
Consolidated Statements of Comprehensive Income (Unaudited) – Quarters ended March 31, 2018 and 2017	8
Consolidated Statements of Cash Flows (Unaudited) – Quarters ended March 31, 2018 and 2017	9
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Quarters ended March 31, 2018 and 2017	10
Notes to Consolidated Financial Statements (Unaudited)	11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations	77
Item 3. Quantitative and Qualitative Disclosures About Market Risk	137
Item 4. Controls and Procedures	137
PART II. OTHER INFORMATION
Item 1.    Legal Proceedings	139
Item 1A. Risk Factors	139
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 harbor 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,” “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.”

First BanCorp. 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. 

The two hurricanes that affected the Corporation’s service areas in 2017 are discussed below in Note 2 to the financial statements and in various sections of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These events caused significant uncertainties, the outcome of which will impact the Corporation’s future results.

Factors that could cause actual results to differ from those expressed in the Corporation’s forward-looking statements include, but are not limited to, risks described or referenced below in Part II, Item 1A. “Risk Factors” and the following:

·the actual pace and magnitude of economic recovery in the Corporation’s service areas that were affected by two hurricanes during 2017 compared to Management’s current views on the economic recovery;

·uncertainties about the effectiveness and the timing of the completion of the rebuilding taking place in the regions affected by the hurricanes, including the rebuilding of the public infrastructure, such as Puerto Rico’s power grid, how and the extent to which government, private or philanthropic funds will be invested in the affected communities, how many displaced individuals will return to their homes in both the short- and long-term, and what other demographic changes will take place, if any;

·uncertainty as to the ultimate outcomes of actions taken, or those that may be taken, by the Puerto Rico government, or the oversight board established by the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) to address Puerto Rico’s financial problems, including the filing of a form bankruptcy under Title III of PROMESA, which provides a court debt restructuring process similar to U.S. bankruptcy protection, and the effects of measures included in the Puerto Rico government fiscal plan, or any revisions to it, on our clients and loan portfolios;

·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 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;

3

·uncertainty about whether the Federal Reserve Bank of New York ( the “New York FED” or “Federal Reserve”) will continue to provide approvals for receiving dividends from the Corporation’s subsidiary, FirstBank Puerto Rico (“FirstBank” or the “Bank”), or making payments of dividends on non-cumulative perpetual preferred stock, or payments on trust preferred securities or subordinated debt, incurring, increasing or guaranteeing debt or repurchasing any capital securities, despite the consents that have enabled the Corporation to receive quarterly dividends from FirstBank since the second quarter of 2016, to pay quarterly interest payments on the Corporation’s subordinated debentures associated with its trust preferred securities since the second quarter of 2016, and to pay monthly dividends on the non-cumulative perpetual preferred stock since December 2016;

·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 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 common stockholders in the future due to the Corporation’s need to receive regulatory approvals 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 net deferred tax assets;

·adverse changes in general economic conditions in Puerto Rico, the United States (“U.S.”), the U.S. Virgin Islands (“USVI”), and the 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 have affected 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 Corporation’s remaining $8.1 million of the Puerto Rico government’s debt securities;   

·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;

4

·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 Board of the Governors of the Federal Reserve System (the “Federal Reserve Board”), the New York FED, the Federal Deposit Insurance Corporation (“FDIC”), government-sponsored housing agencies, and regulators in Puerto Rico, and the USVI and 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 effect on the Corporation’s businesses, business practices and results of operations of a potential higher interest rate environment;

·uncertainty as to whether FirstBank will be able to satisfy its regulators regarding, among other things, its asset quality, liquidity plans, maintenance of capital levels, and compliance with applicable laws, regulations and related requirements; and

·general competitive factors and industry consolidation.

    The Corporation does not undertake, and specifically disclaims any obligation, to update any “forward-looking statements” to reflect occurrences or unanticipated events or circumstances after the date of such statements 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, 2017, 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.

5

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	March 31, 2018		December 31, 2017
(In thousands, except for share information)
ASSETS
Cash and due from banks	$	743,409	$	705,980
Money market investments:
Time deposits with other financial institutions		3,126		3,126
Other short-term investments		97,289		7,289
Total money market investments		100,415		10,415
Investment securities available for sale, at fair value:
Securities pledged that can be repledged		242,738		350,123
Other investment securities		1,572,766		1,540,893
Total investment securities available for sale		1,815,504		1,891,016
Investment securities held to maturity, at amortized cost:
Securities pledged that can be repledged		-		-
Other investment securities		150,486		150,627
Total investment securities held to maturity, fair value of $134,856 (2017- $131,032)		150,486		150,627
Other investment securities		43,532		43,119
Loans, net of allowance for loan and lease losses of $225,856
(2017 - $231,843)		8,470,034		8,618,633
Loans held for sale, at lower of cost or market		91,375		32,980
Total loans, net		8,561,409		8,651,613
Premises and equipment, net		143,115		141,895
Other real estate owned		154,639		147,940
Accrued interest receivable on loans and investments		44,093		57,172
Other assets		443,784		461,491
Total assets	$	12,200,386	$	12,261,268
LIABILITIES
Non-interest-bearing deposits	$	2,019,823	$	1,833,665
Interest-bearing deposits		7,046,642		7,188,966
Total deposits		9,066,465		9,022,631
Securities sold under agreements to repurchase		200,000		300,000
Advances from the Federal Home Loan Bank ("FHLB")		715,000		715,000
Other borrowings		184,150		208,635
Accounts payable and other liabilities		157,667		145,905
Total liabilities		10,323,282		10,392,171
STOCKHOLDERSʼ 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, 220,877,719 shares (2017 - 220,382,343 shares issued)		22,088		22,038
Less: Treasury stock (at par value)		(449)		(410)
Common stock outstanding, 216,390,329 shares outstanding (2017 - 216,278,040
shares outstanding)		21,639		21,628
Additional paid-in capital		936,342		936,772
Retained earnings, includes legal surplus reserve of $59,693		927,681		895,208
Accumulated other comprehensive loss, net of tax of $7,752		(44,662)		(20,615)
Total stockholdersʼ equity		1,877,104		1,869,097
Total liabilities and stockholdersʼ equity	$	12,200,386	$	12,261,268
The accompanying notes are an integral part of these statements.

6

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Quarter Ended
	March 31, 2018		March 31, 2017
(In thousands, except per share information)
Interest and dividend income:
Loans	$	133,175	$	131,442
Investment securities		13,987		13,302
Money market investments and interest-bearing cash accounts		2,256		484
Total interest income	149,418		145,228
Interest expense:
Deposits		16,971		15,972
Securities sold under agreements to repurchase		2,297		2,623
Advances from FHLB		3,372		2,122
Other borrowings		2,085		1,962
Total interest expense	24,725		22,679
Net interest income		124,693		122,549
Provision for loan and lease losses		20,544		25,442
Net interest income after provision for loan and lease losses	104,149		97,107
Non-interest income:
Service charges and fees on deposit accounts		5,088		5,790
Mortgage banking activities		4,165		3,616
Other-than-temporary impairment ("OTTI") losses on available-for-sale debt securities:
Total other-than-temporary impairment losses		-		(12,231)
Portion of other-than-temporary impairment
recognized in other comprehensive income ("OCI")		-		-
Net impairment losses on available-for-sale debt securities		-		(12,231)
Gain on early extinguishment of debt		2,316		-
Insurance commission income		3,355		3,587
Other non-interest income		7,860		7,481
Total non-interest income	22,784		8,243
Non-interest expenses:
Employees' compensation and benefits		40,684		38,653
Occupancy and equipment		15,105		14,088
Business promotion		2,576		3,281
Professional fees		10,060		10,956
Taxes, other than income taxes		3,856		3,676
Insurance and supervisory fees		3,855		4,909
Net loss on other real estate owned ("OREO") and OREO operations		190		4,076
Credit and debit card processing expenses		3,537		2,831
Communications		1,482		1,543
Other non-interest expenses		4,682		3,869
Total non-interest expenses	86,027		87,882
Income before income taxes		40,906		17,468
Income tax (expense) benefit		(7,758)		8,073
Net income	$	33,148	$	25,541
Net income attributable to common stockholders	$	32,479	$	24,872
Net income per common share:
Basic	$	0.15	$	0.12
Diluted	$	0.15	$	0.11
Dividends declared per common share	$	-	$	-
The accompanying notes are an integral part of these statements.

7

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Quarter Ended
		March 31,		March 31,
	2018			2017
(In thousands)
Net income	$	33,148	$	25,541
Available-for-sale debt securities on which an other-than-temporary
impairment has been recognized:
Unrealized gain (loss) on debt securities on which an
other-than-temporary impairment has been recognized		496		(2,930)
Reclassification adjustment for other-than-temporary impairment
on debt securities included in net income		-		12,231
All other unrealized holding (losses) gains on available-for-sale securities arising during the period		(24,549)		1,395
Amount reclassified out of accumulated other comprehensive loss per Accounting Standards
Update ("ASU") 2016-01		6		-
Other comprehensive (loss) income for the period		(24,047)		10,696
Total comprehensive income	$	9,101	$	36,237
The accompanying notes are an integral part of these statements.

8

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Quarter Ended
	March 31, 2018		March 31, 2017
(In thousands)
Cash flows from operating activities:
Net income	$	33,148	$	25,541
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,922		4,141
Amortization of intangible assets		1,006		1,121
Provision for loan and lease losses		20,544		25,442
Deferred income tax expense (benefit)		5,472		(6,016)
Stock-based compensation		2,205		1,734
Other-than-temporary impairments on debt securities		-		12,231
Gain on early extinguishment of debt		(2,316)		-
Unrealized loss on derivative instruments		52		57
Net (gain) loss on sales of premises and equipment and other assets		(847)		9
Net gain on sales of loans		(1,096)		(1,472)
Net amortization/accretion of premiums, discounts, and deferred loan fees and costs		(2,095)		(2,031)
Originations and purchases of loans held for sale		(65,984)		(81,389)
Sales and repayments of loans held for sale		76,163		86,924
Loans held for sale valuation adjustment		558		-
Amortization of broker placement fees		367		527
Net amortization/accretion of premium and discounts on investment securities		476		461
Decrease in accrued interest receivable		13,061		3,413
Increase in accrued interest payable		8		174
Decrease in other assets		10,566		5,419
Increase in other liabilities		166		8,517
Net cash provided by operating activities		95,376		84,803
Cash flows from investing activities:
Principal collected on loans		590,753		669,615
Loans originated and purchased		(550,257)		(704,175)
Proceeds from sales of loans held for investment		13,274		53,245
Proceeds from sales of repossessed assets		10,559		12,159
Purchases of available-for-sale securities		(49,626)		(5,003)
Proceeds from principal repayments and maturities of available-for-sale securities		100,195		53,830
Proceeds from principal repayments of held-to-maturity securities		141		141
Additions to premises and equipment		(5,142)		(2,840)
Proceeds from sale of premises and equipment and other assets		1,857		637
Net redemptions of other equity securities		-		4,500
Net cash provided by investing activities		111,754		82,109
Cash flows from financing activities:
Net increase in deposits		45,026		58,722
Change in securities sold under agreements to repurchase		(100,000)		-
Net FHLB advances paid		-		(100,000)
Repayment of junior subordinated debentures		(21,434)		-
Repurchase of outstanding common stock		(2,624)		(528)
Dividends paid on preferred stock		(669)		(669)
Net cash used in financing activities		(79,701)		(42,475)
Net increase in cash and cash equivalents		127,429		124,437
Cash and cash equivalents at beginning of period		716,395		299,685
Cash and cash equivalents at end of period	$	843,824	$	424,122
Cash and cash equivalents include:
Cash and due from banks	$	743,409	$	414,034
Money market instruments		100,415		10,088
	$	843,824	$	424,122
The accompanying notes are an integral part of these statements.

9

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

	Quarter Ended
	March 31,		March 31,
	2018		2017
(In thousands)
Preferred Stock	$	36,104	$	36,104
Common Stock outstanding:
Balance at beginning of period		21,628		21,745
Common stock issued as compensation		15		14
Common stock withheld for taxes		(38)		(11)
Restricted stock grants		34		95
Balance at end of period		21,639		21,843
Additional Paid-In-Capital:
Balance at beginning of period		936,772		931,856
Stock-based compensation		2,205		1,734
Common stock withheld for taxes		(2,586)		(517)
Restricted stock grants		(34)		(95)
Common stock issued as compensation		(15)		(14)
Balance at end of period		936,342		932,964
Retained Earnings:
Balance at beginning of period		895,208		830,928
Net income		33,148		25,541
Dividends on preferred stock		(669)		(669)
Amount reclassified from accumulated other comprehensive loss per ASU 2016-01		(6)		-
Balance at end of period		927,681		855,800
Accumulated Other Comprehensive (Loss) Income, net of tax:
Balance at beginning of period		(20,615)		(34,390)
Other comprehensive (loss) income, net of tax		(24,047)		10,696
Balance at end of period		(44,662)		(23,694)
Total stockholdersʼ equity	$	1,877,104	$	1,823,017
The accompanying notes are an integral part of these statements.

10

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 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, 2017. 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, 2017, which are included in the Corporation’s 2017 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 significant intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for the quarter ended March 31, 2018 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:

Revenue Recognition

In May 2014, the FASB updated the Accounting Standards Codification (the “Codification” or the “ASC”) to create a new, principles-based revenue recognition framework. This guidance requires entities to recognize revenues when they transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance describes a 5-step process that entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information.

    The Corporation adopted the guidance on January 1, 2018 using a modified retrospective method, in which the guidance applies to existing contracts in effect at January 1, 2018 and new contracts entered into after this date. Most of the Corporation’s revenue, including net interest income, gain on sale of loans, and mortgage servicing fees is explicitly out of scope of the new revenue recognition guidance. The Corporation conducted an assessment of the revenue streams that were potentially affected by the new guidance and reviewed contracts in scope to ensure compliance with the new guidance.

The Corporation has identified service charges on deposits and related cash management services, insurance commissions, merchant-related income, and card interchange income as its most significant revenue streams within the scope of the standard.  For the revenue streams that were found in scope, management reviewed in detail its most significant contracts with corresponding customers. The adoption of this guidance did not have a material effect on the Corporation’s consolidated financial statements. However, additional disclosures required by the standard have been included in Note 22 – Revenue from Contracts with Customers, to the Corporation’s consolidated financial statements.

Recognition and Measurement of Financial Assets and Liabilities

In January 2016, the FASB updated the Codification to require an entity to: (i) measure equity investments at fair value through net income, with certain exceptions, thus, eliminating eligibility for the available-for-sale category; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price; and (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. The guidance provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment, adjusted for certain observable price changes. The guidance also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The adoption of this standard during the first quarter of 2018 did not have a material effect on the Corporation’s consolidated financial statements.

11

Statement of Cash Flows Presentation – Restricted Cash

In August 2016 and November 2016, the FASB updated the Codification to provide specific guidance on the classification and presentation of certain cash payments and cash receipts, including changes in restricted cash, 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 should be applied using a retrospective transition method to each period presented. The Corporation adopted the provisions of this guidance during the first quarter of 2018 without any material effect on the Corporation’s consolidated financial statements.

Income Tax Effect of Intra-Entity Transfers of Assets

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 asset 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. The Corporation adopted the provisions of this guidance during the first quarter of 2018 without any effect on the Corporation’s consolidated financial statements.

Clarifying what Changes Qualify as a Modification of a Share-Based Payment Award

In May 2017, the FASB updated the codification to reduce the cost and complexity when applying ASC Topic 718, “Compensation – Stock Compensation,” and standardize the practice of applying Topic 718 to financial reporting. Topic 718 prescribes the accounting treatment of a modification in the terms or conditions of a share-based payment award. The guidance clarifies what changes would qualify as a modification. This was done by better defining what does not constitute a modification. In order for a change to a share-based arrangement to not require Topic 718 modification treatment, all of the following must be met: (i) the fair value (or alternative measurement method used) of the modified award equals the fair value (or alternative measurement method used) of the original award immediately before the original award is modified; (ii) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (iii) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under this Update. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date. The Corporation adopted the provisions of this guidance on January 1, 2018 without any effect on the Corporation’s consolidated financial statements. The Corporation’s Omnibus Plan provides for equity-based compensation incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, cash-based awards and other stock-based awards. If any change occurs in the future to awards issued under the Omnibus Plan, the Corporation will evaluate it under this guidance.

Lease Accounting

In February 2016, the FASB updated the Codification to provide guidance for the financial reporting about leasing transactions. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the guidance will require both types of leases to be recognized on the balance sheet. The guidance will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The guidance on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period presented in the financial statements. As lessees, the Corporation has lease agreements for branch locations that are currently considered operating leases, and therefore are not recognized on the Corporation’s consolidated balance sheets. The Corporation expects that the new guidance will require these leases to be recognized on the consolidated balance sheets as a right-of-use asset with a corresponding lease liability. The Corporation continues to evaluate the effect that this guidance will have on the Corporation’s consolidated financial statements.

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Accounting for Financial Instruments – Credit Losses

In June 2016, the FASB updated the Codification to introduce new guidance for the accounting for credit losses on instruments that includes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. 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 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 guidance 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 guidance amends the current 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 affect 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 effect 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 OTTI was recognized prior to the date of adoption.

This guidance 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 guidance 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 adoption of the guidance will be permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The Corporation has developed a transition roadmap in order to comply with the timely implementation of this new accounting framework. The Corporation has created a working group with members from multiple areas across the organization that is responsible for assessing the effect of the standard, evaluating interpretative issues, and evaluating the current credit loss models against the new guidance to determine any necessary changes and other related implementation activities. The working group provides periodic updates to the Corporation’s CECL Management Committee, which has oversight responsibilities for the implementation efforts. The Corporation continues to evaluate the effect that this guidance, including the method of implementation, will have on its consolidated financial statements.

Subsequent Measurement of Goodwill

    In January 2017, the FASB updated the Codification to simplify the subsequent measurement of goodwill by eliminating Step 2 from the current two-step goodwill impairment test. This guidance provides that a goodwill impairment test be conducted by comparing the fair value of a reporting unit with its carrying amount. Entities are to recognize an impairment charge for goodwill

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equal to the excess of the carrying amount over the reporting unit’s fair value. Entities have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The effect of this guidance will depend upon the performance of the reporting units and the market conditions affecting the fair value of each reporting unit going forward.

Amortization of Premiums and Discounts of Callable Debt Securities

In March 2017, the FASB updated the Codification to shorten the amortization period for certain purchased callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. With respect to securities held at a discount, the amendments do not require an accounting change; thus, the discount continues to be amortized to maturity. Under current GAAP, premiums and discounts on callable debt securities generally are amortized to the maturity date. An entity must have a large number of similar loans to consider estimates of future principal prepayments when applying the interest method. However, an entity that holds an individual callable debt security at a premium may not amortize that premium to the earliest call date. If that callable debt security is subsequently called, the entity records a loss equal to the unamortized premium. The amendments in this Update more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. In most cases, market participants price securities to the call date that produces the worst yield when the coupon is above current market rates (that is, the security is trading at a premium) and price securities to maturity when the coupon is below market rates (that is, the security is trading at a discount) in anticipation that the borrower will act in its economic best interest. As a result, the amendments more closely align interest income recorded on bonds held at a premium or a discount with the economics of the underlying instrument. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The adoption of this guidance is not expected to have a material effect on the Corporation’s consolidated statement of financial condition or results of operations. As of March 31, 2018, the Corporation had $4.3  million of callable debt securities held at a premium (unamortized premium of $50 thousand).

Derivatives and Hedging

In August 2017, the FASB updated the Codification to: (i) expand hedge accounting for nonfinancial and financial risk components and amend measurement methodologies to more closely align hedge accounting with a company’s risk management activities; (ii) decrease the complexity of preparing and understanding hedge results by eliminating the separate measurement and reporting of hedge ineffectiveness; (iii) enhance transparency, comparability, and understanding of hedge results through enhanced disclosures and changing the presentation of hedge results to align the effects of the hedging instrument and the hedged item; and (iv) reduce the cost and complexity of applying hedge accounting by simplifying the manner in which assessments of hedge effectiveness may be performed. This Update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The guidance requires companies to apply requirements to existing hedging relationships on the date of adoption, and the effect of the adoption should be reflected as of the beginning of the fiscal year of adoption. As of March 31, 2018, all of the derivatives held by the Corporation were considered economic undesignated hedges. The adoption of this guidance is not expected to have a material effect on the Corporation’s consolidated statement of financial condition or results of operations.

Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income

    In February 2018, the FASB updated the Codification to provide entities with an option to reclassify tax effects that were stranded in accumulated other comprehensive income, pursuant to the recently enacted Tax Cuts and Jobs Act of 2017 (the “Tax Act”), to retained earnings. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. This guidance may be early adopted in any interim or annual period for which financial statements have not yet been issued and applied either in the period of adoption or retrospectively to each period in which the effect of the change in the corporate tax rate in the Tax Act is recognized. The adoption of this guidance is not expected to have an effect on the Corporation’s consolidated financial statements.

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NOTE 2 – UPDATE ON EFFECTS OF NATURAL DISASTERS

Two strong hurricanes affected the Corporation’s service areas during September 2017. The following summarizes the more significant continuing financial repercussions of these natural disasters for the Corporation and for its major subsidiary, FirstBank.

Credit Quality and Allowance for Loan and Lease Losses

Relationship officers continued to closely monitor the performance of hurricane-affected loan customers during the first quarter of 2018, and data became available on the performance of consumer and residential credits that had been under payment deferral programs. This information was factored into the determination of the allowance for loan and lease losses as of March 31, 2018. Although the identification and evaluation of hurricane-affected credits has been substantially completed, management’s assessment of the hurricanes’ effect is still subject to uncertainties, both those specific to some individual customers, such as the resolution of insurance claims, and those applicable to the overall economic prospects of the hurricane-affected areas as a whole. During the first quarter of 2018, the Corporation recorded a net loan loss reserve release of approximately $6.4 million in connection with revised estimates associated with the effects of the hurricanes. The revised estimates were primarily attributable to updated assessments of financial performance and repayment prospects of certain individually-assessed commercial credits and lower reserve requirements resulting from payments received during the first quarter that reduced the balance of the consumer loan portfolio outstanding on the dates of the hurricanes.

As of March 31, 2018, the hurricane-related allowance amounted to $62.1 million (net of a $2.8 million charge-off taken on a hurricane-affected construction credit during the fourth quarter of 2017). With the resolution of uncertainties and the ongoing collection of information on individual commercial customers and statistics on the consumer and residential loan portfolios, the loss estimate will be revised as needed. Refer to Note 7, – Loans Held for Investment, to the consolidated financial statements for information about non-performing loans and early delinquency statistics.

Disaster Response Plan Costs, Casualty Losses and Related Insurance

The Corporation has incurred a variety of costs to operate in disaster response mode, and some facilities and their contents were damaged by the storms.  The Corporation maintains insurance for casualty losses as well as for reasonable and necessary disaster response costs and certain revenue lost through business interruption. Most of the significant disaster response costs were incurred by the end of the first quarter of 2018. The cost were included, where appropriate, in an insurance claim receivable based on management’s understanding of the underlying coverage. An insurance claim receivable of $5.3 million was included as part of other assets as of March 31, 2018, and the Corporation has incurred $9.4 million of hurricane-related disaster response costs and casualty losses, including $1.6 million charged to operations in the first quarter of 2018.  Impairments, recoverable expenses and expected recoveries are included as part of “Other non-interest income” in the statement of income.  Management also believes that there is a possibility that some gains will be recognized with respect to casualty and lost revenue claims in future periods, but this is contingent on reaching agreement on the Corporation’s claims with the insurance carriers.

Liquidity Management  

The Corporation experienced rapid accumulation of deposits after the hurricanes in the fourth quarter of 2017 and the first quarter of 2018.  Total deposits as of March 31, 2018, excluding brokered CDs, increased $238.3 million from December 31, 2017 and $599.8 million since September 30, 2017.  The most significant increase was in non-interest-bearing demand deposits, which grew 10%, or $186.2 million from December 31, 2017 and $433.7 million, or 27%, since September 30, 2017.  Hurricane-related factors, such as the effect of payment deferral programs available to customers, disaster relief funds, and settlement of insurance claims continue to contribute to this accumulation.  Although management expects the balances accumulated by deposit customers in the hurricane-affected areas to reduce over time, it is difficult to predict when and to what degree, and there may be further growth as insurance claims are resolved and additional disaster-recovery funds are distributed. 

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NOTE 3 – EARNINGS PER COMMON SHARE

	The calculations of earnings per common share for the quarters ended March 31, 2018 and 2017 are as follows:
		Quarter Ended
		March 31,		March 31,
		2018		2017
(In thousands, except per share information)
Net income		$	33,148	$	25,541
Less: Preferred stock dividends			(669)		(669)
Net income attributable to common stockholders		$	32,479	$	24,872
Weighted-Average Shares:
	Average common shares outstanding		214,646		213,340
	Average potential dilutive common shares		1,648		4,033
	Average common shares outstanding-assuming dilution		216,294		217,373
Earnings per common share:
	Basic	$	0.15	$	0.12
	Diluted	$	0.15	$	0.11

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. Basic weighted-average common shares outstanding exclude unvested shares of restricted stock that do not contain non-forfeitable dividend rights.

Potential dilutive common shares consist of unvested shares of restricted stock that do not contain non-forfeitable dividend rights, performance units that do not contain non-forfeitable dividend rights if the performance condition in met as of the end of the reporting period, and outstanding warrants using the treasury stock method. This method assumes that the potential dilutive common shares are issued and outstanding 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 numbers of potential dilutive shares issued and the shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted earnings per share. Unvested shares of restricted stock and performance units that do not contain non-forfeitable dividend rights, and outstanding warrants that result in lower potential dilutive 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.

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NOTE 4 – STOCK-BASED COMPENSATION

   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, extend the term of the Omnibus Plan to May 24, 2026 and re-approve the material terms of the performance goals under the Omnibus Plan for purposes of the then 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 to 14,169,807 shares of common stock, subject to adjustments for stock splits, reorganizations and other similar events. As of March 31, 2018, 7,063,074 authorized shares of common stock were available for issuance under the Omnibus Plan. The Corporation’s Board of Directors, based on the recommendation of the Corporation’s Compensation and Benefits 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. 

Restricted Stock

Under the Omnibus Plan, the Corporation may grant restricted stock to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While the restricted stock is subject to forfeiture and does not contain non-forfeitable dividend rights, restricted stock participants may exercise full voting rights. The restricted stock granted under the Omnibus Plan is typically subject to a vesting period. During the first quarter of 2018, the Corporation awarded 341,189 shares of restricted stock to employees, fifty percent (50%) of those shares vest in two years from the grant date and the remaining 50% vest in three years of the grant date. Included in those 341,189 shares of restricted stock were 20,447 shares granted to retirement-eligible employees at the grant date. The fair value of the shares of restricted stock granted in the first quarter of 2018 was based on the market price of the Corporation’s outstanding common stock on the date of the grant.

	The following table summarizes the restricted stock activity in the first quarter of 2018 under the Omnibus Plan:
		Quarter Ended
		March 31, 2018
		Number of
		shares of		Weighted-Average
		restricted		Grant Date
		stock		Fair Value
Non-vested shares at beginning of period		1,816,968	$	2.76
Granted		341,189		6.29
Vested		(1,061,476)		2.02
Non-vested shares at March 31, 2018		1,096,681	$	4.58

    For the quarters ended March 31, 2018 and 2017, the Corporation recognized $1.1 million and $0.9 million, respectively, of stock-based compensation expense related to restricted stock awards. As of March 31, 2018, there was $3.9 million of total unrecognized compensation cost related to non-vested shares of restricted stock. The weighted average period over which the Corporation expects to recognize such cost is 1.7 years. The total expense determined for restricted stock awards granted to retirement-eligible employees was charged against earnings at the grant date.

During the first quarter of 2017, the Corporation awarded 949,332 shares of restricted stock to employees subject to a vesting period of two years. Included in those 949,332 shares of restricted stock were 838,332 shares granted to certain senior officers consistent with the requirements of the Troubled Asset Relief Program (“TARP”) Interim Final Rule. On May 10, 2017, the United States Department of the Treasury (the “U.S. Treasury) announced that it had sold all of its remaining 10,291,553 shares of the Corporation’s common stock. As a result of the sale by the U.S. Treasury, the Corporation is no longer subject to the compensation-related restrictions under TARP, which substantially limited the Corporation’s ability to award short-term and long-term incentives to the Corporation’s executives, and the Corporation’s senior officers are no longer subject to the transferability restrictions on their shares of restricted stock. However, since the U.S. Treasury did not recover the full amount of its original investment under TARP, the senior officers forfeited 2,370,571, or 50%, of their outstanding shares of restricted stock, resulting in a reduction in the number of common shares outstanding. The U.S. Treasury continues to hold a warrant to purchase 1,285,899 shares of the Corporation’s common stock.

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The fair value of the shares of restricted stock granted in the first quarter of 2017 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 838,332 shares of restricted stock granted under the TARP requirements, the market price was discounted assuming that 50% of the shares of restricted stock would become freely transferable and the remaining 50% would be forfeited, resulting in a fair value of $2.71 for each share of restricted stock granted under TARP requirements.

    Stock-based compensation accounting guidance requires the Corporation to reverse compensation expense for any awards that are forfeited due to employee or director turnover. Quarterly changes in the estimated forfeiture rate may have a significant effect on stock-based compensation, as the effect of adjusting the rate for all expense amortization is recognized in the period in which the forfeiture estimate is changed.  If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease in the expense recognized in the financial statements.  If the actual forfeiture rate is lower than the estimated forfeiture rate, an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase in the expense recognized in the financial statements. The estimated forfeiture rate did not change as a result of the restricted shares forfeited in connection with the aforementioned U.S. Treasury’s sale of the Corporation’s common stock. 

Performance Units

Under the Omnibus Plan, the Corporation may award performance unit awards to Omnibus Plan participants.  During the first quarter of 2018, the Corporation granted 304,408 unit awards to executives, with each unit representing the value of one share of the Corporation’s common stock.  The performance unit awards granted are for the performance period beginning January 1, 2018 and ending on December 31, 2020 and are subject to a three-year requisite service period.  These awards do not contain non-forfeitable rights to dividend equivalent amounts and can only be settled in shares of the Corporation’s common stock. Included in those 304,408 performance unit awards were 29,171 units granted to retirement-eligible executives at the grant date.  The performance unit will vest based on the achievement of a pre-established tangible book value per share target as of December 31, 2020.  All of the performance units will vest if performance is at the pre-established performance target level or above.  However, the participants may vest on 50% of the awards to the extent that performance is below the target but at 80% of the pre-established performance target level (the 80% minimum threshold).  If performance is between the 80% minimum threshold and the pre-established performance target level, the participants will vest on a proportional amount. No performance units will vest if performance is below the 80% minimum threshold. 

The fair value of the performance unit awards granted in the first quarter of 2018 was based on the market price of the Corporation’s outstanding common stock on the date of the grant.  For the first quarter of 2018, the Corporation recognized $0.2 million of stock-based compensation related to performance unit awards.  As of March 31, 2018, there was $1.7 million of total unrecognized compensation cost related to unvested performance units that the Corporation expects to recognize over the three-year requisite service period. The total expense determined for the performance unit awards granted to retirement-eligible executives was charged against earnings at the grant date. The total amount of compensation expense recognized reflects management’s assessment of the probability that the pre-established performance goal will be achieved. A cumulative adjustment is recognized to compensation expense in the current period to reflect any changes in the probability of achievement of the performance goals.

Salary stock

   Also, 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 issued under the Omnibus Plan, instead of cash. During the first quarter of 2018, the Corporation issued 154,187 shares of common stock (first quarter of 2017 – 135,692 shares) with a weighted average market value of $5.80 (first quarter of 2017 - $6.31) as salary stock compensation. This resulted in a compensation expense of $0.8 million recorded in each of the first quarter of 2018 and 2017.

   During the quarter ended March 31, 2018, the Corporation withheld 56,131 shares (first quarter of 2017 – 45,710 shares) from the common stock paid to certain senior officers as additional compensation and 326,956 shares of the restricted stock that vested during the first quarter of 2018 (first quarter of 2017 – 52,590 shares) to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid in cash any fractional share of salary stock to which the officer was entitled. In the consolidated financial statements, the Corporation treats shares withheld for tax purposes as common stock repurchases.

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NOTE 5 – INVESTMENT SECURITIES

Investment Securities Available for Sale

The amortized cost, non-credit loss component of OTTI recorded in 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 March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018
	Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI		Gross				Fair value
					Unrealized						Weighted-
					gains		losses				average yield %
(Dollars in thousands)
U.S. Treasury securities:
Due within one year	$	49,799	$	-	$	-	$	22	$	49,777	1.55
After 1 to 5 years		7,465		-		-		73		7,392	1.29
U.S. government-sponsored
agencies obligations:
Due within one year		72,484		-		-		242		72,242	1.08
After 1 to 5 years		309,459		-		-		4,996		304,463	1.42
After 5 to 10 years		133,471		-		26		2,736		130,761	2.74
After 10 years		39,190		-		-		254		38,936	2.07
Puerto Rico government
obligations:
After 5 to 10 years		4,052		-		22		-		4,074	3.14
After 10 years		4,035		-		-		1,301		2,734	6.97
United States and Puerto
Rico government
obligations		619,955		-		48		9,624		610,379	1.76
Mortgage-backed securities:
Freddie Mac ("FHLMC") certificates:
After 5 to 10 years		43,037		-		12		1,305		41,744	1.96
After 10 years		262,934		-		-		8,379		254,555	2.28
		305,971		-		12		9,684		296,299	2.23
Ginnie Mae ("GNMA") certificates:
After 1 to 5 years		136		-		3		-		139	2.77
After 5 to 10 years		65,098		-		683		137		65,644	3.04
After 10 years		140,314		-		4,492		986		143,820	3.81
		205,548		-		5,178		1,123		209,603	3.57
Fannie Mae ("FNMA") certificates:
After 1 to 5 years		15,735		-		177		195		15,717	2.89
After 5 to 10 years		109,562		-		-		4,279		105,283	1.76
After 10 years		531,560		-		1,818		14,320		519,058	2.52
		656,857		-		1,995		18,794		640,058	2.40
Collateralized mortgage obligations
guaranteed by the FHLMC
and  GNMA
After 1 to 5 years		8,154		-		8		11		8,151	2.53
After 10 years		34,619		-		321		-		34,940	2.53
		42,773		-		329		11		43,091	2.53
Other mortgage pass-through
trust certificates:
After 10 years		21,309		5,235		-		-		16,074	4.49
Total mortgage-backed
securities		1,232,458		5,235		7,514		29,612		1,205,125	2.60
Total investment securities
available for sale	$	1,852,413	$	5,235	$	7,562	$	39,236	$	1,815,504	2.32

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		December 31, 2017
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI		Gross				Fair value
						Unrealized						Weighted-
						gains		losses				average yield%
(Dollars in thousands)
U.S. Treasury securities:
	After 1 to 5 years	$	7,458	$	-	$	-	$	57	$	7,401	1.29
U.S. government-sponsored
agencies obligations:
	Due within one year		122,471		-		-		319		122,152	1.06
	After 1 to 5 years		309,472		-		28		3,735		305,765	1.42
	After 5 to 10 years		133,451		-		117		319		133,249	2.72
	After 10 years		40,769		-		1		149		40,621	1.84
Puerto Rico government
obligations:
	After 5 to 10 years		4,071		-		47		-		4,118	3.14
	After 10 years		3,972		-		-		1,277		2,695	6.97
United States and Puerto
Rico government
obligations			621,664		-		193		5,856		616,001	1.70
Mortgage-backed securities:
FHLMC certificates:
	After 5 to 10 years		18,658		-		14		63		18,609	2.14
	After 10 years		297,733		-		217		4,853		293,097	2.23
			316,391		-		231		4,916		311,706	2.23
GNMA certificates:
	After 1 to 5 years		81		-		1		-		82	3.23
	After 5 to 10 years		69,661		-		1,244		-		70,905	3.05
	After 10 years		145,067		-		5,910		334		150,643	3.81
			214,809		-		7,155		334		221,630	3.56
FNMA certificates:
	After 1 to 5 years		20,831		-		294		109		21,016	2.69
	After 5 to 10 years		49,934		-		-		818		49,116	1.83
	After 10 years		613,129		-		3,180		6,401		609,908	2.43
			683,894		-		3,474		7,328		680,040	2.39
Collateralized mortgage obligations
	issued or guaranteed by
	FHLMC and GNMA:
	After 1 to 5 years		5,918		-		14		-		5,932	2.21
	After 5 to 10 years		2,556		-		11		-		2,567	2.23
	After 10 years		35,331		-		231		-		35,562	2.22
			43,805		-		256		-		44,061	2.22
Other mortgage pass-through
trust certificates:
	After 10 years		22,791		5,731		-		-		17,060	2.44
Total mortgage-backed
	securities		1,281,690		5,731		11,116		12,578		1,274,497	2.54
Other
Due within one year			100		-		-		-		100	1.48
Equity Securities (1)			424		-		-		6		418	2.11
Total investment securities
	available for sale	$	1,903,878	$	5,731	$	11,309	$	18,440	$	1,891,016	2.27
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

20

Maturities of mortgage-backed securities (“MBS”) 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 noncredit 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 of March 31, 2018 and December 31, 2017. 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 March 31, 2018
	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	$	-	$	-	$	2,734	$	1,301	$	2,734	$	1,301
U.S. Treasury and U.S. government
agenciesʼ obligations		238,248		3,306		360,298		5,017		598,546		8,323
Mortgage-backed securities:
FNMA		354,552		7,690		259,076		11,104		613,628		18,794
FHLMC		138,510		2,916		157,598		6,768		296,108		9,684
GNMA		68,490		1,123		-		-		68,490		1,123
Collateralized mortgage obligations
issued or guaranteed by
FHLMC and GNMA		5,907		11		-		-		5,907		11
Other mortgage pass-through
trust certificates		-		-		16,074		5,235		16,074		5,235
	$	805,707	$	15,046	$	795,780	$	29,425	$	1,601,487	$	44,471
	As of December 31, 2017
	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	$	-	$	-	$	2,695	$	1,277	$	2,695	$	1,277
U.S. Treasury and U.S. government
agenciesʼ obligations		136,459		494		362,050		4,085		498,509		4,579
Mortgage-backed securities:
FNMA		189,699		1,705		274,963		5,623		464,662		7,328
FHLMC		91,174		590		166,331		4,326		257,505		4,916
GNMA		39,145		334		-		-		39,145		334
Other mortgage pass-through
trust certificates		-		-		17,060		5,731		17,060		5,731
Equity securities (1)		-		-		407		6		407		6
	$	456,477	$	3,123	$	823,506	$	21,048	$	1,279,983	$	24,171
(1) As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

21

Assessment for OTTI

Debt securities issued by U.S. government agencies, U.S. government-sponsored entities, and the U.S. Treasury accounted for approximately 98% of the total available-for-sale portfolio as of March 31, 2018, 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 private label MBS, and on Puerto Rico government debt securities, 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 for 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 March 31,
		2018		2017
	(In thousands)
	Total other-than-temporary impairment losses	$	-	$	(12,231)
	Portion of other-than-temporary impairment recognized in OCI		-		-
	Net impairment losses recognized in earnings (1)	$	-	$	(12,231)
	_________
(1)	Credit losses on Puerto Rico government debt securities, recorded in the first quarter of 2017.

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
	December 31,		recognized in earnings on		March 31,
	2017		securities that have been		2018
	Balance		previously impaired		Balance
(In thousands)
Available-for-sale securities
Private label MBS	$	6,792	$	-	$	6,792

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments
	December 31,		recognized in earnings on		March 31,
	2016		securities that have been		2017
	Balance		previously impaired		Balance
(In thousands)
Available for sale securities
Puerto Rico government obligations	$	22,189	$	12,231	$	34,420
Private label MBS		6,792	$	-		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	28,981	$	12,231	$	41,212

22

During the second quarter of 2017, the Corporation sold for an aggregate of $23.4 million three Puerto Rico government available-for-sale debt securities, specifically bonds of the Government Development Bank for Puerto Rico (the “GDB”) and the Puerto Rico Public Buildings Authority, carried on its book at an amortized cost at the time of sale of $23.0 million (net of $34.4 million in cumulative OTTI impairment charges). Approximately $12.2 million of the cumulative OTTI charges on these securities was recorded in the first quarter of 2017.

  For the OTTI charge recorded on the Puerto Rico government debt securities in the first quarter of 2017, the Corporation considered the latest available information about the Puerto Rico government’s financial condition, including but not limited to credit ratings downgrades, revised estimates of recovery rates, and other relevant developments such as government actions, including debt exchange proposals and the fiscal plan published by the Puerto Rico government in March 2017, as applicable. 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 OTTI. The analysis derived an estimate of value based on the present value of risk-adjusted cash flows of the underlying securities and included consideration of the following components:

·The contractual future cash flows of the bonds were 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 were 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 were assumed throughout the life of the bonds, which considered the respective security's credit rating as of the date of the analysis.

·The adjusted future cash flows were 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%, as these three non-performing bonds had been in default since the third quarter of 2016. Based on this analysis, the Corporation recorded in the first quarter of 2017 credit-related OTTI amounting to $12.2 million, assuming recovery rates ranging from 15% to 80% (with a weighted average of 41%).

In addition, the Corporation performed on OTTI assessment on its private label MBS, which are collateralized by fixed-rate mortgages on single-family residential properties in the United States. The interest rate on these private-label MBS is variable, tied to 3-month LIBOR and limited to the weighted-average coupon on the underlying collateral. The underlying mortgages are fixed-rate, single-family loans with original FICO scores (over 700) and moderate 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, if any, is reflected in earnings.  Significant assumptions in the valuation of the private label MBS were as follows:

	As of		As of
	March 31, 2018		December 31, 2017
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	14.5%	14.5%	14.0%	14.0%
Prepayment rate	15.2%	7.5% - 24.5%	16.4%	12.0% - 29.0%
Projected Cumulative Loss Rate	4%	0% - 9%	3%	0% - 6.8%

 No OTTI charges on private label MBS were recorded in either the first quarter of 2018 or the first quarter of 2017.

23

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 March 31, 2018 and December 31, 2017 were as follows:

		March 31, 2018
		Amortized cost						Fair value
				Gross Unrealized
										Weighted-
				gains		losses				average yield%
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	3,712	$	-	$	161	$	3,551	5.39
	After 5 to 10 years		39,523		-		2,703		36,820	5.35
	After 10 years		107,251		-		12,766		94,485	5.21
Total investment securities
	held to maturity	$	150,486	$	-	$	15,630	$	134,856	5.25

		December 31, 2017
		Amortized cost						Fair value
				Gross Unrealized
										Weighted
				gains		losses				average-yield%
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	3,853	$	-	$	173	$	3,680	5.38
	After 5 to 10 years		39,523		-		3,048		36,475	5.28
	After 10 years		107,251		-		16,374		90,877	4.93
Total investment securities
	held to maturity	$	150,627	$	-	$	19,595	$	131,032	5.03

24

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 March 31, 2018 and December 31, 2017:

	As of March 31, 2018
	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	$	-	$	-	$	134,856	$	15,630	$	134,856	$	15,630
	As of December 31, 2017
	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	$	-	$	-	$	131,032	$	19,595	$	131,032	$	19,595

     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.

    Approximately 70% of the held-to-maturity municipal bonds were issued by three of the largest municipalities in Puerto Rico. The vast majority of revenues of these three municipalities is independent of the Puerto Rico central government. 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 PROMESA oversight board has not designated any of Puerto Rico’s 78 municipalities as covered entities under PROMESA. However, while the fiscal plan recently certified by the PROMESA oversight board did not contemplate a restructuring of the debt of Puerto Rico’s municipalities, the plan did call for the gradual elimination of budgetary subsidies provided to municipalities by the central government. Furthermore, municipalities are also likely to be affected by the negative economic and other effects resulting from the recent hurricanes and from expense, revenue or cash management measures taken by the Puerto Rico government to address its fiscal and liquidity shortfalls, or measures included in fiscal plans of other government entities, such as the fiscal plans of the GDB and the Puerto Rico Electric Power Authority (“PREPA”). Given the uncertain effect that the negative fiscal situation of the Puerto Rico central government and the measures taken or to be taken by other government entities may have on municipalities, the Corporation cannot be certain if future impairment charges will be required relating to these securities.

     From time to time, the Corporation has securities held to maturity with an original maturity of three months or less that are considered cash and cash equivalents and classified as money market investments in the consolidated statements of financial condition.  As of March 31, 2018 and December 31, 2017, the Corporation had no outstanding securities held to maturity that were classified as cash and cash equivalents.

25

NOTE 6 – OTHER INVESTMENT 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 the FHLB requires an additional investment that is calculated as a percentage of total FHLB advances, letters of credit, and the collateralized portion of outstanding interest-rate swaps. The stock is capital stock issued at $100 par value. Both stock and cash dividends may be received on FHLB stock.

As of each March 31, 2018 and December 31, 2017, the Corporation had investments in FHLB stock with a book value of $40.9 million. The net realizable value is a reasonable proxy for the fair value of these instruments. Dividend income from FHLB stock for the quarters ended March 31, 2018 and 2017 was $0.7 million and $0.5 million, respectively.

The FHLB of New York issued the shares of FHLB stock owned by the Corporation. 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.

As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities with readily determinable fair value of approximately $0.4 million from available-for-sale investment securities to other investment securities. During the first quarter of 2018, the Corporation measured these equity securities at fair value through earnings resulting in the recognition of a market-to-market loss of $7 thousand recorded as part of other non-interest income in the statement of income.

The Corporation has other equity securities that do not have a readily-available fair value. The carrying value of such securities as of each March 31, 2018 and December 31, 2017 was $2.2 million.

NOTE 7 – LOANS HELD FOR INVESTMENT

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

			As of		As of
		March 31,		December 31,
			2018		2017
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	3,267,868	$	3,290,957
Commercial loans:
Construction loans (1)			79,150		111,397
Commercial mortgage loans (1)			1,552,503		1,614,972
Commercial and Industrial loans (2)			2,061,773		2,083,253
Total Commercial loans			3,693,426		3,809,622
Finance leases			262,863		257,462
Consumer loans			1,471,733		1,492,435
Loans held for investment (2)			8,695,890		8,850,476
Allowance for loan and lease losses			(225,856)		(231,843)
Loans held for investment, net		$	8,470,034	$	8,618,633
__________
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).
(2)	As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

26

Loans held for investment on which accrual of interest income had been discontinued were as follows:
		As of		As of
		March 31,		December 31,
		2018		2017
(In thousands)
Non-performing loans:
Residential mortgage		$	171,380	$	178,291
Commercial mortgage (1)			115,179		156,493
Commercial and Industrial			85,325		85,839
Construction:
Land			14,949		15,026
Construction-commercial (1)			-		35,100
Construction-residential			1,287		1,987
Consumer:
Auto loans			13,453		10,211
Finance leases			1,801		1,237
Other consumer loans			8,603		5,370
Total non-performing loans held for investment (2)(3)(4)		$	411,977	$	489,554
_______________
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).
(2)	Excludes $64.9 million and $8.3 million of non-performing loans held for sale as of March 31, 2018 and December 31, 2017, respectively.
(3)	Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $155.3 million and $158.2 million as of March 31, 2018 and December 31, 2017, 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.
(4)	Non-performing loans exclude $366.4 million and $374.7 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with the modified terms and in accrual status as of March 31, 2018 and December 31, 2017, respectively.

During the first quarter of 2018, the Corporation transferred to held for sale three non-performing commercial and construction loans. The aggregate recorded investment in these loans was written down to $57.2 million, which resulted in charge-offs of $9.7 million of which $4.1 million was taken against previously-established reserves for loan losses, resulting in a charge to the provision for loan and lease losses of $5.6 million for the first quarter of 2018. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

Loans in Process of Foreclosure

    As of March 31, 2018, the recorded investment of residential mortgage loans collateralized by residential real estate property that are in the process of foreclosure amounted to $152.3 million, including $22.7 million of loans insured by the FHA or guaranteed by the VA, and $18.2 million of PCI loans. 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, Florida and USVI) require the foreclosure to be processed through the state’s court while foreclosure in non-judicial states (BVI) is processed without court intervention. Foreclosure timelines vary according to state law and investor guidelines. Occasionally, foreclosures may be delayed due to, among other reasons, mandatory mediations, bankruptcy, court delays and title issues.

27

The Corporation’s aging of the loans held for investment portfolio is as follows:
As of March 31, 2018
		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due (1)		Total Past Due		Purchased Credit-Impaired Loans		Current		Total loans held for investment		90 days past due and still accruing
(In thousands)
Residential mortgage:
FHA/VA and other government-guaranteed
loans (2)(3)(4)		$	-	$	3,665	$	107,693	$	111,358	$	-	$	35,927	$	147,285	$	107,693
Other residential mortgage loans (4)			-		57,505		186,535		244,040		151,067		2,725,476		3,120,583		15,155
Commercial:
Commercial and Industrial loans			13,137		2,419		86,095		101,651		-		1,960,122		2,061,773		770
Commercial mortgage loans (4)			-		49,807		119,156		168,963		4,214		1,379,326		1,552,503		3,977
Construction:
Land (4)			-		12		17,108		17,120		-		9,330		26,450		2,159
Construction-commercial			-		1,012		-		1,012		-		45,227		46,239		-
Construction-residential (4)			-		-		2,488		2,488		-		3,973		6,461		1,201
Consumer:
Auto loans			32,438		7,891		13,453		53,782		-		784,711		838,493		-
Finance leases			5,843		2,216		1,801		9,860		-		253,003		262,863		-
Other consumer loans			13,701		4,577		10,434		28,712		-		604,528		633,240		1,831
Total loans held for investment		$	65,119	$	129,104	$	544,763	$	738,986	$	155,281	$	7,801,623	$	8,695,890	$	132,786
_____________
(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 $30.6 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 March 31, 2018.
(3)	As of March 31, 2018, includes $73.3 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 and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans, and construction-residential loans past due 30-59 days as of March 31, 2018 amounted to $6.8 million, $122.0 million, $5.2 million, $0.6 million, and $0.2 million respectively.

As of December 31, 2017
		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due (1)		Total Past Due		Purchased Credit- Impaired Loans		Current		Total loans held for investment		90 days past due and still accruing (2) (3)
(In thousands)
Residential mortgage:
FHA/VA and other government-guaranteed
loans (2)(3)(4)		$	-	$	6,792	$	102,815	$	109,607	$	-	$	29,332	$	138,939	$	102,815
Other residential mortgage loans (4)			-		92,502		193,750		286,252		153,991		2,711,775		3,152,018		15,459
Commercial:
Commercial and Industrial loans			8,971		576		88,156		97,703		-		1,985,550		2,083,253		2,317
Commercial mortgage loans (4)			-		7,525		163,180		170,705		4,183		1,440,084		1,614,972		6,687
Construction:
Land (4)			-		124		15,177		15,301		-		11,630		26,931		151
Construction-commercial			-		-		35,100		35,100		-		41,456		76,556		-
Construction-residential			-		95		1,987		2,082		-		5,828		7,910		-
Consumer:
Auto loans			57,560		23,783		10,211		91,554		-		752,777		844,331		-
Finance leases			10,549		3,484		1,237		15,270		-		242,192		257,462		-
Other consumer loans			10,776		5,052		9,361		25,189		-		622,915		648,104		3,991
Total loans held for investment		$	87,856	$	139,933	$	620,974	$	848,763	$	158,174	$	7,843,539	$	8,850,476	$	131,420
____________
(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 $29.9 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 December 31, 2017.
(3)	As of December 31, 2017, includes $62.1 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 on two or more monthly payments. FHA/VA and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, and land loans past due 30-59 days as of December 31, 2017 amounted to $6.0 million, $224.0 million, $9.0 million, and $2.5 million, respectively.

28

The Corporation’s credit quality indicators by loan type as of March 31, 2018 and December 31, 2017 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
March 31, 2018
(In thousands)
Commercial mortgage		$	269,926	$	2,117	$	-	$	272,043	$	1,552,503
Construction:
Land			15,971		391		-		16,362		26,450
Construction-commercial			-		-		-		-		46,239
Construction-residential			1,287		-		-		1,287		6,461
Commercial and Industrial			144,205		7,745		729		152,679		2,061,773
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2017
(In thousands)
Commercial mortgage		$	257,503	$	4,166	$	-	$	261,669	$	1,614,972
Construction:
Land			15,971		490		-		16,461		26,931
Construction-commercial			35,100		-		-		35,100		76,556
Construction-residential			1,987		-		-		1,987		7,910
Commercial and Industrial			154,416		3,854		676		158,946		2,083,253
_________
(1)	Excludes non-peforming loans held for sale of $64.9 million ($27.2 million commercial mortgage, $30.0 million construction-commercial, and $7.7 million construction-land) and $8.3 million (construction-land) as of March 31, 2018 and December 31, 2017, respectively.

29

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 of the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently known facts, conditions and values. 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 asset even though partial recovery may occur in the future. There is little or no prospect for near term improvement and no realistic strengthening action of significance pending.

March 31, 2018		Consumer Credit Exposure-Credit Risk Profile Based on Payment Activity
		Residential Real-Estate				Consumer
		FHA/VA/ Guaranteed (1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	147,285	$	2,798,136	$	825,040	$	261,062	$	624,637
Purchased Credit-Impaired (2)			-		151,067		-		-		-
Non-performing			-		171,380		13,453		1,801		8,603
Total		$	147,285	$	3,120,583	$	838,493	$	262,863	$	633,240
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as 90 days past-due loans and still accruing as opposed to non-performing loans since the principal repayment is insured. This balance includes $30.6 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 March 31, 2018.
(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 analyses.
December 31, 2017		Consumer Credit Exposure-Credit Risk Profile Based on Payment Activity
			Residential Real-Estate			Consumer
		FHA/VA/ Guaranteed (1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	138,939	$	2,819,736	$	834,120	$	256,225	$	642,734
Purchased Credit-Impaired (2)			-		153,991		-		-		-
Non-performing			-		178,291		10,211		1,237		5,370
Total		$	138,939	$	3,152,018	$	844,331	$	257,462	$	648,104
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as 90 days past due loans and still accruing as opposed to non-performing loans since the principal repayment is insured. This balance includes $29.9 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 December 31, 2017.
(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 analyses.

30

The following tables present information about impaired loans held for investment, excluding PCI loans, which are reported separately as discussed below:
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment		Interest Income Recognized On Accrual Basis		Interest Income Recognized On Cash Basis
(In thousands)
As of March 31, 2018
With no related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		94,817		126,672		-		95,274		723		170
Commercial:
Commercial mortgage loans		60,811		99,837		-		61,445		82		37
Commercial and Industrial loans		24,712		27,679		-		24,825		246		11
Construction:
Land		-		-		-		-		-		-
Construction-commercial		-		-		-		-		-		-
Construction-residential		-		-		-		-		-		-
Consumer:
Auto loans		387		387		-		394		2		-
Finance leases		-		-		-		-		-		-
Other consumer loans		2,266		3,051		-		2,327		29		17
	$	182,993	$	257,626	$	-	$	184,265	$	1,082	$	235
With a related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		322,793		359,048		22,546		324,110		3,654		231
Commercial:
Commercial mortgage loans		101,315		117,838		13,451		102,304		661		47
Commercial and Industrial loans		95,066		117,400		14,375		92,382		302		20
Construction:
Land		11,815		20,001		1,432		11,864		25		8
Construction-commercial		-		-		-		-		-		-
Construction-residential		252		355		52		252		-		-
Consumer:
Auto loans		20,424		20,424		3,379		20,943		397		-
Finance leases		1,876		1,876		84		1,958		35		-
Other consumer loans		9,746		10,092		1,611		9,913		283		27
	$	563,287	$	647,034	$	56,930	$	563,726	$	5,357	$	333
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		417,610		485,720		22,546		419,384		4,377		401
Commercial:
Commercial mortgage loans		162,126		217,675		13,451		163,749		743		84
Commercial and Industrial loans		119,778		145,079		14,375		117,207		548		31
Construction:
Land		11,815		20,001		1,432		11,864		25		8
Construction-commercial		-		-		-		-		-		-
Construction-residential		252		355		52		252		-		-
Consumer:
Auto loans		20,811		20,811		3,379		21,337		399		-
Finance leases		1,876		1,876		84		1,958		35		-
Other consumer loans		12,012		13,143		1,611		12,240		312		44
	$	746,280	$	904,660	$	56,930	$	747,991	$	6,439	$	568

31

Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment
(In thousands)
As of December 31, 2017
With no related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		116,818		154,048		-		120,241
Commercial:
Commercial mortgage loans		65,100		100,612		-		86,563
Commercial and Industrial loans		28,292		31,254		-		28,567
Construction:
Land		48		49		-		48
Construction-commercial		-		-		-		-
Construction-residential		-		-		-		-
Consumer:
Auto loans		267		267		-		290
Finance leases		-		-		-		-
Other consumer loans		2,521		3,688		-		2,745
	$	213,046	$	289,918	$	-	$	238,454
With a related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		316,616		349,284		22,086		318,606
Commercial:
Commercial mortgage loans		87,814		124,084		9,783		93,720
Commercial and Industrial loans		90,008		112,005		12,359		92,666
Construction:
Land		11,865		19,973		1,402		14,126
Construction-commercial		35,101		38,595		560		35,996
Construction-residential		252		355		55		252
Consumer:
Auto loans		22,338		22,338		3,665		24,328
Finance leases		2,184		2,184		104		2,428
Other consumer loans		11,084		11,830		1,396		11,579
	$	577,262	$	680,648	$	51,410	$	593,701
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		433,434		503,332		22,086		438,847
Commercial:
Commercial mortgage loans		152,914		224,696		9,783		180,283
Commercial and Industrial loans		118,300		143,259		12,359		121,233
Construction:
Land		11,913		20,022		1,402		14,174
Construction-commercial		35,101		38,595		560		35,996
Construction-residential		252		355		55		252
Consumer:
Auto loans		22,605		22,605		3,665		24,618
Finance leases		2,184		2,184		104		2,428
Other consumer loans		13,605		15,518		1,396		14,324
	$	790,308	$	970,566	$	51,410	$	832,155
Interest income of approximately $6.9 million ($6.4 million on an accrual basis and $0.5 million on a cash basis) was recognized on impaired loans for the first quarter of 2017.

32

	The following table shows the activity for impaired loans and the related specific reserve during  the first quarter of 2018 and 2017:
		Quarter ended
		March 31, 2018		March 31, 2017
Impaired Loans:		(In thousands)
Balance at beginning of period		$	790,308	$	887,905
Loans determined impaired during the period			61,408		19,628
Charge-offs (1) (2)			(17,213)		(17,404)
Loans sold, net of charge-offs			(4,121)		(53,245)
Increases to existing impaired loans			6,998		541
Foreclosures			(11,675)		(9,457)
Loans no longer considered impaired			(1,507)		(892)
Loans transferred to held for sale			(57,213)		-
Paid in full or partial payments			(20,705)		(19,878)
Balance at end of period		$	746,280	$	807,198
(1)	The first quarter of 2018 includes charge-offs totaling $9.7 million associated with the $57.2 million in non-performing loans transferred to held for sale.
(2)	The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line as further discussed below.

	Quarter ended
	March 31, 2018		March 31, 2017
Specific Reserve:	(In thousands)
Balance at beginning of period	$	51,410	$	64,421
Provision for loan losses		22,703		18,862
Net charge-offs		(17,183)		(16,972)
Balance at end of period	$	56,930	$	66,311

33

Purchased Credit Impaired Loans (PCI)

   The Corporation acquired PCI loans accounted for under ASC 310-30 as part of a transaction that 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, that 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 and 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 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 amounts of PCI loans were as follows:
	As of
		March 31,		December 31,
		2018		2017
(In thousands)
Residential mortgage loans	$	151,067	$	153,991
Commercial mortgage loans		4,214		4,183
Total PCI loans	$	155,281	$	158,174
Allowance for loan losses		(11,251)		(11,251)
Total PCI loans, net of allowance for loan losses	$	144,030	$	146,923

	The following tables present PCI loans by past due status as of March 31, 2018 and December 31, 2017:
As of March 31, 2018		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
										Current
(In thousands)
Residential mortgage loans		$	-	$	8,291	$	27,025	$	35,316	$	115,751	$	151,067
Commercial mortgage loans			-		-		3,234		3,234		980		4,214
Total (1)		$	-	$	8,291	$	30,259	$	38,550	$	116,731	$	155,281
_____________
(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 March 31, 2018 amounted to $13.5 million and $0.2 million, respectively.
As of December 31, 2017		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
										Current
(In thousands)
Residential mortgage loans		$	-	$	16,600	$	26,471	$	43,071	$	110,920	$	153,991
Commercial mortgage loans			-		355		2,834		3,189		994		4,183
Total (1)		$	-	$	16,955	$	29,305	$	46,260	$	111,914	$	158,174
_____________
(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 December 31, 2017 amounted to $28.1 million and $0.2 million, respectively

34

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 statements 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.

Changes in Accretable Yield of Acquired Loans

Subsequent to the 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 non-accretable 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 and lease losses. As of March 31, 2018, the reserve related to PCI loans acquired from Doral Financial in 2014 and from Doral Bank in 2015 amounted to $11.3 million.

Changes in the accretable yield of PCI loans for the quarters ended March 31, 2018 and 2017 were as follows:
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	103,682	$	116,462
Accretion recognized in earnings		(2,623)		(2,797)
Balance at end of period	$	101,059	$	113,665

35

Changes in the carrying amount of loans accounted for pursuant to ASC 310-30 were as follows:
	Quarter ended		Quarter ended
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	158,174	$	165,818
Accretion		2,623		2,797
Collections		(3,396)		(4,593)
Foreclosures		(2,120)		(922)
Ending balance	$	155,281	$	163,100
Allowance for loan losses		(11,251)		(6,857)
Ending balance, net of allowance for loan losses	$	144,030	$	156,243

Changes in the allowance for loan losses related to PCI loans were as follows:
	Quarter ended		Quarter ended
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	11,251	$	6,857
Provision for loan losses		-		-
Balance at the end of period	$	11,251	$	6,857

The outstanding principal balance of PCI loans, including amounts charged off by the Corporation, amounted to $192.0 million as of March 31, 2018 (December 31, 2017- $196.6 million).

36

Purchases and Sales of Loans

During the first quarter of 2018, the Corporation purchased $14.5 million of residential mortgage loans consistent with a strategic program to purchase ongoing residential mortgage loan production from mortgage bankers in Puerto Rico. In general, 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 FNMA and FHLMC, which generally securitize the transferred loans into mortgage-backed securities for sale into the secondary market. During the first quarter of 2018, the Corporation sold $54.4 million of FHA/VA mortgage loans to GNMA, which packaged them into mortgage-backed securities. Also during the first quarter of 2018, the Corporation sold approximately $20.1 million of performing residential mortgage loans to FNMA and FHLMC. 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. As of March 31, 2018 and December 31, 2017, rebooked GNMA delinquent loans included in the residential mortgage loan portfolio amounted to $73.3 million and $62.1 million, respectively.

During the first quarters of 2018 and 2017, the Corporation repurchased, pursuant to its repurchase option with GNMA, $1.1 million and $10.7 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, which is 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. During the fourth quarter of 2017, the Corporation requested and received approval from GNMA for the exclusion of loans in the areas affected by Hurricanes Irma and Maria from calculations of delinquency and default ratios established in the GNMA Mortgage-Backed Securities Guide. 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 $3 thousand and $6 thousand during the first quarters of 2018 and 2017, 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.

     In addition, during the first quarter of 2018, the Corporation sold a $5.6 million commercial and industrial adversely-classified loan in Puerto Rico, recording a charge-off of $1.3 million, and a $9.2 million commercial and industrial loan participation in the Florida region.

Sale of the Puerto Rico Electric Power Authority (“PREPA”) Loan

    During the first quarter of 2017, the Corporation received an unsolicited offer and sold its outstanding participation in the PREPA line of credit with a book value of $64 million at the time of sale (principal balance of $75 million), thereby reducing its direct exposure to the Puerto Rico government.  A specific reserve of approximately $10.2 million had been allocated to this loan.  Gross proceeds of $53.2 million from the sale resulted in an incremental loss of $0.6 million recorded as a charge to the provision for loan and lease losses in the first quarter of 2017.

37

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 $8.7 billion as of March 31, 2018, credit risk concentration was approximately 75% in Puerto Rico, 19% in the United States, and 6% in the USVI and BVI.

    As of March 31, 2018, the Corporation had $54.8 million outstanding loans extended to the Puerto Rico government, its municipalities and public corporations, compared to $55.9 million as of December 31, 2017. Approximately $33.1 million of the outstanding loans as of March 31, 2018 consisted of loans extended to municipalities in Puerto Rico, which in most cases are supported by assigned property tax revenues.  The vast majority of revenues of the municipalities included in the Corporation’s loan portfolio 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 notes. Late in 2015, the GDB and the Municipal Revenue Collection Center (“CRIM”) signed and perfected 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 commercial depository financial institution in Puerto Rico. In addition to loans extended to municipalities, the Corporation’s exposure to the Puerto Rico government as of March 31, 2018 includes a $6.7 million loan extended to a unit of the central government, and a $15.0 million loan granted to an affiliate of PREPA.

Furthermore, as of March 31, 2018, the Corporation had three loans granted to the hotel industry in Puerto Rico that were previously guaranteed by the Puerto Rico Tourism Development Fund (“TDF”) with an outstanding principal balance of $116.2 million (book value $61.6 million), compared to $120.2 million outstanding (book value of $70.8 million) as of December 31, 2017. Historically, the borrower and the operations of the underlying collateral of these loans have been the primary sources of repayment and the TDF, which is a subsidiary of the GDB, provided a secondary guarantee for payment performance. As part of agreements executed in the second quarter of 2017 and first quarter of 2018, the TDF paid $7.6 million and $4.0 million, respectively, to honor a portion of its guarantee on these loans.  As provided in the agreements, the cash payments received by the Corporation released the TDF from its liability as a guarantor of these loans. All three of the commercial mortgage loans previously guaranteed by the TDF have been classified as non-performing and impaired since the first quarter of 2016, and interest payments have been applied against principal since then. In addition, the GDB agreed to issue to the Bank a fixed income financial instrument pursuant to the GDB’s Restructuring Support Agreement approved by the PROMESA oversight board. During the first quarter of 2018, two of these three commercial mortgage loans, with an aggregate outstanding principal balance of $50.4 million (book value of $27.2 million) were transferred to held for sale.

    In addition, the Corporation had $115.9 million in 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 under the mortgage loan 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 in an aggregate of 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 loan 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 also has credit exposure to USVI government entities. As of March 31, 2018, the Corporation had $76.7 million in loans to USVI government instrumentalities and public corporations, compared to $70.4 million as of December 31, 2017. Of the amount outstanding as of March 31, 2018, public corporations of the USVI owed approximately $53.5 million and an independent instrumentality of the USVI government owed approximately $23.2 million. As of March 31, 2018 all loans were currently performing and up to date on principal and interest payments.

    The Corporation cannot predict at this time the ultimate effect that the current fiscal situation of the Commonwealth of Puerto Rico, the uncertainty about the debt restructuring process, the various legislative and other measures adopted and to be adopted by the Puerto Rico government and the PROMESA oversight board in response to such fiscal situation, and Hurricane Maria will have on the Puerto Rico economy, the Corporation’s clients, and the Corporation’s financial condition and results of operations.

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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, among others, the extension of the maturity of the loan and modifications of the loan rate. As of March 31, 2018, the Corporation’s total TDR loans held for investment of $572.4 million consisted of $350.0 million of residential mortgage loans, $96.3 million of commercial and industrial loans, $85.8 million of commercial mortgage loans, $6.6 million of construction loans, and $33.7 million of consumer loans. Outstanding unfunded commitments on TDR loans amounted to $1.9 million as of March 31, 2018. In addition, the loans held for sale portfolio includes a $30.0 million TDR construction loan.

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 six 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 March 31, 2018, the Corporation classified an additional $0.5 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 loans in these portfolios 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 these loan portfolios through its collection function. The function’s objective is to minimize both early stage delinquencies and losses upon default of loans in these portfolios. 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 generally have one year terms 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 not considered concessions, and the loans continue to be recorded as performing.

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Selected information on TDR loans held for investment that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs held for investment:
		March 31, 2018
		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Forbearance Agreement		Other (1)		Total
(In thousands)
Troubled Debt Restructurings:
Non- FHA/VA Residential Mortgage loans		$	24,390	$	8,396	$	255,731	$	-	$	-	$	61,463	$	349,980
Commercial Mortgage loans			6,518		36,411		30,739		-		2,020		10,146		85,834
Commercial and Industrial loans			2,497		20,448		15,705		-		3,197		54,418		96,265
Construction loans:
Land			17		3,860		2,177		-		-		324		6,378
Construction-commercial (2)			-		-		-		-		-		-		-
Construction-residential			-		-		-		-		-		217		217
Consumer loans - Auto			-		1,235		12,944		-		-		6,632		20,811
Finance leases			-		196		1,680		-		-		-		1,876
Consumer loans - Other			952		1,775		6,356		166		-		1,766		11,015
Total Troubled Debt Restructurings (2)		$	34,374	$	72,321	$	325,332	$	166	$	5,217	$	134,966	$	572,376
(1)	Other concessions granted by the Corporation included 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)	Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

		December 31, 2017
		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Forbearance Agreement		Other (1)		Total
(In thousands)
Troubled Debt Restructurings:
Non- FHA/VA Residential Mortgage loans		$	25,964	$	8,318	$	267,578	$	-	$	-	$	62,070	$	363,930
Commercial Mortgage loans			6,563		2,094		31,870		-		-		10,285		50,812
Commercial and Industrial loans			2,510		20,648		16,049		-		6,623		48,282		94,112
Construction loans:
Land			18		3,941		2,186		-		-		331		6,476
Construction-commercial			-		-		-		35,100		-		-		35,100
Construction-residential			-		-		-		-		-		217		217
Consumer loans - Auto			-		1,347		14,233		-		-		7,025		22,605
Finance leases			-		238		1,946		-		-		-		2,184
Consumer loans - Other			892		2,097		6,891		217		-		1,686		11,783
Total Troubled Debt Restructurings		$	35,947	$	38,683	$	340,753	$	35,317	$	6,623	$	129,896	$	587,219
(1)	Other concessions granted by the Corporation included 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 held for investment activity:
		Quarter Ended
		March 31, 2018		March 31, 2017
(In thousands)
Beginning Balance of TDRs		$	587,219	$	647,048
New TDRs			43,419		40,899
Increases to existing TDRs			6,771		424
Charge-offs post modification (1) (2)			(9,171)		(14,662)
Sales, net of charge-offs			-		(53,245)
Foreclosures			(7,043)		(4,371)
TDR transferred to held for sale, net of charge-off			(30,000)		-
Paid-off and partial payments			(18,819)		(13,729)
Ending balance of TDRs		$	572,376	$	602,364
(1)	The first quarter of 2018 includes a charge-off of $5.1 million associated with a $30.0 million construction loan transferred to held for sale.
(2)	The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line.

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 loans had demonstrated performance prior to the restructuring and payment in full under the restructured terms is expected. Otherwise, loans 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 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 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. 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. The Corporation did not remove any loans from the TDR classification during the first quarter of 2018 and 2017.

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The following table provides a breakdown of the TDR loans held for investment by those in accrual and non-accrual status:
		As of March 31, 2018
		Accrual		Non-accrual (1)(2)		Total TDRs
	(In thousands)
Non-FHA/VA Residential Mortgage loans		$	272,659	$	77,321	$	349,980
Commercial Mortgage loans			24,010		61,824		85,834
Commercial and Industrial loans			43,251		53,014		96,265
Construction loans:
Land			1,197		5,181		6,378
Construction-commercial (2)			-		-		-
Construction-residential			-		217		217
Consumer loans - Auto			14,082		6,729		20,811
Finance leases			1,653		223		1,876
Consumer loans - Other			9,570		1,445		11,015
Total Troubled Debt Restructurings		$	366,422	$	205,954	$	572,376
(1)	Included in non-accrual loans are $53.2 million in loans that are performing under the terms of the restructuring agreement but are reported in nonaccrual 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)	Excludes a $30.0 million non-performing construction loans transferred to held for sale during the first quarter of 2018.

		As of December 31, 2017
		Accrual		Non-accrual (1)		Total TDRs
(In thousands)
Non-FHA/VA Residential Mortgage loans		$	280,729	$	83,201	$	363,930
Commercial Mortgage loans			23,329		27,483		50,812
Commercial and Industrial loans			41,536		52,576		94,112
Construction loans:
Land			1,291		5,185		6,476
Construction-commercial			-		35,100		35,100
Construction-residential			-		217		217
Consumer loans - Auto			15,548		7,057		22,605
Finance leases			1,968		216		2,184
Consumer loans - Other			10,294		1,489		11,783
Total Troubled Debt Restructurings		$	374,695	$	212,524	$	587,219
(1)	Included in non-accrual loans are $88.6 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.

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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 $62.1 million as of March 31, 2018 (December 31, 2017 - $62.1 million). The Corporation excludes FHA/VA guaranteed loans from TDR loan 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 TDR loans completed during the first quarters of 2018 and 2017 were as follows:
	Quarter ended March 31, 2018
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(Dollars in thousands)
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	24	$	2,608	$	2,614
Commercial Mortgage loans	3		36,746		36,758
Commercial and Industrial loans	3		2,597		2,582
Consumer loans - Auto	45		680		680
Consumer loans - Other	136		785		785
Total Troubled Debt Restructurings	211	$	43,416	$	43,419

	Quarter ended March 31, 2017
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(Dollars in thousands)
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	40	$	4,650	$	4,508
Commercial Mortgage loans	6		22,438		22,198
Commercial and Industrial loans	3		10,748		10,748
Construction loans:
Land	1		25		28
Consumer loans - Auto	152		2,247		2,247
Finance leases	8		186		186
Consumer loans - Other	210		969		984
Total Troubled Debt Restructurings	420	$	41,263	$	40,899

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 a modified loan 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.

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Loan modifications considered TDR loans that defaulted during the quarters ended March 31, 2018 and March 31, 2017, and had become TDR during the 12-month period preceding the default date, were as follows:
	Quarter ended March 31,
	2018			2017
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
(Dollars in thousands)
Non-FHA/VA Residential Mortgage loans	4	$	387	3	$	277
Commercial Mortgage loans	-		-	1		57
Consumer loans - Auto	2		23	4		61
Finance leases	1		22	-		-
Consumer loans - Other	11		54	17		61
Total	18	$	486	25	$	456

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 is 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 $35.6 million as of March 31, 2018. 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 quarters of 2018 and 2017:

(In thousands)	March 31, 2018			March 31, 2017
Principal balance deemed collectible at end of period	$	35,553	$	36,564
Amount charged off	$	-	$	-
Charges to the provision for loan losses	$	1,412	$	915
Allowance for loan losses at end of period	$	5,258	$	6,056

Approximately $3.1 million of the loans restructured using the A/B note restructure workout strategy were in accrual status as of March 31, 2018. These loans continue to be individually evaluated for impairment purposes.

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NOTE 8 – 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 March 31, 2018
Allowance for loan and lease losses:
Beginning balance	$	58,975	$	48,493	$	48,871	$	4,522	$	70,982	$	231,843
Charge-offs		(3,371)		(6,810)		(1,930)		(5,177)		(12,072)		(29,360)
Recoveries		335		49		62		13		2,370		2,829
Provision		447		8,661		656		4,764		6,016		20,544
Ending balance	$	56,386	$	50,393	$	47,659	$	4,122	$	67,296	$	225,856
Ending balance: specific reserve for
impaired loans	$	22,546	$	13,451	$	14,375	$	1,484	$	5,074	$	56,930
Ending balance: purchased credit-impaired loans (1)	$	10,873	$	378	$	-	$	-	$	-	$	11,251
Ending balance: general allowance	$	22,967	$	36,564	$	33,284	$	2,638	$	62,222	$	157,675
Loans held for investment:
Ending balance	$	3,267,868	$	1,552,503	$	2,061,773	$	79,150	$	1,734,596	$	8,695,890
Ending balance: impaired loans	$	417,610	$	162,126	$	119,778	$	12,067	$	34,699	$	746,280
Ending balance: purchased credit-
impaired loans	$	151,067	$	4,214	$	-	$	-	$	-	$	155,281
Ending balance: loans with general allowance	$	2,699,191	$	1,386,163	$	1,941,995	$	67,083	$	1,699,897	$	7,794,329

(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended March 31, 2017
Allowance for loan and lease losses:
Beginning balance		$	33,980	$	57,261	$	61,953	$	2,562	$	49,847	$	205,603
Charge-offs			(8,225)		(1,362)		(12,052)		(63)		(11,192)		(32,894)
Recoveries			749		30		875		445		2,981		5,080
Provision (release)			9,271		12,539		(4,806)		942		7,496		25,442
Ending balance		$	35,775	$	68,468	$	45,970	$	3,886	$	49,132	$	203,231
Ending balance: specific reserve for
impaired loans		$	8,551	$	36,638	$	12,711	$	2,835	$	5,576	$	66,311
Ending balance: purchased credit-impaired loans (1)		$	6,545	$	312	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	20,679	$	31,518	$	33,259	$	1,051	$	43,556	$	130,063
Loans held for investment:
Ending balance		$	3,272,598	$	1,596,176	$	2,108,532	$	137,887	$	1,707,156	$	8,822,349
Ending balance: impaired loans		$	432,798	$	193,035	$	86,059	$	51,801	$	43,505	$	807,198
Ending balance: purchased credit-
impaired loans		$	158,940	$	4,160	$	-	$	-	$	-	$	163,100
Ending balance: loans with general allowance		$	2,680,860	$	1,398,981	$	2,022,473	$	86,086	$	1,663,651	$	7,852,051
(1)	Refer to Note 7 - 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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   As of March 31, 2018, the Corporation maintained a $0.6 million reserve for unfunded loan commitments (December 31, 2017 - $0.7 million), mainly related to outstanding commitments on floor plan revolving lines of credit. 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 and any change to the reserve is included as part of other non-interest expenses in the consolidated statements of income.

During the first quarter of 2018, the Corporation implemented enhancements to the methodology behind the calculation of the allowance for commercial loans, which includes, among others,  the following: (i) a revised procedure to determine the historical loss rates applicable for each commercial loan regulatory-based credit risk categories (i.e., pass, special mention, substandard and doubtful) that changed the previous blending of loss rates for loans risk-rated special mention, substandard and doubtful with an aggregation methodology whereas historical losses and portfolio balances of special mention loans are allocated to pass or substandard categories based on the historical proportion of the loans in this risk category that ultimate cured or resulted uncollectible;  (ii) a quarterly sensitivity analysis using actual historical loss rates for loans risk-rated pass, special mention and substandard to compare the results of such sensitivity to the calculated reserves under the revised procedure, and  (iii) establishment of sensitivity thresholds that could trigger further reviews and/or adjustments prior to reaching a conclusion as to the adequacy of the allowance for loan and lease losses for the Corporation’s commercial portfolios.

The comparison of the revised procedure with the sensitivity analysis resulted in an immaterial increase to the qualitative reserve for commercial mortgage loans that was recorded as of March 31, 2018. The Corporation engaged an independent third party to assess the allowance framework and the appropriateness of assumptions used in the analysis and expects such review to be completed during the second quarter of 2018.

Refer to Note 2, – “Updates on Effects of Natural Disasters,” for information about changes to the hurricane-related allowance established by the Corporation in 2017.

NOTE 9 – LOANS HELD FOR SALE

The Corporation’s loans held-for-sale portfolio as of the dates indicated was composed of:

		As of
		March 31, 2018		December 31, 2017
(In thousands)
Residential mortgage loans		$	26,430	$	24,690
Construction loans (1)			37,732		8,290
Commercial mortgage loans (1)			27,213		-
Total (1)		$	91,375	$	32,980
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sales consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

NOTE 10 –OTHER REAL ESTATE OWNED

The following table presents OREO inventory as of the dates indicated:
		March 31,			December 31,
		2018		2017
(In thousands)
OREO
OREO balances, carrying value:
Residential (1)		$	60,240	$	54,381
Commercial			83,911		82,871
Construction			10,488		10,688
Total		$	154,639	$	147,940
(1)	Excludes $17.8 million and $21.3 million as of March 31, 2018 and December 31, 2017, 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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NOTE 11 – 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 will adversely affect the Corporation’s net interest income from its loan and investment portfolios.  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 March 31, 2018 and December 31, 2017, 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.

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
	March 31,		December 31,
(In thousands)	2018		2017
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	$	90,510	$	91,010
Purchased interest rate cap agreements		90,510		91,010
Forward Contracts:
Sale of TBA GNMA MBS pools		25,000		26,000
	$	206,020	$	208,020
(1) Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

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The following table summarizes for derivative instruments their fair values and location in the consolidated statements of financial condition:
	Asset Derivatives					Liability Derivatives
	Statement of	March 31,		December 31,			March 31,		December 31,
	Financial	2018		2017			2018		2017
	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	$	668	$	305
Purchased interest rate cap agreements	Other assets		668		305	Accounts payable and other liabilities		-		-
Forward Contracts:
Sales of TBA GNMA MBS pools	Other assets		3		7	Accounts payable and other liabilities		67		19
		$	671	$	312		$	735	$	324

The following table summarizes the effect of derivative instruments on the statement of income:
		(Loss)
	Location of Loss		Quarter Ended
	Recognized in Statement	March 31,
	of Income on Derivatives	2018		2017
			(In thousands)
UNDESIGNATED ECONOMIC HEDGES:
Interest rate contracts:
Written and purchased interest rate cap agreements	Interest income - Loans	$	-	$	(1)
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage Banking Activities		(52)		(56)
Total loss on derivatives		$	(52)	$	(57)

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.

As of March 31, 2018, the Corporation had not entered into any derivative instrument containing credit-risk-related contingent features.

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NOTE 12 – 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 with respect to 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
As of March 31, 2018
							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
(In thousands)											Net Amount
Description
Derivatives	$	668	$	-	$	668	$	(45)	$	(623)	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,668	$	(200,000)	$	668	$	(45)	$	(623)	$	-
As of December 31, 2017
							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
											Net Amount
(In thousands)
Description
Derivatives	$	305	$	-	$	305	$	(305)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,305	$	(200,000)	$	305	$	(305)	$	-	$	-

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Offsetting of Financial Liabilities and Derivative Liabilities
As of March 31, 2018
							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
(In thousands)											Net Amount
Description
Securities sold under agreements to repurchase	$	400,000	$	(200,000)	$	200,000	$	(200,000)	$	-	$	-
As of December 31, 2017
							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
											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	500,000	$	(200,000)	$	300,000	$	(300,000)	$	-	$	-

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NOTE 13 – GOODWILL AND OTHER INTANGIBLES

Goodwill as of March 31, 2018 and December 31, 2017 amounted to $28.1 million, recognized as part of “Other Assets” in the consolidated statements of financial condition. The Corporation conducted its annual evaluation of goodwill and other intangibles during the fourth quarter of 2017. The Corporation’s goodwill is related to the acquisition of FirstBank Florida in 2005.

There have been no significant 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 quarter of 2018. 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 3.6 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 includes the core deposit intangible acquired in the February 2015 Doral Bank transaction amounting to $3.6 million as of March 31, 2018. 

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 ($0.7 million as of March 31, 2018), which is being amortized over the next 4.7 years on a straight-line basis. The acquired accounts have 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 statements of financial condition:
	As of		As of
	March 31,		December 31,
	2018		2017
(Dollars in thousands)
Core deposit intangible:
Gross amount, beginning of period	$	51,664	$	51,664
Accumulated amortization (1)		(46,580)		(46,186)
Net carrying amount	$	5,084	$	5,478
Remaining amortization period		6.8 years		7.0 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization (2)		(17,039)		(16,465)
Net carrying amount	$	7,426	$	8,000
Remaining amortization period		3.6 years		3.9 years
Insurance customer relationship intangible:
Gross amount	$	1,067	$	1,067
Accumulated amortization (3)		(330)		(292)
Net carrying amount	$	737	$	775
Remaining amortization period		4.7 years		5.0 years
(1) For the quarters ended March 31, 2018 and 2017, the amortization expense of core deposit intangibles amounted to $0.4 million and $0.5 million, respectively.
(2) For each of the quarters ended March 31, 2018 and 2017, the amortization expense of the purchased credit card relationship intangible amounted to $0.6 million.
(3) For each of the quarters ended March 31, 2018 and 2017, the amortization expense of the insurance customer relationship intangible amounted to $38 thousand.

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	The estimated aggregate annual amortization expense related to the intangible assets for future periods is as follows:
			Amount
			(In thousands)
2018		$	2,585
2019			3,088
2020			2,851
2021			2,658
2020			915
2023 and after			1,150

NOTE 14 – NON-CONSOLIDATED VARIABLE INTEREST ENTITIES (“VIE”) 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, under seller/servicer agreements, the Corporation is required to service the loans in accordance with the issuers’ servicing guidelines and standards. As of March 31, 2018, the Corporation serviced loans securitized through GNMA with a principal balance of $1.7 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. FBP Statutory Trust I used 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 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. FBP Statutory Trust II used 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 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 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 2018, the Corporation completed the repurchase of $23.8 million of trust preferred securities of the FBP Statutory Trust I 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 90% of the $23.8 million par value. The 10% discount resulted in a gain of approximately $2.3 million, which is reflected in the statement of income as a “Gain on early extinguishment of debt.”

The Collins Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act eliminated 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

52

interest on the Junior Subordinated Deferrable 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, having received approval from the Federal Reserve, paid $31.2 million for all of the accrued but deferred interest payments plus the interest for the second quarter of 2016 on the Corporation’s subordinated debentures associated with its trust preferred securities. Subsequently, the Corporation has received quarterly approvals that have enabled it to make scheduled quarterly interest payments.  As of March 31, 2018, the Corporation was current on all interest payments due on its subordinated debt. In October 2017, the New York FED terminated the formal written agreement (the “Written Agreement”) entered into on June 3, 2010 between the Corporation and the Reserve Bank. However, the Corporation has agreed with its regulators to continue to obtain approval before paying dividends, receiving dividends from the Bank, making payments on subordinated debt or trust-preferred securities, incurring or guaranteeing debt or purchasing or redeeming any corporate stock. The Corporation has received approval to make the subordinated debentures’ quarterly payment for June 30, 2018.

Grantor Trusts

    During 2004 and 2005, an unaffiliated party, 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 “Grantor Trusts”). 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 Bank, as the sole holder of the certificates, absorbs all risks from losses on non-accruing loans and repossessed collateral. As of March 31, 2018, the amortized cost and fair value of the Grantor Trusts amounted to $21.3 million and $16.1 million, respectively, with a weighted average yield of 4.49%.

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 PRLP's 65% ownership interest in CPG/GS. As of March 31, 2018, the carrying amount of the loan was $4.1 million, which was included in the Corporation's commercial and industrial loans held for investment portfolio. The loan matured in February 2018 and is in the process of refinancing. As of March 31, 2018, the loan is current on its interest payments. FirstBank’s equity interest in CPG/GS is accounted for under the equity method. 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.

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. 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 loan bears variable interest at 30-day LIBOR plus 300 basis points. As of March 31, 2018, the carrying value of the amount outstanding under the revolver agreement was $6.8 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, and the revolver agreement, 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%, which has not occurred, 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.

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    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.

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
		March 31,		March 31,
		2018		2017
(In thousands)
Balance at beginning of period		$	25,255	$	26,244
Capitalization of servicing assets			887		875
Amortization			(737)		(788)
Adjustment to fair value			713		(160)
Other (1)			17		159
Balance at end of period		$	26,135	$	26,330
(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
	March 31,		March 31,
	2018		2017
(In thousands)
Balance at beginning of period	$	1,451	$	461
Temporary impairment charges		17		160
OTTI of servicing assets		(65)		(621)
Recoveries		(730)		-
Balance at end of period	$	673	$	-

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	The components of net servicing income are shown below:
		Quarter ended
		March 31,		March 31,
		2018		2017
			(In thousands)
Servicing fees		$	2,120	$	2,024
Late charges and prepayment penalties			120		99
Adjustment for loans repurchased			17		159
Other			-		(7)
Servicing income, gross			2,257		2,275
Amortization and impairment of servicing assets			(24)		(948)
Servicing income, net		$	2,233	$	1,327

   The Corporation’s servicing assets are subject to prepayment and interest rate risks. As of March 31, 2018, 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 Corporation used constant prepayment rate assumptions for the Corporation’s servicing assets for the government-guaranteed mortgage loans of 5.6% and 6.0% for the quarters ended March 31, 2018 and 2017, respectively. For conventional conforming mortgage loans, the Corporation used 6.2% and 6.3% for the quarters ended March 31, 2018 and 2017, respectively, and, for the conventional non-conforming mortgage loans, the Corporation used 9.1% and 9.5% for the quarters ended March 31, 2018 and 2017, respectively. Discount rate assumptions used were 12% for government-guaranteed mortgage loans; 10% for conventional conforming mortgage loans; and 14.3% for conventional non-conforming mortgage loans for each of the quarters ended March 31, 2018 and 2017.

     The weighted averages of the key economic assumptions that the Corporation used in its valuation model and the sensitivity of the current fair value to immediate 10% and 20% adverse changes in those assumptions for mortgage loans as of March 31, 2018 were as follows:

	(Dollars in thousands)
Carrying amount of servicing assets	$	26,135
Fair value	$	30,720
Weighted-average expected life (in years)		8.56
Constant prepayment rate (weighted-average annual rate)		5.89%
Decrease in fair value due to 10% adverse change	$	725
Decrease in fair value due to 20% adverse change	$	1,421
Discount rate (weighted-average annual rate)		11.23%
Decrease in fair value due to 10% adverse change	$	1,503
Decrease in fair value due to 20% adverse change	$	2,876

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 15 – DEPOSITS

The following table summarizes deposit balances as of the dates indicated:
	March 31,			December 31,
	2018		2017
(In thousands)
Type of account:
Non-interest bearing checking accounts	$	2,019,823	$	1,833,665
Savings accounts		2,413,446		2,401,385
Interest-bearing checking accounts		1,242,957		1,207,511
Certificates of deposit		2,434,162		2,429,585
Brokered certificates of deposit (CDs)		956,077		1,150,485
	$	9,066,465	$	9,022,631

Brokered CDs mature as follows:
	March 31, 2018
(In thousands)
Three months or less	$	133,119
Over three months to six months		149,170
Over six months to one year		265,986
Over one year but less than three years		316,191
Three to five years		90,231
Over five years		1,380
Total	$	956,077

The following are the components of interest expense on deposits:
	Quarter Ended
	March 31,			March 31,
	2018			2017
(In thousands)
Interest expense on deposits	$	16,607	$	15,468
Accretion of premium from acquisition		(3)		(23)
Amortization of broker placement fees		367		527
Interest expense on deposits	$	16,971	$	15,972

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NOTE 16 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase (repurchase agreements) consisted of the following:
		March, 31		December 31,
		2018		2017
(Dollars in thousands)
Short-term fixed-rate repurchase agreement with a rate of 1.53%		$	-	$	100,000
Long-term fixed-rate repurchase agreements, interest ranging from 1.96% to 2.26% (1)(2)			200,000		200,000
		$	200,000	$	300,000
(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 March 31, 2018, includes $200 million with an average rate of 2.11% that lenders have the right to call before their contractual maturities at various dates beginning on May 6, 2018. Subsequent to March 31, 2018, no lender has exercised its call option on repurchase agreements.

Repurchase agreements mature as follows:
		March 31, 2018
		(In thousands)
	Three to four years		200,000
	Total	$	200,000

As of March 31, 2018 and December 31, 2017, the securities underlying such agreements were delivered to the dealers with which the repurchase agreements were transacted.

Repurchase agreements as of March 31, 2018, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	JP Morgan Chase	$	200,000	46

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NOTE 17 – ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

The following is a summary of the advances from the FHLB:
		March 31,		December 31,
		2018		2017
	(In thousands)
	Long-term fixed-rate advances from FHLB, with a weighted-average
	interest rate of 1.91%	$	715,000	$	715,000

Advances from FHLB mature as follows:
		March 31,
		2018
	(In thousands)
	Over three months to six months	$	25,000
	Over six months to one year		70,000
	Over one to three years		300,000
	Over three to five years		320,000
	Total	$	715,000

As of March 31, 2018, the Corporation had additional capacity of approximately $689.5 million on this credit facility based on collateral pledged at the FHLB, including a haircut reflecting the perceived risk associated with the collateral.

NOTE 18 – OTHER BORROWINGS

 Other borrowings, as of the indicated dates, consisted of:

	March 31,		December 31,
	2018		2017
	(In thousands)
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (4.92% as of March 31, 2018
and 4.35% as of December 31, 2017) (1)	$	65,593	$	90,078
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (4.70% as of  March 31, 2018
and 4.12% as of December 31, 2017)		118,557		118,557
	$	184,150	$	208,635
(1) Refer to Note 14, - "Non-Consolidated Variable Interest Entities and Servicing Assets-Trust Preferred Securities," for additional information about the Corporation repurchase and cancellation in the first quarter of 2018 of $23.8 million in trust-preferred securities associated with these junior subordinated debentures.

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NOTE 19 – STOCKHOLDERS’ EQUITY

Common Stock

As of March 31, 2018 and December 31, 2017, the Corporation had 2,000,000,000 authorized shares of common stock with a par value of $0.10 per share. As of March 31, 2018 and December 31, 2017, there were 220,877,719 and 220,382,343 shares issued, respectively, and 216,390,329 and 216,278,040 shares outstanding, respectively. Refer to Note 4 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 have such rights and preferences as are fixed by the Board of Directors when authorizing the issuance of that particular series.  As of March 31, 2018, 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. In December 2016, for the first time since July 2009, the Corporation paid dividends on its non-cumulative perpetual monthly income preferred stock, after receiving regulatory approval. Since then, the Corporation has continued to pay monthly dividend payments on the non-cumulative perpetual monthly income preferred stock. The Corporation intends to request approval in future periods to continue monthly dividend payments on the non-cumulative perpetual monthly income preferred stock. The Corporation has received regulatory approval to pay the monthly dividends on the Corporation’s Series A through E Preferred Stock through June 2018.

  On October 3, 2017, the Federal Reserve terminated the Written Agreement entered into on June 3, 2010 between the Corporation and the Federal Reserve. However, the Corporation has agreed with its regulators to continue to obtain approval before paying dividends, receiving dividends from the Bank, making payments on subordinated debt or trust preferred securities, incurring or guaranteeing debt or purchasing or redeeming any corporate stock.

Treasury stock

During the first quarter of 2018 and 2017, the Corporation withheld an aggregate of 383,087 shares and 98,300 shares, respectively, of the common stock paid to certain senior officers as additional compensation and restricted stock that vested during the first quarter of 2018 and 2017 to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury stock. As of March 31, 2018 and December 31, 2017, the Corporation had 4,487,390 and 4,104,303 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 a legal surplus reserve until such surplus equals the total of paid-in-capital on common and preferred stock. Amounts transferred to the legal surplus reserve 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 must be charged against the undistributed profits of the bank, and the balance, if any, must be charged against the legal surplus reserve, as a reduction thereof. If there is no legal surplus reserve sufficient to cover such balance in whole or in part, the outstanding amount must be charged against the capital account and the Bank cannot pay dividends until it can replenish the legal surplus reserve to an amount of at least 20% of the original capital contributed. During the fourth quarter of 2017, $7.3 million was transferred to the legal surplus reserve. FirstBank’s legal surplus reserve, included as part of retained earnings in the Corporation’s consolidated statement of financial condition, amounted to $59.7 million as of March 31, 2018.  There were no transfers to the legal surplus reserve during the quarter ended March 31, 2018. 

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NOTE 20 - 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 generally not entitled to file consolidated tax returns and, thus, the Corporation is generally not entitled 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 allows entities organized as limited liability companies to perform an election to become a non-taxable “pass-through” entity and utilize losses to offset income from other “pass-through” entities, subject to certain limitations, with the remaining net income passing-through to its partner entities. The 2011 PR Code also 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.

       On March 1, 2017, the Corporation completed the applicable regulatory filings to change the tax status of its subsidiary, First Federal Finance, from a taxable corporation to a non-taxable “pass-through” entity. This election allows the Corporation to realize tax benefits of its deferred tax assets associated with pass-through ordinary net operating losses available at the banking subsidiary, FirstBank, which were subject to a full valuation allowance as of December 31, 2016, against now pass-through ordinary income from this profitable subsidiary.

On March 1, 2017, the Corporation also completed the applicable regulatory filings to change the tax status of its subsidiary, FirstBank Insurance, from a taxable corporation to a non-taxable “pass-through” entity. This election allows the Corporation to offset pass-through income projected to be earned by FirstBank Insurance with net operating losses available at the Holding Company level.

     The Corporation has maintained an effective tax rate lower than the maximum statutory rate 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.

    For the first quarter of 2018, the Corporation recorded a income tax expense of $7.8 million, compared to an income tax benefit of $8.1 million for the same period in 2017. The variance was mostly attributable to a $13.2 million tax benefit recorded in the first quarter of 2017 as a result of the above discussed change in tax status of certain subsidiaries from taxable corporations to limited liability companies that elected to be treated as partnerships for income tax purposes in Puerto Rico, higher pre-tax earnings in the first quarter of 2018, and a higher estimated effective tax rate for 2018.

For the quarter ended March 31, 2018, 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 annual estimated 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 Corporation’s estimated annual effective tax rate in the first quarter of 2018, excluding entities from which a tax benefit cannot be recognized and discrete items, was 27% compared to 24% for the first quarter of 2017.  The estimated annual effective tax rate including all entities for 2018 was 19% (23% excluding discrete items) compared to 13% for the first quarter of 2017 (25% excluding discrete items, primarily the tax benefit resulting from the previously mentioned change in the tax status of the two subsidiaries).

    The Corporation’s net deferred tax asset amounted to $289.3 million as of March 31, 2018, net of a valuation allowance of $186.1 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 net deferred tax asset of the Corporation’s banking subsidiary, FirstBank, amounted to $289.2 million as of March 31, 2018, net of a valuation allowance of $150.0 million, compared to net deferred tax asset of $294.7 million, net of a valuation allowance of $150.7 million, as of December 31, 2017.

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During the third quarter of 2017, the Corporation completed a formal ownership change analysis within the meaning of Section 382 of the U.S. Internal Revenue Code (“Section 382”) covering a comprehensive period, and concluded that an ownership change occurred during such period. Section 382 limits the ability to utilize U.S. and USVI NOLs for income tax purposes at such jurisdictions following an event of an ownership change.  The Section 382 limitation could result in higher U.S. and USVI liabilities in the future than we would incur in the absence of such limitation. As of March 31, 2018, and as a result of the Section 382 limitation, the Corporation incurred an income tax expense of approximately $1.6 million related to its U.S. operations. The limitation did not affect the USVI operations in the first quarter of 2018. Prospectively, the Corporation expects that it will be able to mitigate the adverse effects associated with the Section 382 limitation as any such tax paid in the U.S. or USVI could be creditable against Puerto Rico tax liabilities or taken as deduction against taxable income.  However, our ability to reduce our Puerto Rico tax liability through such a credit or deduction depends on our tax profile at each annual taxable period, which is dependent on various factors.

   As of March 31, 2018, the Corporation did not have Unrecognized Tax Benefits (“UTBs”) recorded on its books. The Corporation classifies all interest and penalties, if any, related to tax uncertainties as income tax expense. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the 2011 PR Code is four years; the statute of limitations for U.S. and USVI income tax purposes is three years after a tax return is due or filed, whichever is later, for each. 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 U.S. and USVI income tax purposes, all tax years subsequent to 2012 remain open to examination. For Puerto Rico tax purposes, all tax years subsequent to 2012 remain open to examination.

    On December 22, 2017, the United States president signed H.R.1, The Tax Cuts and Jobs Acts, which includes an overhaul of individual, business and international taxes and has affected our branch operations in the U.S. and the USVI. The bill includes measures reducing corporate taxes from 35% to 21%, a repeal of the corporate alternative minimum tax regime, changes to business deductions and NOLs, a 15.5% tax on mandatory repatriation of liquid assets, 10% tax on base erosion payments, and a minimum 10.5% tax on inclusion of global intangible low-tax income by U.S. shareholders, among other significant changes. The main provisions affecting our operations in the U.S. and the USVI in the first quarter for 2018 include: the change in tax rate to 21%, the limitation to the amount certain financial institutions may deduct for premiums paid to the FDIC, and changes in permanent differences, such as the meals and entertainment deductions. Other significant provisions, such as the base erosion and anti-abuse tax, do not affect the Corporation’s U.S. and USVI branch operations since these operations’ receipts do not exceed the annual threshold of U.S. effectively connected gross receipts.

NOTE 21 – 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 using pricing models for which the determination of fair value requires significant management judgments estimation.

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For the first quarter of 2018, 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 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. If listed prices or quotes are not available, fair value is based upon discounted cash flow models that use unobservable inputs due to the limited market activity of the instrument, as is the case with certain private label MBS 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 based on historical portfolio performance. 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, using an asset-level risk assessment method taking into account loan credit characteristics (loan-to-value, state jurisdiction, delinquency, property type and pricing behavior, and others) 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. On interest caps, only the seller's credit risk is considered.  The caps were valued using a discounted cash flow approach based on the related LIBOR and swap rate for each cash flow.

A credit spread is considered for those derivative instruments that are not secured. The cumulative mark-to-market effect of credit risk in the valuation of derivative instruments for the quarters ended March 31, 2018 and 2017 was immaterial.

Assets and liabilities measured at fair value on a recurring basis are summarized below:
		As of March 31, 2018								As of December 31, 2017
		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 (1)		$	-	$	-	$	-	$	-	$	418	$	-	$	-	$	418
U.S. Treasury Securities			57,169		-		-		57,169		7,401		-		-		7,401
Noncallable U.S. agency debt			-		329,170		-		329,170		-		361,971		-		361,971
Callable U.S. agency debt and MBS			-		1,406,283		-		1,406,283		-		1,497,253		-		1,497,253
Puerto Rico government obligations			-		4,074		2,734		6,808		-		4,118		2,695		6,813
Private label MBS			-		-		16,074		16,074		-		-		17,060		17,060
Other investments			-		-		-		-		-		-		100		100
Equity securities (1)			413		-		-		413		-		-		-		-
Derivatives, included in assets:
Purchased interest rate cap agreements			-		668		-		668		-		305		-		305
Forward contracts			-		3		-		3		-		7		-		7
Liabilities:
Derivatives, included in liabilities:
Written interest rate cap agreement			-		668		-		668		-		305		-		305
Forward contracts			-		67		-		67		-		19		-		19
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities. As of December 31, 2017, equity securities had a net unrealized loss of $6 thousand.

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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 ended March 31, 2018 and 2017.

		Quarter ended March 31,
		2018		2017
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	19,855		22,914
Total gains (losses) (realized/unrealized):
Included in other comprehensive income			472		518
Principal repayments and amortization			(1,519)		(2,050)
Ending balance		$	18,808	$	21,382
(1)	Amounts mostly related to private label MBS.

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) as of March 31, 2018:
	March 31, 2018
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	16,074	Discounted cash flows	Discount rate	14.5%
				Prepayment rate	7.5% - 24.5% (Weighted Average 15.2%)
				Projected Cumulative Loss Rate	0.00% - 9.0% (Weighted Average 4.0%)
Puerto Rico government obligations		2,734	Discounted cash flows	Discount rate	6.24%
				Prepayment rate	3.00%

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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 that collateralize these obligations that are guaranteed by the Puerto Rico Housing Finance Authority. A significant increase (decrease) in the assumed rate would lead to a higher (lower) fair value estimate. The fair value of these bonds was based on a discounted cash flow analysis that contemplates the credit quality of the holder of second mortgages and a discount for liquidity constraints on the bonds considering the absence of an active market for them. Due to the guarantee of the Puerto Rico Housing Finance Authority and other applicable contractual safeguards, no additional credit spread is applied for services default.

There were no changes in unrealized gains and losses recorded in earnings for the quarters ended March 31, 2018 and 2017 for Level 3 assets and liabilities that were still held at the end of each period.

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 and loans).

As of March 31, 2018, 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 March 31, 2018						(Losses) Gains recorded for the Quarter Ended                    March 31, 2018
		Level 1		Level 2		Level 3
(In thousands)
Loans receivable (1)		$	-	$	-	$	392,493	$	(4,224)
Other real estate owned (2)			-		-		154,639		(287)
Mortgage servicing rights (3)			-		-		26,135		713
Loans held for sale (4)			-		-		64,945		(6,203)
(1)	Consists mainly of impaired commercial and construction loans.  The impairments were generally measured based on the fair value of the collateral. The fair values were 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 values were 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 5.89%, Discount Rate 11.23%.
(4)	The value of these loans was primarily derived from external appraisals, adjusted for specific characteristics of the loans.

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As of March 31, 2017, 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 March 31, 2017						(Losses) recorded for the Quarter Ended March 31, 2017
		Level 1		Level 2		Level 3
(In thousands)
Loans receivable (1)		$	-	$	-	$	430,162	$	(15,211)
Other real estate owned (2)			-		-		137,784		(4,180)
Mortgage servicing rights (3)			-		-		26,330		(160)
(1)	Consists mainly of impaired commercial and construction loans.  The impairments were generally measured based on the fair value of the underlying collateral. The fair values were 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 values were 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 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 6.17%, Discount Rate 11.20%.

Qualitative information regarding the fair value measurements for Level 3 financial instruments are as follows:
	March 31, 2018
	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 Flows	Weighted average prepayment rate of 5.89%; weighted average discount rate of 11.23%

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 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.

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Other investment 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 the Corporation owns 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 is 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 are classified by type, such as commercial, residential mortgage, and automobile. These asset categories are further segmented into fixed- and adjustable-rate categories.  Valuations are carried out based on categories and not on a loan-by-loan basis.  Prepayment assumptions are considered for non-residential loans. For residential mortgage loans, prepayment estimates are based on a prepayment model that combined both a historical calibration and current market prepayment expectations.  Discount rates are 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. 

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 and brokered CDs, with stated maturities, are based on the present value of the future cash flows expected to be paid on the deposits. The discount rates used were based on retail and brokered CDs market rates as of March 31, 2018. The cash flows were based on contractual maturities; no early repayments were assumed.

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 is estimated using exit price indications provided by the counterparty.  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 debenture at a tenor comparable to the time to maturity of the debentures.

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The following tables present the carrying value, estimated fair value and estimated fair value level of the hierarchy of financial instruments as of March 31, 2018 and December 31, 2017:
	Total Carrying Amount in Statement of Financial Condition March 31, 2018		Fair Value Estimate March 31, 2018		Level 1		Level 2		Level 3
(In thousands)
Assets:
Cash and due from banks and money
market investments (amortized cost)	$	843,824	$	843,824	$	843,824	$	-	$	-
Investment securities available
for sale (fair value)		1,815,504		1,815,504		57,169		1,739,527		18,808
Investment securities held to maturity (amortized cost)		150,486		134,856		-		-		134,856
Equity Securities (fair value)		413		413		413		-		-
Other investment securities (amortized cost)		43,119		43,119		-		43,119		-
Loans held for sale (lower of cost or market)		91,375		91,736		-		26,791		64,945
Loans held for investment (amortized cost)		8,695,890
Less: allowance for loan and lease losses		(225,856)
Loans held for investment, net of allowance	$	8,470,034		8,262,128		-		-		8,262,128
Derivatives, included in assets (fair value)		668		668		-		668		-
Liabilities:
Deposits (amortized cost)		9,066,465		9,070,024		-		9,070,024		-
Securities sold under agreements
to repurchase (amortized cost)		200,000		226,076		-		226,076		-
Advances from FHLB (amortized cost)		715,000		701,079		-		701,079		-
Other borrowings (amortized cost)		184,150		171,378		-		-		171,378
Derivatives, included in liabilities (fair value)		735		735		-		735		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2017		Fair Value Estimate December 31, 2017		Level 1		Level 2		Level 3
(In thousands)
Assets:
Cash and due from banks and money
market investments (amortized cost)	$	716,395	$	716,395	$	716,395	$	-	$	-
Investment securities available
for sale (fair value)		1,891,016		1,891,016		7,819		1,863,342		19,855
Investment securities held to maturity (amortized cost)		150,627		131,032		-		-		131,032
Other investment securities (amortized cost)		43,119		43,119		-		43,119		-
Loans held for sale (lower of cost or market)		32,980		34,979		-		25,237		9,742
Loans held for investment (amortized cost)		8,850,476		-		-		-		-
Less: allowance for loan and lease losses		(231,843)		-		-		-		-
Loans held for investment, net of allowance	$	8,618,633		8,372,865		-		-		8,372,865
Derivatives, included in assets (fair value)		312		312		-		312		-
Liabilities:
Deposits (amortized cost)		9,022,631		9,026,600		-		9,026,600		-
Securities sold under agreements
to repurchase (amortized cost)		300,000		325,913		-		325,913		-
Advances from FHLB (amortized cost)		715,000		707,272		-		707,272		-
Other borrowings (amortized cost)		208,635		189,424		-		-		189,424
Derivatives, included in liabilities (fair value)		324		324		-		324		-

The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include cash and due from banks and other short-term assets, such as FHLB stock. Certain assets, the most significant being premises and equipment, mortgage servicing rights, deposits base, and other customer relationship intangibles, are not considered financial instruments and are not included above. Accordingly, this fair value information is not intended to, and does not, represent the Corporation’s underlying value. Many of these assets and liabilities subject to the disclosure requirements are not actively traded, requiring management to estimate fair values. These estimates necessarily involve the use of judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected futures cash flows, and appropriate discount rates.

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NOTE 22 – REVENUE FROM CONTRACTS WITH CUSTOMERS

As noted in Note 1, the Corporation adopted the provisions of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), on January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with Topic 605.

Revenue Recognition

In accordance with Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration to which the Corporation expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the Corporation performs the following five steps: (i) identifies the contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when (or as) the Corporation satisfies a performance obligation. The Corporation only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Corporation assesses the goods or services that are promised within each contract and identifies those that contain performance obligations, and assesses whether each promised good or service is distinct. The Corporation then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Disaggregation of Revenue

The following table summarizes the Corporation’s revenue, which includes net interest income on financial instruments and non-interest income, disaggregated by type of service and business segments for the quarter ended March 31, 2018:

(In thousands)		Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended March 31, 2018:
Net interest income (1)		$	21,205	$	51,049	$	18,920	$	12,518	$	13,392	$	7,609	$	124,693
Service charges and fees on deposit accounts			-		3,165		1,092		-		134		697		5,088
Insurance commissions			-		3,144		-		-		12		199		3,355
Merchant-related income			-		645		161		-		-		185		991
Credit and debit card fees			-		4,169		255		-		128		542		5,094
Other service charges and fees			33		800		300		-		1,039		82		2,254
Not in scope of Topic 606 (1)			4,051		7		(549)		2,378		95		20		6,002
Total non-interest income			4,084		11,930		1,259		2,378		1,408		1,725		22,784
Total Revenue		$	25,289	$	62,979	$	20,179	$	14,896	$	14,800	$	9,334	$	147,477
(1)	Most of the Corporation’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities, as well as other noninterest income from loans, leases, investment securities and derivative financial instruments.

For the three months ended March 31, 2018, substantially all of the Corporation’s revenue under the scope of Topic 606 was related to performance obligations satisfied at a point in time.

The following is a discussion of revenues within the scope of Topic 606.

Service Charges and Fees on Deposit Accounts

Service charges and fees on deposit accounts relate to fees generated from a variety of deposit products and services rendered to customers.  Charges include, but are not limited to, overdraft fees, non-sufficient fund fees, dormant fees and monthly service charges. Such fees are recognized concurrently with the event on a daily basis or on a monthly basis depending upon the customer’s cycle date.  These depository arrangements are considered day-to-day contracts that do not extend beyond the services performed, as customers have the right to terminate these contracts with no penalty or, if any, nonsubstantive penalties.  As a consequence, the income recognition under the standard is not different for the Corporation’s practice before the adoption of this guidance.

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Insurance Commissions

For insurance commissions, which include regular and contingent commissions paid to the Corporation’s insurance agency, the agreements contain a performance obligation related to the sale/issuance of the policy and ancillary administrative post-issuance support. The performance obligation will be satisfied as the policies are issued and revenue will be recognized at that point in time.  In addition, contingent commission income was found to be constrained, as defined under the new standard. Contingent commission income will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or payments are received, which is consistent with the Corporation’s practice before the adoption of this guidance. For the quarter ended March 31, 2018, the Corporation recognized revenue of $2.1 million as payments were received and constraints were released.

Merchant-related Income

For merchant-related income, the determination of which included the consideration of a 2015 sale of merchant contracts that involved sales of point of sale (“POS”) terminals and entry into a marketing alliance under a revenue-sharing agreement, the Corporation concluded that control of the POS terminals and merchant contracts was transferred to the customer at the contract’s inception. With respect to the related revenue-sharing agreement, the Corporation satisfies the marketing alliance performance obligation over the life of the contract, and the associated transaction price is recognized as the entity performs and any constraints over the variable consideration are resolved. There was no material change in the timing or measurement of revenues. The overall effect on an ongoing basis of the new revenue guidance, as compared the Corporation’s practice before the adoption of this guidance, is expected to be immaterial.

Credit and Debit Card Fees

Credit and debit card fees primarily represent revenues earned from interchange fees and ATM fees. Interchange and network revenues are earned on credit and debit card transactions conducted with payment networks. ATM fees are primarily earned as a result of surcharges assessed to non-FirstBank customers who use a FirstBank ATM. Such fees are generally recognized concurrently with the delivery of services on a daily basis.  As a consequence, the income recognition is unchanged from the Corporation’s practice before the adoption of this guidance. 

Other Fees

Other fees primarily include revenues generated from wire transfers, lockboxes, and bank issuances of checks. Such fees are recognized concurrently with the event or on a monthly basis.

Contract Balances

A contract liability is an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. As mentioned above, during 2015, the Bank entered into a long-term strategic marketing alliance with another entity to which the Bank sold its merchant contracts portfolio and related POS terminals.  Merchant services are marketed through FirstBank’s branches and offices in Puerto Rico and the Virgin Islands.  Under the marketing and referral agreement, FirstBank shares with this entity revenues generated by the merchant contracts over the term of the 10-year agreement.  As of March 31, 2018 and December 31, 2017, this contract liability amounted to $2.3 million and $2.4 million, respectively, which will be recognized over the remaining term of the contract. For the quarter ended March 31, 2018, the Corporation recognized revenue and contract liabilities decreased by approximately $0.1 million due to the passage of time. There were no changes in contract liabilities due to changes in transaction price estimates. 

A contract asset is the right to consideration for transferred goods or services when the amount is conditioned on something other than the passage of time. As of March 31, 2018 and December 31, 2017, there were no receivables from contracts with customers or contract assets recorded on the Corporation’s consolidated financial statements.

Other

Except for the contract liabilities noted above, the Corporation did not have any significant performance obligations as of March 31, 2018. The Corporation also did not have any material contract acquisition costs and did not make any significant judgments or estimates in recognizing revenue for financial reporting purposes. 

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NOTE 23 – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

	Quarter  Ended March 31,
	2018		2017
(In thousands)
Cash paid for:
Interest on borrowings	$	24,353	$	22,001
Non-cash investing and financing activities:
Additions to OREO		15,867		13,597
Additions to auto and other repossessed assets		17,508		11,516
Capitalization of servicing assets		887		875
Loan securitizations		54,382		60,525
Loans held for investment transferred to held for sale		67,937		-
Property plant and equipment transferred to other assets		-		1,185

NOTE 24 – 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 based primarily on 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 March 31, 2018, 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 product were also considered in the determination of the reportable segment.

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 that are executed to manage and enhance liquidity.  This segment also lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending resources and also borrows from those segments.  The Consumer (Retail) Banking and the United States Operations segments also lend funds to the 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, “Nature of Business and Summary of Significant Accounting Policies,” in the audited consolidated financial statements of the Corporation for the year ended December 31, 2017, which are included in the Corporation’s 2017 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 March 31, 2018:
Interest income	$	32,321	$	42,550	$	32,337	$	14,254	$	19,527	$	8,429	$	149,418
Net (charge) credit for transfer of funds		(11,116)		15,222		(13,417)		9,974		(663)		-		-
Interest expense		-		(6,723)		-		(11,710)		(5,472)		(820)		(24,725)
Net interest income		21,205		51,049		18,920		12,518		13,392		7,609		124,693
Provision for loan and lease losses		(381)		(5,793)		(6,800)		-		(1,459)		(6,111)		(20,544)
Non-interest income		4,084		11,930		1,259		2,378		1,408		1,725		22,784
Direct non-interest expenses		(7,720)		(26,901)		(6,714)		(948)		(7,956)		(7,622)		(57,861)
Segment income (loss)	$	17,188	$	30,285	$	6,665	$	13,948	$	5,385	$	(4,399)	$	69,072
Average earnings assets	$	2,293,482	$	1,566,795	$	2,632,220	$	2,470,830	$	1,709,918	$	571,199	$	11,244,444
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended March 31, 2017:
Interest income	$	33,958	$	42,917	$	29,411	$	13,757	$	15,789	$	9,396	$	145,228
Net (charge) credit for transfer of funds		(11,698)		4,909		(9,318)		16,233		(126)		-		-
Interest expense		-		(5,900)		-		(11,806)		(4,195)		(778)		(22,679)
Net interest income		22,260		41,926		20,093		18,184		11,468		8,618		122,549
(Provision) release for loan and lease losses		(8,936)		(7,142)		(8,055)		-		35		(1,344)		(25,442)
Non-interest income (loss)		3,586		13,379		1,237		(12,170)		505		1,706		8,243
Direct non-interest expenses		(9,879)		(27,418)		(9,367)		(1,207)		(7,859)		(6,750)		(62,480)
Segment income	$	7,031	$	20,745	$	3,908	$	4,807	$	4,149	$	2,230	$	42,870
Average earnings assets	$	2,500,750	$	1,775,931	$	2,548,936	$	2,157,882	$	1,393,215	$	617,820	$	10,994,534

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
		Quarter Ended
		March 31,
		2018		2017
Net income:
Total income for segments and other		$	69,072	$	42,870
Other operating expenses (1)			(28,166)		(25,402)
Income before income taxes			40,906		17,468
Income tax (expense) benefit			(7,758)		8,073
Total consolidated net income		$	33,148	$	25,541
Average assets:
Total average earning assets for segments		$	11,244,444	$	10,994,534
Average non-earning assets			947,460		886,492
Total consolidated average assets		$	12,191,904	$	11,881,026
(1)	Expenses pertaining to corporate administrative functions that support the operating segment 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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NOTE 25 – REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

The Corporation and FirstBank are each 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 and activities. 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 and FirstBank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classifications are also subject to qualitative judgments and adjustment by the regulators with respect to minimum capital requirements, components, risk weightings, and other factors.

On October 3, 2017, the New York FED terminated the Written Agreement entered into on June 3, 2010 between the Corporation and the New York FED. However, the Corporation has agreed with the New York FED to continue to obtain the approval of the New York FED before paying dividends, receiving dividends from the Bank, making payments on subordinated debt or trust preferred securities, incurring or guaranteeing debt or purchasing or redeeming any corporate stock. 

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 are being phased-in over several years and, in general, will be fully effective as of January 1, 2019, although certain elements of the new rules have recently been deferred by the federal banking agencies. 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, dividends and 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 is being 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 as of January 1, 2016. However, the Corporation’s TRuPs may continue to be included in Tier 2 capital until the instruments are redeemed or mature.

On November 21, 2017, the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency finalized an extension of the phase-in of certain Basel III capital rules for banks not using the Basel advanced approaches. The extension, which was effective January 1, 2018, pauses the full transition to the Basel III treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests, pending the banking agencies’ broader efforts, announced in September 2017, to simplify the regulatory capital rules that apply to banking organizations that are not subject to the advanced approaches capital rules. Because the advanced approaches capital rules apply to banking organizations with more than $250 billion in total consolidated assets or at least $10 billion in total on-balance sheet foreign exposure, the extension relief applies broadly to community, midsize, and regional banks, including the Corporation and FirstBank.

    Please refer to the discussion in “Part I, – Item 1, – Business – Supervision and Regulation,” included in the Corporation’s 2017 Annual Report on 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  March 31, 2018 and December 31, 2017 were as follows:
		Regulatory Requirements
		Actual			For Capital Adequacy Purposes			To be Well-Capitalized-General Thresholds
		Amount		Ratio	Amount		Ratio	Amount		Ratio
(Dollars in thousands)
As of March 31, 2018
Total Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,990,146	22.98%	$	692,691	8.0%		N/A	N/A
FirstBank		$	1,950,261	22.52%	$	692,671	8.0%	$	865,838	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.		$	1,665,842	19.24%	$	389,639	4.5%		N/A	N/A
FirstBank		$	1,532,690	17.70%	$	389,627	4.5%	$	562,795	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,701,946	19.66%	$	519,518	6.0%		N/A	N/A
FirstBank		$	1,840,690	21.26%	$	519,503	6.0%	$	692,671	8.0%
Leverage ratio
First BanCorp.		$	1,701,946	14.18%	$	480,078	4.0%		N/A	N/A
FirstBank		$	1,840,690	15.35%	$	479,527	4.0%	$	599,408	5.0%
As of December 31, 2017
Total Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,989,873	22.53%	$	706,432	8.0%		N/A	N/A
FirstBank		$	1,947,627	22.06%	$	706,218	8.0%	$	882,772	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.		$	1,674,164	18.96%	$	397,368	4.5%		N/A	N/A
FirstBank		$	1,562,431	17.70%	$	397,248	4.5%	$	573,802	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,675,282	18.97%	$	529,824	6.0%		N/A	N/A
FirstBank		$	1,835,445	20.79%	$	529,663	6.0%	$	706,218	8.0%
Leverage ratio
First BanCorp.		$	1,675,282	14.03%	$	477,643	4.0%		N/A	N/A
FirstBank		$	1,835,445	15.39%	$	477,056	4.0%	$	596,320	5.0%

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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 March 31, 2018, commitments to extend credit amounted to approximately $1.2 billion, of which $650.5 million relates to credit card loans. Commercial and Financial standby letters of credit amounted to approximately $43.3 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 making 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.

As of March 31, 2018, First BanCorp. and its subsidiaries were defendants in various legal proceedings arising in the ordinary course of business. On at least a quarterly basis, the Corporation assesses its liabilities and contingencies in connection with threatened and outstanding legal cases, matters and proceedings, utilizing the latest information available. For cases, matters and proceedings where it is both probable the Corporation will incur a loss and the amount can be reasonably estimated, the Corporation establishes an accrual for the loss. Once established, the accrual is adjusted as appropriate to reflect any relevant developments. For cases, matters or proceedings where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established.

Any estimate involves significant judgment, given the varying stages of the proceedings (including the fact that some of them are currently in preliminary stages), the existence of multiple defendants in some of the current proceedings whose share of liability has yet to be determined, the numerous unresolved issues in the proceedings, and the inherent uncertainty of the various potential outcomes of such proceedings. Accordingly, the Corporation’s estimate will change from time-to-time, and actual losses may be more or less than the current estimate.

While the final outcome of legal cases, matters, and proceedings is inherently uncertain, based on information currently available, Management believes that the final disposition of the Corporation’s legal cases, matters or proceedings, to the extent not previously provided for, will not have a material negative adverse effect on the Corporation’s consolidated financial position as a whole.

If management believes that, based on available information, it is at least reasonably possible that a material loss (or additional material loss in excess of any accrual) will be incurred in connection with any legal actions, the Corporation discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as appropriate, if such an estimate can be made, or discloses that an estimate cannot be made. Based on the Corporation’s assessment as of March 31, 2018, no such disclosures were necessary. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these cases, matters and proceedings, if unfavorable, may be material to the Corporation’s consolidated financial position on a particular period.

Ramirez Torres, et al. v Banco Popular de Puerto Rico, et al.FirstBank Puerto Rico is named a defendant in a class action complaint, filed on February 17, 2017 at the Court of First Instance in San Juan, Puerto Rico, captioned Ramirez Torres, et al. v. Banco Popular de Puerto Rico, et al. The complaint seeks damages and preliminary and permanent injunctive relief on behalf of the purported class against Banco Popular de Puerto Rico and other financial institutions with insurance agency subsidiaries in Puerto Rico. Plaintiffs contend that in November 2015, Antilles Insurance Company obtained approval from the Puerto Rico Insurance Commissioner to market an endorsement that allowed its customers to obtain a reimbursement of their insurance premium for good experience, but that defendants failed to offer this product or disclose its existence to their customers, favoring other products instead, in violation of their fiduciary duties as insurance producers. Plaintiffs seek a determination that defendants unlawfully failed to comply with their fiduciary duty to disclose the existence of this new insurance benefit from this carrier, as well as double or treble damages (the latter subject to a determination that defendants engaged in anti-monopolistic practices in failing to offer this product). On July 31, 2017, the court entered judgment dismissing the complaint with prejudice.On August 30, 2017, Plaintiffs filed an Appeal before the Court of Appeals and FirstBank filed its opposition. On March 20, 2018, the Court of Appeals entered Judgment revoking the Court of First Instance, ordering a class certification hearing as well as a preliminary injunction hearing. Our lawyers intend to file a writ of Certiorari in the Supreme Court.

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NOTE 26 – FIRST BANCORP. (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

The following condensed financial information presents the financial position of the Holding Company only as of March 31, 2018 and December 31, 2017, and the results of its operations for the quarters ended March 31, 2018 and 2017.

Statements of Financial Condition
	As of March 31,			As of December 31,
	2018		2017
(In thousands)
Assets
Cash and due from banks	$	16,866	$	20,864
Money market investments		6,111		6,111
Other investment securities		285		285
Loans held for investment, net		178		191
Investment in First Bank Puerto Rico, at equity		2,015,111		2,028,641
Investment in First Bank Insurance Agency, at equity		14,933		12,400
Investment in FBP Statutory Trust I		1,963		2,698
Investment in FBP Statutory Trust II		3,561		3,561
Other assets		5,671		3,799
Total assets	$	2,064,679	$	2,078,550
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	184,150	$	208,635
Accounts payable and other liabilities		3,425		818
Total liabilities		187,575		209,453
Stockholders' equity		1,877,104		1,869,097
Total liabilities and stockholders' equity	$	2,064,679	$	2,078,550

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Statements of Income
	Quarter Ended
	March 31,		March 31,
	2018		2017
	(In thousands)
Income:
Interest income on money market investments	$	5	$	5
Dividends from banking subsidiary		21,584		1,930
Other income		63		62
		21,652		1,997
Expense:
Other borrowings		2,085		1,963
Other operating expenses		596		967
		2,681		2,930
Gain on early extinguishment of debt		2,316		-
Income (loss) income before income taxes and equity in undistributed
earnings of subsidiaries		21,287		(933)
Equity in undistributed earnings of subsidiaries		11,861		26,474
Net income	$	33,148	$	25,541
Other comprehensive (loss) income, net of tax		(24,047)		10,696
Comprehensive income	$	9,101	$	36,237

NOTE 27 – SUBSEQUENT EVENTS

The Corporation has performed an evaluation of events occurringsubsequent to March 31, 2018; management has determined that there were 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
(In thousands, except for per share and financial ratios)		March 31,
		2018		2017
Condensed Income Statements:
	Total interest income	$	149,418	$	145,228
	Total interest expense		24,725		22,679
	Net interest income		124,693		122,549
	Provision for loan and lease losses		20,544		25,442
	Non-interest income		22,784		8,243
	Non-interest expenses		86,027		87,882
	Income before income taxes		40,906		17,468
	Income tax (expense) benefit		(7,758)		8,073
	Net income		33,148		25,541
	Net income attributable to common stockholders		32,479		24,872
Per Common Share Results:
	Net earnings per common share-basic	$	0.15	$	0.12
	Net earnings per common share-diluted	$	0.15	$	0.11
	Cash dividends declared	$	-	$	-
	Average shares outstanding		214,646		213,340
	Average shares outstanding diluted		216,214		217,373
	Book value per common share	$	8.51	$	8.18
	Tangible book value per common share (1)	$	8.32	$	7.97
Selected Financial Ratios (In Percent):
Profitability:
	Return on Average Assets		1.10		0.87
	Interest Rate Spread		4.05		4.15
	Net Interest Margin		4.40		4.42
	Interest Rate Spread - tax equivalent basis (2)		4.22		4.31
	Net Interest Margin - tax equivalent basis (2)		4.57		4.58
	Return on Average Total Equity		7.22		5.77
	Return on Average Common Equity		7.37		5.88
	Average Total Equity to Average Total Assets		15.27		15.12
	Tangible common equity ratio (1)		14.80		14.70
	Dividend payout ratio		-		-
	Efficiency ratio (3)		58.33		67.19
Asset Quality:
	Allowance for loan and lease losses to total loans held for investment		2.60		2.30
	Net charge-offs (annualized) to average loans (4)		1.21		1.26
	Provision for loan and lease losses to net charge-offs		77.43		91.47
	Non-performing assets to total assets (4)		5.22		5.44
	Non-performing loans held for investment to total loans held for investment (4)		4.74		5.41
	Allowance to total non-performing loans held for investment (4)		54.82		42.56
	Allowance to total non-performing loans held for investment,
	excluding residential real estate loans		93.87		62.98
Other Information:
	Common Stock Price: End of period	$	6.02	$	5.65
		As of March 31, 2018		As of December 31, 2017
Balance Sheet Data:
	Loans, including loans held for sale	$	8,787,265	$	8,883,456
	Allowance for loan and lease losses		225,856		231,843
	Money market and investment securities		2,109,937		2,095,177
	Intangible assets		41,345		42,351
	Deferred tax asset, net		289,338		294,809
	Total assets		12,200,386		12,261,268
	Deposits		9,066,465		9,022,631
	Borrowings		1,099,150		1,223,635
	Total preferred equity		36,104		36,104
	Total common equity		1,885,662		1,853,608
	Accumulated other comprehensive loss, net of tax		(44,662)		(20,615)
	Total equity		1,877,104		1,869,097
__________________
(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 expenses 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.

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The following MD&A 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 financial measures that are not based on generally accepted accounting principles in the United States (“GAAP”). Refer to Basis of Presentation below for information about why the non-GAAP financial measures are being presented and the reconciliation of the non-GAAP financial measures for which the reconciliation is not presented earlier.

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, the 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 $33.1 million, or $0.15 per diluted common share, for the quarter ended March 31, 2018, compared to $25.5 million, or $0.11 per diluted common share, for the same period in 2017. 

The key drivers of the Corporation’s GAAP financial results include the following:

·Net interest income increased by $2.1 million to $124.7 million for the quarter ended March 31, 2018 compared to $122.5 million for the same period in 2017. The increase in net interest income was driven primarily by: (i) a $3.0 million increase in interest income on commercial and construction loans, primarily associated with the upward repricing of variable-rate commercial loans; (ii) a  $1.8 million increase in interest income from interest-bearing cash balances, primarily deposits maintained at the Federal Reserve Bank of New York (“New York FED”), due to both higher average balance and increases in the Federal Funds target rate; and (iii) a $0.7 million increase in interest income on investment securities primarily due to the gradual investment of liquidity in higher-yielding U.S agency debt securities. 

The aforementioned variances were partially offset by: (i) a $2.0 million increase in interest expense primarily reflecting the effect of higher market interest rates on the cost of Federal Home Loan Bank of New York (“FHLB”) advances, brokered certificates of deposit (“CDs”), retail CDs, and commercial money market accounts tied to short-term interest rates, partially offset by a $262.4 million decrease in the average balance of total interest-bearing liabilities, primarily brokered CDs and repurchase agreements; (ii) a $0.9 million decrease in interest income on residential mortgage loans associated with both a $33.7 million decrease in the average balance of this portfolio and higher inflows of loans to non-performing status as compared to the first quarter of 2017; and (iii) a $0.4 million decrease in interest income on consumer loans primarily due to higher non-performing auto loan levels.

The net interest margin decreased slightly to 4.40% for the first quarter of 2018 compared to 4.42% for the same period a year ago, primarily related to higher non-performing residential and consumer loan levels.   Refer to Net Interest Income below for additional information.   

·The provision for loan and lease losses decreased by $4.9 million to $20.5 million for the first quarter of 2018 compared to $25.4 million for the same period in 2017. The decrease was driven by: (i) an $8.8 million decrease in the provision for residential mortgage loans, primarily related to lower charge-off levels and the effect in the first quarter of 2017 of adjustments to the loss severity estimates used in the calculation of the general reserve, including adjustments to liquidation cost assumptions, and (ii) a $1.5 million decrease in the provision for consumer loans, primarily related to a $2.0 million reserve release in the first quarter of 2018 resulting from payments received that reduced the balance of the consumer loan portfolio outstanding on the dates of the hurricanes.  These variances were partially offset by a $5.4 million increase in the provision for commercial and construction loans driven by a $5.6 million charge recorded in connection with $57.2 million in loans transferred to held for sale during the first quarter of 2018, and the downgrade in the credit risk classification of a $46.8 million commercial mortgage loan in Florida,

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partially offset by a net loan loss reserve release of approximately $4.2 million related to revised estimates to the reserves associated with the effects of Hurricanes Maria and Irma resulting from updated assessments of financial performance and repayment prospects of certain individually-assessed commercial credits.   

During the first quarter of 2018, the Corporation transferred to held for sale three non-performing commercial and construction loans.  The aggregate recorded investment in these loans was written down to $57.2 million, which resulted in charge-offs of $9.7 million and an incremental loss of $5.6 million reflected in the provision for loan and lease losses for the first quarter of 2018.

Net charge-offs totaled $26.5 million for the first quarter of 2018, or 1.21% of average loans on an annualized basis, compared to $27.8 million, or 1.26% of average loans for the same period in 2017.  The decrease reflects a reduction of $4.4 million in net charge-offs taken on residential mortgage loans, partially offset by a $1.7 million increase in net charge-offs of commercial and construction loans and a $1.5 million increase in net charge-offs of consumer loans.  The increase in net charge-offs of commercial and construction loans reflects the effects of the aforementioned $9.7 million in charge-offs taken on loans transferred to held for sale, a $1.3 million charge-off taken on a $5.6 million adversely classified loan sold during the first quarter of 2018, and a $1.2 million decrease in loan loss recoveries, partially offset by a $10.7 million charge-off recorded on the sale of the Corporation’s participation in the Puerto Rico Electric Power Authority (“PREPA”) line of credit in the first quarter of 2017.  The increase in net charge-offs of consumer loans primarily reflects the effect in the first quarter of 2017 of a loan loss recovery of $1.2 million on the sale of certain credit card loans that had been fully charged-off in prior periods. Refer to 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 $22.8 million for the first quarter of 2018, compared to $8.2 million for the same period in 2017.  The increase was primarily driven by: (i) the impact in the first quarter of 2017 of a $12.2 million other-than-temporary impairment (“OTTI”) charge on bonds of the Government Development Bank for Puerto Rico (the “GDB”) and the Puerto Rico Public Buildings Authority that were subsequently sold in the second quarter of 2017; (ii) a $2.3 million gain on the repurchase and cancellation of $23.8 million in trust preferred securities, and (iii) a $0.5 million increase in revenues from the mortgage banking activities driven by a $0.7 million adjustment recorded in the first quarter of 2018 to reduce the valuation allowance of mortgage servicing rights.  These variances were partially offset by a $0.7 million decreases in service charges on deposit accounts. Refer to Non-Interest Income below for additional information.  

·Non-interest expenses for the first quarter of 2018 was $86.0 million compared to $87.9 million for the same period in 2017.  The decrease in non-interest expenses was largely driven by: (i) a $3.9 million decrease in losses on OREO operations, driven by a $3.6 million decrease in write-downs to the value of OREO properties; (ii) a $1.1 million decrease in the Federal Deposit Insurance Corporation (“FDIC”) insurance premium expense reflecting, among other things, the effect of reductions in brokered CDs, a strengthened capital position, and higher liquidity levels tied to the growth in non-interest bearing deposits; and (iii) a $0.9 million decrease in professional service fees, primarily due to reductions in attorneys’ collection fees. 

These variances were partially offset by: (i) a $2.0 million increase in employees’ compensation and benefits expenses, reflecting costs associated with a cash transition award paid to certain senior officers of $0.6 million in connection with the previously-reported executive compensation program that became effective in the third quarter of 2017, a $0.4 million increase in stock-based compensation expense, and an increase of approximately $0.9 million in bonus expenses; (ii) a $1.0 million increase in occupancy and equipment costs, primarily resulting from hurricane-related expenses, such as repairs and security matters; and (iii) a $0.7 million increase resulting from lower net reserve releases related to unfunded loan commitments.  Refer to Non Interest Expenses below for additional information.

·For the first quarter of 2018, the Corporation recorded income tax expense of $7.8 million, compared to an income tax benefit of $8.1 million for the same period in 2017. The variance was mostly attributable to the aforementioned $13.2 million tax benefit recorded in the first quarter of 2017 as a result of the change in tax status of certain subsidiaries from taxable corporations to limited liability companies that elected to be treated as partnerships for income tax purposes in Puerto Rico, as well as higher pre-tax earnings in the first quarter of 2018 and a higher estimated effective tax rate for 2018. The Corporation’s estimated annual effective tax rate in the first quarter of 2018, excluding entities from which a tax benefit cannot be recognized and discrete items, was 27% compared to 24% for the first quarter of 2017. The estimated annual effective tax rate including all entities for 2018 was 19% (23% excluding discrete items), compared to 13% for the first quarter of 2017 (25% excluding discrete items, primarily the tax benefit resulting from the above-mentioned change in the tax status of certain subsidiaries). As of March 31, 2018, the Corporation had a net deferred tax asset of $289.3 million (net of a valuation allowance of $186.1 million).  Refer to Income Taxes below for additional information.  

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·As of March 31, 2018, total assets were $12.2 billion, a decrease of $60.9 million from December 31, 2017. The decrease was mainly due to a $96.2 million decrease in total loans, primarily reflecting reductions of $83.8 million and $15.5 million in the Puerto Rico and Virgin Island regions, respectively, partially offset by a $3.1 million increase in the Florida region.  The decrease reflects the effect of three large loans totaling $28.3 million that were paid off during the first quarter, two large loans totaling $14.8 million that were sold during the first quarter, and significant payments received, including payments that reduced the outstanding balance of three revolving commercial lines of credit in Puerto Rico by $24.2 million.  Total investment securities decreased by $75.2 million, driven by U.S. agency MBS prepayments and a decrease in the fair value of available-for-sale investment securities.  Accrued interest receivables on loans and investment securities decreased by $13.1 million, primarily related to interest payments collected on loans after the expiration in the first quarter of 2018 of the three-month payment deferral program extended to eligible customers affected by Hurricanes Maria and Irma. These variances were partially offset by a $127.4 million increase in cash and cash equivalents, largely driven by the growth in non-interest bearing deposits during the first quarter of 2018 and proceeds from U.S. agency MBS and loan repayments, partially offset by liquidity used to pay off maturing brokered CDs and a $100 million short-term repurchase agreement as well as for the repurchase of $23.8 million of trust preferred securities.  Refer to Financial Condition and Operating DataAnalysis  below for additional information.

·As of March 31, 2018, total liabilities were $10.3 billion, a decrease of $68.9 million from December 31, 2017.  The decrease was mainly due to the repayment at maturity of a $100 million short-term repurchase agreement, the repurchase and cancellation of $23.8 million in trust preferred securities, and a $194.4 million decrease in brokered CDs.  These variances were partially offset by a $194.6 million increase in deposits, excluding government deposits and brokered CDs, primarily reflected in non-interest bearing deposits. Hurricane-related factors, such as the effect of payment deferral programs, disaster relief funds, and settlements of insurance claims contributed to this accumulation.  Government deposits increased by $43.7 million, primarily related to an increase in the balance of a Puerto Rico government-owned corporation’s transactional deposit account.  Refer to Risk Management – Liquidity Risk and Capital Adequacy below for additional information about the Corporation’s funding sources.

·As of March 31, 2018, the Corporation’s stockholders’ equity was $1.9 billion, an increase of $8.0 million from December 31, 2017.  The increase was mainly driven by the earnings generated in the first quarter, partially offset by a decrease in the fair value of available-for-sale investment securities recorded as part of other comprehensive loss.  The Corporation’s Total Capital, Common Equity Tier 1 Capital, Tier 1 Capital and Leverage ratios calculated under the Basel III rules as currently in effect were 22.98%, 19.24%, 19.66%, and 14.18%, respectively, as of March 31, 2018, compared to Total Capital, Common Equity Tier 1 Capital, Tier 1 Capital and Leverage ratios of 22.53%, 18.96%, 18.97%, and 14.03%, respectively, as of December 31. 2017. 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 $606.3 million for the quarter ended March 31, 2018, excluding the utilization activity on outstanding credit cards, compared to $867.6 million for the same period in 2017. The decrease was largely affected by the effect in the first quarter of 2017 of the refinancing and renewal of three large commercial loans in Puerto Rico totaling $176.4 million, and lower origination volumes on residential and consumer loans spread through all of the regions served by the Corporation.     

·Total non-performing assets were $637.2 million as of March 31, 2018, a decrease of $13.4 million from December 31, 2017. The decrease was primarily attributable to charge-offs totaling $11.4 million taken on four commercial and construction loans, including $9.7 million associated with the aforementioned loans transferred to held for sale during the first quarter, and payments totaling $4.0 million received in the first quarter to reduce the outstanding balance of commercial mortgage loans that were previously guaranteed by the TDF. 

·Adversely classified commercial and construction loans, including loans held for sale, increased by $24.9 million to $507.3 million as of March 31, 2018, driven by the downgrade in the credit risk classification of a $46.8 million commercial mortgage loan in the Florida region, partially offset by the sale of a $5.6 million commercial and industrial loan, collections, and charge offs.

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The Corporation’s financial results for the first quarter of 2018 and 2017 included the following 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 in uncertain amounts (the “Special Items”):

Quarter ended March 31, 2018

·Positive effect in earnings of $4.8 million ($2.9 million after-tax) related to a $6.4 million net loan loss reserve release in connection  with revised estimates of the reserves associated with the effects of Hurricanes Irma and Maria, partially offset by $1.6 million of hurricane-related expenses recorded in the first quarter. Refer to Provision for Loan and Lease Losses below for additional information.

·Charge to the provision for loan and lease losses of $5.6 million ($3.4 million after-tax) associated with three non-performing commercial and construction loans totaling $57.2 million that were transferred to held for sale during the first quarter. Refer to Provision for Loan and Lease Losses below for additional information.

·Gain of $2.3 million on the repurchase and cancellation of $23.8 million in trust preferred securities, reflected in the consolidated statement of income as “Gain on early extinguishment of debt.” The gain, realized at the holding company level, had no effect on the income tax expense in 2018. Refer to Non-Interest Income below for additional information.

Quarter ended March 31, 2017

·Tax benefit of $13.2 million related to the change in tax status of certain subsidiaries from taxable corporations to limited liability companies that make an election to be treated as partnerships for income tax purposes in Puerto Rico. Refer to Income Taxes below for additional information.

·OTTI charge of $12.2 million on Puerto Rico government debt securities, specifically bonds of the GDB and the Puerto Rico Public Buildings Authority.  No tax benefit was recognized for the OTTI charge in 2017.

·Charge to the provision for loan and lease losses of $0.6 million ($0.3 million after-tax) related to the sale of the Corporation’s participation in the PREPA line of credit with a book value of $64 million at the time of sale.  Refer to Provision for Loan and Lease Losses below for additional information.

·Costs of $0.3 million associated with a secondary offering of the Corporation’s common stock by certain of the existing stockholders.  The costs, incurred at the holding company level, had no effect on the income tax expense in the quarter ended March 31, 2017 based on available operating expenses and net operating losses at the holding company level.

The following table reconciles for the first quarter of 2018 and 2017, the reported net income to adjusted net income, a non-GAAP financial measure that excludes the Special Items identified above:
	Quarter ended March 31,
	2018		2017
(In thousands)
Net income, as reported (GAAP)	$	33,148	$	25,541
Adjustments:
Hurricane-related loan loss reserve release		(6,407)		-
Hurricane-related expenses		1,596		-
Charge to the provision related to loans transferred to held for sale		5,645		-
Gain on early extinguishment of debt		(2,316)		-
Income tax benefit related to change in tax-status of certain subsidiaries		-		(13,161)
Charge to the provision related to the sale of the PREPA credit line		-		569
Secondary offering costs		-		274
Other-than-temporary impairment on debt securities		-		12,231
Income tax impact of adjustments (1)		(324)		(222)
Adjusted net income	$	31,342	$	25,232
(1) See Basis of Presentation below for the individual tax impact for each reconciling item.

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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 the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in First BanCorp.’s 2017 Annual Report on Form 10-K. There have not been any material changes in the Corporation’s critical accounting policies since December 31, 2017. 

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 ended March 31, 2018 was $124.7 million compared to $122.5 million for the comparable period in 2017. On a tax-equivalent basis and excluding the changes in the fair value of derivative instruments, net interest income for the quarter ended March 31, 2018 was $129.5 million compared to $126.2 million for the comparable period in 2017.

The following tables include a detailed analysis of net interest income. Part I presents average volumes (based on the average daily balance) 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 the 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 March 31,	2018		2017		2018		2017		2018		2017
	(Dollars in thousands)
	Interest-earning assets:
	Money market & other short-term investments	$	618,468	$	268,934	$	2,256	$	484	1.48	%	0.73	%
	Government obligations (2)		798,186		729,307		6,193		4,360	3.15	%	2.42	%
	Mortgage-backed securities		1,260,142		1,334,560		10,625		11,614	3.42	%	3.53	%
	FHLB stock		40,937		39,560		693		461	6.87	%	4.73	%
	Other investments		2,705		2,699		2		2	0.30	%	0.30	%
	Total investments (3)		2,720,438		2,375,060		19,769		16,921	2.95	%	2.89	%
	Residential mortgage loans		3,227,222		3,260,885		43,350		44,280	5.45	%	5.51	%
	Construction loans		118,907		130,494		922		1,144	3.14	%	3.56	%
	Commercial and Industrial and commercial mortgage loans		3,688,415		3,760,594		45,189		41,820	4.97	%	4.51	%
	Finance leases		260,119		234,729		4,660		4,314	7.27	%	7.45	%
	Consumer loans		1,484,305		1,475,569		40,306		41,070	11.01	%	11.29	%
	Total loans (4) (5)		8,778,968		8,862,271		134,427		132,628	6.21	%	6.07	%
	Total interest-earning assets	$	11,499,406	$	11,237,331	$	154,196	$	149,549	5.44	%	5.40	%
	Interest-bearing liabilities:
	Brokered CDs	$	1,043,255	$	1,413,667	$	4,355	$	4,805	1.69	%	1.38	%
	Other interest-bearing deposits		6,021,699		5,884,772		12,616		11,167	0.85	%	0.77	%
	Other borrowed funds		414,488		516,187		4,382		4,585	4.29	%	3.60	%
	FHLB advances		715,000		642,222		3,372		2,122	1.91	%	1.34	%
	Total interest-bearing liabilities	$	8,194,442	$	8,456,848	$	24,725	$	22,679	1.22	%	1.09	%
	Net interest income					$	129,471	$	126,870
	Interest rate spread									4.22	%	4.31	%
	Net interest margin									4.57	%	4.58	%

(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 received or paid.
(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 included $1.8 million and $2.1 million for the first quarter of 2018 and 2017, respectively, of income from prepayment penalties and late fees related to the Corporation’s loan portfolio.

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Part II
		Quarter ended March 31,
		2018 compared to 2017
		Increase (decrease)
		Due to:
	(In thousands)	Volume		Rate		Total
	Interest income on interest-earning assets:
	Money market and other short-term investments	$	990	$	782	$	1,772
	Government obligations		441		1,392		1,833
	Mortgage-backed securities		(635)		(354)		(989)
	FHLB stock		17		215		232
	Other investments		-		-		-
	Total investments		813		2,035		2,848
	Residential mortgage loans		(455)		(475)		(930)
	Construction loans		(96)		(126)		(222)
	Commercial and Industrial and Commercial mortgage loans		(879)		4,248		3,369
	Finance leases		465		(119)		346
	Consumer loans		249		(1,013)		(764)
	Total loans		(716)		2,515		1,799
	Total interest income		97		4,550		4,647
	Interest expense on interest-bearing liabilities:
	Brokered CDs		(1,419)		969		(450)
	Other interest-bearing deposits		265		1,184		1,449
	Other borrowed funds		(1,002)		799		(203)
	FHLB advances		262		988		1,250
	Total interest expense		(1,894)		3,940		2,046
	Change in net interest income	$	1,991	$	610	$	2,601

Portions of the Corporation’s interest-earning assets, mostly investments in obligations of some U.S. government agencies and sponsored entities, generate interest that is exempt from income tax, principally in Puerto Rico. Also, interest and gains on sales of investments held by the Corporation’s international banking entities (“IBEs”) are tax-exempt under 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.

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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:
	Quarter Ended March 31,
(Dollars in thousands)	2018			2017
Interest Income - GAAP	$	149,418		$	145,228
Unrealized loss on derivative instruments		-			1
Interest income excluding valuations		149,418			145,229
Tax-equivalent adjustment		4,778			4,320
Interest income on a tax-equivalent basis excluding valuations		154,196			149,549
Interest Expense - GAAP		24,725			22,679
Net interest income - GAAP	$	124,693		$	122,549
Net interest income excluding valuations - Non-GAAP	$	124,693		$	122,550
Net interest income on a tax-equivalent basis and excluding valuations- Non-GAAP	$	129,471		$	126,870
Average Balances
Loans and leases	$	8,778,968		$	8,862,271
Total securities, other short-term investments and interest-bearing cash balances		2,720,438			2,375,060
Average Interest-Earning Assets	$	11,499,406		$	11,237,331
Average Interest-Bearing Liabilities	$	8,194,442		$	8,456,848
Average Yield/Rate
Average yield on interest-earning assets - GAAP		5.27	%		5.24	%
Average rate on interest-bearing liabilities - GAAP		1.22	%		1.09	%
Net interest spread - GAAP		4.05	%		4.15	%
Net interest margin - GAAP		4.40	%		4.42	%
Average yield on interest-earning assets excluding valuations- Non-GAAP		5.27	%		5.24	%
Average rate on interest-bearing liabilities		1.22	%		1.09	%
Net interest spread excluding valuations- Non-GAAP		4.05	%		4.15	%
Net interest margin excluding valuations- Non-GAAP		4.40	%		4.42	%
Average yield on interest-earning assets on a tax-equivalent basis
and excluding valuations - Non-GAAP		5.44	%		5.40	%
Average rate on interest-bearing liabilities		1.22	%		1.09	%
Net interest spread on a tax-equivalent basis and excluding valuations- Non-GAAP		4.22	%		4.31	%
Net interest margin on a tax-equivalent basis and excluding valuations- Non-GAAP		4.57	%		4.58	%

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 ended March 31, 2018, net interest income increased $2.1 million to $124.7 million, compared to $122.5 million for the same period in 2017.  The $2.1 million increase in net interest income was primarily due to:

·A $3.0 million increase in interest income on commercial and construction loans, primarily associated with the upward repricing of variable-rate commercial loans.

·A $1.8 million increase in interest income from interest-bearing cash balances due to both an increase of $305.5 million in the average balance of deposits maintained at the New York FED and increases in the Federal Funds target rate.  The growth in non-interest bearing deposits provided higher liquidity levels in the first quarter of 2018 as compared to the same period a year ago.  In addition, the Federal Funds target rate has increased three times since the end of the first quarter of 2017 from a range of 0.75% - 1.00% to its current range of 1.50% - 1.75%. 

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·A $0.7 million increase in interest income on investment securities primarily due to the gradual investment of liquidity in higher-yielding U.S agency debt securities.

Partially offset by:

·A $2.0 million increase in interest expense, primarily reflecting the effect of higher market interest rates on the cost of FHLB advances, brokered CDs, retail CDs, and commercial money market accounts tied to short-term interest rates, partially offset by a $262.4 million decrease in the average balance of total interest-bearing liabilities, primarily brokered CDs and repurchase agreements.  Over the last 12 months, the Corporation repaid $744.5 million of maturing brokered CDs with an all-in cost of 1.18% and new issuances amounted to $341.3 million with an all-in cost of 1.69%.  While the Corporation continues to reduce its reliance in brokered CDs, it is increasing the core deposit base.  For the first quarter of 2018 the average balance of non-brokered interest-bearing deposits increased by $136.9 million and the average balance of non-interest-bearing deposits increased by$468.9 million, as compared to the same period in 2017.

·A $0.9 million decrease in interest income on residential mortgage loans associated with both a $33.7 million decrease in the average balance of this portfolio and higher inflows of loans to non-performing status as compared to the first quarter of 2017.

·A $0.4 million decrease in interest income on consumer loans primarily due to higher non-performing auto loan levels.

The net interest margin decreased by 2 basis points to 4.40% for the first quarter of 2018, compared to 4.42% for the first quarter of 2017, driven by higher non-performing residential and consumer loan levels and the change in mix of earning assets, partially offset by an improved funding mix driven by the increase in the proportion of interest-earning assets funded by the growth in non-interest bearing deposits.  Loans decreased as a percentage of interest-earning assets from 78.8% in the first quarter of 2017 to 76.3% in the first quarter of 2018.

On an adjusted tax-equivalent basis, net interest income for the first quarter of 2018 increased by $2.6 million to $129.5 million when compared to the same period in 2017. In addition to the facts discussed above, the increase for the first quarter of 2018 also included an increase of $0.5 million in the tax-equivalent adjustment primarily attributable to a higher volume of tax exempt U.S agency debt securities.

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. Important factors that influence this judgment are re-evaluated on a quarterly basis to respond to changing conditions.

     As described in Note 2, “Update on Effects of Natural Disasters to the accompanying consolidated financial statements,” two strong hurricanes affected the Corporation’s service areas during September 2017.  These hurricanes caused widespread property damage, flooding, power outages, and water and communication service interruptions, and severely disrupted normal economic activity in the affected areas.  Relationship officers continued to closely monitor the performance of hurricane-affected loan customers during the first quarter of 2018, and data became available on the performance of consumer and residential credits that had been under payment deferral programs.  This information was factored into the determination of the allowance for loan and lease losses as of March 31, 2018.  Although the identification and evaluation of hurricane-affected credits has been substantially completed, management’s assessment of the hurricanes’ effect is still subject to uncertainties, both those specific to some individual customers, such as the resolution of insurance claims, and those applicable to the overall economic prospects of the hurricane affected areas as a whole.  During the first quarter of 2018, the Corporation recorded a net loan loss reserve release of approximately $6.4 million in connection with revised estimates associated with the effects of the hurricanes.  The reserve release consisted of a $4.2 million release attributable to updated assessments of financial performance and repayment prospects of certain individually-assessed commercial credits and a $2.2 million release related to lower reserve requirements resulting from payments received during the first quarter that reduced the balance of consumer and, to a lesser extent, residential mortgage loans outstanding on the dates of the hurricanes.  As of March 31, 2018, the hurricane-related allowance amounted to $62.1 million (net of a $2.8 million charge-off taken on a hurricane-affected construction credit during the fourth quarter of 2017).  With the ongoing collection of information on individual commercial customers and statistics on the consumer and residential loan portfolios, the loss estimate will be revised as needed.  The methodologies that the Corporation used to determine the hurricane-related qualitative estimate and for the review of individual large commercial credits are discussed in detail in Note 1, “Nature of Business and Summary of Significant Accounting Policies,” in the

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audited consolidated financial statements of the Corporation’s for the year ended December 31, 2017, which are included in the Corporation’s 2017 Annual Report on Form 10-K.

In addition, during the first quarter of 2018, the Corporation transferred to held for sale three non-performing commercial and construction loans.  The aggregate recorded investment in these loans was written down to $57.2 million, which resulted in charge-offs of $9.7 million and an incremental loss of $5.6 million reflected in the provision for loan and lease losses for the first quarter of 2018. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loans in the Virgin Islands (net of a $5.1 million write-down to fair value recorded at the time of the transfer) and two non-performing commercial mortgage loans totaling $27.2 million (net of write-downs to fair value of $4.6 million recorded at the time of the transfer).

     Further, the provision for loan and lease losses for the first quarter of 2017 included a $0.6 million charge related to the PREPA credit line.  Refer to Note 7, “Loans Held For Investment – Purchases and Sales of Loans,” for additional information about this transaction.         

On a non-GAAP basis, excluding the effect of the above mentioned changes related to the hurricanes, the loans transferred to held for sale, and the sale of the PREPA credit line, the adjusted provision for loan and lease losses of $21.3 million for the first quarter of 2018 decreased by $3.6 million as compared to the adjusted provision of $24.9 million for the first quarter of 2017.  The $3.6 million decrease in the adjusted provision was driven by:

·An $8.7 million decrease in the adjusted provision for residential mortgage loans, primarily related to lower charge-off levels and the effect in the first quarter of 2017 of adjustments to the loss severity estimates used in the calculation of the general reserve, including adjustments to liquidation cost assumptions.

Partially offset by:

·A $4.6 million increase in the adjusted provision for commercial and construction loans, driven by the downgrade in the credit risk classification of a $46.8 million commercial mortgage loan in Florida.

·A $0.6 million increase in the adjusted provision for consumer loans, primarily reflecting the effect in the first quarter of 2017 of a loan loss recovery of $1.2 million on the sale of certain credit card loans that had been fully charged-off in prior periods.

Refer to Basis of Presentation below for a reconciliation of the GAAP provision for loan and lease losses to the non-GAAP provision for loan and lease losses excluding the effect of the hurricane-related reserve release, the loans transferred to held for sale, and the sale of the PREPA credit line.  Also refer to Risk Management –Credit Risk Management below for an analysis of the allowance for loan and lease losses, including enhancements to the calculation of the allowance for loan losses for commercial and construction loans implemented in the first quarter of 2018, non-performing assets, impaired loans and related information, and refer to Financial Condition and Operating Data 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.

Non-Interest Income
		Quarter Ended March 31,
		2018		2017
	(In thousands)
	Service charges on deposit accounts	$	5,088	$	5,790
	Mortgage banking activities		4,165		3,616
	Insurance income		3,355		3,587
	Other operating income		7,860		7,481
	Non-interest income before OTTI on debt securities and gain on
	early extinguishment of debt		20,468		20,474
	OTTI on debt securities		-		(12,231)
	Gain on early extinguishment of debt		2,316		-
	Total	$	22,784	$	8,243

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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 gains 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 mainly 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 contractually shared revenues from merchant contracts sold in 2015.

The net gain 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 2018 of $23.8 million in trust preferred securities of FBP Statutory Trust I 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 90% of the $23.8 million par value.  The 10% discount resulted in a gain of $2.3 million, which is reflected in the statement of income as a “Gain on early extinguishment of debt.”  As of March 31, 2018, the Corporation still had Floating Rate Junior Subordinated Debentures (“subordinated debt”) outstanding in the aggregate amount of $184.2 million. 

Non-interest income for the first quarter of 2018 amounted to $22.8 million, compared to $8.2 million for the same period in 2017. The $14.5 million increase in non-interest income was primarily related to:

·The effect in the first quarter of 2017 of a $12.2 million 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.  These bonds were sold in the second quarter of 2017.

·The $2.3 million gain recorded in the first quarter of 2018 on the repurchase and cancellation of $23.8 million in trust preferred securities.

·A $0.5 million increase in revenues from mortgage banking activities driven by a $0.7 million adjustment recorded in the first quarter of 2018 to reduce the valuation allowance of mortgage servicing rights, partially offset by lower conforming loan originations and sales in the secondary market resulting in a $0.3 million decrease in gain on sale of residential mortgage loans.  Total loans sold in the secondary market to U.S. government-sponsored entities amounted to $74.5 million with a related gain of $1.9 million in the first quarter of 2018, including gains of $0.6 million on To-Be-Announced MBS (“TBA”) hedges, compared to $85.1 million with a related gain of $2.3 million in the first quarter of 2017, net of TBA hedge losses of $60 thousand. 

·A $0.4 million increase in “other operating income” in the table above, reflecting the effect of a $0.8 million gain on the sale of fixed assets of a closed banking branch in Florida and a $0.3 million increase in transaction fee income from credit and debit cards, POS, and ATMs, partially offset by a $0.6 million lower of cost or market adjustment recorded in the first quarter of 2017 to reduce the carrying value of a construction loan held for sale.

Partially offset by:

·A $0.7 million decrease in service charges on deposit accounts, primarily related to a decrease in the volume of returned item and overdraft fee transactions. 

·A $0.2 million decrease in seasonal contingent insurance commissions received by the insurance agency based on the prior year’s production of insurance policies. 

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Non-Interest Expenses
The following table presents the components of non-interest expenses:
		Quarter Ended March 31,
		2018		2017
	(In thousands)
	Employees' compensation and benefits	$	40,684	$	38,653
	Occupancy and equipment		15,105		14,088
	Insurance and supervisory fees		3,855		4,909
	Taxes, other than income taxes		3,856		3,676
	Professional fees:
	Collections, appraisals and other credit-related fees		1,599		2,072
	Outsourcing technology services		5,123		5,354
	Other professional fees		3,338		3,530
	Credit and debit card processing expenses		3,537		2,831
	Business promotion		2,576		3,281
	Communications		1,482		1,543
	Net loss on OREO and OREO operations		190		4,076
	Other		4,682		3,869
	Total	$	86,027	$	87,882

Non-interest expenses for the first quarter of 2018 were $86.0 million, compared to $87.9 million for the same period in 2017.  The $1.9 million decrease in non-interest expenses was mainly due to:

·A $3.9 million decrease in losses from OREO operations, primarily reflecting a $3.6 million decrease in write downs to the value of OREO properties.  

·A $1.1 million decrease in the FDIC insurance premium expense, included as part of “Insurance and supervisory fees” in the table above, reflecting, among other things, the effect of reductions in brokered CDs, a strengthened capital position, and improved liquidity metrics tied to the growth in non-interest-bearing deposits.

·A $0.9 million decrease in total professional service fees, primarily reflecting lower attorneys’ collection fees.

·A $0.7 million decrease in business promotion expenses, primarily due to the timing of marketing related-activities and lower charitable contribution expenses. 

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These decreases were partially offset by:

·A $2.0 million increase in employee’s compensation and benefits, primarily reflecting costs associated with a cash transition award paid to certain senior officers of $0.6 million in connection with the previously-reported executive compensation program that became effective in the third quarter of 2017, a $0.4 million increase in stock-based compensation expense, and an increase of approximately $0.9 million in bonuses expense. 

·A $1.0 million increase in occupancy and equipment expenses, primarily related to hurricane-related expenses amounting to $1.6 million recorded in the first quarter of 2018, mostly attributable to repairs and security matters.  These variances were partially offset by lower electricity and property tax expenses.  The Corporation has incurred a variety of costs to operate in disaster response mode, and some facilities and their contents were damaged by the storms.  The Corporation maintains insurance for casualty losses, as well as for reasonable and necessary disaster response costs and certain revenue lost through business interruption. Most of the significant disaster response costs were incurred by the end of the first quarter of 2018. These costs were included, where appropriate, in an insurance claim receivable based on management’s understanding of the underlying coverage. An insurance claim receivable of $5.3 million was included in other assets as of March 31, 2018. The Corporation has incurred $9.3 million of hurricane-related disaster response costs and casualty losses, including the aforementioned $1.6 million charge to operations in the first quarter of 2018.

·A $0.8 million increase in “other operating expenses” in the table above, primarily reflecting related to lower net reserve releases related to unfunded loan commitments.  

·A $0.7 million increase in credit and debit card processing expenses, mainly related to higher transaction volumes.

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 generally not entitled to file consolidated tax returns and, thus, the Corporation is generally not entitled  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 allows entities organized as limited liability companies to perform an election to become a non-taxable “pass-through” entity and utilize losses to offset income from other “pass-through” entities, subject to certain limitations, with the remaining net income passing-through its partner entities.  The 2011 PR Code also 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.

On March 1, 2017, the Corporation completed the applicable regulatory filings to change the tax status of its subsidiary, First Federal Finance, from a taxable corporation to a non-taxable “pass-through” entity. This election allows the Corporation to realize tax benefits of its deferred tax assets associated with pass-through ordinary net operating losses available at the banking subsidiary, FirstBank, which were subject to a full valuation allowance as of December 31, 2016, against now pass-through ordinary income from this profitable subsidiary.

On March 1, 2017, the Corporation also completed the applicable regulatory filings to change the tax status of its subsidiary, FirstBank Insurance, from a taxable corporation to a non-taxable “pass-through” entity. This election allows the Corporation to offset pass-through income earned by FirstBank Insurance with net operating losses available at the holding company (the “Holding Company”) level.

The Corporation has maintained an effective tax rate lower than the maximum statutory rate 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.

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For the first quarter of 2018, the Corporation recorded an income tax expense of $7.8 million, compared to an income tax benefit of $8.1 million for the same period in 2017. The variance was mostly attributable to the $13.2 million tax benefit recorded in the first quarter of 2017 as a result of the above discussed change in tax status of certain subsidiaries from taxable corporations to limited liability companies that elected to be treated as partnerships for income tax purposes in Puerto Rico, higher pre-tax earnings in the first quarter of 2018, and a higher estimated effective tax rate for 2018.

For the quarter ended March 31, 2018, 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 annual estimated 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 Corporation’s estimated annual effective tax rate in the first quarter of 2018, excluding entities from which a tax benefit cannot be recognized and discrete items, was 27% compared to 24% for the first quarter of 2017.  The estimated annual effective tax rate including all entities for 2018 was 19% (23% excluding discrete items),  compared to 13% for the first quarter of 2017, (25% excluding discrete items, primarily the tax benefit resulting from the previously mentioned change in the tax status of two subsidiaries)

  The Corporation’s net deferred tax asset amounted to $289.3 million as of March 31, 2018, net of a valuation allowance of $186.1 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 net deferred tax asset of the Corporation’s banking subsidiary, FirstBank, amounted to $289.2 million as of March 31, 2018, net of a valuation allowance of $150.0 million, compared to net deferred tax asset of $294.7 million, net of a valuation allowance of $150.7 million, as of December 31, 2017.

During the third quarter of 2017, the Corporation completed a formal ownership change analysis within the meaning of Section 382 of the U.S. Internal Revenue Code (“Section 382”) covering a comprehensive period, and concluded that an ownership change occurred during such period. Section 382 limits the ability to utilize U.S. and USVI NOLs for income tax purposes at such jurisdictions following an event of an ownership change.  The Section 382 limitation could result in higher U.S. and USVI liabilities in the future than we would incur in the absence of such limitation. As of March 31, 2018, and as a result of the Section 382 limitation, the Corporation incurred an income tax expense of approximately $1.6 million related to its U.S. operations. The limitation did not affect the USVI operations in the first quarter of 2018. Prospectively, the Corporation expects that it will be able to mitigate the adverse effects associated with the Section 382 limitation as any such tax paid in the U.S. or USVI could be creditable against Puerto Rico tax liabilities or taken as deduction against taxable income.  However, our ability to reduce our Puerto Rico tax liability through such a credit or deduction depends on our tax profile at each annual taxable period, which is dependent on various factors.

On December 22, 2017, the United States president signed H.R.1, The Tax Cuts and Jobs Act, which includes an overhaul of individual, business and international taxes and has affected our branch operations in the U.S. and the USVI. The bill includes measures reducing corporate taxes from 35% to 21%, a repeal of the corporate alternative minimum tax regime, changes to business deductions and NOLs, a 15.5% tax on mandatory repatriation of liquid assets, 10% tax on base erosion payments, and a minimum 10.5% tax on inclusion of global intangible low-tax income by U.S. shareholders, among other significant changes. The main provisions affecting our operations in the U.S. and the USVI in the first quarter for 2018 include: the change in tax rate to 21%, the limitation to the amount certain financial institutions may deduct for premiums paid to the FDIC, and changes in permanent differences such as the meals and entertainment deductions. Other significant provisions, such as the base erosion and anti-abuse tax, do not affect the Corporation’s US and USVI branch operations since these operations’ receipts do not exceed the annual threshold of US effectively connected gross receipts.

On April 16, 2018, the Puerto Rico House of Representatives introduced the house legislative project 1544 (“P de la C. 1544”) including proposed changes to the Puerto Rico Income Tax Code. The P de la C. 1544 proposes changes effective January 1, 2019 including: a reduction in the maximum corporate tax rate to 31% from the current 39%, the NOL limitation will increase to 90% from the current 80%, and changes to the alternative minimum tax (“AMT”) computation including a reduction in rate to 23%, from the current 30%, among others. The legislative project also eliminates the exemption on interest income of certain mortgage loans, and provides additional limitations to deductions related to meals and travel. Other proposed measures include a reduction of the business to business services sales tax for electronic payments to 2%, from the current 4%, effective July 1, 2018, and to 0% effective July 1, 2019.  The P de la C. 1544 also includes preventive measures which condition the reductions in income tax rates and sales and taxes to the government reaching the budgeted revenue collections.

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FINANCIAL CONDITION AND OPERATING DATA ANALYSIS

Assets

The Corporation’s total assets were $12.2 billion as of March 31, 2018, a decrease of $60.9 million from December 31, 2017. The decrease, as further discussed below, was mainly due to a $96.2 million decrease in total loans, a $75.2 million decrease in total investment securities, and a $13.1 million decrease in accrued interest receivables on loans and investments. 

The variances were partially offset by a $127.4 million increase in cash and cash equivalents, largely driven by the increase of $186.2 million in non-interest-bearing deposits during the first quarter of 2018 and proceeds from U.S. agency MBS and loan repayments, partially offset by liquidity used to pay off maturing brokered CDs and a $100 million short-term repurchase agreement, as well as for the repurchase of $23.8 million of trust preferred securities.

Loan Portfolio

The following table presents the composition of the Corporation’s loan portfolio, including loans held for sale, as of the dates indicated:
			March 31,		December 31,
	(In thousands)		2018		2017
	Residential mortgage loans		$	3,267,868	$	3,290,957
	Commercial loans:
	Commercial mortgage loans(1)			1,552,503		1,614,972
	Construction loans (1)			79,150		111,397
	Commercial and Industrial loans			2,061,773		2,083,253
	Total commercial loans			3,693,426		3,809,622
	Finance leases			262,863		257,462
	Consumer loans			1,471,733		1,492,435
	Total loans held for investment			8,695,890		8,850,476
	Less:
	Allowance for loan and lease losses			(225,856)		(231,843)
	Total loans held for investment, net		$	8,470,034	$	8,618,633
	Loans held for sale (1)			91,375		32,980
	Total loans, net		$	8,561,409	$	8,651,613
	__________________
	(1)	During the first quarter of 2018, the Corporation transferred $57.2 million in loans (net of fair value write-downs of $9.7 million at the time of the transfer) to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan in the Virgin Islands (net of a fair value write-down of $5.1 million at the time of the transfer) and two non-performing commercial mortgage loans totaling $27.2 million in Puerto Rico (net of fair value write-downs of $4.6 million at the time of the transfer).

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As of March 31, 2018, the Corporation’s total loan portfolio, before allowance, amounted to $8.8 billion, down $96.2 million when compared to December 31, 2017. The decline primarily reflects reductions of $83.8 million and $15.5 million in the Puerto Rico and Virgin Island regions, respectively. The decrease was mainly related to a $59.5 million decline in the commercial and construction loan portfolio driven by three large loans totaling $28.3 million that were paid off during the first quarter, two large loans totaling $14.8 million sold in the first quarter, and significant payments received in the first quarter, including payments that reduced the outstanding balance of three revolving commercial lines of credit in Puerto Rico by $24.2 million. The variances were partially offset by an increase of $3.1 million in the Florida region.

   As shown in the table above, as of March 31, 2018, the loans held for investment portfolio was comprised of commercial and construction loans (42%), residential real estate loans (38%), and consumer and finance leases (20%). Of the total gross loan portfolio held for investment of $8.7 billion as of March 31, 2018, approximately 75% has credit risk concentration in Puerto Rico, 19% in the United States (mainly in the state of Florida) and 6% in the Virgin Islands, as shown in the following table:

As of March 31, 2018	Puerto Rico		Virgin  Islands		United  States		Total
(In thousands)
Residential mortgage loans	$	2,396,307	$	273,557	$	598,004	$	3,267,868
Commercial mortgage loans		1,062,693		90,817		398,993		1,552,503
Construction loans		42,148		8,309		28,693		79,150
Commercial and Industrial loans		1,366,090		121,182		574,501		2,061,773
Total commercial loans		2,470,931		220,308		1,002,187		3,693,426
Finance leases		262,863		-		-		262,863
Consumer loans		1,368,759		45,215		57,759		1,471,733
Total loans held for investment, gross	$	6,498,860	$	539,080	$	1,657,950	$	8,695,890
Loans held for sale		50,814		30,000		10,561		91,375
Total loans, gross	$	6,549,674	$	569,080	$	1,668,511	$	8,787,265

As of December 31, 2017	Puerto Rico		Virgin  Islands		United  States		Total
(In thousands)
Residential mortgage loans	$	2,413,379	$	282,738	$	594,840	$	3,290,957
Commercial mortgage loans		1,127,409		95,464		392,099		1,614,972
Construction loans		41,511		43,314		26,572		111,397
Commercial and Industrial loans		1,373,714		116,323		593,216		2,083,253
Total commercial loans		2,542,634		255,101		1,011,887		3,809,622
Finance leases		257,462		-		-		257,462
Consumer loans		1,389,560		46,412		56,463		1,492,435
Total loans held for investment, gross	$	6,603,035	$	584,251	$	1,663,190	$	8,850,476
Loans held for sale		30,397		325		2,258		32,980
Total loans, gross	$	6,633,432	$	584,576	$	1,665,448	$	8,883,456

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Residential Real Estate Loans

As of March 31, 2018, the Corporation’s residential mortgage loan portfolio held for investment decreased by $23.1 million as compared to the balance as of December 31, 2017, mainly resulting from activities in Puerto Rico as principal repayments, charge-offs and $12.9 million of foreclosures recorded in the first quarter of 2018, exceeded the volume of loans originated and held for investment purposes. The residential mortgage loan portfolio held for investment in the Puerto Rico and Virgin Island regions decreased during the first quarter of 2018 by $17.1 million and $9.2 million, respectively, partially offset by an increase of $3.2 million in the Florida region.   

    The majority of the Corporation’s outstanding balance of residential mortgage loans in Puerto Rico and the Virgin Islands consists of fixed-rate loans that traditionally carried higher yields than residential mortgage loans in Florida. In the Florida region, approximately 57% of the residential mortgage loan portfolio consisted of adjustable rate mortgages. In accordance with the Corporation’s underwriting guidelines, residential mortgage loans are mostly fully-documented loans, and the Corporation does not 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 March 31, 2018, the Corporation’s commercial and construction loan portfolio held for investment decreased by $116.2 million to $3.7 billion, as compared to the balance as of December 31, 2017. The decrease in commercial and construction loans held for investment was mainly related to the aforementioned transfer of $57.2 million of non-performing loans to held for sale (net of fair value write-downs of $9.7 million recorded at the time of the transfer), three large loans totaling $28.3 million that were paid off during the first quarter, two large loans totaling $14.8 million sold in the first quarter, and significant payments received in the first quarter, including payments that reduced the outstanding balance of three revolving commercial lines of credit in Puerto Rico by $24.2 million. 

The commercial and construction loan portfolio, including loans held for sale, decreased by $45.0 million in the Puerto Rico region driven by a $7.7 million commercial mortgage loan paid off during the first quarter, the aforementioned sale of a $5.6 million adversely classified loans, payments of $4.0 million that reduced the outstanding balance of loans that were previously guaranteed by the TDF, significant repayments that reduced the balance of certain commercial loans, including payments totaling $24.2 million that reduced the outstanding balance of three revolving commercial lines of credit, and charge-offs.  In the Virgin Islands, commercial and construction loans decreased by $4.7 million, driven by the fair value write-down of $5.1 million recorded on the construction loan transferred to held for sale during the first quarter.  In Florida, commercial and construction loans decreased by $9.7 million, mainly attributable to the sale of a $9.2 million commercial loan participation and two large loans paid off during the first quarter totaling $20.6 million, partially offset by new loan originations.

As of March 31, 2018, the Corporation had $54.8 million of outstanding loans extended to the Puerto Rico government, its municipalities and public corporations, compared to $55.9 million as of December 31, 2017. Approximately $33.1 million of the outstanding loans as of March 31, 2018 consisted of loans extended to municipalities in Puerto Rico, which in most cases are supported by assigned property tax revenues. The vast majority of revenues of the municipalities included in the Corporation’s loan portfolio 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 notes. Late in 2015, the GDB and the Municipal Revenue Collection Center (“CRIM”) signed and perfected a deed of trust. Through this deed, the GDB, as fiduciary, is required 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 commercial depository financial institution in Puerto Rico. Approximately $6.7 million of the outstanding loans as of March 31, 2018 consisted of a loan to a unit of the central government, and approximately $15.0 million consisted of a loan to an affiliate of PREPA.   

  Furthermore, as of March 31, 2018, the Corporation had three loans granted to the hotel industry in Puerto Rico that were previously guaranteed by the TDF with an outstanding principal balance of $116.2 million (book value $61.6 million), compared to $120.2 million outstanding (book value of $70.8 million) as of December 31, 2017. Historically, the borrower and the operations of the underlying collateral of these loans have been the primary sources of repayment and the TDF, which is a subsidiary of the GDB, provided a secondary guarantee for payment performance. As part of agreements executed in the second quarter of 2017 and first quarter of 2018, the TDF paid $7.6 million and $4.0 million, respectively, to honor a portion of its guarantee on these loans.  As provided in the agreements, the cash payments received by the Corporation released the TDF from its liability as a guarantor of these loans. All three of the commercial mortgage loans previously guaranteed by the TDF have been classified as non-performing and impaired since the first quarter of 2016, and interest payments have been applied against principal since then. Approximately $5.2 million of interest payments received on loans previously guaranteed by the TDF since late March 2016 have been applied against principal. In addition, the GDB agreed to issue to the Bank a fixed income financial instrument pursuant to the GDB’s Restructuring Support Agreement approved by the PROMESA oversight board. During the first quarter of 2018, two of these three commercial

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mortgage loans, with an aggregate outstanding principal balance of $50.4 million (book value of $27.2 million) were transferred to held for sale.

The Corporation also has credit exposure to USVI government entities. As of March 31, 2018, the Corporation had $76.7 million in loans to USVI government instrumentalities and public corporations, compared to $70.4 million as of December 31, 2017. Of the amount outstanding as of March 31, 2018, public corporations of the USVI owed approximately $53.5 million and an independent instrumentality of the USVI government owed approximately $23.2 million. As of March 31, 2018, all loans were currently performing and up to date on principal and interest payments.

As of March 31, 2018, the Corporation’s total exposure to shared national credit (“SNC”) loans amounted to $730.1 million.  As of March 31, 2018, approximately $269.0 million of the SNC exposure related to the portfolio in Puerto Rico and $461.1 million related to the portfolio in the Florida region.

The composition of the Corporation’s construction loan portfolio held for investment as of March 31, 2018 by category and geographic location follows:

As of March 31, 2018
		Puerto Rico		Virgin Islands		United  States		Total
(In thousands)
Loans for residential housing projects:
Mid-rise (1)		$	587	$	-	$	-	$	587
Single-family, detached			1,862		689		2,314		4,865
Total for residential housing projects			2,449		689		2,314		5,452
Construction loans to individuals secured by residential properties			426		595		-		1,021
Loans for commercial projects (2)			15,267		4,629		26,364		46,260
Land loans - residential			12,739		2,402		15		15,156
Land loans - commercial			11,305		-		-		11,305
Total before net deferred fees and allowance for loan losses		$	42,186	$	8,315	$	28,693	$	79,194
Net deferred fees			(38)		(6)		-		(44)
Total construction loan portfolio, gross			42,148		8,309		28,693		79,150
Allowance for loan losses			(3,369)		(738)		(15)		(4,122)
Total construction loan portfolio, net (2)		$	38,779	$	7,571	$	28,678	$	75,028
____________________
(1)	Mid-rise relates to buildings of up to 7 stories.
(2)	Excludes a construction-commercial loan held for sale of $30.0 million in the Virgin Islands.

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The following table presents further information related to the Corporation’s construction portfolio as of and for the quarter ended March 31, 2018:
	(In thousands)
	Total undisbursed funds under existing commitments	$	70,433
	Construction loans held for investment in non-accrual status	$	16,236
	Construction loans held for sale in non-accrual status	$	37,732
	Net charge offs - Construction loans (1)	$	5,164
	Allowance for loan losses - Construction loans	$	4,122
	Non-performing construction loans to total construction loans, including held for sale		46.17%
	Allowance for loan losses for construction loans to total construction loans held for investments		5.21%
	Net charge-offs (annualized) to total average construction loans (1)		17.37%
	(1) Includes a charge-off of $5.1 million associated with the fair value write-down of a $30.0 million construction loan transferred to held for sale in the Virgin Islands.

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	$	1,787
	Over $600k (1)		662
		$	2,449
_____________
(1)	One residential housing project in Puerto Rico.

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Consumer Loans and Finance Leases

As of March 31, 2018, the Corporation’s consumer loan and finance lease portfolio decreased by $15.3 million to $1.7 billion, as compared to the portfolio balance as of December 31, 2017.The decrease was primarily reflected in credit card, auto loans, and boat loans, which decreased by $9.9 million, $5.8 million, and $2.5 million, respectively, partially offset by a $5.4 million increase in finance leases. The decrease was primarily associated with the result of charge-offs and repayments that exceeded the volume of new loan originations.

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 of First BanCorp.’s loan production, including purchases, refinancings, renewals and draws from existing revolving and nonrevolving commitments, for the periods indicated:
	Quarter Ended March 31,
	2018		2017
		(In thousands)
Residential real estate	$	120,774	$	164,140
Commercial and industrial and commercial mortgage		335,075		524,695
Construction		10,684		25,615
Finance leases		27,478		24,388
Consumer		189,430		205,647
Total loan production	$	683,441	$	944,485

The Corporation is experiencing continued loan demand and has continued its targeted origination strategy. During the first quarter of 2018, total loan originations, including purchases, refinancing’s and draws from existing revolving and non-revolving commitments, amounted to approximately $683.4 million, compared to $944.5 million for the comparable period in 2017.

Residential mortgage loan originations and purchases amounted to $120.8 million for the first quarter of 2018, compared to $164.1 million for the first quarter of 2017.  These statistics include purchases from mortgage bankers of $14.5 million for the first quarter of 2018, compared to $14.8 million for the comparable period in 2017. The decrease of $43.4 million in the first quarter of 2018, as compared to the same period of 2017, reflects declines of approximately $27.4 million in Puerto Rico, primarily in conforming loan originations and refinancings, and decreases of $14.4 million and $1.6 million in Florida and the Virgin Islands, respectively.

Commercial and construction loan originations (excluding government loans) amounted to $329.8 million for the first quarter of 2018, compared to $550.3 million for the first quarter of 2017.  The decrease in the first quarter of 2018, compared to the same period in 2017, reflects a decrease of approximately $217.8 million in the Puerto Rico region, primarily due to the effect in the first quarter of 2017 of the refinancing and renewal of three large commercial loans in Puerto Rico totaling $176.4 million and reduced activity compared to pre-hurricane levels, and a decrease of $4.7 million in the Virgin Island region, partially offset by an increase of $2.1 million in the Florida region.

Government loan originations amounted to $16.0 million for the first quarter of 2018, mainly related to the utilization of an arranged overdraft line of credit of a government entity in the Virgin Islands region.

Originations of auto loans (including finance leases) for the first quarter of 2018 amounted to $101.4 million, a decrease of $4.0 million, compared to $105.4 million for the first quarter of 2017. The decrease was primarily reflected in the Puerto Rico and Florida regions with decreases of $3.6 million and $0.6 million, respectively, partially offset by a $0.2 million increase in the Virgin Islands. Personal loan originations for the first quarter 2018, other than credit cards, amounted to $38.4 million, compared to $47.7 million for the first quarter of 2017. Most of the decrease in personal loan originations for the first quarter of 2018, as compared with the same period in 2017, was reflected in the Puerto Rico region. The utilization activity on the outstanding credit card portfolio for the first quarter of 2018 amounted to $77.1 million, compared to $76.9 million for the first quarter of 2017.

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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 March 31, 2018 amounted to $1.8 billion, a decrease of $75.5 million from December 31, 2017. The decrease was mainly driven by U.S. agency MBS prepayments of $42.3 million and a $24.1 million decrease in the fair value of available-for-sale investment securities, primarily U.S. agency MBS, due to changes in market interest rates. 

As of March 31, 2018, approximately 98% of the Corporation’s available-for-sale securities portfolio was invested in U.S. Government and agency debentures and fixed-rate U.S. government sponsored-agency MBS (mainly GNMA, FNMA and FHLMC fixed-rate securities).

The Corporation owns bonds of the Puerto Rico Housing Finance Authority in the aggregate amount of $8.1 million that are carried on the Corporation’s books at their aggregate fair value of $6.8 million and are current as to contractual payments as of March 31, 2018.

As of March 31, 2018, the Corporation’s held-to-maturity investment securities portfolio amounted to $150.5 million, down $0.1 million from December 31, 2017. Held-to-maturity investment securities consist of financing arrangements with Puerto Rico municipalities issued in bond form, which are accounted for as securities, but are underwritten as loans with features that are typically found in commercial loans.  These obligations typically are not 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 70% of the Corporation’s municipality bonds consist of obligations issued by three of the largest municipalities in Puerto Rico. 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 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 investments as of the indicated dates:
		March 31,		December 31,
		2018		2017
(In thousands)
Money market investments		$	100,415	$	10,415
Investment securities available for sale, at fair value:
U.S. government and agencies obligations			603,571		609,188
Puerto Rico government obligations			6,808		6,813
Mortgage-backed securities			1,205,125		1,274,497
Other (1)			-		518
Total investment securities available for sale, at fair value			1,815,504		1,891,016
Investment securities held-to-maturity, at amortized cost:
Puerto Rico Municipal Bonds			150,486		150,627
Other investment securities, including $40.9 million of FHLB stock
as of March 31, 2018 and December 31, 2017 (1)			43,532		43,119
Total money market and investment securities		$	2,109,937	$	2,095,177
________________
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

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Mortgage-backed securities as of the indicated dates consisted of:
	March 31,		December 31,
(In thousands)	2018		2017
Available for sale:
FHLMC certificates	$	296,299	$	311,706
GNMA certificates		209,603		221,630
FNMA certificates		640,058		680,040
Collateralized mortgage obligations issued or
guaranteed by FHLMC and GNMA		43,091		44,061
Other mortgage pass-through certificates		16,074		17,060
Total mortgage-backed securities	$	1,205,125	$	1,274,497

The carrying values of investment securities classified as available for sale and held to maturity as of March 31, 2018 by contractual maturity (excluding mortgage-backed securities) are shown below:
	Carrying		Weighted
(Dollars in thousands)	Amount		Average Yield %
U.S. Government and agencies obligations
Due within one year	$	122,019	1.27
Due after one year through five years		311,855	1.42
Due after five years through ten years		130,761	2.74
Due after ten years		38,936	2.07
		603,571	1.72
Puerto Rico government and municipalities obligations
Due after one year through five years		3,712	5.39
Due after five years through ten years		43,597	5.14
Due after ten years		109,985	5.27
		157,294	5.24
Total		760,865	2.44
Mortgage-backed securities		1,205,125	2.60
Total investment securities available for sale and held to maturity	$	1,965,990	2.54

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Net interest income of future periods could be affected by prepayments of mortgage-backed securities. Any 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 March 31, 2018, the Corporation had approximately $221.3 million in debt securities (U.S. agencies and Puerto Rico government securities) with embedded calls and with an average yield of 2.15%. 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 5 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 2017 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 liquidity needs 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 March 31, 2018, FirstBank could not pay any dividend to the holding company except upon receipt of required regulatory approvals.  During the first quarter of 2018, the Corporation continued to pay quarterly interest payments on the subordinated debentures associated with its trust preferred securities and the monthly dividend income on its non-cumulative perpetual monthly income preferred stock pursuant to regulatory approvals.

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 (the “MIALCO”), using measures of liquidity developed by management that 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 Controller’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.

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.

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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 its 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. It uses multiple measures to monitor the liquidity position, including core liquidity, basic liquidity, and time-based reserve measures. As of March 31, 2018, the estimated core liquidity reserve (which includes cash and free liquid assets) was $2.0 billion or 16.2% of total assets, compared to $1.9 billion or 15.6% of total assets as of December 31, 2017. The basic liquidity ratio (which adds available secured lines of credit to the core liquidity) was approximately 21.9% of total assets, compared to 21.2% of total assets as of December 31, 2017.   The increase in core liquidity levels was largely driven by the aforementioned deposit build-up experienced after the hurricanes.  As of March 31, 2018, the Corporation had $689.5 million available for additional credit from the FHLB of New York. Unpledged liquid securities as of March 31, 2018, mainly fixed-rate MBS and U.S. agency debentures, amounted to approximately $1.0 billion. 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 March 31, 2018, the holding company had $23.0 million of cash and cash equivalents. Cash and cash equivalents at the Bank level as of March 31, 2018 were approximately $837.0 million. The Bank had $956.1 million in brokered CDs as of March 31, 2018, of which approximately $548.3 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 67% 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 its outstanding brokered CDs. As of March 31, 2018, the amount of brokered CDs had decreased $194.4 million to $956.1 million from brokered CDs of $1.2 billion as of December 31, 2017. 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 quarter of 2018, the Corporation increased non-brokered deposits, excluding government deposits, by $194.6 million to $7.4 billion as further discussed below.    

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 quarter of 2018 by $194.4 million to $956.1 million as of March 31, 2018.    

     The average remaining term to maturity of the retail brokered CDs outstanding as of March 31, 2018 was approximately 1.3 year.

     The use of brokered CDs has historically been 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, 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.

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The following table presents contractual maturities of time deposits with denominations of $100,000 or higher as of March 31, 2018:
			Total
			(In thousands)
	Three months or less	$	412,728
	Over three months to six months		420,571
	Over six months to one year		641,050
	Over one year		1,135,050
	Total	$	2,609,399

     Certificates of deposit in denominations of $100,000 or higher include brokered CDs of $956 million issued to deposit brokers in the form of large certificates of deposit that are generally participated out by brokers in amounts of less than the FDIC insurance limit.

Government deposits – As of March 31, 2018, the Corporation had $541.4 million of Puerto Rico public sector deposits ($443.0 million in transactional accounts and $98.4 million in time deposits) compared to $490.3 million as of December 31, 2017. Approximately 24% came from municipalities and municipal agencies in Puerto Rico and 76% came from public corporations and the central government and agencies.  Most of the increase in 2018 was related to the increase in the balance of a Puerto Rico government-owned corporation’s transactional deposit account.

In addition, as of March 31, 2018, the Corporation had $154.3 million of government deposits in the Virgin Islands, compared to $161.7 million as of December 31, 2017.

Retail deposits – The Corporation’s deposit products also include regular saving accounts, demand deposit accounts, money market accounts and retail CDs.Total deposits, excluding brokered CDs and government deposits, increased by $194.6 million to $7.4 billion from the balance of $7.2 billion as of December 31, 2017.  The higher balance reflects increases of $137.2 million and $72.5 million in Puerto Rico and the Virgin Islands, respectively, partially offset by a $15.2 million decrease in Florida.  The Corporation experienced rapid accumulation of deposits after the hurricanes in the fourth quarter of 2017 and the first quarter of 2018.  Total deposits as of March 31, 2018, excluding brokered CDs and government deposits, increased $194.6 million from December 31, 2017 and $571.6 million since September 30, 2017.  The most significant increase was in noninterest-bearing demand deposits, which grew 10%, or $186.2 million, since December 31, 2017 and $433.6 million, or 27%, since September 30, 2017.  Hurricane-related factors, such as the effect of payment deferral programs available to customers, disaster relief funds, and settlement of insurance claims, continue to contribute to this accumulation.  Although management expects the balances accumulated by deposit customers in the hurricane-affected areas to reduce over time, it is difficult to predict when and to what degree, and there may be further growth as insurance claims are resolved and additional disaster-recovery funds are distributed.  Refer to Note 15 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 ended March 31, 2018 and 2017.

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 $400 million as of March 31, 2018, compared to $500 million as of December 31, 2017.  The Corporation repaid at maturity a $100 million short-term repurchase agreement carried at a cost of 1.53%.  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 16 in the Corporation’s unaudited consolidated financial statements for the quarter ended March 31, 2018 for further details about repurchase agreements outstanding by counterparty and maturities.

As of March 31, 2018, 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.

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 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.

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     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 each March 31, 2018 and December 31, 2017, the outstanding balance of FHLB advances was $715.0 million.  As of March 31, 2018, the Corporation had $689.5 million 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. FBP Statutory Trust I used 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 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. FBP statutory Trust II used 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 to purchase $128.9 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures.

The trust-preferred 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 by 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 2018, the Corporation completed the repurchase of $23.8 million of trust preferred securities of FBP Statutory Trust I that were being 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 subordinated debenture.  As of March 31, 2018, the Corporation still had subordinated debentures outstanding in the aggregate amount of $184.2 million. 

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 2016 second quarter on the Corporation’s subordinated debentures associated with its trust-preferred securities. Subsequently, the Corporation received quarterly regulatory approvals and made scheduled quarterly interest payments.  As of March 31, 2018, the Corporation was current on all interest payments due related to its subordinated debentures.  On October 3, 2017, the New York FED terminated the Written Agreement entered into on June 3, 2010 between the Corporation and the Federal Reserve.  However, the Corporation has agreed with its regulators to continue to obtain approval before paying dividends, receiving dividends from the Bank, making payments on subordinated debt or trust-preferred securities, incurring or guaranteeing debt or purchasing or redeeming any corporate stock.  The Corporation has received approval to make the subordinated debentures quarterly payment for June 30, 2018. The Corporation intends to request approval for future periods to continue regularly-scheduled quarterly payments. 

Other Sources of Funds and Liquidity - 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 quarter of 2018, the Corporation sold approximately $54.4 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.

Although 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

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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. 

Effect 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 further 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 the Corporation’s 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 Caa1 by Moody’s, seven 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 $843.8 million as of March 31, 2018, an increase of $127.4 million when compared to the balance as of December 31, 2017. The following discussion highlights the major activities and transactions that affected the Corporation’s cash flows during the first quarters of 2018 and 2017.

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 foreseeable future.

For the first quarters of 2018 and 2017, net cash provided by operating activities was $95.4 million and $84.8 million, respectively.  Net cash generated from operating activities was higher than reported net income largely as a result of adjustments for 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 purchasing, selling and repaying available-for-sale and held-to-maturity investment securities. For the quarter ended March 31, 2018, net cash provided by investing activities was $111.8 million, primarily reflecting U.S. agency MBS prepayments and proceeds from the aforementioned sale of a commercial loan participation in Florida and an adversely classified loan in Puerto Rico.  

For the first quarter of 2017, net cash provided by investing activities was $82.1 million, primarily reflecting U.S. agency MBS prepayments and proceeds from the sale of the PREPA credit line. 

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. For the first quarter of 2018, net cash used in financing activities was $79.7 million, mainly reflecting the effect of repayments of maturing brokered CDs and a $100 million short-term repurchase agreement, as well as the repurchase of trust-preferred securities, partially offset by the increase in non-brokered deposits.   

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 In the first quarter of 2017, net cash used in financing activities was $42.5 million, mainly reflecting the effect of repayments of maturing short-term FHLB advances and brokered CDs, partially offset by the increase in non-brokered deposits.   

Capital

As of March 31, 2018, the Corporation’s stockholders’ equity was $1.9 billion, an increase of $8.0 million from December 31, 2017.  The increase was mainly driven by the earnings generated in the first quarter, partially offset by a decrease in the fair value of available-for-sale investment securities recorded as part of other comprehensive loss.  In December 31, 2016, for the first time since July 2009, the Corporation paid dividends on its non-cumulative perpetual monthly income preferred stock, after receiving regulatory approval.  Since then, the Corporation has continued to pay monthly dividend payments on the non-cumulative perpetual monthly income preferred stock. As mentioned above, on October 3, 2017, the Federal Reserve terminated the Written Agreement entered into on June 3, 2010 between the Corporation and the Federal Reserve. However, the Corporation has agreed with its regulators to continue to obtain approval before paying dividends, receiving dividends from the Bank, making payments on subordinated debt or trust preferred securities, incurring or guaranteeing debt or purchasing or redeeming any corporate stock. The Corporation received regulatory approvals to pay the monthly dividends on the Corporation’s Series A through E Preferred Stock through June 2018. The Corporation intends to request approval in future periods to continue to pay monthly dividend payments on the non-cumulative perpetual monthly income preferred stock.

Set forth below are First BanCorp.'s and FirstBank's regulatory capital ratios as of March 31, 2018 and December 31, 2017:
			Banking Subsidiary
	First BanCorp.		FirstBank		To be well capitalized - General thresholds
		Fully		Fully
As of March 31, 2018	Actual	Phased-in (1)	Actual	Phased-in (1)
Total capital ratio (Total capital to risk-weighted assets)	22.98%	22.47%	22.52%	22.03%	10.00%
Common Equity Tier 1 capital ratio
(Common equity Tier 1 capital to risk weighted assets)	19.24%	18.79%	17.70%	17.29%	6.50%
Tier 1 capital ratio (Tier 1 capital to risk-weighted assets)	19.66%	19.19%	21.26%	20.76%	8.00%
Leverage ratio	14.18%	14.18%	15.35%	15.35%	5.00%
			Banking Subsidiary
	First BanCorp		FirstBank		To be well capitalized - General thresholds
		Fully		Fully
As of December 31, 2017	Actual	Phased-in (1)	Actual	Phased-in (1)
Total capital (Total capital to risk-weighted assets)	22.53%	21.99%	22.06%	21.53%	10.00%
Common Equity Tier 1 capital ratio
(Common equity Tier 1 capital to risk weighted assets)	18.96%	18.09%	17.70%	16.86%	6.50%
Tier 1 capital ratio (Tier 1 capital to risk-weighted assets)	18.97%	18.49%	20.79%	20.26%	8.00%
Leverage ratio	14.03%	14.01%	15.39%	15.37%	5.00%
(1) Certain adjustments required under the Basel III rules will be phased-in through the end of 2018 although certain elements of the Basel III rules have recently been deferred by the federal banking agencies. The ratios shown in this column are calculated assuming a fully phased-in adjustments as if they were effective as of March 31, 2018 and December 31, 2017.

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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 are being phased-in over several years and, in general, will be fully effective as of January 1, 2019; however, the federal banking agencies have recently deferred certain elements of the Basel III rules. 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, dividends and 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 is being progressively increased, 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.

On November 21, 2017, the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency finalized an extension of the phase-in of certain Basel III capita rules for banks not using the Basel advanced approaches capital rule.  The extension, which was effective on January 1, 2018, pauses the full transition of the Basel III treatment of mortgage servicing assets, certain deferred tax assets, and investments in the capital of unconsolidated financial institutions and minority interests, pending the banking agencies’ broader efforts, announced in September 2017, to simplify the regulatory capital rules that apply to banking organizations that are not subject to the advanced approaches capital rules.  Because the advanced approaches capital rules apply to banking organizations with more than $250 billion in assets or foreign bank subsidiaries with more than $10 billion in assets, the extension relief applies broadly to community, midsize, and regional banks, including the Corporation and FirstBank.

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.  Consistent with these requirements, the Corporation submitted its third annual company-run stress test to regulators in July 2017, which was made public in October 2017.  The results show that even in a severely adverse economic environment, the Corporation’s and the Bank’s capital ratios exceed both the regulatory minimum required ratios mandated under Basel III and the generally required well-capitalized thresholds throughout the nine-quarter planning 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 assets and insurance customer relationship intangible assets. Tangible assets are total assets less goodwill, core deposit intangibles, purchased credit card relationship and insurance customer assets relationship assets intangible assets.  Refer to Basis of Presentation below for additional information.

     The following table is a reconciliation of the Corporation’s tangible common equity and tangible assets as of March 31, 2018 and December 31, 2017, respectively:

	March 31,		December 31,
(In thousands, except ratios and per share information)	2018		2017
Total equity - GAAP	$	1,877,104	$	1,869,097
Preferred equity		(36,104)		(36,104)
Goodwill		(28,098)		(28,098)
Purchased credit card relationship intangible		(7,426)		(8,000)
Core deposit intangible		(5,084)		(5,478)
Insurance customer relationship intangible		(737)		(775)
Tangible common equity	$	1,799,655	$	1,790,642
Total assets - GAAP	$	12,200,386	$	12,261,268
Goodwill		(28,098)		(28,098)
Purchased credit card relationship intangible		(7,426)		(8,000)
Core deposit intangible		(5,084)		(5,478)
Insurance customer relationship intangible		(737)		(775)
Tangible assets	$	12,159,041	$	12,218,917
Common shares outstanding		216,390		216,278
Tangible common equity ratio		14.80%		14.65%
Tangible book value per common share	$	8.32	$	8.28

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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 must be charged against the undistributed profits of the bank, and the balance, if any, must be charged against the legal surplus reserve, as a reduction thereof. If there is no legal surplus reserve sufficient to cover such balance, in whole or in part, the outstanding amount must be charged against the capital account and the Bank cannot pay dividends until it can replenish the legal surplus reserve to an amount of at least 20% of the original capital contributed. During the fourth quarter of 2017, $7.3 million was transferred to the legal surplus reserve. FirstBank’s legal surplus reserve, included as part of retained earnings in the Corporation’s consolidated statement of financial condition, amounted to $59.7 million as of March 31, 2018.  There were no transfers to the legal surplus reserve during the quarter ended March 31, 2018.

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 processes 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 March 31, 2018, commitments to extend credit amounted to approximately $1.2 billion, of which $650.5 million related to credit card loans.  Commercial and financial standby letters of credit amounted to approximately $43.3 million.  Commitments to extend credit are agreements to lend to customers as long as the conditions established in the contract are met.

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Contractual Obligations and Commitments
The following table presents a detail of the maturities of 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 March 31, 2018
	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
	(In thousands)
Contractual obligations:
Certificates of deposit	$	3,390,239	$	1,905,798	$	1,106,492	$	371,183	$	6,766
Securities sold under agreements to repurchase (1)		200,000		-		-		200,000		-
Advances from FHLB		715,000		95,000		300,000		320,000		-
Other borrowings		184,150		-		-		-		184,150
Total contractual obligations	$	4,489,389	$	2,000,798	$	1,406,492	$	891,183	$	190,916
Commitments to sell mortgage loans	$	59,335
Standby letters of credit	$	2,369
Commitments to extend credit:
Lines of credit	$	1,103,190
Letters of credit		40,959
Construction undisbursed funds		70,433
Total commercial commitments	$	1,214,582
(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’s 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 pipeline of loan originations, 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, which 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 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, 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 March 31, 2018 interest rate curves remain constant. Then, net interest income is estimated under rising and falling rate scenarios. For the rising rate scenario, a gradual (ramp) parallel upward shift of the yield curve is assumed during the first 12 months (the “+200 ramp” scenario). Conversely, for the falling rate scenario, a gradual (ramp) parallel downward shift of the yield curve is assumed during the first 12 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 March 2018, as compared to December 2017, reflected a 54 basis points increase in the short-term horizon, between 1 to 12 months, while market rates increased by 48 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 increased by 38 basis points, causing a more flattened yield curve. The U.S. Treasury curve in the short-term increased by 36 basis points and in the medium-term horizon increased by 39 basis points, as compared to the December 2017 end of month levels. The long-term horizon increased by 28 basis points as compared to December 2017 end-of-month levels.

The following table presents the results of the simulations as of March 31, 2018 and December 31, 2017.  Consistent with prior years, these exclude non-cash changes in the fair value of derivatives:
	March 31, 2018								December 31, 2017
	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	$	18.2	3.54	%	$	18.1	3.41	%	$	18.0	3.55	%	$	17.5	3.42	%
- 200 bps ramp	$	(16.7)	(3.24)	%	$	(19.4)	(3.65)	%	$	(14.6)	(2.89)	%	$	(17.7)	(3.47)	%

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The Corporation continues to manage its balance sheet structure to control the overall interest rate risk. As of March 31, 2018, the simulations showed that the Corporation maintains an asset-sensitive position.  The Corporation has continued repositioning the balance sheet and improving the funding mix, driven by an increase in the average balance of non-interest bearing deposits and reductions in brokered certificates of deposits, short-term repurchase agreements and other borrowings.  The above-mentioned growth in non-interest bearing deposits, along with proceeds from US agency mortgage-backed securities and loan repayments, has helped the Corporation continue to maintain high liquidity levels.

Taking into consideration the above-mentioned facts for modeling purposes, the net interest income for the next 12 months under a non-static balance sheet scenario is estimated to increase by $18.1 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 $19.4 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 MBS 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 consolidated statement of financial condition and the amount of gains and losses reported in the consolidated statement of income, refer to Note 11 in the accompanying unaudited consolidated financial statements.

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
	Quarter Ended		Quarter Ended
(In thousands)	March 31, 2018		March 31, 2018
Fair value of contracts outstanding at the beginning
of the period	$	312	$	(324)
Changes in fair value during the period		359		(411)
Fair value of contracts outstanding as of March 31, 2018	$	671	$	(735)

	Sources of Fair Value
		Payment Due by Period
					Maturity 1-3 Years		Maturity 3-5 Years		Maturity in Excess of 5 Years		Total Fair Value
		Maturity
(In thousands)		Less Than One Year
As of March 31, 2018
Pricing from observable market inputs -
Asset Derivatives			$	3	$	668	$	-	$	-	$	671
Pricing from observable market inputs -
Liability Derivatives				(67)		(668)		-		-		(735)
			$	(64)	$	-	$	-	$	-	$	(64)

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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 expectations for rates in the future.

As of March 31, 2018 and December 31, 2017, all of the derivative instruments held by the Corporation were considered undesignated economic 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 21 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 made by the Bank. 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 commercial and industrial (“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.

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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 is determined by empirical analysis and judgments regarding the quality of each individual loan portfolio. All known relevant internal and external factors that affect loan collectability are 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.

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.

Hurricanes Maria and Irma caused widespread property damage, flooding, power outages, and water and communication services interruptions, and severely disrupted normal economic activity in the affected areas.  Damages associated with these hurricane-related events have had and will continue to have significant short-term economic repercussions, both positive and negative, for the Corporation’s commercial and individual loan customers in the most severely affected parts of Puerto Rico and the Virgin Islands.  While these events have affected certain quality metrics, including higher non-performing assets, the hurricanes’ ultimate effect on loan collections is uncertain.  The methodologies used by the Corporation to determine the hurricane-related qualitative estimate and for the review of individual large commercial credits are discussed in detail in Note 1, “Nature of Business and Summary of Significant Accounting Policies,” in the audited consolidated financial statements for the year ended December 31, 2017, which are included in the Corporation’s 2017 Annual Report on Form 10-K.  With the ongoing collection of information on individual commercial customers and statistics on the consumer and residential loan portfolios, the loss estimate will be revised as needed.

The ratio of the allowance for loan and lease losses to total loans held for investment remained relatively flat at 2.60% as of March 31, 2018, compared to 2.62% as of December 31, 2017. The change for each portfolio follows:

·The allowance to total loans ratio for the residential mortgage portfolio decreased from 1.79% as of December 31, 2017 to 1.73% as of March 31, 2018, primarily due to lower delinquency levels reflecting the effect of clients that resumed their payments after the expiration of the three-month payment deferral program.

·The allowance to total loans ratio for the commercial mortgage portfolio increased from 3.00% as of December 31, 2017 to 3.25% as of March 31, 2018, driven by the effect of the downgrade of a $46.8 million loans in Florida. 

·The allowance to total loans for the C&I portfolio decreased from 2.35% as of December 31, 2017 to 2.31% as of March 31, 2018, reflecting the effect of a $3.8 million net loan loss reserve release related to revised estimates of the reserve associated with the effects of Hurricanes Maria and Irma, primarily due to updated assessments about the performance and repayment prospects of certain individually assessed commercial loans. 

·The allowance to total loans for the construction loan portfolio increased from 4.06% as of December 31, 2017 to 5.21% as of March 31, 2018, primarily due to the effect of the aforementioned transfer of loans to held for sale, including the transfer to held for sale of a $30.0 million construction loan in the Virgin Islands.

·The allowance to total loans for the consumer loan portfolio decreased from 4.06% as of December 31, 2017 to 3.88% as of March 31, 2018, reflecting the effect of a $2.0 million release of the hurricane-related qualitative reserve resulting from payments received during the first quarter that reduced the balance of the consumer loan portfolio outstanding on the dates of the hurricanes.

The ratio of the total allowance to non-performing loans held for investment was 54.82% as of March 31, 2018 compared to 47.36% as of December 31, 2017, reflecting the effect of the aforementioned transfer to held for sale of non-performing commercial and construction loans totaling $57.2 million.   

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. and British Virgin Islands or the U.S. mainland (mainly in the state of Florida), the performance of the

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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 driven by the loss of income due to higher unemployment, reduced demand and general adverse economic conditions that were exacerbated by the effect of Hurricanes Maria and Irma. The Corporation sets adequate loan-to-value ratios following its regulatory and credit policy standards.

As shown in the following table, the allowance for loan and lease losses amounted to $225.9 million as of March 31, 2018, or 2.60% of total loans, compared with $231.8 million, or 2.62% of total loans, as of December 31, 2017. Refer to Provision for Loan and Lease Losses above for additional information.

		Quarter Ended March 31
(Dollars in thousands)		2018			2017
Allowance for loan and lease losses, beginning of period		$	231,843		$	205,603
Provision (release) for loan and lease losses:
Residential Mortgage (1)			447			9,271
Commercial Mortgage (2)			8,661			12,539
Commercial and Industrial (3)			656			(4,806)
Construction (4)			4,764			942
Consumer and Finance Leases (5)			6,016			7,496
Total provision for loan and lease losses (6)			20,544			25,442
Charge-offs
Residential Mortgage			(3,371)			(8,225)
Commercial Mortgage (7)			(6,810)			(1,362)
Commercial and Industrial (8)			(1,930)			(12,052)
Construction (9)			(5,177)			(63)
Consumer and Finance Leases			(12,072)			(11,192)
Total charge offs (10)			(29,360)			(32,894)
Recoveries:
Residential Mortgage			335			749
Commercial Mortgage			49			30
Commercial and Industrial			62			875
Construction			13			445
Consumer and Finance Leases			2,370			2,981
Total recoveries			2,829			5,080
Net Charge-Offs			(26,531)			(27,814)
Allowance for loan and lease losses, end of period		$	225,856		$	203,231
Allowance for loan and lease losses to period end total loans held for investment			2.60	%		2.30	%
Allowance for loan and lease losses, excluding the $62.1 million hurricane-related allowance, to period
	end total loans held for investment (11)		1.88	%		2.30	%
Net charge-offs (annualized) to average loans outstanding during the period			1.21	%		1.26	%
Net charge-offs (annualized), excluding charge-offs of $9.7 million related to loans transferred to held
	for sale in the first quarter of 2018 and the charge-off of $10.7 million related to the sale of the
	PREPA credit line in the first quarter of 2017, to average loans outstanding during the period (11)		0.77	%		0.78	%
Provision for loan and lease losses to net charge-offs during the period			0.77	x		0.91	x
Provision for loan and lease losses to net charge-offs during period, excluding the effect of the
	hurricane-related reserve release and loans transferred to held for sale in the first quarter of 2018,
	and the effect of the sale of the PREPA credit line in the first quarter of 2017 (11)		1.26	x		1.46	x
____________________
(1)	Net of a $0.1 million net loan loss reserve release for the first quarter of 2018 associated with the effects of Hurricanes Maria and Irma.
(2)	Net of a $0.2 million net loan loss reserve release for the first quarter of 2018 associated with the revised estimates of the effects of Hurricanes Maria and Irma. Includes a provision of $1.1 million associated with $27.2 million in non-performing commercial mortgage loans transferred to held for sale in the first quarter of 2018.
(3)	Net of a $3.8 million net loan loss reserve release for the first quarter of 2018 associated with revised estimates of the effects of Hurricanes Maria and Irma. Includes a provision of $0.6 million associated with the sale of the PREPA credit line in the first quarter of 2017.
(4)	Net of a $0.2 million net loan loss reserve release for the first quarter of 2018 associated with the revised estimates of the effects of Hurricanes Maria and Irma. Includes a provision of $4.5 million associated with a $30.0 million non-performing construction loan transferred to held for sale in the first quarter of 2018.
(5)	Net of a $2.0 million net loan loss reserve release for the first quarter of 2018 associated with revised estimates of the effects of Hurricanes Maria and Irma.
(6)	Net of a $6.4 million net loan loss reserve release for the first quarter of 2018 associated with revised estimates of the effects of Hurricanes Maria and Irma. Includes a provision of $5.6 million associated with $57.2 million in non-performing loans transferred to held for sale in the first quarter of 2018. Includes a provision of $0.6 million associated with the sale of the PREPA credit line in the first quarter of 2017.
(7)	Includes charge-offs totaling $4.6 million associated with $27.2 million in non-performing commercial mortgage loans transferred to held for sale in the first quarter of 2018.
(8)	Includes a charge-off of $10.7 million associated with the sale of the PREPA credit line in the first quarter of 2017.
(9)	Includes a charge-off of $5.1 million associated with a $30.0 million non-performing construction loan transferred to held for sale in the first quarter of 2018.
(10)	Includes charge-offs totaling $9.7 million associated with $57.2 million in non-performing loans transferred to held for sale in the first quarter of 2018. Includes a charge-off of $10.7 million associated with the sale of the PREPA credit line in the first quarter of 2017.
(11)	Non-GAAP financial measures, refer to Basis of Presentation below for a reconciliation of these measures.

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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
	March 31, 2018					December 31, 2017
(In thousands)	Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans
Residential mortgage loans	$	56,386		37	%	$	58,975		37	%
Commercial mortgage loans		50,393		18	%		48,493		18	%
Construction loans		4,122		1	%		4,522		1	%
Commercial and Industrial loans		47,659		24	%		48,871		24	%
Consumer loans and finance leases		67,296		20	%		70,982		20	%
	$	225,856		100	%	$	231,843		100	%

During the first quarter of 2018, the Corporation implemented enhancements to the methodology behind the calculation of the allowance for commercial loans, which includes, among others,  the following: (i) a revised procedure to determine the historical loss rates applicable for each commercial loan regulatory-based credit risk categories (i.e., pass, special mention, substandard and doubtful) that changed the previous blending of loss rates for loans risk-rated special mention, substandard and doubtful with an aggregation methodology whereas historical losses and portfolio balances of special mention loans are allocated to pass or substandard categories based on the historical proportion of the loans in this risk category that ultimate cured or resulted uncollectible;  (ii) a quarterly sensitivity analysis using actual historical loss rates for loans risk-rated pass, special mention and substandard to compare the results of such sensitivity to the calculated reserves under the revised procedure, and  (iii) establishment of sensitivity thresholds that could trigger further reviews and/or adjustments prior to reaching a conclusion as to the adequacy of the allowance for loan and lease losses for the Corporation’s commercial portfolios.

The comparison of the revised procedure with the sensitivity analysis resulted in an immaterial increase to the qualitative reserve for commercial mortgage loans that was recorded as of March 31, 2018. The Corporation engaged an independent third party to assess the allowance framework and the appropriateness of assumptions used in the analysis and expects such review to be completed during the second quarter of 2018.

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The following table sets forth information concerning the composition of the Corporation's allowance for loan and lease losses as of March 31, 2018 and December 31, 2017 by loan category and by whether the allowance and related provisions were calculated individually or through a general valuation allowance.
As of March 31, 2018	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	$	94,817		$	60,811		$	24,712		$	-		$	2,653		$	182,993
Impaired loans with specific reserves:
Principal balance of loans, net of charge-offs		322,793			101,315			95,066			12,067			32,046			563,287
Allowance for loan and lease losses		22,546			13,451			14,375			1,484			5,074			56,930
Allowance for loan and lease losses to principal
balance		6.98	%		13.28	%		15.12	%		12.30	%		15.83	%		10.11	%
PCI loans:
Carrying value of PCI loans		151,067			4,214			-			-			-			155,281
Allowance for PCI loans		10,873			378			-			-			-			11,251
Allowance for PCI loans to carrying value		7.20	%		8.97	%		-			-			-			7.25	%
Loans with general allowance:
Principal balance of loans		2,699,191			1,386,163			1,941,995			67,083			1,699,897			7,794,329
Allowance for loan and lease losses		22,967			36,564			33,284			2,638			62,222			157,675
Allowance for loan and lease losses to principal
balance		0.85	%		2.64	%		1.71	%		3.93	%		3.66	%		2.02	%
Total loans held for investment:
Principal balance of loans	$	3,267,868		$	1,552,503		$	2,061,773		$	79,150		$	1,734,596		$	8,695,890
Allowance for loan and lease losses		56,386			50,393			47,659			4,122			67,296			225,856
Allowance for loan and lease losses to principal
balance (1)		1.73	%		3.25	%		2.31	%		5.21	%		3.88	%		2.60	%

		Residential Mortgage Loans			Commercial Mortgage Loans									Consumer and Finance Leases
											Construction Loans
(Dollars in thousands)								C&I Loans									Total
As of December 31, 2017
Impaired loans without specific reserves:
Principal balance of loans, net of charge-offs		$	116,818		$	65,100		$	28,292		$	48		$	2,788		$	213,046
Impaired loans with specific reserves:
Principal balance of loans, net of charge-offs			316,616			87,814			90,008			47,218			35,606			577,262
Allowance for loan and lease losses			22,086			9,783			12,359			2,017			5,165			51,410
Allowance for loan and lease losses to principal
balance			6.98	%		11.14	%		13.73	%		4.27	%		14.51	%		8.91	%
PCI loans:
Carrying value of PCI loans			153,991			4,183			-			-			-			158,174
Allowance for PCI loans			10,873			378			-			-			-			11,251
Allowance for PCI loans to carrying value			7.06	%		9.04	%		-			-			-			7.11	%
Loans with general allowance:
Principal balance of loans			2,703,532			1,457,875			1,964,953			64,131			1,711,503			7,901,994
Allowance for loan and lease losses			26,016			38,332			36,512			2,505			65,817			169,182
Allowance for loan and lease losses to principal
balance			0.96	%		2.63	%		1.86	%		3.91	%		3.85	%		2.14	%
Total loans held for investment:
Principal balance of loans		$	3,290,957		$	1,614,972		$	2,083,253		$	111,397		$	1,749,897		$	8,850,476
Allowance for loan and lease losses			58,975			48,493			48,871			4,522			70,982			231,843
Allowance for loan and lease losses to principal
balance (1)			1.79	%		3.00	%		2.35	%		4.06	%		4.06	%		2.62	%
__________
(1)	Loans used in the denominator include PCI loans of $155.3 million and $158.2 million as of March 31, 2018 and December 31, 2017, respectively. However, the Corporation separately tracks and reports PCI loans and excludes these loans from the amounts of non-performing loans, impaired loans, TDRs and non-performing assets.

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The following tables show the activity for impaired loans held for investment and the related specific reserve during the first quarter of 2018 and 2017:
			Quarter Ended
		March 31, 2018		March 31, 2017
		(In thousands)
	Impaired Loans:
	Balance at beginning of period	$	790,308	$	887,905
	Loans determined impaired during the period		61,408		19,628
	Charge-offs (1) (2)		(17,213)		(17,404)
	Loans sold, net of charge-offs		(4,121)		(53,245)
	Increases to existing impaired loans		6,998		541
	Foreclosures		(11,675)		(9,457)
	Loans no longer considered impaired		(1,507)		(892)
	Loans transferred to held for sale		(57,213)		-
	Paid in full or partial payments		(20,705)		(19,878)
	Balance at end of period	$	746,280	$	807,198
(1)	The first quarter of 2018 includes charge-offs totaling $9.7 million associated with the $57.2 million in non-performing loans transferred to held for sale.
(2)	The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line.
			Quarter Ended
		(In thousands)
	Specific Reserve:
	Balance at beginning of period	$	51,410	$	64,421
	Provision for loan losses		22,702		19,294
	Net charge-offs		(17,183)		(17,404)
	Balance at end of period	$	56,929	$	66,311

In addition, as of March 31, 2018, the Corporation maintained a $0.6 million reserve for unfunded loan commitments, mainly related to outstanding commitments on floor plan revolving lines of credit. 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. The reserve for unfunded loan commitments is included as part of accounts payable and other liabilities in the consolidated statement of financial condition and any change to the reserve is included as part of other non-interest expenses in the consolidated statement of income.

Non-performing Loans and Non-performing Assets

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 and 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.

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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. Therefore, the Corporation separately tracks and reports PCI loans and excludes these from the amounts of non-performing loans, impaired loans, TDR loans, 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 (the carrying value of the loan) or fair value less estimated costs to sell off the real estate. Appraisals are obtained periodically, but 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.

Past-Due Loans 90 days and still accruing

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 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.

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The following table presents non-performing assets as of the dates indicated:
		March 31,			December 31,
(Dollars in thousands)		2018			2017
Non-performing loans held for investment:
Residential mortgage		$	171,380		$	178,291
Commercial mortgage (1)			115,179			156,493
Commercial and Industrial			85,325			85,839
Construction (1)			16,236			52,113
Finance leases			1,801			1,237
Consumer			22,056			15,581
Total non-performing loans held for investment (1)		$	411,977		$	489,554
OREO			154,639			147,940
Other repossessed property			5,646			4,802
Total non-performing assets, excluding loans held for sale		$	572,262		$	642,296
Non-performing loans held for sale (1)			64,945			8,290
Total non-performing assets, including loans held for sale (2)(3)		$	637,207		$	650,586
Past due loans 90 days and still accruing (4)(5)		$	163,045		$	160,725
Non-performing assets to total assets			5.22	%		5.31	%
Non-performing loans held for investment to total loans held for investment			4.74	%		5.53	%
Allowance for loan and lease losses		$	225,856		$	231,843
Allowance to total non-performing loans held for investment (6)			54.82	%		47.36	%
Allowance to total non-performing loans held for investment,
excluding residential real estate loans (7)			93.87	%		74.48	%
___________
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).
(2)	Purchased credit impaired loans accounted for under ASC 310-30 of $155.3 million and $158.2 million as of March 31, 2018 and December 31, 2017, 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 $366.4 million and $374.7 million of TDR loans that were in compliance with the modified terms and in accrual status as of March 31, 2018 and December 31, 2017, 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 $30.6 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 March 31, 2018.
(5)	Amounts include purchased credit impaired loans with individual delinquencies over 90 days and still accruing with a carrying value as of March 31, 2018 and December 31, 2017 of approximately $30.3 million and $29.3 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.
(6)	The ratio of the allowance for loan and lease losses to non-performing loans held for investment, excluding the hurricane-related allowance, was 39.74% and 33.39% as of March 31, 2018 and December 31, 2017, respectively.
(7)	The ratio of the allowance for loan and lease losses to non-performing loans held for investment, excluding the residential real estate and the hurricane-related allowance, was 68.05% and 52.52% as of March 31, 2018 and December 31, 2017, respectively.

118

The following table shows non-performing assets by geographic segment:
		March 31,		December 31,
(Dollars in thousands)		2018		2017
Puerto Rico:
Non-performing loans held for investment:
Residential mortgage		$	141,432	$	147,852
Commercial mortgage (1)			89,575		128,232
Commercial and Industrial			78,913		79,809
Construction			14,458		14,506
Finance leases			1,801		1,237
Consumer			20,985		14,885
Total non-performing loans held for investment			347,164		386,521
OREO			146,128		140,063
Other repossessed property			5,501		4,723
Total non-performing assets, excluding loans held for sale		$	498,793	$	531,307
Non-performing loans held for sale (1)			34,945		8,290
Total non-performing assets, including loans held for sale (2)		$	533,738	$	539,597
Past due loans 90 days and still accruing  (3)		$	161,281	$	151,724
Virgin Islands:
Non-performing loans held for investment:
Residential mortgage		$	19,004	$	22,110
Commercial mortgage			22,973		25,309
Commercial and Industrial			6,412		6,030
Construction (4)			1,778		37,607
Consumer			729		281
Total non-performing loans held for investment			50,896		91,337
OREO			7,015		6,306
Other repossessed property			32		26
Total non-performing assets, excluding loans held for sale		$	57,943	$	97,669
Non-performing loans held for sale (4)			30,000		-
Total non-performing assets, including loans held for sale		$	87,943	$	97,669
Past due loans 90 days and still accruing		$	1,764	$	9,001
United States:
Non-performing loans held for investment:
Residential mortgage		$	10,944	$	8,329
Commercial mortgage			2,631		2,952
Consumer			342		415
Total non-performing loans held for investment			13,917		11,696
OREO			1,496		1,571
Other repossessed property			113		53
Total non-performing assets		$	15,526	$	13,320
Past due loans 90 days and still accruing		$	-	$	-
(1)	During the first quarter of 2018, the Corporation transferred two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million) to held for sale.
(2)	Purchased credit impaired loans accounted for under ASC 310-30 of $155.3 million and $158.2 million as of March 31, 2018 and December 31, 2017, 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 purchased credit impaired loans with individual delinquencies over 90 days and still accruing with a carrying value as of  March 31, 2018  and December 31, 2017 of approximately $30.3 million and $29.3 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.
(4)	During the first quarter of 2018, the Corporation transferred a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) to held for sale.

119

     Total non-performing loans, including non-performing loans held for sale, were $476.9 million as of March 31, 2018. This represents a decrease of $20.9 million from $497.8 million as of December 31, 2017. The decrease in non-performing loans was primarily attributable to the charge-offs totaling $11.4 million taken on four commercial and construction loans, including $9.7 million associated with the aforementioned loans transferred to held-for-sale during the first quarter, and payments totaling $4.0 million received in the first quarter of 2018 that reduced the outstanding balance of non-performing commercial mortgage loans that were previously guaranteed by the TDF.   

    Non-performing commercial mortgage loans, including loans held for sale, decreased by $14.1 million to $142.4 million as of March 31, 2018 from $156.5 million as of December 31, 2017. The decrease was primarily related to charge-offs totaling $6.3 million taken on three commercial mortgage loans in Puerto Rico, including $4.6 million related to $27.2 million in loans transferred to held for sale in the first quarter of 2018, the aforementioned payments totaling $4.0 million received in the first quarter that reduced the outstanding balance of non-performing commercial mortgage loans that were previously guaranteed by the TDF, and a $1.6 million loan brought current and restored to accrual status in the Virgin Islands.  Total inflows of non-performing commercial mortgage loans were $3.6 million during the first quarter of 2018 compared to $0.9 million for the same period in 2017. 

     Non-performing C&I loans decreased by $0.5 million to $85.3 million as of March 31, 2018 from $85.8 million as of December 31, 2017. Total inflows of non-performing C&I loans were $2.8 million for the quarter ended March 31, 2018, compared to $1.4 million for the same quarter in 2017. 

Non-performing construction loans, including non-performing construction loans held for sale, decreased by $6.4 million to $54.0 million as of March 31, 2018 from $60.4 million as of December 31, 2017, mainly due to the $5.1 million charge-off taken on the $30.0 million non-performing construction loan transferred to held for sale in the Virgin Islands, and a $0.6 million write-down to the fair value of another construction loan held for sale in Puerto Rico.  The inflows of non-performing construction loans during the first quarter of 2018 amounted to $0.2 million compared to inflows of $0.5 million for the same period in 2017.

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 March 31, 2018
Beginning balance		$	156,493	$	85,839	$	52,113		294,445
Plus:
	Additions to non-performing		3,568		2,772		196		6,536
Less:
	Loans returned to accrual status		(3,151)		-		-		(3,151)
	Non-performing loans transferred to OREO		(1,456)		(1,133)		(58)		(2,647)
	Non-performing loans charged-off		(6,810)		(531)		(5,177)		(12,518)
	Loan collections		(6,251)		(1,622)		(57)		(7,930)
	Reclassification		-		-		(781)		(781)
	Loans transferred to loans held for sale, net of charge-offs		(27,214)		-		(30,000)		(57,214)
Ending balance		$	115,179	$	85,325	$	16,236	$	216,740

120

		Commercial Mortgage		Commercial & Industrial		Construction			Total
(In thousands)
Quarter ended March 31, 2017
Beginning balance		$	178,696	$	146,599	$	49,852		375,147
Plus:
	Additions to non-performing		905		1,389		457		2,751
Less:
	Loans returned to accrual status		(473)		(812)		-		(1,285)
	Non-performing loans transferred to OREO		(531)		(457)		(162)		(1,150)
	Non-performing loans charged-off		(1,107)		(11,975)		(60)		(13,142)
	Loan collections		(2,829)		(3,527)		(1,619)		(7,975)
	Reclassification		247		-		-		247
	Non-performing loans sold, net of charge-off		-		(53,245)		-		(53,245)
Ending balance		$	174,908	$	77,972	$	48,468	$	301,348

The following tables present the activity of commercial and construction non-performing loans held for sale:
		Commercial Mortgage		Construction			Total
(In thousands)
Quarter ended March 31, 2018
Beginning balance		$	-	$	8,079	$	8,079
Plus:
	Loans transferred from held for investment		27,213		30,000		57,213
Less:
	Lower of cost or market adjustment		-		(558)		(558)
Ending balance		$	27,213	$	37,521	$	64,734

    Total non-performing commercial and construction loans, including non-performing loans held for sale, with a book value of $281.7 million as of March 31, 2018 are being carried (net of reserves and accumulated charge-offs) at 49.0% of unpaid principal balance. 

Non-performing residential mortgage loans decreased by $6.9 million to $171.4 as of March 31, 2018 from $178.3 million as of December 31, 2017. The decrease was driven by loans transferred to the OREO portfolio, loans brought current, and charge-offs recorded during the first quarter, partially offset by inflows of loans that already had delinquent payments before the hurricanes and failed to resume their payments after the expiration of the three-month payments deferral programs.

121

	The following table presents the activity of residential non-performing loans held for investment:
		Quarters Ended
(In thousands)		March 31, 2018		March 31, 2017
Beginning balance		$	178,291	$	160,867
Plus:
Additions to non-performing			26,961		22,848
Less:
Loans returned to accrual status			(19,121)		(12,150)
Non-performing loans transferred to OREO			(10,129)		(9,551)
Non-performing loans charged-off			(2,800)		(4,452)
Loan collections			(2,603)		(2,422)
Reclassification			781		(247)
Ending balance		$	171,380	$	154,893

The amount of non-performing consumer loans, including finance leases, increased by $7.0 million during the first quarter of 2018 to $23.9 million compared to $16.8 million as of December 31, 2017.  The increase was mainly related to inflows of loans that already had delinquent payments before the hurricanes and failed to resume their payments after the expiration of the three-month payment deferral program.  The inflows of non-performing consumer loans during the first quarter of 2018 were $16.3 million, an increase of $8.5 million, compared to inflows of $7.8 million for the same period in 2017.

As of March 31, 2018, approximately $83.3 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 $53.2 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 quarter ended March 31, 2018, interest income of approximately $1.5 million related to non-performing loans with a carrying value of $281.9 million as of March 31, 2018, mainly non-performing construction and commercial loans, was applied against the related principal balances under the cost-recovery method.

122

As of March 31, 2018, approximately $74.6 million, or 18.1% 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 March 31, 2018
Non-performing loans held for investment
charged-off to realizable value	$	56,696		$	13,816		$	3,305		$	-		$	811		$	74,628
Other non-performing loans held
for investment		114,684			101,363			82,020			16,236			23,046			337,349
Total non-performing loans held
for investment	$	171,380		$	115,179		$	85,325		$	16,236		$	23,857		$	411,977
Allowance to non-performing loans held for
investments		32.90	%		43.75	%		55.86	%		25.39	%		282.08	%		54.82	%
Allowance to non-performing loans held for
investments, excluding non-performing loans
charged-off to realizable value		49.17	%		49.72	%		58.11	%		25.39	%		292.01	%		66.95	%
As of December 31, 2017
Non-performing loans held for investment
charged-off to realizable value	$	76,668		$	60,680		$	6,872		$	48		$	843		$	145,111
Other non-performing loans held
for investment		101,623			95,813			78,967			52,065			15,975			344,443
Total non-performing loans held
for investment	$	178,291		$	156,493		$	85,839		$	52,113		$	16,818		$	489,554
Allowance to non-performing loans held for
investments		33.08	%		30.99	%		56.93	%		8.68	%		422.06	%		47.36	%
Allowance to non-performing loans held for
investments, excluding non-performing loans
charged-off to realizable value		58.03	%		50.61	%		61.89	%		8.69	%		444.33	%		67.31	%

123

Total loans in early delinquency (i.e., 30-89 days past due loans, as defined in regulatory report instructions) amounted to $202.5 million as of March 31, 2018, a decrease of $42.2 million compared to $244.7 million as of December 31, 2017.  The variances by major portfolio categories follow:

·Consumer loans in early delinquency decreased in the first quarter by $44.5 million to $66.7 million as of March 31, 2018 from $111.2 million as of December 31, 2017, and residential mortgage loans in early delinquency decreased in the first quarter by $46.4 million to $69.5 million as of March 31, 2018 from $115.9 million as of December 31, 2017. These variances reflect a combination of clients that resumed their payments after the expiration of the three-month payment deferral programs and loans classified as non-performing during the first quarter.  When compared to pre-hurricane levels, consumer loans in early delinquency decreased by $16.2 million to $66.7 million as of March 31, 2018 from $82.9 million as of June 30, 2017, and residential mortgage loans in early delinquency decreased by $35.2 million to $69.5 million as of March 31, 2018 from $104.7 million as of June 30, 2017. 

·Commercial and construction loans in early delinquency increased in the first quarter by $48.7 million to $66.4 million as of March 31, 2018 from $17.7 million as of December 31, 2017, primarily related to the aforementioned $46.8 million commercial mortgage loan adversely classified in the Florida region during the first quarter of 2018.  When compared to pre-hurricane levels, commercial and construction loans in early delinquency increased by $60.4 million to $66.4 million as of March 31, 2018 from $6.0 million as of June 30, 2017.

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, among others, the extension of the maturity of the loan and modifications of the loan rate. Refer to Note 7, “Loans Held for Investment,” to the accompanying consolidated financial statements for additional information and statistics about the Corporation’s TDR loans.  

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 loans had demonstrated performance prior to the restructuring and payment in full under the restructured terms is expected. Otherwise, loans 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 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.

124

The following table provides a breakdown between the accrual and nonaccrual TDRs:
(In thousands)		As of March 31, 2018
		Accrual		Non-accrual (1)(2)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	272,659	$	77,321	$	349,980
Commercial Mortgage loans			24,010		61,824		85,834
Commercial and Industrial loans			43,251		53,014		96,265
Construction loans (2)			1,197		5,398		6,595
Consumer loans - Auto			14,082		6,729		20,811
Finance leases			1,653		223		1,876
Consumer loans - Other			9,570		1,445		11,015
Total Troubled Debt Restructurings		$	366,422	$	205,954	$	572,376
(1)	Included in non-accrual loans are $53.2 million in loans that were 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)	Excludes a $30.0 million non-performing construction loans transferred to held for sale during the first quarter of 2018.

The OREO portfolio, which is part of non-performing assets, increased by $6.7 million to $154.7 million as of March 31, 2018 from $147.9 million as of December 31, 2017. The following tables show the composition of the OREO portfolio as of March 31, 2018 and December 31, 2017, as well as the activity during the quarter ended March 31, 2018 of the OREO portfolio by geographic region:

OREO Composition by Region
(In thousands)	As of March 31, 2018
	Puerto Rico		Virgin Islands		Florida			Consolidated
Residential	$	57,652	$	1,223	$	1,365	$	60,240
Commercial		78,853		4,926		132		83,911
Construction		9,623		865		-		10,488
	$	146,128	$	7,014	$	1,497	$	154,639
(In thousands)	As of December 31, 2017
	Puerto Rico		Virgin Islands		Florida			Consolidated
Residential	$	52,427	$	514	$	1,440	$	54,381
Commercial		77,812		4,927		132		82,871
Construction		9,823		865		-		10,688
	$	140,062	$	6,306	$	1,572	$	147,940
OREO Activity by Region
(In thousands)	As of March 31, 2018
	Puerto Rico		Virgin Islands		Florida			Consolidated
Beginning Balance	$	140,062	$	6,306	$	1,572	$	147,940
Additions		15,073		708		85		15,866
Sales		(8,103)		-		(160)		(8,263)
Fair value adjustments		(904)		-		-		(904)
Ending Balance	$	146,128	$	7,014	$	1,497	$	154,639

125

Net Charge-offs and Total Credit Losses

Net charge-offs totaled $26.5 million for the first quarter of 2018, or 1.21% of average loans on an annualized basis, compared to $27.8 million, or 1.26% of average loans for the same period in 2017.  Net charge-offs for the first quarter of 2018 included charge-offs totaling $9.7 million associated with the $57.2 million in non-performing commercial and construction loans transferred to held for sale.  For the first quarter of 2017, net charge-offs included a $10.7 million charge-off related to the sale of the PREPA credit line.  Excluding the charge offs related to the loans transferred to held for sale in the first quarter of 2018 and the charge-off related to the sale of the PREPA credit line, total adjusted net charge-offs for the first quarter of 2018 were $16.9 million, or 0.77% of average loans on an annualized basis, compared to adjusted net charge-offs of $17.1 million, 0.78% of average loans for the first quarter of 2017.

 Commercial mortgage loans net charge-offs in the first quarter of 2018 were $6.8 million, or an annualized 1.69% of average commercial mortgage loans, compared to $1.3 million, or an annualized 0.33% of average loans, for the first quarter of 2017.  Commercial mortgage loans net charge-offs for the first quarter of 2018 included $4.6 million associated with $27.2 million in non-performing loans transferred to held for sale.  Excluding the effect of the loans transferred to held for sale, adjusted commercial mortgage loans net charge-offs for the first quarter of 2018 were $2.2 million.  The increase, as compared to the first quarter of 2017, was primarily related to a commercial relationship in Puerto Rico.

 Construction loans net charge-offs in the first quarter of 2018 were $5.2 million, or an annualized 17.37% of related average loans, compared to net recoveries of $0.4 million for the first quarter of 2017. The variance was primarily related to the $5.1 million charge-off recorded on the $30.0 million non-performing loan transferred to held for sale in the Virgin Islands.

Commercial and industrial loans net charge-offs in the first quarter of 2018 totaled $1.9 million, or an annualized 0.36% of related average loans, compared to $11.2 million, or an annualized 2.07%, for the first quarter of 2017.   For the first quarter of 2017, commercial and industrial net charge-offs included a $10.7 million charge-off related to the sale of the PREPA credit line.

Residential mortgage loans net charge-offs in the first quarter of 2018 were $3.0 million, or an annualized 0.38% of related average loans, compared to $7.5 million, or an annualized 0.92% of related average loans, for the first quarter of 2017. Approximately $2.4  million in charge-offs for the first quarter of 2018 resulted from valuations for impairment purposes of residential mortgage loans considered homogeneous given high delinquency and loan-to-value levels, compared to $3.7 million for the first quarter of 2017. Net charge-offs on residential mortgage loans also included $0.7 million related to foreclosures, compared to $3.0 million in the first quarter of 2017.

Net charge-offs of consumer loans and finance leases in the first quarter of 2018 were $9.7 million, or an annualized 2.22% of related average loans, compared to $8.2 million, or an annualized 1.92% of average loans, in the first quarter of 2017.  The increase primarily reflects the effect of the loan loss recovery of $1.2 million recorded in the first quarter of 2017 on the sale of certain credit card loans that had been fully charged off in prior periods.

The following table presents annualized net charge-offs to average loans held-in-portfolio:
		Quarter Ended
		March 31, 2018		March 31, 2017
Residential mortgage		0.38	%	0.92	%
Commercial mortgage (1)		1.69	%	0.33	%
Commercial and industrial (2)		0.36	%	2.07	%
Construction (3) (4)		17.37	%	(1.17)	%
Consumer and finance leases		2.22	%	1.92	%
Total loans (5) (6)		1.21	%	1.26	%
_______________
(1)	Includes net charge-offs totaling $4.6 million associated with $27.2 million in non-performing commercial mortgage loans transferred to held for sale in the first quarter of 2018. The ratio of commercial mortgage net charge-offs to average loans, excluding the charge-offs associated with commercial mortgage loans transferred to held for sale, was 0.55% for the first quarter of 2018.
(2)	Includes a charge-off of $10.7 million associated with the sale of the PREPA credit line in the first quarter of 2017. The ratio of commercial and industrial net charge-offs to average loans, excluding the charge-off associated with the sale of the PREPA credit line, was 0.08% for the first quarter of 2017.
(3)	Includes a charge-off of $5.1 million associated with a $30.0 million non-performing construction loan transferred to held for sale in the first quarter of 2018. The ratio of construction net charge-offs to average loans, excluding the charge-off associated with the construction loan transferred to held for sale, was 0.22% for the first quarter of 2018.
(4)	For the first quarter of 2017, recoveries in construction loans exceeded charge-offs.
(5)	Includes net charge-offs totaling $9.7 million associated with $57.2 million in non-performing loans transferred to held for sale in the first quarter of 2018. The ratio of total loans net charge-offs to average loans, excluding charge-offs associated with loans transferred to held for sale, was 0.77% for the first quarter of 2018.
(6)	Includes a charge-off of $10.7 million associated with the sale of the PREPA credit line in the first quarter of 2017. The ratio of total net charge-offs to average loans, excluding the charge-off associated with the sale of the PREPA credit line, was 0.78% in the first quarter of 2017.

126

The following table presents net charge-offs (or recoveries) to average loans held in various portfolios by geographic segment:
		Quarter Ended
		March 31,		March 31,
		2018		2017
PUERTO RICO:
	Residential mortgage	0.43	%	1.19	%
	Commercial mortgage (1)	2.45	%	0.46	%
	Commercial and Industrial (2)	0.52	%	2.86	%
	Construction	0.62	%	0.52	%
	Consumer and finance leases	2.25	%	1.96	%
	Total loans (3)	1.25	%	1.62	%
VIRGIN ISLANDS:
	Residential mortgage	0.73	%	0.10	%
	Commercial mortgage (4)	(0.15)	%	(0.11)	%
	Commercial and Industrial (5)	(0.01)	%	-	%
	Construction (6) (7)	46.90	%	(3.90)	%
	Consumer and finance leases	2.55	%	1.19	%
	Total loans (8) (9)	4.01	%	(0.15)	%
FLORIDA:
	Residential mortgage	-	%	0.11	%
	Commercial mortgage (10)	(0.01)	%	(0.01)	%
	Commercial and Industrial	0.05	%	-	%
	Construction (11)	(0.20)	%	(0.12)	%
	Consumer and finance leases	1.30	%	1.43	%
	Total loans	0.06	%	0.09	%
(1) Includes charge-offs totaling $4.6 million associated with $27.2 million in non-performing commercial mortgage loans transferred to held for sale in the first quarter of 2018. The ratio of commercial mortgage net-charge offs to average loans in Puerto Rico, excluding the charge-offs associated with commercial mortgage loans transferred to held for sale was 0.80% for  the first quarter of 2018.
(2) Includes the charge-off of $10.7 million associated with the sale of the PREPA credit line in the first quarter of 2017. The ratio of commercial and industrial net charge-offs to average loans in Puerto Rico, excluding the charge-off associated with the sale of the PREPA credit line, was 0.12%.
(3) Includes charge-offs totaling $4.6 million associated with $27.2 million in non-performing loans transferred to held for sale in the first quarter of 2018. The ratio of total loans net charge-offs to average loans in Puerto Rico, excluding charge-offs associated with loans transferred to held for sale, was 0.97% for the first quarter of 2018.
(4) For the first quarter of 2018 and 2017, recoveries in commercial mortgage loans in the Virgin Islands exceeded charge-offs.
(5) For the first quarter of 2018, recoveries in commercial and industrial loans in the Virgin Islands exceeded charge-offs.
(6) Includes a charge-off of $5.1 million associated with a $30.0 million non-performing construction loan transferred to held for sale in the first quarter of 2018. The ratio of construction net charge-offs to average loans in the Virgin Islands, excluding the charge-off associated with the construction loans transferred to held for sale, was 0.00% for the first quarter of 2018.
(7) For the first quarter of 2017, recoveries in construction loans in the Virgin Islands exceeded charge-offs.
(8) Includes the charge-off of $5.1 million associated with the $30.0 million non-performing loan transferred to held for sale in the Virgin Islands in the first quarter of 2018. The ratio of total loans net charge-offs to average loans in the Virgin Islands, excluding charge-offs associated with the loan transferred to held for sale, was 0.52% for the first quarter of 2018.
(9) For the first quarter of 2017, recoveries in total loans in the Virgin Islands exceeded charge-offs.
(10) For the first quarter of 2018 and 2017, recoveries in commercial mortgage loans in Florida exceeded charge-offs.
(11) For the first quarter of 2018 and 2017, recoveries in construction loans in Florida exceeded charge-offs.

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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 quarter of 2018 amounted to $26.7 million, or a loss rate of 1.20% on an annualized basis to average loans and repossessed assets, compared to credit losses of $31.9 million, or a loss rate of 1.59% on an annualized basis, for the same period in 2017.

The following table presents information about of the OREO inventory and credit losses for the periods indicated:
		Quarter Ended
		March 31,
(Dollars in thousands)		2018		2017
OREO
OREO balances, carrying value:
Residential		$	60,240	$	50,683
Commercial			83,911		76,208
Construction			10,488		10,893
Total		$	154,639	$	137,784
OREO activity (number of properties):
Beginning property inventory			708		626
Properties acquired			130		114
Properties disposed			(83)		(69)
Ending property inventory			755		671
Average holding period (in days)
Residential			416		333
Commercial			1,092		881
Construction			1,473		1,150
			855		701
OREO operations gain (loss) :
Market adjustments and gain (losses) on sale:
Residential		$	179	$	(1,388)
Commercial			(175)		(3,383)
Construction			(163)		793
			(159)		(3,978)
Other OREO operations expenses			(31)		(97)
Net Loss on OREO operations		$	(190)	$	(4,075)
CHARGE-OFFS
Residential charge offs, net			(3,036)		(7,476)
Commercial charge offs, net			(8,629)		(12,509)
Construction charge offs, net			(5,164)		382
Consumer and finance leases charge-offs, net			(9,702)		(8,211)
Total charge-offs, net			(26,531)		(27,814)
TOTAL CREDIT LOSSES (1)		$	(26,721)	$	(31,889)
LOSS RATIO PER CATEGORY (2):
Residential			0.35%		1.07%
Commercial			0.93%		1.66%
Construction			16.31%		-3.28%
Consumer			2.22%		1.91%
TOTAL CREDIT LOSS RATIO (3)			1.20%		1.59%
________
(1)	Equal to Net Loss on OREO operations 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 loss 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 risk, the potential for operational and reputational loss has increased. To mitigate and control operational risk, the Corporation has developed, and continues to enhance, specific internal controls, policies and procedures that are designated 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 loan portfolio held for investment of $8.7 billion as of March 31, 2018, credit risk concentration was approximately 75% in Puerto Rico, 19% in the United States (mainly in the state of Florida) and 6% in the Virgin Islands. 

Update to the Puerto Rico Fiscal Situation

Economy Indicators and Projections

A significant portion of our financial activities and credit exposure is concentrated in the Commonwealth of Puerto Rico, which has been in an economic recession since 2006, that has been exacerbated by the effects of Hurricanes Irma and Maria in 2017.  The New Fiscal Plan certified by the PROMESA oversight board, projects a contraction in the Puerto Rico’s gross national product (“GNP”) of 13.2% for fiscal year 2018, followed by projected growths of 5.9% and 1.6% for fiscal years 2019 and 2020, respectively. Such projected growth was based on an assumption that over $62 billion of disaster relief funding will enter the economy of Puerto Rico from federal and private sources. Of the total disaster relief funding of $62 billion, approximately $35 billion is estimated to be used for public assistance, $19 billion for individual assistance, and $8 billion will be used for private and business insurance pay outs. Meanwhile, the GDB Economic Activity Index (the “GDB-EAI”) in December 2017 was 104.9, a 13.9% reduction compared to March 2017, and a decrease of 13.3% compared to August 2017. The GDB-EAI is a coincident index of economic activity for Puerto Rico made up of four indicators (non-farm payroll employment, electric power generation, cement sales and gasoline consumption).  The New Fiscal Plan projects that the hurricanes will create a spike in inflation of 2.0% in fiscal year 2018, with subsequent average increases of about 1.8.

5% over the next six years, until fiscal year 2023.  The seasonally adjusted unemployment rate in Puerto Rico was 10.9% in December 2017, compared to 12.4% in December 2016.

GDB liquidation plan

On July 14, 2017, the PROMESA oversight board authorized the GDB to pursue the restructuring of its debts under Title VI of PROMESA and conditionally certified the GDB’s Restructuring Support Agreement (“RSA”) under the relevant provisions of Title VI.  The PROMESA oversight board’s decision was in response to a request from Puerto Rico’s Fiscal Agency and Financial Advisory Authority, dated June 30, 2017, in which the agency noted that the proposed restructuring, along with certain related settlements contemplated by the RSA, will result in an efficient wind down of GDB’s operations and a comprehensive financial restructuring of GDB’s obligations. The RSA provides for the organized and consensual restructuring of a substantial portion of the

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GDB’s liabilities, including the GDB public bonds, deposit claims by municipalities and certain non-public entities, and claims under certain GDB-issued letters of credit and guarantees (“Participating Bond Claims”). In exchange for releasing the GDB from liability relating to these claims, the claim-holders will receive new bonds to be issued by a new entity.

On April 20, 2018, the PROMESA oversight board approved the new GDB fiscal plan. The new GDB fiscal plan authorizes the recently amended terms of the GDB’s Restructuring Support Agreement (“RSA”). It also paves the way for the GDB’s operational wind-down, provides for a simplified transaction structure, and ensures equal treatment of creditors. It also offers municipalities offset rights against their deposit claims.

New Fiscal Plan

On April 19, 2018, the PROMESA oversight board’s twelfth public meeting took place. In that meeting, the PROMESA oversight board approved the Commonwealth of Puerto Rico New Fiscal Plan (the “New Fiscal Plan”). The New Fiscal Plan uses a six-year horizon and projects a six-year cumulative decline in population of 12%. In addition, the New Fiscal Plan established an annual emergency reserve of $130 million for 10 years. As mentioned above, it also assumes $62 billion in disaster relief funding. The New Fiscal Plan include a series of structural reforms in areas, such as: (i) human capital and labor, (ii) ease of doing business, (iii) power sector reform, and (iv) infrastructure reform.  The plan also proposes fiscal measures projected to drive $12.3 billion in increased revenues and reduced expenditures through fiscal year 2023, and up to $142 billion in fiscal benefits over a 30-year period.  These fiscal measures include areas, such as: (i) tax compliance and incentives, (ii) governmental rightsizing, (iii) healthcare reform, (iv) reduction of appropriations, (v) comprehensive pension reform, and (vi) fiscal controls, budgeting, procurement practices and accountability.

Exposure to Puerto Rico Government

As of March 31, 2018, the Corporation had $213.4 million of direct exposure to the Puerto Rico government, its municipalities and public corporations, compared to $214.5 million as of December 31, 2017. As of March 31, 2018, approximately $183.5 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, compared to $184.6 million as of December 31, 2017.  Approximately 73% of the Corporation’s municipality exposure consisted primarily of senior priority obligations concentrated in three of the largest municipalities in Puerto Rico. 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 notes. The PROMESA oversight board has not designated any of the Commonwealth’s 78 municipalities as covered entities under PROMESA.  However, while the recent fiscal plan approved by the PROMESA oversight board did not contemplate a restructuring of the debt of Puerto Rico’s municipalities, the plan did call for the gradual elimination of budgetary subsidies provided to municipalities. Furthermore, municipalities are also likely to be affected by the negative economic and other effects resulting from expense, revenue or cash management measures taken to address the Puerto Rico government’s fiscal and liquidity shortfalls, as well as measures included in fiscal plans of other government entities.  In addition to municipalities, the total direct exposure also included a $6.7 million loan to a unit of the central government, and a $15.0 million loan to an affiliate of PREPA.  The Corporation’s total direct exposure also included obligations of the Puerto Rico government, specifically bonds of the Puerto Rico Housing Finance Authority, at an amortized cost of $8.1 million as part of its available-for-sale investment securities portfolio recorded on its books at a fair value of $6.8 million as of March 31, 2018.

	The following table details the Corporation’s total direct exposure to the Puerto Rico Government according to their maturities:
		As of March 31, 2018
			Investment
			Portfolio				Total
			(Amortized cost)		Loans		Exposure
(In thousands)
Central Government:
After 1 to 5 years		$	-	$	6,739	$	6,739
Total Central Government			-		6,739		6,739
Puerto Rico Housing Finance Authority:
After 5 to 10 years			4,052		-		4,052
After 10 years			4,035		-		4,035
Total Puerto Rico Housing Finance Authority			8,087		-		8,087
Public Corporations:
Affiliate of the Puerto Rico Electric Power Authority:
After 1 to 5 years			-		14,984		14,984
Total Public Corporations			-		14,984		14,984
Municipalities:
After 1 to 5 years			3,712		33,056		36,768
After 5 to 10 years			39,523		-		39,523
After 10 years			107,251		-		107,251
Total Municipalities			150,486		33,056		183,542
Total Direct Government Exposure		$	158,573	$	54,779	$	213,352

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Furthermore, as of March 31, 2018, the Corporation had three loans granted to the hotel industry in Puerto Rico that were previously guaranteed by the TDF with an outstanding principal balance of $116.2 million (book value $61.6 million), compared to $120.2 million outstanding (book value of $70.8 million) as of December 31, 2017. Historically, the borrower and the operations of the underlying collateral of these loans have been the primary sources of repayment and the TDF, which is a subsidiary of the GDB, provided a secondary guarantee for payment performance. As part of agreements executed in the second quarter of 2017 and first quarter of 2018, the TDF paid $7.6 million and $4.0 million, respectively, to honor a portion of its guarantee on these loans.  As provided in the agreements, the cash payments received by the Corporation released the TDF from its liability as a guarantor of these loans. All three of the commercial mortgage loans previously guaranteed by the TDF have been classified as non-performing and impaired since the first quarter of 2016, and interest payments have been applied against principal since then. Approximately $5.2 million of interest payments received on loans previously guaranteed by the TDF since late March 2016 have been applied against principal. In addition, the GDB agreed to issue to the Bank a fixed income financial instrument pursuant to the GDB’s Restructuring Support Agreement approved by the PROMESA oversight board. During the first quarter of 2018, two of these three commercial mortgage loans, with an aggregate outstanding principal balance of $50.4 million (book value of $27.2 million) were transferred to held for sale.

In addition, the Corporation had $115.9 million in 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 under the mortgage loan 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 in aggregate of 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 loan 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.

As of March 31, 2018, the Corporation had $541.4 million of public sector deposits in Puerto Rico, compared to $490.3 million as of December 31, 2017. Approximately 24% is from municipalities and municipal agencies in Puerto Rico and 76% is from public corporations and the central government and agencies in Puerto Rico.

Exposure to USVI Government

The Corporation has operations in the USVI and has credit exposure to USVI government entities.

The USVI is experiencing a number of fiscal and economic challenges, exacerbated by the impact of Hurricane Irma in the third quarter of 2017, that could adversely affect the ability of its public corporations and instrumentalities to service their outstanding debt obligations.  PROMESA does not apply to the USVI and, as such, there is currently no federal legislation permitting the restructuring of the debts of the USVI and its public corporations and instrumentalities.

To the extent that the fiscal condition of the USVI government continues to deteriorate, the U.S. Congress or the government of the USVI may enact legislation allowing for the restructuring of the financial obligations of the USVI government entities or imposing a stay on creditor remedies, including by making PROMESA applicable to the USVI.

As of March 31, 2018, the Corporation had $76.7 million in loans to USVI government instrumentalities and public corporations, compared to $70.4 million as of December 31, 2017. Of the amount outstanding as of March 31, 2018, public corporations of the USVI owed approximately $53.5 million and an independent instrumentality of the USVI government owned approximately $23.2 million.  As of March 31, 2018, all loans were currently performing and up to date on principal and interest payments.

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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 the 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 GAAP, which are referred to as non-GAAP financial measures:

1.Net interest income, interest rate spread, and net interest margin are reported excluding the 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 tax-exempt loans, on a common basis that facilitates comparison of results to the 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.

2.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 asset and the insurance customer relationship intangible asset. Tangible assets are total assets less goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible asset and the insurance customer relationship intangible asset. 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.

3.Adjusted provision for loan and lease losses, adjusted net charge-offs and the ratios of adjusted net charge-offs to average loans, adjusted provision for loan and lease losses to net charge-offs, and the adjusted allowance to total loans held for investment are non-GAAP financial measures that exclude the effects related to: (a) a $6.4 million net loan loss reserve release recorded in the first quarter of 2018 in connection with revised estimates of the reserve associated with the effects of Hurricanes Maria and Irma, (b) a $5.6 million charge to the provision associated with commercial and construction loans transferred to held for sale in the first quarter of 2018, and (c) the effect related to the sale of the Corporation’s participation in the PREPA line of credit in the first quarter of 2017.  Management believes that this information helps investors understand the adjusted measures without regard to items that are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts on reported results and facilitates comparisons with prior periods.

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4.Adjusted non-interest income excludes the effect of the $2.3 million gain on the repurchase and cancellation of trust preferred securities in the first quarter of 2018 and the effect of $12.2 million in other-than-temporary impairment charges on debt securities recorded in the first quarter of 2017. Management believes that the exclusion from non-interest income of items that are not expected to reoccur with any regularity or may reoccur at uncertain times or in uncertain amounts facilitates comparisons with prior periods, and provides an alternate presentation of the Corporation’s performance. 

5.Adjusted non-interest expenses reflect the exclusion of hurricane-related expenses of $1.6 million associated with the effects of Hurricanes Irma and Maria in the first quarter of 2018, and the exclusion of costs of $0.3 million associated with a secondary offering of the Corporation’s common stock by certain of the existing stockholders in the first quarter of 2017. Management believes that adjustments to non-interest expenses of items that are above normal or recurring levels, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts facilitate comparisons with prior periods, and provide an alternate presentation of the Corporation’s performance.

6.Adjusted net income that reflects the effect of the $13.2 million tax benefit recorded in the first quarter of 2017 related to the change in tax status of certain subsidiaries from taxable corporations to limited liability companies, and the effect of all the items mentioned above and their tax related impacts as follows:

·Tax expense of $2.5 million in the first quarter of 2018 related to the net loan loss reserve release resulting from the revised estimates of the reserves associated with the effects of Hurricanes Maria and Irma (calculated based on the statutory tax rate of 39%).

·Tax benefit of $2.2 million in the first quarter of 2018 related to the charges to the provision for loan and lease losses recorded in connection with the $57.2 million in loans transferred to held for sale (calculated based on the statutory tax rate of 39%).

·Tax benefit of $0.6 million in the first quarter of 2018 related to hurricane-related costs (calculated based on the statutory tax rate of 39%).

·Tax benefit of $0.2 million in the first quarter of 2017 related to the charge to the provision for loan and lease losses in connection with the sale of the Corporation’s participation in the PREPA credit line (calculated based on the statutory tax rate of 39%).

·No tax expense/benefit was recorded for the gain on repurchase and cancellation of trust preferred securities and for costs related to the secondary offering that was recorded at the holding company level in the first quarter of 2018 and the first quarter of 2017, respectively.

·No tax benefit was recognized for the OTTI charges recorded in the first quarter of 2017 on tax-exempt bonds of the GDB and the Puerto Rico Public Buildings Authority.

Management believes that adjustments to net income of items that are not reflective of core operating performance, are not expected to reoccur with any regularity or may reoccur at uncertain times and in uncertain amounts facilitate comparisons with prior periods, and provide an alternate presentation of the Corporation’s performance.

The Corporation uses these non-GAAP financial measures, and believes that these non-GAAP financial measures enhance 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. Any analysis of these non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.

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Refer to Overview of Results of Operations above for the reconciliation of the non-GAAP financial measure “adjusted net income,” to the GAAP financial measures. The following tables reconcile the non-GAAP financial measures “adjusted net charge-offs,” “adjusted net charge-offs to average loans ratio,” “adjusted provision for loan and lease losses,” “adjusted provision for loan and lease losses to adjusted net charge-offs,” “adjusted allowance for loan and lease losses to total loans held for investment,” “adjusted non-interest income,” and “adjusted non-interest expenses,” to the GAAP financial measures for the first quarter of 2018 and 2017:

2018 First Quarter		As reported                 (GAAP)		Loans Transferred to Held for Sale		Storm-related Allowance		Storm-related Expenses and Related Adjustments		Repurchase and Cancellation of Trust Preferred Securities		Adjusted                 (Non-GAAP)
(Dollars in thousands)
Total net-charge offs (1)	$	26,531	$	(9,673)	$	-	$	-	$	-	$	16,858
Total net charge-offs to average loans		1.21%										0.77%
Commercial mortgage		6,761		(4,573)		-		-		-		2,188
Commercial mortgage net charge-offs average loans		1.69%										0.55%
Construction		5,164		(5,100)		-		-		-		64
Construction net charge-offs to average loans		17.37%										0.22%
Provision for loan and lease losses	$	20,544	$	(5,645)	$	6,407	$	-	$	-	$	21,306
Residential mortgage		447		-		136		-		-		583
Commercial mortgage		8,661		(1,105)		245		-		-		7,801
Commercial and industrial		656		-		3,822		-		-		4,478
Construction		4,764		(4,540)		161		-		-		385
Consumer		6,016		-		2,043		-		-		8,059
Non-interest income	$	22,784	$	-	$	-	$	-	$	(2,316)	$	20,468
Gain on early extinguishment of debt		2,316		-		-		-		(2,316)		-
Non-interest expenses	$	86,027	$		$		$	(1,596)	$	-	$	84,431
Employees' compensation and benefits		40,684		-		-		(5)		-		40,679
Occupancy and equipment		15,105		-		-		(1,549)		-		13,556
Business promotion		2,576		-		-		(31)		-		2,545
__________________
(1) Net charge-offs percentages annualized
2017 First Quarter		As reported                 (GAAP)		Sale of PREPA Credit Line		Secondary Offering Costs		OTTI on Debt Securities		Adjusted                 (Non-GAAP)
(Dollars in thousands)
Total net-charge offs (1)	$	27,814	$	(10,734)	$	-	$	-	$	17,080
Total net charge-offs to average loans		1.26%								0.78%
Commercial and Industrial		11,177		(10,734)		-		-		443
Commercial and industrial net charge-offs average loans		2.07%								0.08%
Provision for loan and lease losses	$	25,442	$	(569)	$	-	$	-	$	24,873
Commercial and industrial		(4,806)		(569)		-		-		(5,375)
Non-interest income	$	8,243	$	-	$	-	$	12,231	$	20,474
(Loss) gain on investments and impairments		(12,231)		-		-		12,231		-
Non-interest expenses	$	87,882	$		$	(274)	$	-	$	87,608
Professional fees		10,956		-		(254)		-		10,702
Business promotion		3,281		-		(20)		-		3,261
__________________
(1) Net charge-offs percentages annualized

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The following tables reconcile the ratios of provision for loan and lease losses to net charge-offs, net charge-offs to average loans, and allowance for loan and lease losses to total loans held for investment for the first quarter of 2018 and 2017 to the Non-GAAP financial measure "adjusted provision for loan and lease losses to net charge-offs," "adjusted net charge-offs to average loans," and "adjusted allowance for loan and lease losses to total loans held for investment" for the first quarter of 2018 and 2017:
	Provision for Loan and Lease Losses to Net Charge-Offs
	and Net Charge-Offs to Average Loans
	(GAAP to Non-GAAP reconciliation)
	Quarter Ended March 31, 2018
	Provision for Loan		Net Charge-Offs
(In thousands)	and Lease Losses
Provision for loan and lease losses and net charge-offs (GAAP)	$	20,544	$	26,531
Less special items:
Loans transferred to held for sale		(5,645)		(9,673)
Storm-related reserve release/(charge) to the provision for loan and lease losses		6,407		-
Provision for loan and lease losses and net charge-offs, excluding special items (Non-GAAP)	$	21,306	$	16,858
Average Loans	$	8,778,968
Provision for loan and lease losses to net charge-offs (GAAP)		77.43%
Provision for loan and lease losses to net charge-offs, excluding special items (Non-GAAP)		126.39%
Net charge-offs to average loans (GAAP)		1.21%
Net charge-offs to average loans, excluding special items (Non-GAAP)		0.77%

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	Provision for Loan and Lease Losses to Net Charge-Offs
	and Net Charge-Offs to Average Loans
	(GAAP to Non-GAAP reconciliation)
	Quarter Ended March 31, 2017
	Provision for Loan		Net Charge-Offs
(In thousands)	and Lease Losses
Provision for loan and lease losses and net charge-offs (GAAP)	$	25,442	$	27,814
Less special items:
Sale of the PREPA credit line		(569)		(10,734)
Provision for loan and lease losses and net charge-offs, excluding special items (Non-GAAP)	$	24,873	$	17,080
Average Loans	$	8,862,271
Provision for loan and lease losses to net charge-offs (GAAP)		91.47%
Provision for loan and lease losses to net charge-offs, excluding special items (Non-GAAP)		145.63%
Net charge-offs to average loans (GAAP)		1.26%
Net charge-offs to average loans, excluding special items (Non-GAAP)		0.78%

	Allowance for Loan and Lease Losses to Total Loans Held for Investment (GAAP to Non-GAAP reconciliation)		Allowance for Loan and Lease Losses to Total Loans Held for Investment (GAAP to Non-GAAP reconciliation)
	As of March 31, 2018		As of December 31, 2017
(In thousands)	Allowance for Loan and Lease Losses	Total Loans Held for Investment	Allowance for Loan and Lease Losses	Total Loans Held for Investment
Allowance for Loan and Lease Losses  and Total Loans Held for Investment (GAAP)	$225,856	$8,695,890	$231,843	$8,850,476
Less Special items:
Storm-related allowance for loan and lease losses	(62,136)	-	(68,543)	-
Allowance for Loan and Lease Losses and Total Loans Held for Investment,
excluding special items (Non-GAAP)	$163,720	$8,695,890	$163,300	$8,850,476
Allowance for Loan and Lease Losses to Total Loans Held for Investment (GAAP)	2.60%		2.62%
Allowance for Loan and Lease Losses to Total Loans Held for Investment,
excluding special items (Non-GAAP)	1.88%		1.85%

136

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 Control and Procedures

First BanCorp.’s management evaluated the effectiveness of the design and operation of First BanCorp.’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2018. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to ensure timely decisions regarding required disclosures. During the evaluation of disclosure controls and procedures and our internal control over financial reporting as of December 31, 2017, which was conducted during the preparation of our financial statements that were included in our Annual Report on Form 10-K for the year ended December 31, 2017, management identified a material weakness in internal control over financial reporting relating to management’s review and approval of the appropriateness of certain assumptions used to estimate the allowance for loan losses for commercial loans. As a result, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017, our disclosure controls and procedures and our internal control over financial reporting were ineffective. Upon identification of the material weakness and under the direction of our Chief Executive Officer and Chief Financial Officer, we developed a plan to remediate the material weakness.

As of March 31, 2018, and as described under Status of Remediation of Material Weakness in Internal Control Over Financial Reporting below, the material weakness has not being fully remediated. As a result, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2018, our disclosure controls and procedures were not effective. Notwithstanding the aforementioned material weakness, management has taken additional steps to assure the accuracy of our allowance for loan losses for commercial loans as of March 31, 2018, and has concluded that the financial statements included in this report fairly present, in all material respects, our financial condition for the periods presented in conformity with generally accepted accounting principles.

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, other than as described below under the caption “Status of Remediation of Material Weakness in Internal Control Over Financial Reporting.”

Status of Remediation of Material Weakness in Internal Control Over Financial Reporting

As previously described in Part II, Item 9A of our 2017 Form 10-K, we began implementing a remediation plan to address the control deficiency that led to the material weakness mentioned above. The remediation plan includes the following:

·Implementing a revised procedure to determine the historical loss rates to be applied to the different commercial loans regulatory-based credit risk categories (i.e., pass, special mention, substandard and doubtful).

·Implementing a quarterly sensitivity analysis using actual historical loss rates for loans risk-rated pass, special mention and substandard to compare the results of such sensitivity to the calculated reserves under the revised procedure, and establishing sensitivity thresholds that could trigger further reviews and/or adjustments prior to reaching a conclusion as to the adequacy of the allowance for loan losses for the Corporation’s commercial portfolio.

·Engaging an independent third party to assess the allowance framework and the appropriateness of the assumptions used in the analysis.

137

The Corporation implemented enhancements to the methodology and internal controls behind the calculation of the allowance for commercial loans that were in place and operating during the first quarter of 2018, which includes, among others, the following: (i) a revised procedure to determine the historical loss rates applicable for each commercial loan regulatory-based credit risk category (i.e., pass, special mention, substandard and doubtful) that changed the previous blending of loss rates for loans risk-rated special mention, substandard and doubtful to an aggregation methodology under which historical losses and portfolio balances of special mention loans are allocated to pass or substandard categories based on the historical proportion of the loans in this risk category that are ultimately cured or resulted uncollectible; and (ii) the implementation of a quarterly sensitivity analysis and establishment of sensitivity thresholds as described in the Remediation Plan.

In addition, the Corporation engaged an independent third party to assess the allowance framework and the appropriateness of assumptions used in the analysis and expects such review to be completed during the second quarter of 2018.

Management believes that the new procedures and controls discussed above will appropriately remediate the material weakness; however, the effectiveness of the controls has not been fully tested by management. The Corporation expects to remediate the material weakness during 2018 subsequent to the completion of the independent third party assessment and when, in the opinion of our management, the revised control processes have been operating on a satisfactory basis for a sufficient period of time and have been independently validated by management.

The remediation and ultimate resolution of the material weakness will be reviewed with the Audit Committee of the Corporation’s Board of Directors.

138

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 in Item 1A, “Risk Factors,” in the Corporation’s 2017 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 2017 Form 10-K.

There have been no other material changes from those risk factors previously disclosed in Item 1A, “Risk Factors,“ of Part I of the Corporation’s 2017 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.

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 purchases. The following table provides information relating to the Corporation’s purchases of shares of its common stock in the first quarter of 2018.

Period	Total number of shares purchased (1)		Average price paid	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet be Purchased Under These Plans or Programs
January 2018	26,346	$	5.48	-	-
February 2018	15,497		6.02	-	-
March 2018	341,244		6.44	-	-
Total	383,087	$	6.35	-	-

(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 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 below:

141

Exhibit Index

10.1 – Form of First BanCorp Long-Term Incentive Award Agreement.

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 quarterly period ended March 31, 2018, furnished in XBRL (eXtensible Business Reporting Language)

142

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: May 10, 2018	By:	/s/ Aurelio Alemán
		Aurelio Alemán
		President and Chief Executive Officer

Date: May 10, 2018	By:	/s/ Orlando Berges
		Orlando Berges
		Executive Vice President and Chief Financial Officer

143

EX-10

 

EXHIBIT 10.1

FORM OF FIRST BANCORP
LONG-TERM INCENTIVE AWARD AGREEMENT

THIS AGREEMENT is effective as of the ____ day of ______ 20___ (the “Effective Date”), by and between First BanCorp (the "Corporation"), and the "Participant".

        The Corporation, pursuant to its First BanCorp Omnibus Incentive Plan, as amended (the "Plan"), hereby grants a Long-Term Incentive Award consisting of time-vested Restricted Stock (the “Restricted Stock”) and Performance Shares (the “Performance Shares” and, in conjunction with the Restricted Stock, the “Award”) to the Participant, which award shall have the terms and conditions set forth in this Agreement:

1.    Definitions  

All capitalized terms used herein and not otherwise specifically defined herein shall have the meanings ascribed to such terms in the Plan.

2.    Award

(a) Restricted Stock. The Corporation, as of the Effective Date, hereby grants to the Participant a Restricted Stock award of _________ shares of common stock, par value $0.10 per share, of the Corporation (the "Common Stock"), subject to the terms and conditions set forth herein and subject to the terms and conditions of the Plan which is incorporated herein by reference and made a part hereof for all purposes.

        (b) Performance Shares.  The Corporation, as of the Effective Date, hereby grants to the Participant a Performance Share award of _________ shares of Common Stock, subject to the terms and conditions set forth herein and subject to the terms and conditions of the Plan, which is incorporated herein by reference and made part hereof for all purposes. The Performance Shares vest based on achieving the established tangible book value (the “Performance Goal) at the end of a three year performance period from the Effective Date (the “Performance Cycle”).

As reflected in the table below, the Participant may earn 50% of their target opportunity for threshold-level performance (80% performance).  Amounts between threshold and target are interpolated to reward incremental achievement and no amounts are paid for results on a particular performance metric if actual results are below threshold.

Performance at the Performance Shares Vesting Date	Award Payout
Threshold: at 80% of target performance	50% of target payout (minimum payout)
Target: at 100% of target performance	100% of target payout

        The Award will vest as set forth below.

3.    Vesting      

(a) Restricted Stock Vesting. Subject to the terms and conditions of this Agreement, the Restricted Stock shall vest solely on the basis of the passage of time over a three-year period (the “Restricted Stock Vesting Date”), as follows: fifty percent (50%) of the shares shall vest on the second anniversary date of the Effective Date of the award and the remaining fifty percent (50%) shall vest on the third anniversary date of the Effective Date of the award. Notwithstanding the foregoing, and subject to earlier vesting as provided in Section 7 hereof, Restricted Stock may vest more quickly in the event of death, Disability, Retirement, a Change in Control or other specified permitted vesting events.

(b) Performance Shares Vesting. Subject to the terms and conditions of this Agreement, the Performance Shares shall vest on the third anniversary of the Effective Date of the award, subject to the achievement of Performance Goals established by the Committee during the Performance Cycle (the “Performance Shares Vesting Date”, and, in conjunction with the Restricted Stock Vesting Date, the “Vesting Date”).

4.    Restriction on Transfer

(a) Until the shares of the Award vest pursuant to Section 3 hereof, none of the shares may be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered, and no attempt to transfer the shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Award.

 (b) Notwithstanding the foregoing (and assuming that the Participant has not made an accelerated income tax inclusion election with respect to the Award), at any time beginning with the date upon which any shares of the Award become vested and ending on December 31 of the calendar year including that date, a portion of such shares may be transferred as may reasonably be required to pay the federal, state, local, or foreign taxes that are anticipated to apply to the income recognized due to this vesting, and the amounts made transferrable for this purposes shall not count toward the percentages in the schedule above.

5.    Issuance and Custody

(a) The Corporation shall issue in book-entry form only and shall not be represented by a certificate, registered in the name of the Participant, evidencing the Restricted Stock. Each such book-entry shall bear the following legend:

“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS BOOK-ENTRY FORM ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN LONG-TERM INCENTIVE AWARD AGREEMENT EFFECTIVE AS OF MARCH 21, 2018, AS AMENDED FROM TIME TO TIME, AND THE FIRST BANCORP OMNIBUS INCENTIVE PLAN, AS AMENDED. COPIES OF SUCH AGREEMENT AND PLAN MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS BOOK-ENTRY FORM TO THE SECRETARY OF THE CORPORATION.”

(b) Participant shall execute stock powers relating to the Restricted Stock and deliver the same to the Corporation. The Corporation shall use such stock powers only for the purpose of canceling any unvested Restricted Stock that is forfeited.

(c) Each book-entry form issued pursuant to Section 5(a) hereof, together with the stock powers relating to the Restricted Stock, shall be deposited by the Corporation with the Secretary of the Board of Directors (the “Secretary”) of the Corporation or a custodian designated by the Secretary. Unless otherwise determined by the Committee, delivery of the Restricted Stock will be by book-entry credit to an account maintained by the registrar and transfer agent of the shares with the applicable restrictions on transferability imposed on such Restricted Stock by this Award Agreement. Upon vesting of the Restricted Stock in accordance with this Award Agreement, Corporation will instruct the transfer agent to electronically transfer the Participant’s shares to a brokerage or other account on the Participant’s behalf (or make such other arrangements for the delivery of the shares as Corporation reasonably determines).

(d) After any Restricted Stock or Performance Shares vest pursuant to Section 3 hereof and there exists no restrictions on transfer pursuant to Section 4 hereof, the Corporation shall promptly issued a book-entry form evidencing such vested Award, free of the legend provided in section 5(a) hereof, and shall be delivered to the Participant or the Participant's legal representatives, beneficiaries or heirs.

6.    Distributions and Adjustments

(a) If all or any portion of the Award vest in Participant subsequent to any change in the number or character of shares of Common Stock (through stock dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of Common Stock or other securities of the Corporation, issuance of warrants or other rights to purchase shares of Common Stock or other securities of the Corporation or other similar corporate transaction or event affecting the shares such that an adjustment is determined by the Compensation and Benefit Committee of the Board of Directors (the "Committee") to be appropriate in order to prevent dilution or enlargement of the interest represented by the shares), Participant shall then receive upon such vesting the number and type of securities or other consideration which he would have received if the Award had vested prior to the event changing the number or character of outstanding shares of Common Stock.

(b) Any additional shares of Common Stock, any other securities of the Corporation and any other property (except for cash dividends) distributed with respect to the Award prior to the Vesting Date shall be subject to the same restrictions, terms and conditions as the Award.

(c) Any additional shares of Common Stock, any securities and any other property (except for cash dividends) distributed with respect to the Award prior to the Vesting Date shall be promptly deposited with the Secretary or the custodian designated by the Secretary to be held in custody in accordance with Section 5(c) hereof.

(d) The Restricted Stock shall have the rights to dividends or dividend equivalents, as applicable, during the Restriction Period.  Such dividends or dividend equivalents will accrue during the Restriction Period, but not be paid until restrictions lapse. Subject to the aforementioned and issuance of dividends or dividend equivalents on the Corporation’s common stock, dividends will be paid in cash.

(e) Performance Shares shall have the right to receive dividend equivalents. Such dividend equivalents will accrue during the Performance Cycle and be paid at the Performance Shares Vesting Date based upon achievement of the Performance Goals. Subject to the aforementioned and issuance of dividends or dividend equivalents on the Corporation’s common stock, dividends will be paid in cash. 

(f) In the case of Restricted Stock, the Participant will have the right to vote the shares.

7.    Forfeiture; Termination of Services; Change in Control

(a) In the event of the death of the Participant while employed by the Corporation, Award held by the Participant which have not vested, shall vest irrespective of whether the vesting period has been completed. In the case of Performance Shares, the number of shares will be calculated as if the target number of the Performance Goals had in fact been earned. 

(b) In the event the Participant’s employment is terminated by reason of Disability, Award held by such participant which have not vested, shall vest irrespective of whether the vesting period has been completed. In the case of Performance Shares, the number of shares will be calculated as if the target number of the Performance Goals had in fact been earned.

(c) In the event the Participant’s employment is terminated by the Corporation or any Affiliate for Cause, Award held by the Participant which have not vested shall be forfeited and canceled upon such termination.

(d) Unless otherwise determined by the Committee, in the event the Participant’s employment ends as a result of the Participant’s resignation from the Corporation or an Affiliate, any Award held by such Participant which have not vested, shall be forfeited and canceled upon such termination.

(e) In the event the Participant’s employment is involuntarily terminated within one year after a Change in Control, if any Award held by the Participant is not assumed by the successor entity it shall vest irrespective of whether the vesting period has been completed. In the case of Performance Shares, the number of shares will be calculated as if the target number of the Performance Goals had in fact been earned.

(f) In the event of the Participant’s Retirement: (1) Restricted Stock held by Participant which have not vested, shall vest irrespective of whether the vesting period has been completed; and (2) outstanding Performance Shares shall continue outstanding and vest in full on the Performance Shares Vesting Date in accordance with the actual results of the Performance Goals during the Performance Cycle.

(g) Based on particular circumstances evaluated by the Committee as they may relate to the termination of a Participant, the Board may, with the recommendation of the Committee, grant the full vesting of the Award held by the Participant upon termination of employment.

(h) If awards are accelerated for reasons other than death, disability, retirement, or change in control, those discretionarily accelerated shares will be limited to 10% of the total number of shares authorized under Section 5(a) of the Plan.

8.    Taxes

        The Corporation is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of shares of Common Stock, or any payroll or other payment to a participant, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Corporation and participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive shares of Common Stock or other property and to make cash payments in respect thereof in satisfaction of a participant’s withholding obligations, either on a mandatory or elective basis in the discretion of the Committee, or in satisfaction of other tax obligations if such withholding will not result in additional accounting expense to the Corporation. Notwithstanding other provisions of the Plan, only the minimum amount of shares of Common Stock deliverable in connection with an Award necessary to satisfy statutory withholding requirements will be withheld, unless withholding of any additional amount of shares of Common Stock will not result in additional accounting expense to the Corporation.

9.    Miscellaneous    

(a) This Agreement is issued pursuant to the Plan and is subject to its terms. In the event of any conflicts between this Agreement and the Plan, the terms and conditions of the Plan shall prevail. Participant hereby acknowledges receipt of a copy of the Plan. The Plan is also available for inspection during business hours at the principal office of the Corporation.

(b) This Agreement shall not confer on the Participant any right with respect to continuance of employment of the Corporation or any of its Affiliates.

(c) This Agreement shall be governed by and construed under the laws of the Commonwealth of Puerto Rico, without regard for conflicts of laws principles thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, and the corporate seal affixed, by its officers thereunto duly authorized, and the Participant has hereunto set his hand, all on the day and year first above written.

Corporate Seal

FIRST BANCORP                                                             PARTICIPANT

By: By:

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: May 10, 2018	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: May 10, 2018	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 March 31, 2018 (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: May 10, 2018	/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 March 31, 2018 (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: May 10, 2018	/s/ Orlando Berges
	Name: Orlando Berges
	Title: Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Trading Symbol	fbp
Entity Registrant Name	FIRST BANCORP /PR/
Entity Central Index Key	0001057706
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		216,406,013

XML

Consolidated Statements of Financial Condition - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
ASSETS
Cash and due from banks		$ 743,409	$ 705,980
Money market investments:
Time deposits with other financial institutions		3,126	3,126
Other short term investments		97,289	7,289
Total money market investments		100,415	10,415
Investment securities available for sale, at fair value:
Securities pledged that can be repledged		242,738	350,123
Other investment securities		1,572,766	1,540,893
Total investment securities available for sale		1,815,504	1,891,016
Investment securities held to maturity, at amortized cost:
Securities pledged that can be repledged		0	0
Other investment securities		150,486	150,627
Total investment securities held to maturity, fair value of $134,856 (2017- $131,302)			150,627
Other equity securities		43,532	43,119
Loans, net of allowance for loan and lease losses of $225,856 (2017 - $231,483)		8,470,034	8,618,633
Loans held for sale, at lower of cost or market	[1]	91,375	32,980
Total loans, net		8,561,409	8,651,613
Premises and equipment, net		143,115	141,895
Other real estate owned		154,639	147,940
Accrued interest receivable on loans and investments		44,093	57,172
Other assets		443,784	461,491
Total assets		12,200,386	12,261,268
LIABILITIES
Non-interest-bearing deposits		2,019,823	1,833,665
Interest-bearing deposits		7,046,642	7,188,966
Total deposits		9,066,465	9,022,631
Securities sold under agreements to repurchase		200,000	300,000
Advances from the Federal Home Loan Bank (FHLB)		715,000	715,000
Other borrowings		184,150	208,635
Accounts payable and other liabilities		157,667	145,905
Total liabilities		10,323,282	10,392,171
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, 220,877,719 shares (2016 - 216,278,040 shares issued)		22,088	22,038
Less: Treasury stock (at par value)		(449)	(410)
Common stock outstanding, 216,390,329 shares outstanding (2017 - 216,278,040 shares outstanding)		21,639	21,628
Additional paid-in capital		936,342	936,772
Retained earnings, includes legal surplus reserve of $52,436		927,681	895,208
Accumulated other comprehensive loss , net of tax of $7,752		(44,662)	(20,615)
Total stockholders' equity		1,877,104	1,869,097
Total liabilities and stockholders' equity		$ 12,200,386	$ 12,261,268

[1] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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Consolidated Statements of Financial Condition (Parenthetical) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Allowance for loan and lease losses	$ 225,856,000	$ 231,843,000
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	22,004,000	22,004,000
Preferred stock, shares outstanding	1,444,146	1,444,146
Preferred stock, liquidation value	$ 36,104,000	$ 36,104,000
Common stock, par value	$ 0.1	$ 0.1
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, shares issued	220,877,719	220,382,343
Common stock, shares outstanding	216,390,329	216,278,040
Income tax expense	$ 7,758,000
Legal Surplus Amount	59,693,000	$ 59,693,000
Held To Maturity Securities Fair Value	134,856,000	131,032,000
Accumulated Other Comprehensive Income (Loss) [Member]
Income tax expense	$ 7,752,000	$ 7,752,000

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CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018		Mar. 31, 2017
Interest and dividend income:
Loans	$ 133,175		$ 131,442
Investment securities	13,987		13,302
Money market investments and interest-bearing cash accounts	2,256		484
Total interest income	149,418		145,228
Interest expense:
Deposits	16,971		15,972
Securities sold under agreements to repurchase	2,297		2,623
Advances from FHLB	3,372		2,122
Other borrowings	2,085		1,962
Total interest expense	24,725		22,679
Net interest income	124,693	[1]	122,549
Provision for loan and lease losses	20,544		25,442
Net interest income after provision for loan and lease losses	104,149		97,107
Non-interest income:
Service charges and fees on deposit accounts	5,088		5,790
Mortgage banking activities	4,165		3,616
Other-than-temporary impairment (OTTI) losses on available-for-sale debt securities:
Total other-than-temporary impairment losses	0		(12,231)
Portion of other-than-temporary impairment recognized in other comprehensive income (OCI)	0		0
Net impairment losses on available-for-sale debt securities	0		(12,231)
Gain on early extinguishment of debt	2,316		0
Insurance commission income	3,355		3,587
Other non-interest income	7,860		7,481
Total non-interest income	22,784		8,243
Non-interest expenses:
Employees' compensation and benefits	40,684		38,653
Occupancy and equipment	15,105		14,088
Business promotion	2,576		3,281
Professional fees	10,060		10,956
Taxes, other than income taxes	3,856		3,676
Insurance and supervisory fees	3,855		4,909
Net loss on real estate owned (OREO) and OREO operations	190		4,076
Credit and debit card processing expenses	3,537		2,831
Communications	1,482		1,543
Other non-interest expenses	4,682		3,869
Total non-interest expenses	86,027		87,882
(Loss) income before income taxes	40,906		17,468
Income tax benefit (expense)	(7,758)		8,073
Net (loss) income	33,148		25,541
Net (loss) income attributable to common stockholders	$ 32,479		$ 24,872
Net (loss) income per common share:
Basic	$ 0.15		$ 0.12
Diluted	0.15		0.11
Dividends declared per common share	$ 0		$ 0

[1] Most of the Corporation’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities, as well as other noninterest income from loans, leases, investment securities and derivative financial instruments.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net income	$ 33,148	$ 25,541
Available-for-sale debt securities on which an other-than-temporary impairment has been recognized:
Unrealized gain (loss) on debt securities on which an other-than-temporary impairment has been recognized	496	(2,930)
Reclassification adjustment for other-than-temporary impairment on debt securities included in net income	0	12,231
All other unrealized gains and losses on available-for-sale securities:
All other unrealized holding gains on available-for-sale securities arising during the period	(24,549)	1,395
Amount Reclassified Out Of Accumulated Other Comprehensive Income Loss Per ASU 2016 01	6	0
Income tax expense related to items of other comprehensive income	0	0
Other comprehensive income (loss) for the period	(24,047)	10,696
Total comprehensive (loss) income	$ 9,101	$ 36,237

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CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income	$ 33,148	$ 25,541
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,922	4,141
Amortization of intangible assets	1,006	1,121
Provision for loan and lease losses	20,544	25,442
Deferred income tax expense (benefit)	5,472	(6,016)
Stock-based compensation	2,205	1,734
Gain on early extinguishment of debt	(2,316)	0
Other-than-temporary impairments on debt securities	0	12,231
Unrealized loss on derivative instruments	52	57
Net (gain) loss on sales of premises and equipment and other assets	(847)	9
Net gain on sales of loans	(1,096)	(1,472)
Net amortization/accretion of premiums, discounts and deferred loan fees and costs	(2,095)	(2,031)
Originations and purchases of loans held for sale	(65,984)	(81,389)
Sales and repayments of loans held for sale	76,163	86,924
Loans held for sale valuation adjustment	558	0
Amortization of broker placement fees	367	527
Net amortization/accretion of premium and discounts on investment securities	476	461
Decrease in accrued interest receivable	13,061	3,413
Increase in accrued interest payable	8	174
Decrease in other assets	10,566	5,419
Increase in other liabilities	166	8,517
Net cash provided by operating activities	95,376	84,803
Cash flows from investing activities:
Principal collected on loans	590,753	669,615
Loans originated and purchased	(550,257)	(704,175)
Proceeds from sale of loans held for investment	13,274	53,245
Proceeds from sale of repossessed assets	10,559	12,159
Purchases of available-for-sale securities	(49,626)	(5,003)
Proceeds from principal repayments and maturities of available-for-sale securities	100,195	53,830
Proceeds from principal repayments and maturities of held-to-maturity securities	141	141
Additions to premises and equipment	(5,142)	(2,840)
Proceeds from sale of premises and equipment and other assets	1,857	637
Net redemption of other equity securities	0	4,500
Net cash provided by investing activities	111,754	82,109
Cash flows from financing activities:
Net increase in deposits	45,026	58,722
Net FHLB advances paid	0	100,000
Dividends paid on preferred stock	(669)	(669)
Repurchase of outstanding common stock	(2,624)	(528)
Change in securities sold under agreements to repurchase	(100,000)	0
Repayment of junior subordinated debentures	(21,434)	0
Net cash used in financing activities	(79,701)	(42,475)
Net increase in cash and cash equivalents	127,429	124,437
Cash and cash equivalents at beginning of period	716,395	299,685
Cash and cash equivalents at end of period	843,824	424,122
Cash and cash equivalents include:
Cash and Cash Equivalents, at Carrying Value, Total	$ 843,824	$ 424,122

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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			$ 21,745	$ 931,856	$ 830,928	$ (34,390)
Total stockholders' equity	$ 1,823,017	$ 36,104	21,843	931,856	830,928	(23,694)
Balance at beginning of period at Dec. 31, 2016			21,745	931,856	830,928	(34,390)
Common stock issued as compensation			14	(14)
Common stock withheld for taxes			(11)	(517)
Restricted stock grants			95	(95)
Stock-based compensation				1,734
Net income	25,541				25,541
Dividends on preferred stock	(669)				(669)
Other comprehensive income (loss), net of tax	10,696					10,696
Balance at end of period at Mar. 31, 2017	1,823,017	36,104	21,843	932,964	855,800	(23,694)
Amount reclassified from accumulated other comprehensive loss per ASU 201601					0
Total stockholders' equity	1,823,017	36,104	21,843	932,964	855,800	(23,694)
Total stockholders' equity	1,869,097		21,628	936,772	895,208	(20,615)
Total stockholders' equity	1,869,097	36,104	21,628	936,772	927,681	(44,662)
Balance at beginning of period at Dec. 31, 2017	1,869,097		21,628	936,772	895,208	(20,615)
Common stock issued as compensation			15	(15)
Common stock withheld for taxes			(38)	(2,586)
Restricted stock grants			34	(34)
Stock-based compensation				2,205
Net income	33,148				33,148
Dividends on preferred stock	(669)				(669)
Other comprehensive income (loss), net of tax	(24,047)					(24,047)
Balance at end of period at Mar. 31, 2018	1,877,104	36,104	21,639	936,342	927,681	(44,662)
Amount reclassified from accumulated other comprehensive loss per ASU 201601					(6)
Total stockholders' equity	$ 1,877,104	$ 36,104	$ 21,639	$ 936,342	$ 927,681	$ (44,662)

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2018

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 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, 2017. 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, 2017, which are included in the Corporation’s 2017 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 significant intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for the quarter ended March 31, 2018 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:

Revenue Recognition

In May 2014, the FASB updated the Accounting Standards Codification (the “Codification” or the “ASC”) to create a new, principles-based revenue recognition framework. This guidance requires entities to recognize revenues when they transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance describes a 5-step process that entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information.

The Corporation adopted the guidance on January 1, 2018 using a modified retrospective method, in which the guidance applies to existing contracts in effect at January 1, 2018 and new contracts entered into after this date. Most of the Corporation’s revenue, including net interest income, gain on sale of loans, and mortgage servicing fees is explicitly out of scope of the new revenue recognition guidance. The Corporation conducted an assessment of the revenue streams that were potentially affected by the new guidance and reviewed contracts in scope to ensure compliance with the new guidance.

The Corporation has identified service charges on deposits and related cash management services, insurance commissions, merchant-related income, and card interchange income as its most significant revenue streams within the scope of the standard.  For the revenue streams that were found in scope, management reviewed in detail its most significant contracts with corresponding customers. The adoption of this guidance did not have a material effect on the Corporation’s consolidated financial statements. However, additional disclosures required by the standard have been included in Note 22 – Revenue from Contracts with Customers, to the Corporation’s consolidated financial statements.

Recognition and Measurement of Financial Assets and Liabilities

In January 2016, the FASB updated the Codification to require an entity to: (i) measure equity investments at fair value through net income, with certain exceptions, thus, eliminating eligibility for the available-for-sale category; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price; and (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. The guidance provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment, adjusted for certain observable price changes. The guidance also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The adoption of this standard during the first quarter of 2018 did not have a material effect on the Corporation’s consolidated financial statements.

Statement of Cash Flows Presentation – Restricted Cash

In August 2016 and November 2016, the FASB updated the Codification to provide specific guidance on the classification and presentation of certain cash payments and cash receipts, including changes in restricted cash, 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 should be applied using a retrospective transition method to each period presented. The Corporation adopted the provisions of this guidance during the first quarter of 2018 without any material effect on the Corporation’s consolidated financial statements.

Income Tax Effect of Intra-Entity Transfers of Assets

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 asset 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. The Corporation adopted the provisions of this guidance during the first quarter of 2018 without any effect on the Corporation’s consolidated financial statements.

Clarifying what Changes Qualify as a Modification of a Share-Based Payment Award

In May 2017, the FASB updated the codification to reduce the cost and complexity when applying ASC Topic 718, “Compensation – Stock Compensation,” and standardize the practice of applying Topic 718 to financial reporting. Topic 718 prescribes the accounting treatment of a modification in the terms or conditions of a share-based payment award. The guidance clarifies what changes would qualify as a modification. This was done by better defining what does not constitute a modification. In order for a change to a share-based arrangement to not require Topic 718 modification treatment, all of the following must be met: (i) the fair value (or alternative measurement method used) of the modified award equals the fair value (or alternative measurement method used) of the original award immediately before the original award is modified; (ii) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (iii) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under this Update. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date. The Corporation adopted the provisions of this guidance on January 1, 2018 without any effect on the Corporation’s consolidated financial statements. The Corporation’s Omnibus Plan provides for equity-based compensation incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, cash-based awards and other stock-based awards. If any change occurs in the future to awards issued under the Omnibus Plan, the Corporation will evaluate it under this guidance.

Lease Accounting

In February 2016, the FASB updated the Codification to provide guidance for the financial reporting about leasing transactions. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the guidance will require both types of leases to be recognized on the balance sheet. The guidance will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The guidance on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period presented in the financial statements. As lessees, the Corporation has lease agreements for branch locations that are currently considered operating leases, and therefore are not recognized on the Corporation’s consolidated balance sheets. The Corporation expects that the new guidance will require these leases to be recognized on the consolidated balance sheets as a right-of-use asset with a corresponding lease liability. The Corporation continues to evaluate the effect that this guidance will have on the Corporation’s consolidated financial statements.

Accounting for Financial Instruments – Credit Losses

In June 2016, the FASB updated the Codification to introduce new guidance for the accounting for credit losses on instruments that includes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. 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 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 guidance 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 guidance amends the current 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 affect 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 effect 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 OTTI was recognized prior to the date of adoption.

This guidance 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 guidance 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 adoption of the guidance will be permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The Corporation has developed a transition roadmap in order to comply with the timely implementation of this new accounting framework. The Corporation has created a working group with members from multiple areas across the organization that is responsible for assessing the effect of the standard, evaluating interpretative issues, and evaluating the current credit loss models against the new guidance to determine any necessary changes and other related implementation activities. The working group provides periodic updates to the Corporation’s CECL Management Committee, which has oversight responsibilities for the implementation efforts. The Corporation continues to evaluate the effect that this guidance, including the method of implementation, will have on its consolidated financial statements.

Subsequent Measurement of Goodwill

In January 2017, the FASB updated the Codification to simplify the subsequent measurement of goodwill by eliminating Step 2 from the current two-step goodwill impairment test. This guidance provides that a goodwill impairment test be conducted by comparing the fair value of a reporting unit with its carrying amount. Entities are to recognize an impairment charge for goodwill equal to the excess of the carrying amount over the reporting unit’s fair value. Entities have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The effect of this guidance will depend upon the performance of the reporting units and the market conditions affecting the fair value of each reporting unit going forward.

Amortization of Premiums and Discounts of Callable Debt Securities

In March 2017, the FASB updated the Codification to shorten the amortization period for certain purchased callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. With respect to securities held at a discount, the amendments do not require an accounting change; thus, the discount continues to be amortized to maturity. Under current GAAP, premiums and discounts on callable debt securities generally are amortized to the maturity date. An entity must have a large number of similar loans to consider estimates of future principal prepayments when applying the interest method. However, an entity that holds an individual callable debt security at a premium may not amortize that premium to the earliest call date. If that callable debt security is subsequently called, the entity records a loss equal to the unamortized premium. The amendments in this Update more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. In most cases, market participants price securities to the call date that produces the worst yield when the coupon is above current market rates (that is, the security is trading at a premium) and price securities to maturity when the coupon is below market rates (that is, the security is trading at a discount) in anticipation that the borrower will act in its economic best interest. As a result, the amendments more closely align interest income recorded on bonds held at a premium or a discount with the economics of the underlying instrument. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The adoption of this guidance is not expected to have a material effect on the Corporation’s consolidated statement of financial condition or results of operations. As of March 31, 2018, the Corporation had $4.3million of callable debt securities held at a premium (unamortized premium of $50 thousand).

Derivatives and Hedging

In August 2017, the FASB updated the Codification to: (i) expand hedge accounting for nonfinancial and financial risk components and amend measurement methodologies to more closely align hedge accounting with a company’s risk management activities; (ii) decrease the complexity of preparing and understanding hedge results by eliminating the separate measurement and reporting of hedge ineffectiveness; (iii) enhance transparency, comparability, and understanding of hedge results through enhanced disclosures and changing the presentation of hedge results to align the effects of the hedging instrument and the hedged item; and (iv) reduce the cost and complexity of applying hedge accounting by simplifying the manner in which assessments of hedge effectiveness may be performed. This Update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The guidance requires companies to apply requirements to existing hedging relationships on the date of adoption, and the effect of the adoption should be reflected as of the beginning of the fiscal year of adoption. As of March 31, 2018, all of the derivatives held by the Corporation were considered economic undesignated hedges. The adoption of this guidance is not expected to have a material effect on the Corporation’s consolidated statement of financial condition or results of operations.

Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income

In February 2018, the FASB updated the Codification to provide entities with an option to reclassify tax effects that were stranded in accumulated other comprehensive income, pursuant to the recently enacted Tax Cuts and Jobs Act of 2017 (the “Tax Act”), to retained earnings. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. This guidance may be early adopted in any interim or annual period for which financial statements have not yet been issued and applied either in the period of adoption or retrospectively to each period in which the effect of the change in the corporate tax rate in the Tax Act is recognized. The adoption of this guidance is not expected to have an effect on the Corporation’s consolidated financial statements.

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UPDATE ON IMPACTS OF NATURAL DISASTERS

3 Months Ended

Mar. 31, 2018

Natural Disasters [Text Block]

NOTE 2 – UPDATE ON EFFECTS OF NATURAL DISASTERS

Two strong hurricanes affected the Corporation’s service areas during September 2017. The following summarizes the more significant continuing financial repercussions of these natural disasters for the Corporation and for its major subsidiary, FirstBank.

Credit Quality and Allowance for Loan and Lease Losses

Relationship officers continued to closely monitor the performance of hurricane-affected loan customers during the first quarter of 2018, and data became available on the performance of consumer and residential credits that had been under payment deferral programs. This information was factored into the determination of the allowance for loan and lease losses as of March 31, 2018. Although the identification and evaluation of hurricane-affected credits has been substantially completed, management’s assessment of the hurricanes’ effectis still subject to uncertainties, both those specific to some individual customers, such as the resolution of insurance claims, and those applicable to the overall economic prospects of the hurricane-affected areas as a whole. During the first quarter of 2018, the Corporation recorded a net loan loss reserve release of approximately $6.4 million in connection with revised estimates associated with the effects of the hurricanes. The revised estimates were primarily attributable to updated assessments of financial performance and repayment prospects of certain individually-assessed commercial credits and lower reserve requirements resulting from payments received during the first quarter that reduced the balance of the consumer loan portfolio outstanding on the dates of the hurricanes.

As of March 31, 2018, the hurricane-related allowance amounted to $62.1 million (net of a $2.8 million charge-off taken on a hurricane-affected construction credit during the fourth quarter of 2017). With the resolution of uncertainties and the ongoing collection of information on individual commercial customers and statistics on the consumer and residential loan portfolios, the loss estimate will be revised as needed. Refer to Note 7, – Loans Held for Investment, to the consolidated financial statements for information about non-performing loans and early delinquency statistics.

Disaster Response Plan Costs, Casualty Losses and Related Insurance

The Corporation has incurred a variety of costs to operate in disaster response mode, and some facilities and their contents were damaged by the storms. The Corporation maintains insurance for casualty losses as well as for reasonable and necessary disaster response costs and certain revenue lost through business interruption. Most of the significant disaster response costs were incurred by the end of the first quarter of 2018. The cost were included, where appropriate, in an insurance claim receivable based on management’s understanding of the underlying coverage. An insurance claim receivable of $5.3 million was included as part of other assets as of March 31, 2018, and the Corporation has incurred $9.4 million of hurricane-related disaster response costs and casualty losses, including $1.6 million charged to operations in the first quarter of 2018. Impairments, recoverable expenses and expected recoveries are included as part of “Other non-interest income” in the statement of income. Management also believes that there is a possibility that some gains will be recognized with respect to casualty and lost revenue claims in future periods, but this is contingent on reaching agreement on the Corporation’s claims with the insurance carriers.

Liquidity Management

The Corporation experienced rapid accumulation of deposits after the hurricanes in the fourth quarter of 2017 and the first quarter of 2018. Total deposits as of March 31, 2018, excluding brokered CDs, increased $238.3 million from December 31, 2017 and $599.8 million since September 30, 2017. The most significant increase was in non-interest-bearing demand deposits, which grew 10%, or $186.2 million from December 31, 2017 and $433.7 million, or 27%, since September 30, 2017. Hurricane-related factors, such as the effect of payment deferral programs available to customers, disaster relief funds, and settlement of insurance claims continue to contribute to this accumulation. Although management expects the balances accumulated by deposit customers in the hurricane-affected areas to reduce over time, it is difficult to predict when and to what degree, and there may be further growth as insurance claims are resolved and additional disaster-recovery funds are distributed.

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EARNINGS PER COMMON SHARE

3 Months Ended

Mar. 31, 2018

EARNINGS PER COMMON SHARE

NOTE 2 – EARNINGS PER COMMON SHARE

	The calculations of earnings per common share for the quarters ended March 31, 2018 and 2017 are as follows:
		Quarter Ended
		March 31,		March 31,
		2018		2017
(In thousands, except per share information)
Net income		$	33,148	$	25,541
Less: Preferred stock dividends			(669)		(669)
Net income attributable to common stockholders		$	32,479	$	24,872
Weighted-Average Shares:
	Average common shares outstanding		214,646		213,340
	Average potential dilutive common shares		1,648		4,033
	Average common shares outstanding-assuming dilution		216,294		217,373
Earnings per common share:
	Basic	$	0.15	$	0.12
	Diluted	$	0.15	$	0.11

Earnings per common share is computed by dividing net income attributable to common stockholders by the weighted-averagenumber 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 dividendperiod that have not been declared as of the end of the period. Basic weighted-average common shares outstanding exclude unvested shares of restricted stock that do not contain non-forfeitable dividend rights.

Potential dilutive common shares consist of unvested shares of restricted stock that do not contain non-forfeitable dividend rights, performance units that do not contain non-forfeitable dividend rights if the performance condition in met as of the end of the reporting period, and outstanding warrants using the treasury stock method. This method assumes that the potential dilutive common shares are issued and outstanding 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 numbers of potential dilutive shares issued and the shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted earnings per share. Unvested shares of restricted stock and performance units that do not contain non-forfeitable dividend rights, and outstanding warrants that result in lower potential dilutive shares issued than shares purchased under the treasury stockmethod, are not included in the computation of dilutive earnings per share since their inclusion would have an antidilutive effect on earnings per share.

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STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2018

STOCK-BASED COMPENSATION

NOTE 3 – STOCK-BASED COMPENSATION

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, extend the term of the Omnibus Plan to May 24, 2026 and re-approve the material terms of the performance goals under the Omnibus Plan for purposes of the then 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 to 14,169,807 shares of common stock, subject to adjustments for stock splits, reorganizations and other similar events. As of March 31, 2018, 7,063,074 authorized shares of common stock were available for issuance under the Omnibus Plan. The Corporation’s Board of Directors, based on the recommendation of the Corporation’s Compensation and Benefits 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.

Restricted Stock

Under the Omnibus Plan, the Corporation may grant restricted stock to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While the restricted stock is subject to forfeiture and does not contain non-forfeitable dividend rights, restricted stock participants may exercise full voting rights. The restricted stock granted under the Omnibus Plan is typically subject to a vesting period. During the first quarter of 2018, the Corporation awarded 341,189 shares of restricted stock to employees, fifty percent (50%) of those shares vest in two years from the grant date and the remaining 50% vest in three years of the grant date. Included in those 341,189 shares of restricted stock were 20,447shares granted to retirement-eligible employees at the grant date. The fair value of the shares of restricted stock granted in the first quarter of 2018 was based on the market price of the Corporation’s outstanding common stock on the date of the grant.

	The following table summarizes the restricted stock activity in the first quarter of 2018 under the Omnibus Plan:
		Quarter Ended
		March 31, 2018
		Number of
		shares of		Weighted-Average
		restricted		Grant Date
		stock		Fair Value
Non-vested shares at beginning of period		1,816,968	$	2.76
Granted		341,189		6.29
Vested		(1,061,476)		2.02
Non-vested shares at March 31, 2018		1,096,681	$	4.58

For the quartersended March 31, 2018 and 2017, the Corporation recognized $1.1 million and $0.9 million, respectively, of stock-based compensation expense related to restricted stock awards. As of March 31, 2018, there was $3.9million of total unrecognized compensation cost related to non-vested shares of restricted stock. The weighted average period over which the Corporation expects to recognize such cost is 1.7years. The total expense determined for restricted stock awards granted to retirement-eligible employees was charged against earnings at the grant date.

During the first quarter of 2017, the Corporation awarded 949,332 shares of restricted stock to employees subject to a vesting period of two years. Included in those 949,332 shares of restricted stock were 838,332 shares granted to certain senior officers consistent with the requirements of the Troubled Asset Relief Program (“TARP”) Interim Final Rule. On May 10, 2017, the United States Department of the Treasury (the “U.S. Treasury) announced that it had sold all of its remaining 10,291,553 shares of the Corporation’s common stock. As a result of the sale by the U.S. Treasury, the Corporation is no longer subject to the compensation-related restrictions under TARP, which substantially limited the Corporation’s ability to award short-term and long-term incentives to the Corporation’s executives, and the Corporation’s senior officers are no longer subject to the transferability restrictions on their shares of restricted stock. However, since the U.S. Treasury did not recover the full amount of its original investment under TARP, the senior officers forfeited 2,370,571, or 50%, of their outstanding shares of restricted stock, resulting in a reduction in the number of common shares outstanding. The U.S. Treasury continues to hold a warrant to purchase 1,285,899 shares of the Corporation’s common stock.

The fair value of the shares of restricted stock granted in the first quarter of 2017 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 838,332 shares of restricted stock granted under the TARP requirements, the market price was discounted assuming that 50% of the shares of restricted stock would become freely transferable and the remaining 50% would be forfeited, resulting in a fair value of $2.71 for each share of restricted stock granted under TARP requirements.

Stock-based compensation accounting guidance requires the Corporation to reverse compensation expense for any awards that are forfeited due to employee or director turnover. Quarterly changes in the estimated forfeiture rate may have a significant effect on stock-based compensation, as the effect of adjusting the rate for all expense amortization is recognized in the period in which the forfeiture estimate is changed.  If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease in the expense recognized in the financial statements.  If the actual forfeiture rate is lower than the estimated forfeiture rate, an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase in the expense recognized in the financial statements. The estimated forfeiture rate did not change as a result of the restricted shares forfeited in connection with the aforementioned U.S. Treasury’s sale of the Corporation’s common stock. 

Performance Units

Under the Omnibus Plan, the Corporation may award performance unit awards to Omnibus Plan participants. During the first quarter of 2018, the Corporation granted 304,408unit awards to executives, with each unit representing the value of one share of the Corporation’s common stock. The performance unit awards granted are for the performance period beginning January 1, 2018 and ending on December 31, 2020 and are subject to a three-year requisite service period. These awards do not contain non-forfeitable rights to dividend equivalent amounts and can only be settled in shares of the Corporation’s common stock. Included in those 304,408 performance unit awards were 29,171 units granted to retirement-eligible executives at the grant date. The performance unit will vest based on the achievement of a pre-established tangible book value per share target as of December 31, 2020. All of the performance units will vest if performance is at the pre-established performance target level or above. However, the participants may vest on 50% of the awards to the extent that performance is below the target but at 80% of the pre-established performance target level (the 80% minimum threshold). If performance is between the 80% minimum threshold and the pre-established performance target level, the participants will vest on a proportional amount. No performance units will vest if performance is below the 80% minimum threshold.

The fair value of the performance unit awards granted in the first quarter of 2018 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the first quarter of 2018, the Corporation recognized $0.2 million of stock-based compensation related to performance unit awards. As of March 31, 2018, there was $1.7 million of total unrecognized compensation cost related to unvested performance units that the Corporation expects to recognize over the three-year requisite service period. The total expense determined for the performance unit awards granted to retirement-eligible executives was charged against earnings at the grant date. The total amount of compensation expense recognized reflects management’s assessment of the probability that the pre-established performance goal will be achieved. A cumulative adjustment is recognized to compensation expense in the current period to reflect any changes in the probability of achievement of the performance goals.

Salary stock

Also, 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 issued under the Omnibus Plan, instead of cash. During the first quarter of 2018, the Corporation issued 154,187 shares of common stock (first quarter of 2017– 135,692 shares) with a weighted average market value of $5.80 (first quarter of 2017 - $6.31) as salary stock compensation. This resulted in a compensation expense of $0.8 million recorded in each of the first quarter of 2018and 2017.

During the quarter ended March 31, 2018, the Corporation withheld 56,131 shares (first quarter of 2017 – 45,710 shares) from the common stock paid to certain senior officers as additional compensation and 326,956 shares of the restricted stock that vested during the first quarter of 2018 (first quarter of 2017– 52,590 shares) to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid in cash any fractional share of salary stock to which the officer was entitled. In the consolidated financial statements, the Corporation treats shares withheld for tax purposes as common stock repurchases.

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INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2018

INVESTMENT SECURITIES

NOTE 5 – INVESTMENT SECURITIES

Investment Securities Available for Sale

The amortized cost, non-credit loss component of OTTI recorded in 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 March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018
	Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI		Gross				Fair value
					Unrealized						Weighted-
					gains		losses				average yield %
(Dollars in thousands)
U.S. Treasury securities:
Due within one year	$	49,799	$	-	$	-	$	22	$	49,777	1.55
After 1 to 5 years		7,465		-		-		73		7,392	1.29
U.S. government-sponsored
agencies obligations:
Due within one year		72,484		-		-		242		72,242	1.08
After 1 to 5 years		309,459		-		-		4,996		304,463	1.42
After 5 to 10 years		133,471		-		26		2,736		130,761	2.74
After 10 years		39,190		-		-		254		38,936	2.07
Puerto Rico government
obligations:
After 5 to 10 years		4,052		-		22		-		4,074	3.14
After 10 years		4,035		-		-		1,301		2,734	6.97
United States and Puerto
Rico government
obligations		619,955		-		48		9,624		610,379	1.76
Mortgage-backed securities:
Freddie Mac ("FHLMC") certificates:
After 5 to 10 years		43,037		-		12		1,305		41,744	1.96
After 10 years		262,934		-		-		8,379		254,555	2.28
		305,971		-		12		9,684		296,299	2.23
Ginnie Mae ("GNMA") certificates:
After 1 to 5 years		136		-		3		-		139	2.77
After 5 to 10 years		65,098		-		683		137		65,644	3.04
After 10 years		140,314		-		4,492		986		143,820	3.81
		205,548		-		5,178		1,123		209,603	3.57
Fannie Mae ("FNMA") certificates:
After 1 to 5 years		15,735		-		177		195		15,717	2.89
After 5 to 10 years		109,562		-		-		4,279		105,283	1.76
After 10 years		531,560		-		1,818		14,320		519,058	2.52
		656,857		-		1,995		18,794		640,058	2.40
Collateralized mortgage obligations
guaranteed by the FHLMC
and GNMA
After 1 to 5 years		8,154		-		8		11		8,151	2.53
After 10 years		34,619		-		321		-		34,940	2.53
		42,773		-		329		11		43,091	2.53
Other mortgage pass-through
trust certificates:
After 10 years		21,309		5,235		-		-		16,074	4.49
Total mortgage-backed
securities		1,232,458		5,235		7,514		29,612		1,205,125	2.60
Total investment securities
available for sale	$	1,852,413	$	5,235	$	7,562	$	39,236	$	1,815,504	2.32

		December 31, 2017
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI		Gross				Fair value
						Unrealized						Weighted-
						gains		losses				average yield%
(Dollars in thousands)
U.S. Treasury securities:
	After 1 to 5 years	$	7,458	$	-	$	-	$	57	$	7,401	1.29
U.S. government-sponsored
agencies obligations:
	Due within one year		122,471		-		-		319		122,152	1.06
	After 1 to 5 years		309,472		-		28		3,735		305,765	1.42
	After 5 to 10 years		133,451		-		117		319		133,249	2.72
	After 10 years		40,769		-		1		149		40,621	1.84
Puerto Rico government
obligations:
	After 5 to 10 years		4,071		-		47		-		4,118	3.14
	After 10 years		3,972		-		-		1,277		2,695	6.97
United States and Puerto
Rico government
obligations			621,664		-		193		5,856		616,001	1.70
Mortgage-backed securities:
FHLMC certificates:
	After 5 to 10 years		18,658		-		14		63		18,609	2.14
	After 10 years		297,733		-		217		4,853		293,097	2.23
			316,391		-		231		4,916		311,706	2.23
GNMA certificates:
	After 1 to 5 years		81		-		1		-		82	3.23
	After 5 to 10 years		69,661		-		1,244		-		70,905	3.05
	After 10 years		145,067		-		5,910		334		150,643	3.81
			214,809		-		7,155		334		221,630	3.56
FNMA certificates:
	After 1 to 5 years		20,831		-		294		109		21,016	2.69
	After 5 to 10 years		49,934		-		-		818		49,116	1.83
	After 10 years		613,129		-		3,180		6,401		609,908	2.43
			683,894		-		3,474		7,328		680,040	2.39
Collateralized mortgage obligations
	issued or guaranteed by
	FHLMC and GNMA:
	After 1 to 5 years		5,918		-		14		-		5,932	2.21
	After 5 to 10 years		2,556		-		11		-		2,567	2.23
	After 10 years		35,331		-		231		-		35,562	2.22
			43,805		-		256		-		44,061	2.22
Other mortgage pass-through
trust certificates:
	After 10 years		22,791		5,731		-		-		17,060	2.44
Total mortgage-backed
	securities		1,281,690		5,731		11,116		12,578		1,274,497	2.54
Other
Due within one year			100		-		-		-		100	1.48
Equity Securities (1)			424		-		-		6		418	2.11
Total investment securities
	available for sale	$	1,903,878	$	5,731	$	11,309	$	18,440	$	1,891,016	2.27
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

Maturities of mortgage-backed securities (“MBS”) 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 noncredit 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 of March 31, 2018 and December 31, 2017. 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 March 31, 2018
	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	$	-	$	-	$	2,734	$	1,301	$	2,734	$	1,301
U.S. Treasury and U.S. government
agenciesʼ obligations		238,248		3,306		360,298		5,017		598,546		8,323
Mortgage-backed securities:
FNMA		354,552		7,690		259,076		11,104		613,628		18,794
FHLMC		138,510		2,916		157,598		6,768		296,108		9,684
GNMA		68,490		1,123		-		-		68,490		1,123
Collateralized mortgage obligations
issued or guaranteed by
FHLMC and GNMA		5,907		11		-		-		5,907		11
Other mortgage pass-through
trust certificates		-		-		16,074		5,235		16,074		5,235
	$	805,707	$	15,046	$	795,780	$	29,425	$	1,601,487	$	44,471
	As of December 31, 2017
	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	$	-	$	-	$	2,695	$	1,277	$	2,695	$	1,277
U.S. Treasury and U.S. government
agenciesʼ obligations		136,459		494		362,050		4,085		498,509		4,579
Mortgage-backed securities:
FNMA		189,699		1,705		274,963		5,623		464,662		7,328
FHLMC		91,174		590		166,331		4,326		257,505		4,916
GNMA		39,145		334		-		-		39,145		334
Other mortgage pass-through
trust certificates		-		-		17,060		5,731		17,060		5,731
Equity securities (1)		-		-		407		6		407		6
	$	456,477	$	3,123	$	823,506	$	21,048	$	1,279,983	$	24,171
(1) As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

Assessment for OTTI

Debt securities issued by U.S. government agencies, U.S. government-sponsored entities, and the U.S. Treasury accounted for approximately 98% of the total available-for-sale portfolio as of March 31, 2018, 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 private label MBS, and on Puerto Rico government debt securities, 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 for 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 March 31,
		2018		2017
	(In thousands)
	Total other-than-temporary impairment losses	$	-	$	(12,231)
	Portion of other-than-temporary impairment recognized in OCI		-		-
	Net impairment losses recognized in earnings (1)	$	-	$	(12,231)
	_________
(1)	Credit losses on Puerto Rico government debt securities, recorded in the first quarter of 2017.

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
	December 31,		recognized in earnings on		March 31,
	2017		securities that have been		2018
	Balance		previously impaired		Balance
(In thousands)
Available-for-sale securities
Private label MBS	$	6,792	$	-	$	6,792

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments
	December 31,		recognized in earnings on		March 31,
	2016		securities that have been		2017
	Balance		previously impaired		Balance
(In thousands)
Available for sale securities
Puerto Rico government obligations	$	22,189	$	12,231	$	34,420
Private label MBS		6,792	$	-		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	28,981	$	12,231	$	41,212

During the second quarter of 2017, the Corporation sold for an aggregate of $23.4 million three Puerto Rico government available-for-sale debt securities, specifically bonds of the Government Development Bank for Puerto Rico (the “GDB”) and the Puerto Rico Public Buildings Authority, carried on its book at an amortized cost at the time of sale of $23.0 million (net of $34.4 million in cumulative OTTI impairment charges). Approximately $12.2 million of the cumulative OTTI charges on these securities was recorded in the first quarter of 2017.

For the OTTI charge recorded on the Puerto Rico government debt securities in the first quarter of 2017, the Corporation considered the latest available information about the Puerto Rico government’s financial condition, including but not limited to credit ratings downgrades, revised estimates of recovery rates, and other relevant developments such as government actions, including debt exchange proposals and the fiscal plan published by the Puerto Rico government in March 2017, as applicable. 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 OTTI. The analysis derived an estimate of value based on the present value of risk-adjusted cash flows of the underlying securities and included consideration of the following components:

The contractual future cash flows of the bonds were 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 were 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 were assumed throughout the life of the bonds, which considered the respective security's credit rating as of the date of the analysis.

The adjusted future cash flows were 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%, as these three non-performing bonds had been in default since the third quarter of 2016. Based on this analysis, the Corporation recorded in the first quarter of 2017 credit-related OTTI amounting to $12.2 million, assuming recovery rates ranging from 15% to 80% (with a weighted average of 41%).

In addition, the Corporation performed on OTTI assessment on its private label MBS, which are collateralized by fixed-rate mortgages on single-family residential properties in the United States. The interest rate on these private-label MBS is variable, tied to 3-month LIBOR and limited to the weighted-average coupon on the underlying collateral. The underlying mortgages are fixed-rate, single-family loans with original FICO scores (over 700) and moderate 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, if any, is reflected in earnings. Significant assumptions in the valuation of the private label MBS were as follows:

	As of		As of
	March 31, 2018		December 31, 2017
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	14.5%	14.5%	14.0%	14.0%
Prepayment rate	15.2%	7.5% - 24.5%	16.4%	12.0% - 29.0%
Projected Cumulative Loss Rate	4%	0% - 9%	3%	0% - 6.8%

No OTTI charges on private label MBS were recorded in either the first quarter of 2018 or the first quarter of 2017.

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 March 31, 2018 and December 31, 2017 were as follows:

		March 31, 2018
		Amortized cost						Fair value
				Gross Unrealized
										Weighted-
				gains		losses				average yield%
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	3,712	$	-	$	161	$	3,551	5.39
	After 5 to 10 years		39,523		-		2,703		36,820	5.35
	After 10 years		107,251		-		12,766		94,485	5.21
Total investment securities
	held to maturity	$	150,486	$	-	$	15,630	$	134,856	5.25

		December 31, 2017
		Amortized cost						Fair value
				Gross Unrealized
										Weighted
				gains		losses				average-yield%
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	3,853	$	-	$	173	$	3,680	5.38
	After 5 to 10 years		39,523		-		3,048		36,475	5.28
	After 10 years		107,251		-		16,374		90,877	4.93
Total investment securities
	held to maturity	$	150,627	$	-	$	19,595	$	131,032	5.03

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 March 31, 2018 and December 31, 2017:

	As of March 31, 2018
	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	$	-	$	-	$	134,856	$	15,630	$	134,856	$	15,630
	As of December 31, 2017
	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	$	-	$	-	$	131,032	$	19,595	$	131,032	$	19,595

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

Approximately 70% of the held-to-maturity municipal bonds were issued by three of the largest municipalities in Puerto Rico. The vastmajority of revenues of these three municipalities is independent of the Puerto Rico central government. These obligations typically are notissued in bearer form, nor are they registered with the SEC and are not rated by external credit agencies. In most cases, these bonds havepriority over the payment of operating costs and expenses of the municipality, which are required by law to levy special property taxes in suchamounts as are required for the payment of all of their respective general obligation bonds and loans. The PROMESA oversight board has not designated any ofPuerto Rico’s 78 municipalities as covered entities under PROMESA. However, while the fiscal plan recently certified by the PROMESA oversight board did not contemplate a restructuring of the debt of Puerto Rico’s municipalities, the plan did call forthe gradual elimination of budgetary subsidies provided to municipalities by the central government. Furthermore, municipalities are also likely to be affected by thenegative economic and other effects resulting from the recent hurricanes and from expense, revenue or cash management measures taken by thePuerto Rico government to address its fiscal and liquidity shortfalls, or measures included in fiscal plans of other government entities, such asthe fiscal plans of the GDB and the Puerto Rico Electric Power Authority (“PREPA”). Given the uncertain effect that the negative fiscal situation of the Puerto Rico central government and the measures taken or to be taken by othergovernment entities may have on municipalities, the Corporation cannot be certain if future impairment charges will be required relating tothese securities.

From time to time, the Corporation has securities held to maturity with an original maturity of three months or less that are considered cash and cash equivalents and classified as money market investments in the consolidated statements of financial condition.  As of March 31, 2018 and December 31, 2017, the Corporation had no outstanding securities held to maturity that were classified as cash and cash equivalents.

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OTHER EQUITY SECURITIES

3 Months Ended

Mar. 31, 2018

OTHER EQUITY SECURITIES

NOTE 6 – OTHER INVESTMENT SECURITIES

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

As of each March 31, 2018 and December 31, 2017, the Corporation had investments in FHLB stock with a book value of $40.9million. The net realizable value is a reasonable proxy for the fair value of these instruments. Dividend income from FHLB stock for the quarters ended March 31, 2018 and 2017 was $0.7 million and $0.5 million, respectively.

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

As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities with readily determinable fair value of approximately $0.4 million from available-for-sale investment securities to other investment securities. During the first quarter of 2018, the Corporation measured these equity securities at fair value through earnings resulting in the recognition of a market-to-market loss of $7 thousand recorded as part of other non-interest income in the statement of income.

The Corporation has other equity securities that do not have a readily-available fair value. The carrying value of such securities as of each March 31, 2018 and December 31, 2017 was $2.2million.

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LOAN PORTFOLIO

3 Months Ended

Mar. 31, 2018

LOAN PORTFOLIO

NOTE 7 – LOANS HELD FOR INVESTMENT

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

			As of		As of
		March 31,		December 31,
			2018		2017
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	3,267,868	$	3,290,957
Commercial loans:
Construction loans (1)			79,150		111,397
Commercial mortgage loans (1)			1,552,503		1,614,972
Commercial and Industrial loans (2)			2,061,773		2,083,253
Total Commercial loans			3,693,426		3,809,622
Finance leases			262,863		257,462
Consumer loans			1,471,733		1,492,435
Loans held for investment (2)			8,695,890		8,850,476
Allowance for loan and lease losses			(225,856)		(231,843)
Loans held for investment, net		$	8,470,034	$	8,618,633
__________
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).
(2)	As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, 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 were as follows:
		As of		As of
		March 31,		December 31,
		2018		2017
(In thousands)
Non-performing loans:
Residential mortgage		$	171,380	$	178,291
Commercial mortgage (1)			115,179		156,493
Commercial and Industrial			85,325		85,839
Construction:
Land			14,949		15,026
Construction-commercial (1)			-		35,100
Construction-residential			1,287		1,987
Consumer:
Auto loans			13,453		10,211
Finance leases			1,801		1,237
Other consumer loans			8,603		5,370
Total non-performing loans held for investment (2)(3)(4)		$	411,977	$	489,554
_______________
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).
(2)	Excludes $64.9 million and $8.3 million of non-performing loans held for sale as of March 31, 2018 and December 31, 2017, respectively.
(3)	Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $155.3 million and $158.2 million as of March 31, 2018 and December 31, 2017, 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.
(4)	Non-performing loans exclude $366.4 million and $374.7 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with the modified terms and in accrual status as of March 31, 2018 and December 31, 2017, respectively.

During the first quarter of 2018, the Corporation transferred to held for sale three non-performing commercial and construction loans. The aggregate recorded investment in these loans was written down to $57.2 million, which resulted in charge-offs of $9.7 million of which $4.1 million was taken against previously-established reserves for loan losses, resulting in a charge to the provision for loan and lease losses of $5.6 million for the first quarter of 2018. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

Loans in Process of Foreclosure

As of March 31, 2018, the recorded investment of residential mortgage loans collateralized by residential real estate property that are inthe process of foreclosure amounted to $152.3 million, including $22.7million of loans insured by the FHA or guaranteed by the VA, and $18.2million of PCI loans. The Corporation commences the foreclosure process on residential real estate loans when a borrower becomes 120 daysdelinquent in accordance with the guidelines of the Consumer Financial Protection Bureau (“CFPB”). Foreclosure procedures and timelines varydepending on whether the property is located in a judicial or non-judicial state. Judicial states (Puerto Rico, Florida and USVI) require theforeclosure to be processed through the state’s court while foreclosure in non-judicial states (BVI) is processed without court intervention.Foreclosure timelines vary according to state law and investor guidelines. Occasionally, foreclosures may be delayed due to, among other reasons, mandatorymediations, bankruptcy, court delays and title issues.

The Corporation’s aging of the loans held for investment portfolio is as follows:
As of March 31, 2018
		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due (1)		Total Past Due		Purchased Credit-Impaired Loans		Current		Total loans held for investment		90 days past due and still accruing
(In thousands)
Residential mortgage:
FHA/VA and other government-guaranteed
loans (2)(3)(4)		$	-	$	3,665	$	107,693	$	111,358	$	-	$	35,927	$	147,285	$	107,693
Other residential mortgage loans (4)			-		57,505		186,535		244,040		151,067		2,725,476		3,120,583		15,155
Commercial:
Commercial and Industrial loans			13,137		2,419		86,095		101,651		-		1,960,122		2,061,773		770
Commercial mortgage loans (4)			-		49,807		119,156		168,963		4,214		1,379,326		1,552,503		3,977
Construction:
Land (4)			-		12		17,108		17,120		-		9,330		26,450		2,159
Construction-commercial			-		1,012		-		1,012		-		45,227		46,239		-
Construction-residential (4)			-		-		2,488		2,488		-		3,973		6,461		1,201
Consumer:
Auto loans			32,438		7,891		13,453		53,782		-		784,711		838,493		-
Finance leases			5,843		2,216		1,801		9,860		-		253,003		262,863		-
Other consumer loans			13,701		4,577		10,434		28,712		-		604,528		633,240		1,831
Total loans held for investment		$	65,119	$	129,104	$	544,763	$	738,986	$	155,281	$	7,801,623	$	8,695,890	$	132,786
_____________
(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 $30.6 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 March 31, 2018.
(3)	As of March 31, 2018, includes $73.3 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 and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans, and construction-residential loans past due 30-59 days as of March 31, 2018 amounted to $6.8 million, $122.0 million, $5.2 million, $0.6 million, and $0.2 million respectively.

As of December 31, 2017
		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due (1)		Total Past Due		Purchased Credit- Impaired Loans		Current		Total loans held for investment		90 days past due and still accruing (2) (3)
(In thousands)
Residential mortgage:
FHA/VA and other government-guaranteed
loans (2)(3)(4)		$	-	$	6,792	$	102,815	$	109,607	$	-	$	29,332	$	138,939	$	102,815
Other residential mortgage loans (4)			-		92,502		193,750		286,252		153,991		2,711,775		3,152,018		15,459
Commercial:
Commercial and Industrial loans			8,971		576		88,156		97,703		-		1,985,550		2,083,253		2,317
Commercial mortgage loans (4)			-		7,525		163,180		170,705		4,183		1,440,084		1,614,972		6,687
Construction:
Land (4)			-		124		15,177		15,301		-		11,630		26,931		151
Construction-commercial			-		-		35,100		35,100		-		41,456		76,556		-
Construction-residential			-		95		1,987		2,082		-		5,828		7,910		-
Consumer:
Auto loans			57,560		23,783		10,211		91,554		-		752,777		844,331		-
Finance leases			10,549		3,484		1,237		15,270		-		242,192		257,462		-
Other consumer loans			10,776		5,052		9,361		25,189		-		622,915		648,104		3,991
Total loans held for investment		$	87,856	$	139,933	$	620,974	$	848,763	$	158,174	$	7,843,539	$	8,850,476	$	131,420
____________
(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 $29.9 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 December 31, 2017.
(3)	As of December 31, 2017, includes $62.1 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 on two or more monthly payments. FHA/VA and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, and land loans past due 30-59 days as of December 31, 2017 amounted to $6.0 million, $224.0 million, $9.0 million, and $2.5 million, respectively.

The Corporation’s credit quality indicators by loan type as of March 31, 2018 and December 31, 2017 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
March 31, 2018
(In thousands)
Commercial mortgage		$	269,926	$	2,117	$	-	$	272,043	$	1,552,503
Construction:
Land			15,971		391		-		16,362		26,450
Construction-commercial			-		-		-		-		46,239
Construction-residential			1,287		-		-		1,287		6,461
Commercial and Industrial			144,205		7,745		729		152,679		2,061,773
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2017
(In thousands)
Commercial mortgage		$	257,503	$	4,166	$	-	$	261,669	$	1,614,972
Construction:
Land			15,971		490		-		16,461		26,931
Construction-commercial			35,100		-		-		35,100		76,556
Construction-residential			1,987		-		-		1,987		7,910
Commercial and Industrial			154,416		3,854		676		158,946		2,083,253
_________
(1)	Excludes non-peforming loans held for sale of $64.9 million ($27.2 million commercial mortgage, $30.0 million construction-commercial, and $7.7 million construction-land) and $8.3 million (construction-land) as of March 31, 2018 and December 31, 2017, respectively.

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 of the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently known facts, conditions and values. 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 asset even though partial recovery may occur in the future.There is little or no prospect for near term improvement and no realistic strengthening action of significance pending.

March 31, 2018		Consumer Credit Exposure-Credit Risk Profile Based on Payment Activity
		Residential Real-Estate				Consumer
		FHA/VA/ Guaranteed (1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	147,285	$	2,798,136	$	825,040	$	261,062	$	624,637
Purchased Credit-Impaired (2)			-		151,067		-		-		-
Non-performing			-		171,380		13,453		1,801		8,603
Total		$	147,285	$	3,120,583	$	838,493	$	262,863	$	633,240
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as 90 days past-due loans and still accruing as opposed to non-performing loans since the principal repayment is insured. This balance includes $30.6 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 March 31, 2018.
(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 analyses.
December 31, 2017		Consumer Credit Exposure-Credit Risk Profile Based on Payment Activity
			Residential Real-Estate			Consumer
		FHA/VA/ Guaranteed (1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	138,939	$	2,819,736	$	834,120	$	256,225	$	642,734
Purchased Credit-Impaired (2)			-		153,991		-		-		-
Non-performing			-		178,291		10,211		1,237		5,370
Total		$	138,939	$	3,152,018	$	844,331	$	257,462	$	648,104
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as 90 days past due loans and still accruing as opposed to non-performing loans since the principal repayment is insured. This balance includes $29.9 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 December 31, 2017.
(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 analyses.

The following tables present information about impaired loans held for investment, excluding PCI loans, which are reported separately as discussed below:
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment		Interest Income Recognized On Accrual Basis		Interest Income Recognized On Cash Basis
(In thousands)
As of March 31, 2018
With no related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		94,817		126,672		-		95,274		723		170
Commercial:
Commercial mortgage loans		60,811		99,837		-		61,445		82		37
Commercial and Industrial loans		24,712		27,679		-		24,825		246		11
Construction:
Land		-		-		-		-		-		-
Construction-commercial		-		-		-		-		-		-
Construction-residential		-		-		-		-		-		-
Consumer:
Auto loans		387		387		-		394		2		-
Finance leases		-		-		-		-		-		-
Other consumer loans		2,266		3,051		-		2,327		29		17
	$	182,993	$	257,626	$	-	$	184,265	$	1,082	$	235
With a related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		322,793		359,048		22,546		324,110		3,654		231
Commercial:
Commercial mortgage loans		101,315		117,838		13,451		102,304		661		47
Commercial and Industrial loans		95,066		117,400		14,375		92,382		302		20
Construction:
Land		11,815		20,001		1,432		11,864		25		8
Construction-commercial		-		-		-		-		-		-
Construction-residential		252		355		52		252		-		-
Consumer:
Auto loans		20,424		20,424		3,379		20,943		397		-
Finance leases		1,876		1,876		84		1,958		35		-
Other consumer loans		9,746		10,092		1,611		9,913		283		27
	$	563,287	$	647,034	$	56,930	$	563,726	$	5,357	$	333
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		417,610		485,720		22,546		419,384		4,377		401
Commercial:
Commercial mortgage loans		162,126		217,675		13,451		163,749		743		84
Commercial and Industrial loans		119,778		145,079		14,375		117,207		548		31
Construction:
Land		11,815		20,001		1,432		11,864		25		8
Construction-commercial		-		-		-		-		-		-
Construction-residential		252		355		52		252		-		-
Consumer:
Auto loans		20,811		20,811		3,379		21,337		399		-
Finance leases		1,876		1,876		84		1,958		35		-
Other consumer loans		12,012		13,143		1,611		12,240		312		44
	$	746,280	$	904,660	$	56,930	$	747,991	$	6,439	$	568

Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment
(In thousands)
As of December 31, 2017
With no related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		116,818		154,048		-		120,241
Commercial:
Commercial mortgage loans		65,100		100,612		-		86,563
Commercial and Industrial loans		28,292		31,254		-		28,567
Construction:
Land		48		49		-		48
Construction-commercial		-		-		-		-
Construction-residential		-		-		-		-
Consumer:
Auto loans		267		267		-		290
Finance leases		-		-		-		-
Other consumer loans		2,521		3,688		-		2,745
	$	213,046	$	289,918	$	-	$	238,454
With a related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		316,616		349,284		22,086		318,606
Commercial:
Commercial mortgage loans		87,814		124,084		9,783		93,720
Commercial and Industrial loans		90,008		112,005		12,359		92,666
Construction:
Land		11,865		19,973		1,402		14,126
Construction-commercial		35,101		38,595		560		35,996
Construction-residential		252		355		55		252
Consumer:
Auto loans		22,338		22,338		3,665		24,328
Finance leases		2,184		2,184		104		2,428
Other consumer loans		11,084		11,830		1,396		11,579
	$	577,262	$	680,648	$	51,410	$	593,701
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		433,434		503,332		22,086		438,847
Commercial:
Commercial mortgage loans		152,914		224,696		9,783		180,283
Commercial and Industrial loans		118,300		143,259		12,359		121,233
Construction:
Land		11,913		20,022		1,402		14,174
Construction-commercial		35,101		38,595		560		35,996
Construction-residential		252		355		55		252
Consumer:
Auto loans		22,605		22,605		3,665		24,618
Finance leases		2,184		2,184		104		2,428
Other consumer loans		13,605		15,518		1,396		14,324
	$	790,308	$	970,566	$	51,410	$	832,155
Interest income of approximately $6.9 million ($6.4 million on an accrual basis and $0.5 million on a cash basis) was recognized on impaired loans for the first quarter of 2017.

	The following table shows the activity for impaired loans and the related specific reserve during the first quarter of 2018 and 2017:
		Quarter ended
		March 31, 2018		March 31, 2017
Impaired Loans:		(In thousands)
Balance at beginning of period		$	790,308	$	887,905
Loans determined impaired during the period			61,408		19,628
Charge-offs (1) (2)			(17,213)		(17,404)
Loans sold, net of charge-offs			(4,121)		(53,245)
Increases to existing impaired loans			6,998		541
Foreclosures			(11,675)		(9,457)
Loans no longer considered impaired			(1,507)		(892)
Loans transferred to held for sale			(57,213)		-
Paid in full or partial payments			(20,705)		(19,878)
Balance at end of period		$	746,280	$	807,198
(1)	The first quarter of 2018 includes charge-offs totaling $9.7 million associated with the $57.2 million in non-performing loans transferred to held for sale.
(2)	The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line as further discussed below.

	Quarter ended
	March 31, 2018		March 31, 2017
Specific Reserve:	(In thousands)
Balance at beginning of period	$	51,410	$	64,421
Provision for loan losses		22,703		18,862
Net charge-offs		(17,183)		(16,972)
Balance at end of period	$	56,930	$	66,311

Purchased Credit Impaired Loans (PCI)

The Corporation acquired PCI loans accounted for under ASC 310-30 as part of a transaction that 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, that 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 and 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 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 amounts of PCI loans were as follows:
	As of
		March 31,		December 31,
		2018		2017
(In thousands)
Residential mortgage loans	$	151,067	$	153,991
Commercial mortgage loans		4,214		4,183
Total PCI loans	$	155,281	$	158,174
Allowance for loan losses		(11,251)		(11,251)
Total PCI loans, net of allowance for loan losses	$	144,030	$	146,923

	The following tables present PCI loans by past due status as of March 31, 2018 and December 31, 2017:
As of March 31, 2018		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
										Current
(In thousands)
Residential mortgage loans		$	-	$	8,291	$	27,025	$	35,316	$	115,751	$	151,067
Commercial mortgage loans			-		-		3,234		3,234		980		4,214
Total (1)		$	-	$	8,291	$	30,259	$	38,550	$	116,731	$	155,281
_____________
(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 March 31, 2018 amounted to $13.5 million and $0.2 million, respectively.
As of December 31, 2017		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
										Current
(In thousands)
Residential mortgage loans		$	-	$	16,600	$	26,471	$	43,071	$	110,920	$	153,991
Commercial mortgage loans			-		355		2,834		3,189		994		4,183
Total (1)		$	-	$	16,955	$	29,305	$	46,260	$	111,914	$	158,174
_____________
(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 December 31, 2017 amounted to $28.1 million and $0.2 million, respectively

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 statements 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.

Changes in Accretable Yield of Acquired Loans

Subsequent to the 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 non-accretable 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 and lease losses. As of March 31, 2018, the reserve related to PCI loans acquired from Doral Financial in 2014 and from Doral Bank in 2015 amounted to $11.3 million.

Changes in the accretable yield of PCI loans for the quarters ended March 31, 2018 and 2017 were as follows:
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	103,682	$	116,462
Accretion recognized in earnings		(2,623)		(2,797)
Balance at end of period	$	101,059	$	113,665

Changes in the carrying amount of loans accounted for pursuant to ASC 310-30 were as follows:
	Quarter ended		Quarter ended
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	158,174	$	165,818
Accretion		2,623		2,797
Collections		(3,396)		(4,593)
Foreclosures		(2,120)		(922)
Ending balance	$	155,281	$	163,100
Allowance for loan losses		(11,251)		(6,857)
Ending balance, net of allowance for loan losses	$	144,030	$	156,243

Changes in the allowance for loan losses related to PCI loans were as follows:
	Quarter ended		Quarter ended
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	11,251	$	6,857
Provision for loan losses		-		-
Balance at the end of period	$	11,251	$	6,857

The outstanding principal balance of PCI loans, including amounts charged off by the Corporation, amounted to $192.0million as of March 31, 2018 (December 31, 2017- $196.6million).

Purchases and Sales of Loans

During the first quarter of 2018, the Corporation purchased $14.5 million of residential mortgage loans consistent with a strategic program to purchase ongoing residential mortgage loan production from mortgage bankers in Puerto Rico. In general, 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 FNMA and FHLMC, which generally securitize the transferred loans into mortgage-backed securities for sale into the secondary market. During the first quarter of 2018, the Corporation sold $54.4 million of FHA/VA mortgage loans to GNMA, which packaged them into mortgage-backed securities. Also during the first quarter of 2018, the Corporation sold approximately $20.1 million of performing residential mortgage loans to FNMA and FHLMC. 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. As of March 31, 2018 and December 31, 2017, rebooked GNMA delinquent loans included in the residential mortgage loan portfolio amounted to $73.3 million and $62.1 million, respectively.

During the first quarters of 2018 and 2017, the Corporation repurchased, pursuant to its repurchase option with GNMA, $1.1 million and $10.7 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, which is 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. During the fourth quarter of 2017, the Corporation requested and received approval from GNMA for the exclusion of loans in the areas affected by Hurricanes Irma and Maria from calculations of delinquency and default ratios established in the GNMA Mortgage-Backed Securities Guide. 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 $3 thousand and $6 thousand during the first quarters of 2018 and 2017, 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.

In addition, during the first quarter of 2018, the Corporation sold a $5.6 million commercial and industrial adversely-classified loan in Puerto Rico, recording a charge-off of $1.3 million, and a $9.2 million commercial and industrial loan participation in the Florida region.

Sale of the Puerto Rico Electric Power Authority (“PREPA”) Loan

During the first quarter of 2017, the Corporation received an unsolicited offer and sold its outstanding participation in the PREPA line of credit with a book value of $64 million at the time of sale (principal balance of $75 million), thereby reducing its direct exposure to the Puerto Rico government.  A specific reserve of approximately $10.2 million had been allocated to this loan.  Gross proceeds of $53.2 million from the sale resulted in an incremental loss of $0.6 million recorded as a charge to the provision for loan and lease losses in the first quarter of 2017.

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 $8.7 billion as of March 31, 2018, credit risk concentration was approximately 75% in Puerto Rico, 19% in the United States, and 6% in the USVI and BVI.

As of March 31, 2018, the Corporation had $54.8million outstanding loans extended to the Puerto Rico government, its municipalities and public corporations, compared to $55.9 million as of December 31, 2017. Approximately $33.1million of the outstanding loans as of March 31, 2018 consisted of loans extended to municipalities in Puerto Rico, which in most cases are supported by assigned property tax revenues.  The vast majority of revenues of the municipalities included in the Corporation’s loan portfolio 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 notes. Late in 2015, the GDB and the Municipal Revenue Collection Center (“CRIM”) signed and perfected 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 commercial depository financial institution in Puerto Rico. In addition to loans extended to municipalities, the Corporation’s exposure to the Puerto Rico government as of March 31, 2018 includes a $6.7million loanextended to a unit of the central government, and a $15.0 million loan granted to an affiliate of PREPA.

Furthermore, as of March 31, 2018, the Corporation had three loans granted to the hotel industry in Puerto Rico that were previously guaranteed by the Puerto Rico Tourism Development Fund (“TDF”) with an outstanding principal balance of $116.2 million (book value $61.6 million), compared to $120.2 million outstanding (book value of $70.8 million) as of December 31, 2017. Historically, the borrower and the operations of the underlying collateral of these loans have been the primary sources of repayment and the TDF, which is a subsidiary of the GDB, provided a secondary guarantee for payment performance. As part of agreements executed in the second quarter of 2017 and first quarter of 2018, the TDF paid $7.6million and $4.0 million, respectively, to honor a portion of its guarantee on these loans.  As provided in the agreements, the cash payments received by the Corporation released the TDF from its liability as a guarantor of these loans. All three of the commercial mortgage loans previously guaranteed by the TDF have been classified as non-performing and impaired since the first quarter of 2016, and interest payments have been applied against principal since then. In addition, the GDB agreed to issue to the Bank a fixed income financial instrument pursuant to the GDB’s Restructuring Support Agreement approved by the PROMESA oversight board. During the first quarter of 2018, two of these three commercial mortgage loans, with an aggregate outstanding principal balance of $50.4 million (book value of $27.2 million) were transferred to held for sale.

In addition, the Corporation had $115.9million in 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 under the mortgage loan 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 in an aggregate of 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 loan 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 also has credit exposure to USVI government entities. As of March 31, 2018, the Corporation had $76.7 million in loans to USVI government instrumentalities and public corporations, compared to $70.4 million as of December 31, 2017. Of the amount outstanding as of March 31, 2018, public corporations of the USVI owed approximately $53.5 million and an independent instrumentality of the USVI government owed approximately $23.2 million. As of March 31, 2018 all loans were currently performing and up to date on principal and interest payments.

The Corporation cannot predict at this time the ultimate effect that the current fiscal situation of the Commonwealth of Puerto Rico, the uncertainty about the debt restructuring process, the various legislative and other measures adopted and to be adopted by the Puerto Rico government and the PROMESA oversight board in response to such fiscal situation, and Hurricane Maria will have on the Puerto Rico economy, the Corporation’s clients, and 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, among others, the extension of the maturity of the loan and modifications of the loan rate. As of March 31, 2018, the Corporation’s total TDR loans held for investment of $572.4 million consisted of $350.0 million of residential mortgage loans, $96.3 million of commercial and industrial loans, $85.8 million of commercial mortgage loans, $6.6 million of construction loans, and $33.7 million of consumer loans. Outstanding unfunded commitments on TDR loans amounted to $1.9 million as of March 31, 2018. In addition, the loans held for sale portfolio includes a $30.0 million TDR construction loan.

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 six 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 March 31, 2018, the Corporation classified an additional $0.5 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 loans in these portfolios 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 these loan portfolios through its collection function. The function’s objective is to minimize both early stage delinquencies and losses upon default of loans in these portfolios. In the case of the commercialand 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 generallyhave oneyear terms 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 not considered concessions, and the loans continue to be recorded as performing.

Selected information on TDR loans held for investment that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs held for investment:
		March 31, 2018
		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Forbearance Agreement		Other (1)		Total
(In thousands)
Troubled Debt Restructurings:
Non- FHA/VA Residential Mortgage loans		$	24,390	$	8,396	$	255,731	$	-	$	-	$	61,463	$	349,980
Commercial Mortgage loans			6,518		36,411		30,739		-		2,020		10,146		85,834
Commercial and Industrial loans			2,497		20,448		15,705		-		3,197		54,418		96,265
Construction loans:
Land			17		3,860		2,177		-		-		324		6,378
Construction-commercial (2)			-		-		-		-		-		-		-
Construction-residential			-		-		-		-		-		217		217
Consumer loans - Auto			-		1,235		12,944		-		-		6,632		20,811
Finance leases			-		196		1,680		-		-		-		1,876
Consumer loans - Other			952		1,775		6,356		166		-		1,766		11,015
Total Troubled Debt Restructurings (2)		$	34,374	$	72,321	$	325,332	$	166	$	5,217	$	134,966	$	572,376
(1)	Other concessions granted by the Corporation included 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)	Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

		December 31, 2017
		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Forbearance Agreement		Other (1)		Total
(In thousands)
Troubled Debt Restructurings:
Non- FHA/VA Residential Mortgage loans		$	25,964	$	8,318	$	267,578	$	-	$	-	$	62,070	$	363,930
Commercial Mortgage loans			6,563		2,094		31,870		-		-		10,285		50,812
Commercial and Industrial loans			2,510		20,648		16,049		-		6,623		48,282		94,112
Construction loans:
Land			18		3,941		2,186		-		-		331		6,476
Construction-commercial			-		-		-		35,100		-		-		35,100
Construction-residential			-		-		-		-		-		217		217
Consumer loans - Auto			-		1,347		14,233		-		-		7,025		22,605
Finance leases			-		238		1,946		-		-		-		2,184
Consumer loans - Other			892		2,097		6,891		217		-		1,686		11,783
Total Troubled Debt Restructurings		$	35,947	$	38,683	$	340,753	$	35,317	$	6,623	$	129,896	$	587,219
(1)	Other concessions granted by the Corporation included 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 held for investment activity:
		Quarter Ended
		March 31, 2018		March 31, 2017
(In thousands)
Beginning Balance of TDRs		$	587,219	$	647,048
New TDRs			43,419		40,899
Increases to existing TDRs			6,771		424
Charge-offs post modification (1) (2)			(9,171)		(14,662)
Sales, net of charge-offs			-		(53,245)
Foreclosures			(7,043)		(4,371)
TDR transferred to held for sale, net of charge-off			(30,000)		-
Paid-off and partial payments			(18,819)		(13,729)
Ending balance of TDRs		$	572,376	$	602,364
(1)	The first quarter of 2018 includes a charge-off of $5.1 million associated with a $30.0 million construction loan transferred to held for sale.
(2)	The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line.

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 loans had demonstrated performance prior to the restructuring and payment in full under the restructured terms is expected. Otherwise, loans 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 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 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. 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. The Corporation did not remove any loans from the TDR classification during the first quarter of 2018 and 2017.

The following table provides a breakdown of the TDR loans held for investment by those in accrual and non-accrual status:
		As of March 31, 2018
		Accrual		Non-accrual (1)(2)		Total TDRs
	(In thousands)
Non-FHA/VA Residential Mortgage loans		$	272,659	$	77,321	$	349,980
Commercial Mortgage loans			24,010		61,824		85,834
Commercial and Industrial loans			43,251		53,014		96,265
Construction loans:
Land			1,197		5,181		6,378
Construction-commercial (2)			-		-		-
Construction-residential			-		217		217
Consumer loans - Auto			14,082		6,729		20,811
Finance leases			1,653		223		1,876
Consumer loans - Other			9,570		1,445		11,015
Total Troubled Debt Restructurings		$	366,422	$	205,954	$	572,376
(1)	Included in non-accrual loans are $53.2 million in loans that are performing under the terms of the restructuring agreement but are reported in nonaccrual 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)	Excludes a $30.0 million non-performing construction loans transferred to held for sale during the first quarter of 2018.

		As of December 31, 2017
		Accrual		Non-accrual (1)		Total TDRs
(In thousands)
Non-FHA/VA Residential Mortgage loans		$	280,729	$	83,201	$	363,930
Commercial Mortgage loans			23,329		27,483		50,812
Commercial and Industrial loans			41,536		52,576		94,112
Construction loans:
Land			1,291		5,185		6,476
Construction-commercial			-		35,100		35,100
Construction-residential			-		217		217
Consumer loans - Auto			15,548		7,057		22,605
Finance leases			1,968		216		2,184
Consumer loans - Other			10,294		1,489		11,783
Total Troubled Debt Restructurings		$	374,695	$	212,524	$	587,219
(1)	Included in non-accrual loans are $88.6 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.

TDR loans exclude restructured residential mortgage loans that are guaranteed by the U.S. federal government (i.e., FHA/VA loans) totaling $62.1 million as of March 31, 2018 (December 31, 2017 - $62.1 million). The Corporation excludes FHA/VA guaranteed loans from TDR loan 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 TDR loans completed during the first quarters of 2018 and 2017 were as follows:
	Quarter ended March 31, 2018
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(Dollars in thousands)
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	24	$	2,608	$	2,614
Commercial Mortgage loans	3		36,746		36,758
Commercial and Industrial loans	3		2,597		2,582
Consumer loans - Auto	45		680		680
Consumer loans - Other	136		785		785
Total Troubled Debt Restructurings	211	$	43,416	$	43,419

	Quarter ended March 31, 2017
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(Dollars in thousands)
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	40	$	4,650	$	4,508
Commercial Mortgage loans	6		22,438		22,198
Commercial and Industrial loans	3		10,748		10,748
Construction loans:
Land	1		25		28
Consumer loans - Auto	152		2,247		2,247
Finance leases	8		186		186
Consumer loans - Other	210		969		984
Total Troubled Debt Restructurings	420	$	41,263	$	40,899

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 a modified loan 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 ended March 31, 2018 and March 31, 2017, and had become TDR during the 12-month period preceding the default date, were as follows:
	Quarter ended March 31,
	2018			2017
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
(Dollars in thousands)
Non-FHA/VA Residential Mortgage loans	4	$	387	3	$	277
Commercial Mortgage loans	-		-	1		57
Consumer loans - Auto	2		23	4		61
Finance leases	1		22	-		-
Consumer loans - Other	11		54	17		61
Total	18	$	486	25	$	456

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 is 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 $35.6 million as of March 31, 2018. 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 quarters of 2018 and 2017:

(In thousands)	March 31, 2018			March 31, 2017
Principal balance deemed collectible at end of period	$	35,553	$	36,564
Amount charged off	$	-	$	-
Charges to the provision for loan losses	$	1,412	$	915
Allowance for loan losses at end of period	$	5,258	$	6,056

Approximately $3.1 million of the loans restructured using the A/B note restructure workout strategy were in accrual status as of March 31, 2018. These loans continue to be individually evaluated for impairment purposes.

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ALLOWANCE FOR LOAN AND LEASE LOSSES

3 Months Ended

Mar. 31, 2018

ALLOWANCE FOR LOAN AND LEASE LOSSES

NOTE7 – ALLOWANCEFORLOANAND LEASELOSSES

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 March 31, 2018
Allowance for loan and lease losses:
Beginning balance	$	58,975	$	48,493	$	48,871	$	4,522	$	70,982	$	231,843
Charge-offs		(3,371)		(6,810)		(1,930)		(5,177)		(12,072)		(29,360)
Recoveries		335		49		62		13		2,370		2,829
Provision		447		8,661		656		4,764		6,016		20,544
Ending balance	$	56,386	$	50,393	$	47,659	$	4,122	$	67,296	$	225,856
Ending balance: specific reserve for
impaired loans	$	22,546	$	13,451	$	14,375	$	1,484	$	5,074	$	56,930
Ending balance: purchased credit-impaired loans (1)	$	10,873	$	378	$	-	$	-	$	-	$	11,251
Ending balance: general allowance	$	22,967	$	36,564	$	33,284	$	2,638	$	62,222	$	157,675
Loans held for investment:
Ending balance	$	3,267,868	$	1,552,503	$	2,061,773	$	79,150	$	1,734,596	$	8,695,890
Ending balance: impaired loans	$	417,610	$	162,126	$	119,778	$	12,067	$	34,699	$	746,280
Ending balance: purchased credit-
impaired loans	$	151,067	$	4,214	$	-	$	-	$	-	$	155,281
Ending balance: loans with general allowance	$	2,699,191	$	1,386,163	$	1,941,995	$	67,083	$	1,699,897	$	7,794,329

(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended March 31, 2017
Allowance for loan and lease losses:
Beginning balance		$	33,980	$	57,261	$	61,953	$	2,562	$	49,847	$	205,603
Charge-offs			(8,225)		(1,362)		(12,052)		(63)		(11,192)		(32,894)
Recoveries			749		30		875		445		2,981		5,080
Provision (release)			9,271		12,539		(4,806)		942		7,496		25,442
Ending balance		$	35,775	$	68,468	$	45,970	$	3,886	$	49,132	$	203,231
Ending balance: specific reserve for
impaired loans		$	8,551	$	36,638	$	12,711	$	2,835	$	5,576	$	66,311
Ending balance: purchased credit-impaired loans (1)		$	6,545	$	312	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	20,679	$	31,518	$	33,259	$	1,051	$	43,556	$	130,063
Loans held for investment:
Ending balance		$	3,272,598	$	1,596,176	$	2,108,532	$	137,887	$	1,707,156	$	8,822,349
Ending balance: impaired loans		$	432,798	$	193,035	$	86,059	$	51,801	$	43,505	$	807,198
Ending balance: purchased credit-
impaired loans		$	158,940	$	4,160	$	-	$	-	$	-	$	163,100
Ending balance: loans with general allowance		$	2,680,860	$	1,398,981	$	2,022,473	$	86,086	$	1,663,651	$	7,852,051
(1)	Refer to Note 7 - Loans Held for Investment-PCI Loans for a detail of changes in the allowance for loan losses related to PCI loans.

As of March 31, 2018, the Corporation maintained a $0.6 million reserve for unfunded loan commitments (December 31, 2017 - $0.7million), mainly related to outstanding commitments on floor plan revolving lines of credit. 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 amountsfor unfunded commitments. The reserve for unfunded loan commitments is included as part of accounts payable and other liabilities in theconsolidated statement of financial condition and any change to the reserve is included as part of other non-interest expenses in theconsolidated statements of income.

During the first quarter of 2018, the Corporation implemented enhancements to the methodology behind the calculation of the allowance for commercial loans, which includes, among others, the following: (i) a revised procedure to determine the historical loss rates applicable for each commercial loan regulatory-based credit risk categories (i.e., pass, special mention, substandard and doubtful) that changed the previous blending of loss rates for loans risk-rated special mention, substandard and doubtful with an aggregation methodology whereas historical losses and portfolio balances of special mention loans are allocated to pass or substandard categories based on the historical proportion of the loans in this risk category that ultimate cured or resulted uncollectible; (ii) a quarterly sensitivity analysis using actual historical loss rates for loans risk-rated pass, special mention and substandard to compare the results of such sensitivity to the calculated reserves under the revised procedure, and  (iii) establishment of sensitivity thresholds that could trigger further reviews and/or adjustments prior to reaching a conclusion as to the adequacy of the allowance for loan and lease losses for the Corporation’s commercial portfolios.

The comparison of the revised procedure with the sensitivity analysis resulted in an immaterial increase to the qualitative reserve for commercial mortgage loans that was recorded as of March 31, 2018. The Corporation engaged an independent third party to assess the allowance framework and the appropriateness of assumptions used in the analysis and expects such review to be completed during the second quarter of 2018.

Refer to Note 2, – “Updates on Effects of Natural Disasters,” for information about changes to the hurricane-related allowance established by the Corporation in 2017.

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LOANS HELD FOR SALE

3 Months Ended

Mar. 31, 2018

LOANS HELD FOR SALE

NOTE 9–LOANS HELD FOR SALE

The Corporation’s loans held-for-sale portfolio as of the dates indicated was composed of:

		As of
		March 31, 2018		December 31, 2017
(In thousands)
Residential mortgage loans		$	26,430	$	24,690
Construction loans (1)			37,732		8,290
Commercial mortgage loans (1)			27,213		-
Total (1)		$	91,375	$	32,980
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sales consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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OTHER REAL ESTATE OWNED

3 Months Ended

Mar. 31, 2018

Text Block [Abstract]

Other Real Estate Owned Disclosure [Text Block]

NOTE9–OTHER REAL ESTATE OWNED

The following table presents OREO inventory as of the dates indicated:
		March 31,			December 31,
		2018		2017
(In thousands)
OREO
OREO balances, carrying value:
Residential (1)		$	60,240	$	54,381
Commercial			83,911		82,871
Construction			10,488		10,688
Total		$	154,639	$	147,940
(1)	Excludes $17.8 million and $21.3 million as of March 31, 2018 and December 31, 2017, 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

3 Months Ended

Mar. 31, 2018

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 11–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 will adversely affect the Corporation’s net interest income from its loan and investment portfolios. 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 March 31, 2018 and December 31, 2017, 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.

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
	March 31,		December 31,
(In thousands)	2018		2017
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	$	90,510	$	91,010
Purchased interest rate cap agreements		90,510		91,010
Forward Contracts:
Sale of TBA GNMA MBS pools		25,000		26,000
	$	206,020	$	208,020
(1) Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

The following table summarizes for derivative instruments their fair values and location in the consolidated statements of financial condition:
	Asset Derivatives					Liability Derivatives
	Statement of	March 31,		December 31,			March 31,		December 31,
	Financial	2018		2017			2018		2017
	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	$	668	$	305
Purchased interest rate cap agreements	Other assets		668		305	Accounts payable and other liabilities		-		-
Forward Contracts:
Sales of TBA GNMA MBS pools	Other assets		3		7	Accounts payable and other liabilities		67		19
		$	671	$	312		$	735	$	324

The following table summarizes the effect of derivative instruments on the statement of income:
		(Loss)
	Location of Loss		Quarter Ended
	Recognized in Statement	March 31,
	of Income on Derivatives	2018		2017
			(In thousands)
UNDESIGNATED ECONOMIC HEDGES:
Interest rate contracts:
Written and purchased interest rate cap agreements	Interest income - Loans	$	-	$	(1)
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage Banking Activities		(52)		(56)
Total loss on derivatives		$	(52)	$	(57)

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.

As of March 31, 2018, the Corporation had not entered into any derivative instrument containing credit-risk-related contingent features.

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OFFSETTING OF ASSETS AND LIABILITIES

3 Months Ended

Mar. 31, 2018

Text Block [Abstract]

OFFSETTING OF ASSETS AND LIABILITIES

NOTE 12–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 with respect to 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
As of March 31, 2018
							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
(In thousands)											Net Amount
Description
Derivatives	$	668	$	-	$	668	$	(45)	$	(623)	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,668	$	(200,000)	$	668	$	(45)	$	(623)	$	-
As of December 31, 2017
							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
											Net Amount
(In thousands)
Description
Derivatives	$	305	$	-	$	305	$	(305)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,305	$	(200,000)	$	305	$	(305)	$	-	$	-

Offsetting of Financial Liabilities and Derivative Liabilities
As of March 31, 2018
							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
(In thousands)											Net Amount
Description
Securities sold under agreements to repurchase	$	400,000	$	(200,000)	$	200,000	$	(200,000)	$	-	$	-
As of December 31, 2017
							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
											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	500,000	$	(200,000)	$	300,000	$	(300,000)	$	-	$	-

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GOODWILL AND OTHER INTANGIBLES

3 Months Ended

Mar. 31, 2018

GOODWILL AND OTHER INTANGIBLES

NOTE 13 – GOODWILL AND OTHER INTANGIBLES

Goodwill as of March 31, 2018 and December 31, 2017 amounted to $28.1million, recognized as part of “Other Assets” in the consolidated statements of financial condition. The Corporation conducted its annual evaluation of goodwill and other intangibles during the fourth quarter of 2017. The Corporation’s goodwill is related to the acquisition of FirstBank Florida in 2005.

There have been no significant 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 quarter of 2018. 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 3.6 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 includes the core deposit intangible acquired in the February 2015 Doral Bank transaction amounting to $3.6million as of March 31, 2018.

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 ($0.7 million as of March 31, 2018), which is being amortized over the next 4.7 years on a straight-line basis. The acquired accounts have 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 statements of financial condition:
	As of		As of
	March 31,		December 31,
	2018		2017
(Dollars in thousands)
Core deposit intangible:
Gross amount, beginning of period	$	51,664	$	51,664
Accumulated amortization (1)		(46,580)		(46,186)
Net carrying amount	$	5,084	$	5,478
Remaining amortization period		6.8 years		7.0 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization (2)		(17,039)		(16,465)
Net carrying amount	$	7,426	$	8,000
Remaining amortization period		3.6 years		3.9 years
Insurance customer relationship intangible:
Gross amount	$	1,067	$	1,067
Accumulated amortization (3)		(330)		(292)
Net carrying amount	$	737	$	775
Remaining amortization period		4.7 years		5.0 years
(1) For the quarters ended March 31, 2018 and 2017, the amortization expense of core deposit intangibles amounted to $0.4 million and $0.5 million, respectively.
(2) For each of the quarters ended March 31, 2018 and 2017, the amortization expense of the purchased credit card relationship intangible amounted to $0.6 million.
(3) For each of the quarters ended March 31, 2018 and 2017, the amortization expense of the insurance customer relationship intangible amounted to $38 thousand.

	The estimated aggregate annual amortization expense related to the intangible assets for future periods is as follows:
			Amount
			(In thousands)
2018		$	2,585
2019			3,088
2020			2,851
2021			2,658
2020			915
2023 and after			1,150

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

3 Months Ended

Mar. 31, 2018

NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

NOTE 14 – NON-CONSOLIDATED VARIABLE INTEREST ENTITIES (“VIE”) 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, under seller/servicer agreements, the Corporation is required to service the loans in accordance with the issuers’ servicing guidelines and standards. As of March 31, 2018, the Corporation serviced loans securitized through GNMA with a principal balance of $1.7 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. FBP Statutory Trust I used 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 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. FBP Statutory Trust II used 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 securitiesto 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 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 2018, the Corporation completed the repurchase of $23.8 millionof trust preferred securities of the FBP Statutory Trust I 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 90% of the $23.8 million par value. The 10% discount resulted in a gain of approximately $2.3 million, which is reflected in the statement of income as a “Gain on early extinguishment of debt.”

The Collins Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act eliminated 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 Deferrable 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, having received approval from the Federal Reserve, paid $31.2 million for all of the accrued but deferred interest payments plus the interest for the second quarter of 2016 on the Corporation’s subordinated debentures associated with its trust preferred securities. Subsequently, the Corporation has received quarterly approvals that have enabled it to make scheduled quarterly interest payments. As of March 31, 2018, the Corporation was current on all interest payments due on its subordinated debt. In October 2017, the New York FED terminated the formal written agreement (the “Written Agreement”) entered into on June 3, 2010 between the Corporation and the Reserve Bank. However, the Corporation has agreed with its regulators to continue to obtain approval before paying dividends, receiving dividends from the Bank, making payments on subordinated debt or trust-preferred securities, incurring or guaranteeing debt or purchasing or redeeming any corporate stock. The Corporation has received approval to make the subordinated debentures’ quarterly payment for June 30, 2018.

Grantor Trusts

During 2004 and 2005, an unaffiliated party, 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 “Grantor Trusts”). 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 Bank, as the sole holder of the certificates, absorbs all risks from losses on non-accruing loans and repossessed collateral. As of March 31, 2018, the amortized cost and fair value of the Grantor Trusts amounted to $21.3 million and $16.1 million, respectively, with a weighted average yield of 4.49%.

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 PRLP's 65% ownership interest in CPG/GS. As of March 31, 2018, the carrying amount of the loan was $4.1 million,which was included in the Corporation's commercial and industrial loans held for investment portfolio.The loan matured in February 2018 and is in the process of refinancing. As of March 31, 2018, the loan is current on its interest payments. FirstBank’s equity interest in CPG/GS is accounted for under the equity method. 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.

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. 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 loan bears variable interest at 30-day LIBOR plus 300 basis points. As of March 31, 2018, the carrying value of the amount outstanding under the revolver agreement was $6.8 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, and the revolver agreement, 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%, which has not occurred, 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.

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
		March 31,		March 31,
		2018		2017
(In thousands)
Balance at beginning of period		$	25,255	$	26,244
Capitalization of servicing assets			887		875
Amortization			(737)		(788)
Adjustment to fair value			713		(160)
Other (1)			17		159
Balance at end of period		$	26,135	$	26,330
(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
	March 31,		March 31,
	2018		2017
(In thousands)
Balance at beginning of period	$	1,451	$	461
Temporary impairment charges		17		160
OTTI of servicing assets		(65)		(621)
Recoveries		(730)		-
Balance at end of period	$	673	$	-

	The components of net servicing income are shown below:
		Quarter ended
		March 31,		March 31,
		2018		2017
			(In thousands)
Servicing fees		$	2,120	$	2,024
Late charges and prepayment penalties			120		99
Adjustment for loans repurchased			17		159
Other			-		(7)
Servicing income, gross			2,257		2,275
Amortization and impairment of servicing assets			(24)		(948)
Servicing income, net		$	2,233	$	1,327

The Corporation’s servicing assets are subject to prepayment and interest rate risks. As of March 31, 2018, 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 Corporation used constant prepayment rate assumptions for the Corporation’s servicing assets for the government-guaranteed mortgage loansof 5.6% and6.0% for the quarters ended March 31, 2018 and 2017, respectively. For conventional conforming mortgage loans, the Corporation used 6.2% and 6.3% for the quarters ended March 31, 2018 and 2017,respectively, and, for the conventional non-conforming mortgage loans, the Corporation used 9.1% and 9.5% for the quarters ended March 31, 2018 and 2017, respectively. Discount rate assumptions used were 12% for government-guaranteed mortgage loans; 10% for conventional conforming mortgage loans; and14.3%for conventional non-conforming mortgage loans for each of the quarters ended March 31, 2018 and 2017.

The weighted averages of the key economic assumptions that the Corporation used in its valuation model and the sensitivity of the current fair value to immediate 10% and 20% adverse changes in those assumptions for mortgage loans as ofMarch 31, 2018 were as follows:

	(Dollars in thousands)
Carrying amount of servicing assets	$	26,135
Fair value	$	30,720
Weighted-average expected life (in years)		8.56
Constant prepayment rate (weighted-average annual rate)		5.89%
Decrease in fair value due to 10% adverse change	$	725
Decrease in fair value due to 20% adverse change	$	1,421
Discount rate (weighted-average annual rate)		11.23%
Decrease in fair value due to 10% adverse change	$	1,503
Decrease in fair value due to 20% adverse change	$	2,876

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

3 Months Ended

Mar. 31, 2018

DEPOSITS

NOTE 14 – DEPOSITS

The following table summarizes deposit balances as of the dates indicated:
	March 31,			December 31,
	2018		2017
(In thousands)
Type of account:
Non-interest bearing checking accounts	$	2,019,823	$	1,833,665
Savings accounts		2,413,446		2,401,385
Interest-bearing checking accounts		1,242,957		1,207,511
Certificates of deposit		2,434,162		2,429,585
Brokered certificates of deposit (CDs)		956,077		1,150,485
	$	9,066,465	$	9,022,631

Brokered CDs mature as follows:
	March 31, 2018
(In thousands)
Three months or less	$	133,119
Over three months to six months		149,170
Over six months to one year		265,986
Over one year but less than three years		316,191
Three to five years		90,231
Over five years		1,380
Total	$	956,077

The following are the components of interest expense on deposits:
	Quarter Ended
	March 31,			March 31,
	2018			2017
(In thousands)
Interest expense on deposits	$	16,607	$	15,468
Accretion of premium from acquisition		(3)		(23)
Amortization of broker placement fees		367		527
Interest expense on deposits	$	16,971	$	15,972

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

3 Months Ended

Mar. 31, 2018

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

NOTE 15 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase (repurchase agreements) consisted of the following:
		March, 31		December 31,
		2018		2017
(Dollars in thousands)
Short-term fixed-rate repurchase agreement with a rate of 1.53%		$	-	$	100,000
Long-term fixed-rate repurchase agreements, interest ranging from 1.96% to 2.26% (1)(2)			200,000		200,000
		$	200,000	$	300,000
(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 March 31, 2018, includes $200 million with an average rate of 2.11% that lenders have the right to call before their contractual maturities at various dates beginning on May 6, 2018. Subsequent to March 31, 2018, no lender has exercised its call option on repurchase agreements.

Repurchase agreements mature as follows:
		March 31, 2018
		(In thousands)
	Three to four years		200,000
	Total	$	200,000

As of March 31, 2018 and December 31, 2017, the securities underlying such agreements were delivered to the dealers with which the repurchase agreements were transacted.

Repurchase agreements as of March 31, 2018, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	JP Morgan Chase	$	200,000	46

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

3 Months Ended

Mar. 31, 2018

ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

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

The following is a summary of the advances from the FHLB:
		March 31,		December 31,
		2018		2017
	(In thousands)
	Long-term fixed-rate advances from FHLB, with a weighted-average
	interest rate of 1.91%	$	715,000	$	715,000

Advances from FHLB mature as follows:
		March 31,
		2018
	(In thousands)
	Over three months to six months	$	25,000
	Over six months to one year		70,000
	Over one to three years		300,000
	Over three to five years		320,000
	Total	$	715,000

As of March 31, 2018, the Corporation had additional capacity of approximately $689.5 million on this credit facility based on collateral pledged at the FHLB, including a haircut reflecting the perceived risk associated with the collateral.

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OTHER BORROWINGS

3 Months Ended

Mar. 31, 2018

OTHER BORROWINGS

NOTE 18 – OTHER BORROWINGS

Other borrowings, as of the indicated dates, consisted of:

	March 31,		December 31,
	2018		2017
	(In thousands)
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (4.92% as of March 31, 2018
and 4.35% as of December 31, 2017) (1)	$	65,593	$	90,078
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (4.70% as of March 31, 2018
and 4.12% as of December 31, 2017)		118,557		118,557
	$	184,150	$	208,635
(1) Refer to Note 14, - "Non-Consolidated Variable Interest Entities and Servicing Assets-Trust Preferred Securities," for additional information about the Corporation repurchase and cancellation in the first quarter of 2018 of $23.8 million in trust-preferred securities associated with these junior subordinated debentures.

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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2018

STOCKHOLDERS' EQUITY

NOTE 19 – STOCKHOLDERS’ EQUITY

Common Stock

As of March 31, 2018 and December 31, 2017, the Corporation had 2,000,000,000 authorized shares of common stock with a par value of $0.10 per share. As of March 31, 2018 and December 31, 2017, there were 220,877,719 and 220,382,343 shares issued, respectively, and 216,390,329 and 216,278,040 shares outstanding, respectively. Refer to Note 4 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 have such rights and preferences as are fixed by the Board of Directors when authorizing the issuance of that particular series. As of March 31, 2018, 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. In December 2016, for the first time since July 2009, the Corporation paid dividends on its non-cumulative perpetual monthly income preferred stock, after receiving regulatory approval. Since then, the Corporation has continued to pay monthly dividend payments on the non-cumulative perpetual monthly income preferred stock. The Corporation intends to request approval in future periods to continue monthly dividend payments onthe non-cumulative perpetual monthly income preferred stock. The Corporation has received regulatory approval to pay the monthly dividends on the Corporation’s Series A through E Preferred Stock through June 2018.

On October 3, 2017, the Federal Reserve terminated the Written Agreement entered into on June 3, 2010 between the Corporation and the Federal Reserve. However, the Corporation has agreed with its regulators to continue to obtain approval before paying dividends, receiving dividends from the Bank, making payments on subordinated debt or trust preferred securities, incurring or guaranteeing debt or purchasing or redeeming any corporate stock.

Treasury stock

During the first quarter of 2018 and 2017, the Corporation withheld an aggregate of 383,087 shares and 98,300 shares, respectively, of the common stock paid to certain senior officers as additional compensation and restricted stock that vested during the first quarter of 2018 and 2017 to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury stock. As of March 31, 2018 and December 31, 2017, the Corporation had 4,487,390and4,104,303shares 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 a legal surplus reserve until such surplus equals the total of paid-in-capital on common and preferred stock. Amounts transferred to the legal surplus reserve 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 must be charged against the undistributed profits of the bank, and the balance, if any, must be charged against the legal surplus reserve, as a reduction thereof. If there is no legal surplus reserve sufficient to cover such balance in whole or in part, the outstanding amount must be charged against the capital account and the Bank cannot pay dividends until it can replenish the legal surplus reserve to an amount of at least 20% of the original capital contributed.During the fourth quarter of 2017, $7.3 million was transferred to the legal surplus reserve. FirstBank’s legal surplus reserve, included as part of retained earnings in the Corporation’s consolidated statement of financial condition, amounted to $59.7 million as of March 31, 2018. There were no transfers to the legal surplus reserve during the quarter ended March 31, 2018.

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INCOME TAXES

3 Months Ended

Mar. 31, 2018

INCOME TAXES

NOTE 20 - 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 generally not entitled to file consolidated tax returns and, thus, the Corporation is generally not entitled 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 allows entities organized as limited liability companies to perform an election to become a non-taxable “pass-through” entity and utilize losses to offset income from other “pass-through” entities, subject to certain limitations, with the remaining net income passing-through to its partner entities. The 2011 PR Code also 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.

On March 1, 2017, the Corporation completed the applicable regulatory filings to change the tax status of its subsidiary, First Federal Finance, from a taxable corporation to a non-taxable “pass-through” entity. This election allows the Corporation to realize tax benefits of its deferred tax assets associated with pass-through ordinary net operating losses available at the banking subsidiary, FirstBank, which were subject to a full valuation allowance as of December 31, 2016, against now pass-through ordinary income from this profitable subsidiary.

On March 1, 2017, the Corporation also completed the applicable regulatory filings to change the tax status of its subsidiary, FirstBank Insurance, from a taxable corporation to a non-taxable “pass-through” entity. This election allows the Corporation to offset pass-through income projected to be earned by FirstBank Insurance with net operating losses available at the Holding Company level.

The Corporation has maintained an effective tax rate lower than the maximum statutory rate 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.

For the first quarter of 2018, the Corporation recorded a income tax expense of $7.8 million, compared to an income tax benefit of $8.1 million for the same period in 2017. The variance was mostly attributable to a $13.2 million tax benefit recorded in the first quarter of 2017 as a result of the above discussed change in tax status of certain subsidiaries from taxable corporations to limited liability companies that elected to be treated as partnerships for income tax purposes in Puerto Rico, higher pre-tax earnings in the first quarter of 2018, and a higher estimated effective tax rate for 2018.

For the quarter ended March 31, 2018, 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 annual estimated 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 Corporation’s estimated annual effective tax rate in the first quarter of 2018, excluding entities from which a tax benefit cannot be recognized and discrete items, was 27% compared to 24% for the first quarter of 2017.  The estimated annual effective tax rate including all entities for 2018 was 19% (23% excluding discrete items)compared to 13% for the first quarter of 2017 (25% excluding discrete items, primarily the tax benefit resulting from the previously mentioned change in the tax status of the two subsidiaries).

The Corporation’s net deferred tax asset amounted to $289.3 million as of March 31, 2018, net of a valuation allowance of $186.1 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 net deferred tax asset of the Corporation’s banking subsidiary, FirstBank, amounted to $289.2 million as of March 31, 2018, net of a valuation allowance of $150.0million, compared to net deferred tax asset of $294.7million, net of a valuation allowance of $150.7million, as of December 31, 2017.

During the third quarter of 2017, the Corporation completed a formal ownership change analysis within the meaning of Section 382 of the U.S. Internal Revenue Code (“Section 382”) covering a comprehensive period, and concluded that an ownership change occurred during such period. Section 382 limits the ability to utilize U.S. and USVI NOLs for income tax purposes at such jurisdictions following an event of an ownership change.  The Section 382 limitation could result in higher U.S. and USVI liabilities in the future than we would incur in the absence of such limitation. As of March 31, 2018, and as a result of the Section 382 limitation, the Corporation incurred an income tax expense of approximately $1.6 million related to its U.S. operations. The limitation did not affect the USVI operations in the first quarter of 2018. Prospectively, the Corporation expects that it will be able to mitigate the adverse effects associated with the Section 382 limitation as any such tax paid in the U.S. or USVI could be creditable against Puerto Rico tax liabilities or taken as deduction against taxable income.  However, our ability to reduce our Puerto Rico tax liability through such a credit or deduction depends on our tax profile at each annual taxable period, which is dependent on various factors.

As of March 31, 2018, the Corporation did not have Unrecognized Tax Benefits (“UTBs”) recorded on its books. The Corporation classifies all interest and penalties, if any, related to tax uncertainties as income tax expense. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the 2011 PR Code is four years; the statute of limitations for U.S. and USVI income tax purposes is three years after a tax return is due or filed, whichever is later, for each. 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 U.S. and USVI income tax purposes, all tax years subsequent to 2012 remain open to examination. For Puerto Rico tax purposes, all tax years subsequent to 2012 remain open to examination.

On December 22, 2017, the United States president signed H.R.1, The Tax Cuts and Jobs Acts, which includes an overhaul of individual, business and international taxes and has affected our branch operations in the U.S. and the USVI. The bill includes measures reducing corporate taxes from 35% to 21%, a repeal of the corporate alternative minimum tax regime, changes to business deductions and NOLs, a 15.5% tax on mandatory repatriation of liquid assets, 10% tax on base erosion payments, and a minimum 10.5% tax on inclusion of global intangible low-tax income by U.S. shareholders, among other significant changes. The main provisions affecting our operations in theU.S. and the USVI in the first quarter for 2018 include: the change in tax rate to 21%, the limitation to the amount certain financial institutions may deduct for premiums paid to the FDIC, and changes in permanent differences, such as the meals and entertainment deductions. Other significant provisions, such as the base erosion and anti-abuse tax, do not affect the Corporation’s U.S. and USVI branch operations since these operations’ receipts do not exceed the annual threshold of U.S. effectively connected gross receipts.

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FAIR VALUE

3 Months Ended

Mar. 31, 2018

FAIR VALUE

NOTE 21 – 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 using pricing models for which the determination of fair value requires significant management judgments estimation.

For the first quarter of 2018, 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 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. If listed prices or quotes are not available, fair value is based upon discounted cash flow models that use unobservable inputs due to the limited market activity of the instrument, as is the case with certain private label MBS 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 based on historical portfolio performance. 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, using an asset-level risk assessment method taking into account loan credit characteristics (loan-to-value, state jurisdiction, delinquency, property type and pricing behavior, and others) 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. On interest caps, only the seller's credit risk is considered.  The caps were valued using a discounted cash flow approach based on the related LIBOR and swap rate for each cash flow.

A credit spread is considered for those derivative instruments that are not secured. The cumulative mark-to-market effect of credit risk in the valuation of derivative instruments for the quarters ended March 31, 2018 and 2017 was immaterial.

Assets and liabilities measured at fair value on a recurring basis are summarized below:
		As of March 31, 2018								As of December 31, 2017
		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 (1)		$	-	$	-	$	-	$	-	$	418	$	-	$	-	$	418
U.S. Treasury Securities			57,169		-		-		57,169		7,401		-		-		7,401
Noncallable U.S. agency debt			-		329,170		-		329,170		-		361,971		-		361,971
Callable U.S. agency debt and MBS			-		1,406,283		-		1,406,283		-		1,497,253		-		1,497,253
Puerto Rico government obligations			-		4,074		2,734		6,808		-		4,118		2,695		6,813
Private label MBS			-		-		16,074		16,074		-		-		17,060		17,060
Other investments			-		-		-		-		-		-		100		100
Equity securities (1)			413		-		-		413		-		-		-		-
Derivatives, included in assets:
Purchased interest rate cap agreements			-		668		-		668		-		305		-		305
Forward contracts			-		3		-		3		-		7		-		7
Liabilities:
Derivatives, included in liabilities:
Written interest rate cap agreement			-		668		-		668		-		305		-		305
Forward contracts			-		67		-		67		-		19		-		19
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities. As of December 31, 2017, equity securities had a net unrealized loss of $6 thousand.

The table below presents a reconciliation of the beginning and ending balancesof all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters ended March 31, 2018 and 2017.

		Quarter ended March 31,
		2018		2017
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	19,855		22,914
Total gains (losses) (realized/unrealized):
Included in other comprehensive income			472		518
Principal repayments and amortization			(1,519)		(2,050)
Ending balance		$	18,808	$	21,382
(1)	Amounts mostly related to private label MBS.

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) as of March 31, 2018:
	March 31, 2018
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	16,074	Discounted cash flows	Discount rate	14.5%
				Prepayment rate	7.5% - 24.5% (Weighted Average 15.2%)
				Projected Cumulative Loss Rate	0.00% - 9.0% (Weighted Average 4.0%)
Puerto Rico government obligations		2,734	Discounted cash flows	Discount rate	6.24%
				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 that collateralize these obligations that are guaranteed by the Puerto Rico Housing Finance Authority. A significant increase (decrease) in the assumed rate would lead to a higher (lower) fair value estimate. The fair value of these bonds was based on a discounted cash flow analysis that contemplates the credit quality of the holder of second mortgages and a discount for liquidity constraints on the bonds considering the absence of an active market for them. Due to the guarantee of the Puerto Rico Housing Finance Authority and other applicable contractual safeguards, no additional credit spread is applied for services default.

There were no changes in unrealized gains and losses recorded in earnings for the quarters ended March 31, 2018 and 2017 for Level 3 assets and liabilities that were still held at the end of each period.

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 and loans).

As of March 31, 2018, 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 March 31, 2018						(Losses) Gains recorded for the Quarter Ended March 31, 2018
		Level 1		Level 2		Level 3
(In thousands)
Loans receivable (1)		$	-	$	-	$	392,493	$	(4,224)
Other real estate owned (2)			-		-		154,639		(287)
Mortgage servicing rights (3)			-		-		26,135		713
Loans held for sale (4)			-		-		64,945		(6,203)
(1)	Consists mainly of impaired commercial and construction loans. The impairments were generally measured based on the fair value of the collateral. The fair values were 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 values were 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 5.89%, Discount Rate 11.23%.
(4)	The value of these loans was primarily derived from external appraisals, adjusted for specific characteristics of the loans.

As of March 31, 2017, 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 March 31, 2017						(Losses) recorded for the Quarter Ended March 31, 2017
		Level 1		Level 2		Level 3
(In thousands)
Loans receivable (1)		$	-	$	-	$	430,162	$	(15,211)
Other real estate owned (2)			-		-		137,784		(4,180)
Mortgage servicing rights (3)			-		-		26,330		(160)
(1)	Consists mainly of impaired commercial and construction loans. The impairments were generally measured based on the fair value of the underlying collateral. The fair values were 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 values were 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 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 6.17%, Discount Rate 11.20%.

Qualitative information regarding the fair value measurements for Level 3 financial instruments are as follows:
	March 31, 2018
	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 Flows	Weighted average prepayment rate of 5.89%; weighted average discount rate of 11.23%

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 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 investment 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 the Corporation owns 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 is 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 are classified by type, such as commercial, residential mortgage, and automobile. These asset categories are further segmented into fixed- and adjustable-rate categories.  Valuations are carried out based on categories and not on a loan-by-loan basis.  Prepayment assumptions are considered for non-residential loans. For residential mortgage loans, prepayment estimates are based on a prepayment model that combined both a historical calibration and current market prepayment expectations.  Discount rates are 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. 

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 and brokered CDs, with stated maturities, are based on the present value of the future cash flows expected to be paid on the deposits. The discount rates used were based on retail and brokered CDs market rates as of March 31, 2018. The cash flows were based on contractual maturities; no early repayments were assumed.

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 is estimated using exit price indications provided by the counterparty.  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 debenture at a tenor comparable to the time to maturity of the debentures.

The following tables present the carrying value, estimated fair value and estimated fair value level of the hierarchy of financial instruments as of March 31, 2018 and December 31, 2017:
	Total Carrying Amount in Statement of Financial Condition March 31, 2018		Fair Value Estimate March 31, 2018		Level 1		Level 2		Level 3
(In thousands)
Assets:
Cash and due from banks and money
market investments (amortized cost)	$	843,824	$	843,824	$	843,824	$	-	$	-
Investment securities available
for sale (fair value)		1,815,504		1,815,504		57,169		1,739,527		18,808
Investment securities held to maturity (amortized cost)		150,486		134,856		-		-		134,856
Equity Securities (fair value)		413		413		413		-		-
Other investment securities (amortized cost)		43,119		43,119		-		43,119		-
Loans held for sale (lower of cost or market)		91,375		91,736		-		26,791		64,945
Loans held for investment (amortized cost)		8,695,890
Less: allowance for loan and lease losses		(225,856)
Loans held for investment, net of allowance	$	8,470,034		8,262,128		-		-		8,262,128
Derivatives, included in assets (fair value)		668		668		-		668		-
Liabilities:
Deposits (amortized cost)		9,066,465		9,070,024		-		9,070,024		-
Securities sold under agreements
to repurchase (amortized cost)		200,000		226,076		-		226,076		-
Advances from FHLB (amortized cost)		715,000		701,079		-		701,079		-
Other borrowings (amortized cost)		184,150		171,378		-		-		171,378
Derivatives, included in liabilities (fair value)		735		735		-		735		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2017		Fair Value Estimate December 31, 2017		Level 1		Level 2		Level 3
(In thousands)
Assets:
Cash and due from banks and money
market investments (amortized cost)	$	716,395	$	716,395	$	716,395	$	-	$	-
Investment securities available
for sale (fair value)		1,891,016		1,891,016		7,819		1,863,342		19,855
Investment securities held to maturity (amortized cost)		150,627		131,032		-		-		131,032
Other investment securities (amortized cost)		43,119		43,119		-		43,119		-
Loans held for sale (lower of cost or market)		32,980		34,979		-		25,237		9,742
Loans held for investment (amortized cost)		8,850,476		-		-		-		-
Less: allowance for loan and lease losses		(231,843)		-		-		-		-
Loans held for investment, net of allowance	$	8,618,633		8,372,865		-		-		8,372,865
Derivatives, included in assets (fair value)		312		312		-		312		-
Liabilities:
Deposits (amortized cost)		9,022,631		9,026,600		-		9,026,600		-
Securities sold under agreements
to repurchase (amortized cost)		300,000		325,913		-		325,913		-
Advances from FHLB (amortized cost)		715,000		707,272		-		707,272		-
Other borrowings (amortized cost)		208,635		189,424		-		-		189,424
Derivatives, included in liabilities (fair value)		324		324		-		324		-

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REVENUE FROM CONTRACTS WITH CUSTOMERS

3 Months Ended

Mar. 31, 2018

Revenue From Contract With Customers [Text Block]

NOTE 22 – REVENUE FROM CONTRACTS WITH CUSTOMERS

As noted in Note 1, the Corporation adopted the provisions of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), on January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with Topic 605.

Revenue Recognition

In accordance with Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration to which the Corporation expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the Corporation performs the following five steps: (i) identifies the contract(s) with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when (or as) the Corporation satisfies a performance obligation. The Corporation only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Corporation assesses the goods or services that are promised within each contract and identifies those that contain performance obligations, and assesses whether each promised good or service is distinct. The Corporation then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Disaggregation of Revenue

The following table summarizes the Corporation’s revenue, which includes net interest income on financial instruments and non-interest income, disaggregated by type of service and business segments for the quarter ended March 31, 2018:

(In thousands)		Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended March 31, 2018:
Net interest income (1)		$	21,205	$	51,049	$	18,920	$	12,518	$	13,392	$	7,609	$	124,693
Service charges and fees on deposit accounts			-		3,165		1,092		-		134		697		5,088
Insurance commissions			-		3,144		-		-		12		199		3,355
Merchant-related income			-		645		161		-		-		185		991
Credit and debit card fees			-		4,169		255		-		128		542		5,094
Other service charges and fees			33		800		300		-		1,039		82		2,254
Not in scope of Topic 606 (1)			4,051		7		(549)		2,378		95		20		6,002
Total non-interest income			4,084		11,930		1,259		2,378		1,408		1,725		22,784
Total Revenue		$	25,289	$	62,979	$	20,179	$	14,896	$	14,800	$	9,334	$	147,477
(1)	Most of the Corporation’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities, as well as other noninterest income from loans, leases, investment securities and derivative financial instruments.

For the three months ended March 31, 2018, substantially all of the Corporation’s revenue under the scope of Topic 606 was related to performance obligations satisfied at a point in time.

The following is a discussion of revenues within the scope of Topic 606.

Service Charges and Fees on Deposit Accounts

Service charges and fees on deposit accounts relate to fees generated from a variety of deposit products and services rendered to customers.  Charges include, but are not limited to, overdraft fees, non-sufficient fund fees, dormant fees and monthly service charges. Such fees are recognized concurrently with the event on a daily basis or on a monthly basis depending upon the customer’s cycle date. These depository arrangements are considered day-to-day contracts that do not extend beyond the services performed, as customers have the right to terminate these contracts with no penalty or, if any, nonsubstantive penalties. As a consequence, the income recognition under the standard is not different for the Corporation’s practice before the adoption of this guidance.

Insurance Commissions

For insurance commissions, which include regular and contingent commissions paid to the Corporation’s insurance agency, the agreements contain a performance obligation related to the sale/issuance of the policy and ancillary administrative post-issuance support. Theperformance obligation will be satisfied as the policies are issued and revenue will be recognized at that point in time.  In addition, contingent commission income was found to be constrained, as defined under the new standard. Contingent commission income will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or payments are received, which is consistent with the Corporation’s practice before the adoption of this guidance. For the quarter ended March 31, 2018, the Corporation recognized revenue of $2.1 million as payments were received and constraints were released.

Merchant-related Income

For merchant-related income, the determination of which included the consideration of a 2015 sale of merchant contracts that involved sales of point of sale (“POS”) terminals and entry into a marketing alliance under a revenue-sharing agreement, the Corporation concluded that control of the POS terminals and merchant contracts was transferred to the customer at the contract’s inception. With respect to the related revenue-sharing agreement, the Corporation satisfies the marketing alliance performance obligation over the life of the contract, and the associated transaction price is recognized as the entity performs and any constraints over the variable consideration are resolved. There was no material change in the timing or measurement of revenues. The overall effect on an ongoing basis of the new revenue guidance, as compared the Corporation’s practice before the adoption of this guidance, is expected to be immaterial.

Credit and Debit Card Fees

Credit and debit card fees primarily represent revenues earned from interchange fees and ATM fees. Interchange and network revenues are earned on credit and debit card transactions conducted with payment networks. ATM fees are primarily earned as a result of surcharges assessed to non-FirstBank customers who use a FirstBank ATM. Such fees are generally recognized concurrently with the delivery of services on a daily basis. As a consequence, the income recognition is unchanged from the Corporation’s practice before the adoption of this guidance. 

Other Fees

Other fees primarily include revenues generated from wire transfers, lockboxes, and bank issuances of checks. Such fees are recognized concurrently with the event or on a monthly basis.

Contract Balances

A contract liability is an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer. As mentioned above, during 2015, the Bank entered into a long-term strategic marketing alliance with another entity to which the Bank sold its merchant contracts portfolio and related POS terminals. Merchant services are marketed through FirstBank’s branches and offices in Puerto Rico and the Virgin Islands. Under the marketing and referral agreement, FirstBank shares with this entity revenues generated by the merchant contracts over the term of the 10-year agreement. As of March 31, 2018 and December 31, 2017, this contract liability amounted to $2.3 million and $2.4 million, respectively, which will be recognized over the remaining term of the contract. For the quarter ended March 31, 2018, the Corporation recognized revenue and contract liabilities decreased by approximately $0.1 million due to the passage of time. There were no changes in contract liabilities due to changes in transaction price estimates.

A contract asset is the right to consideration for transferred goods or services when the amount is conditioned on something other than the passage of time. As of March 31, 2018 and December 31, 2017, there were no receivables from contracts with customers or contract assets recorded on the Corporation’s consolidated financial statements.

Other

Except for the contract liabilities noted above, the Corporation did not have any significant performance obligations as of March 31, 2018. The Corporation also did not have any material contract acquisition costs and did not make any significant judgments or estimates in recognizing revenue for financial reporting purposes. 

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SUPPLEMENTAL CASH FLOW INFORMATION

3 Months Ended

Mar. 31, 2018

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 21 – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

	Quarter Ended March 31,
	2018		2017
(In thousands)
Cash paid for:
Interest on borrowings	$	24,353	$	22,001
Non-cash investing and financing activities:
Additions to OREO		15,867		13,597
Additions to auto and other repossessed assets		17,508		11,516
Capitalization of servicing assets		887		875
Loan securitizations		54,382		60,525
Loans held for investment transferred to held for sale		67,937		-
Property plant and equipment transferred to other assets		-		1,185

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2018

SEGMENT INFORMATION

NOTE 24 – 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 basedprimarily on 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 March 31, 2018, 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 product were also considered in the determination of the reportable segment.

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 that are executed to manage and enhance liquidity. This segment also lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending resources and also borrows from those segments. The Consumer (Retail) Banking and the United States Operations segments also lend funds to the 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, “Nature of Business and Summary of Significant Accounting Policies,” in the audited consolidated financial statements of the Corporation for the year ended December 31, 2017, which are included in the Corporation’s 2017 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 March 31, 2018:
Interest income	$	32,321	$	42,550	$	32,337	$	14,254	$	19,527	$	8,429	$	149,418
Net (charge) credit for transfer of funds		(11,116)		15,222		(13,417)		9,974		(663)		-		-
Interest expense		-		(6,723)		-		(11,710)		(5,472)		(820)		(24,725)
Net interest income		21,205		51,049		18,920		12,518		13,392		7,609		124,693
Provision for loan and lease losses		(381)		(5,793)		(6,800)		-		(1,459)		(6,111)		(20,544)
Non-interest income		4,084		11,930		1,259		2,378		1,408		1,725		22,784
Direct non-interest expenses		(7,720)		(26,901)		(6,714)		(948)		(7,956)		(7,622)		(57,861)
Segment income (loss)	$	17,188	$	30,285	$	6,665	$	13,948	$	5,385	$	(4,399)	$	69,072
Average earnings assets	$	2,293,482	$	1,566,795	$	2,632,220	$	2,470,830	$	1,709,918	$	571,199	$	11,244,444
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended March 31, 2017:
Interest income	$	33,958	$	42,917	$	29,411	$	13,757	$	15,789	$	9,396	$	145,228
Net (charge) credit for transfer of funds		(11,698)		4,909		(9,318)		16,233		(126)		-		-
Interest expense		-		(5,900)		-		(11,806)		(4,195)		(778)		(22,679)
Net interest income		22,260		41,926		20,093		18,184		11,468		8,618		122,549
(Provision) release for loan and lease losses		(8,936)		(7,142)		(8,055)		-		35		(1,344)		(25,442)
Non-interest income (loss)		3,586		13,379		1,237		(12,170)		505		1,706		8,243
Direct non-interest expenses		(9,879)		(27,418)		(9,367)		(1,207)		(7,859)		(6,750)		(62,480)
Segment income	$	7,031	$	20,745	$	3,908	$	4,807	$	4,149	$	2,230	$	42,870
Average earnings assets	$	2,500,750	$	1,775,931	$	2,548,936	$	2,157,882	$	1,393,215	$	617,820	$	10,994,534

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
		Quarter Ended
		March 31,
		2018		2017
Net income:
Total income for segments and other		$	69,072	$	42,870
Other operating expenses (1)			(28,166)		(25,402)
Income before income taxes			40,906		17,468
Income tax (expense) benefit			(7,758)		8,073
Total consolidated net income		$	33,148	$	25,541
Average assets:
Total average earning assets for segments		$	11,244,444	$	10,994,534
Average non-earning assets			947,460		886,492
Total consolidated average assets		$	12,191,904	$	11,881,026
(1)	Expenses pertaining to corporate administrative functions that support the operating segment 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

3 Months Ended

Mar. 31, 2018

REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

NOTE 25 – REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

The Corporation and FirstBank are each 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 and activities. 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 and FirstBank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classifications are also subject to qualitative judgments and adjustment by the regulators with respect to minimum capital requirements, components, risk weightings, and other factors.

On October 3, 2017, the New York FED terminated the Written Agreement entered into on June 3, 2010 between the Corporation and the New York FED. However, the Corporation has agreed with the New York FED to continue to obtain the approval of the New York FED before paying dividends, receiving dividends from the Bank, making payments on subordinated debt or trust preferred securities, incurring or guaranteeing debt or purchasing or redeeming any corporate stock.

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 are being phased-in over several years and, in general, will be fully effective as of January 1, 2019, although certain elements of the new rules have recently been deferred by the federal banking agencies. 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, dividends and 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 is being 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 as of January 1, 2016. However, the Corporation’s TRuPs may continue to be included in Tier 2 capital until the instruments are redeemed or mature.

On November 21, 2017, the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency finalized an extension of the phase-in of certain Basel III capital rules for banks not using the Basel advanced approaches. The extension, which was effective January 1, 2018, pauses the full transition to the Basel III treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests, pending the banking agencies’ broader efforts, announced inSeptember 2017, to simplify the regulatory capital rules that apply to banking organizations that are not subject to the advanced approaches capital rules. Because the advanced approaches capital rules apply to banking organizations with more than $250 billion in total consolidated assets or at least $10 billion in total on-balance sheet foreign exposure, the extension relief applies broadly to community, midsize, and regional banks, including the Corporation and FirstBank.

Please refer to the discussion in “Part I, – Item 1, – Business – Supervision and Regulation,” included in the Corporation’s 2017 Annual Report on 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 March 31, 2018 and December 31, 2017 were as follows:
		Regulatory Requirements
		Actual			For Capital Adequacy Purposes			To be Well-Capitalized-General Thresholds
		Amount		Ratio	Amount		Ratio	Amount		Ratio
(Dollars in thousands)
As of March 31, 2018
Total Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,990,146	22.98%	$	692,691	8.0%		N/A	N/A
FirstBank		$	1,950,261	22.52%	$	692,671	8.0%	$	865,838	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.		$	1,665,842	19.24%	$	389,639	4.5%		N/A	N/A
FirstBank		$	1,532,690	17.70%	$	389,627	4.5%	$	562,795	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,701,946	19.66%	$	519,518	6.0%		N/A	N/A
FirstBank		$	1,840,690	21.26%	$	519,503	6.0%	$	692,671	8.0%
Leverage ratio
First BanCorp.		$	1,701,946	14.18%	$	480,078	4.0%		N/A	N/A
FirstBank		$	1,840,690	15.35%	$	479,527	4.0%	$	599,408	5.0%
As of December 31, 2017
Total Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,989,873	22.53%	$	706,432	8.0%		N/A	N/A
FirstBank		$	1,947,627	22.06%	$	706,218	8.0%	$	882,772	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.		$	1,674,164	18.96%	$	397,368	4.5%		N/A	N/A
FirstBank		$	1,562,431	17.70%	$	397,248	4.5%	$	573,802	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,675,282	18.97%	$	529,824	6.0%		N/A	N/A
FirstBank		$	1,835,445	20.79%	$	529,663	6.0%	$	706,218	8.0%
Leverage ratio
First BanCorp.		$	1,675,282	14.03%	$	477,643	4.0%		N/A	N/A
FirstBank		$	1,835,445	15.39%	$	477,056	4.0%	$	596,320	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 March 31, 2018, commitments to extend credit amounted to approximately $1.2 billion, of which $650.5 million relates to credit card loans. Commercial and Financial standby letters of credit amounted to approximately $43.3 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 making 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.

As of March 31, 2018, First BanCorp. and its subsidiaries were defendants in various legal proceedings arising in the ordinary course of business. On at least a quarterly basis, the Corporation assesses its liabilities and contingencies in connection with threatened and outstanding legal cases, matters and proceedings, utilizing the latest information available. For cases, matters and proceedings where it is both probable the Corporation will incur a loss and the amount can be reasonably estimated, the Corporation establishes an accrual for the loss. Once established, the accrual is adjusted as appropriate to reflect any relevant developments. For cases, matters or proceedings where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established.

Any estimate involves significant judgment, given the varying stages of the proceedings (including the fact that some of them are currently in preliminary stages), the existence of multiple defendants in some of the current proceedings whose share of liability has yet to be determined, the numerous unresolved issues in the proceedings, and the inherent uncertainty of the various potential outcomes of such proceedings. Accordingly, the Corporation’s estimate will change from time-to-time, and actual losses may be more or less than the current estimate.

While the final outcome of legal cases, matters, and proceedings is inherently uncertain, based on information currently available, Management believes that the final disposition of the Corporation’s legal cases, matters or proceedings,to the extent not previously provided for, will not have a material negative adverse effect on the Corporation’s consolidated financial position as a whole.

If management believes that, based on available information, it is at least reasonably possible that a material loss (or additional material loss in excess of any accrual) will be incurred in connection with any legal actions, the Corporation discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as appropriate, if such an estimate can be made, or discloses that an estimate cannot be made. Based on the Corporation’s assessment as of March 31, 2018, no such disclosures were necessary. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these cases, matters and proceedings, if unfavorable, may be material to the Corporation’s consolidated financial position on a particular period.

Ramirez Torres, et al. v Banco Popular de Puerto Rico, et al.FirstBank Puerto Rico is named a defendant in a class action complaint, filed on February 17, 2017 at the Court of First Instance in San Juan, Puerto Rico, captioned Ramirez Torres, et al. v. Banco Popular de Puerto Rico, et al. The complaint seeks damages and preliminary and permanent injunctive relief on behalf of the purported class against Banco Popular de Puerto Rico and other financial institutions with insurance agency subsidiaries in Puerto Rico. Plaintiffs contend that in November 2015, Antilles Insurance Company obtained approval from the Puerto Rico Insurance Commissioner to market an endorsement that allowed its customers to obtain a reimbursement of their insurance premium for good experience, but that defendants failed to offer this product or disclose its existence to their customers, favoring other products instead, in violation of their fiduciary duties as insurance producers. Plaintiffs seek a determination that defendants unlawfully failed to comply with their fiduciary duty to disclose the existence of this new insurance benefit from this carrier, as well as double or treble damages (the latter subject to a determination that defendants engaged in anti-monopolistic practices in failing to offer this product). On July 31, 2017, the court entered judgment dismissing the complaint with prejudice.On August 30, 2017, Plaintiffs filed an Appeal before the Court of Appeals and FirstBank filed its opposition. On March 20, 2018, the Court of Appeals entered Judgment revoking the Court of First Instance, ordering a class certification hearing as well as a preliminary injunction hearing. Our lawyers intend to file a writ of Certiorari in the Supreme Court.

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FIRST BANCORP. (Holding Company Only) Financial Information

3 Months Ended

Mar. 31, 2018

FIRST BANCORP. (Holding Company Only) Financial Information

NOTE 26 – FIRST BANCORP. (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

The following condensed financial information presents the financial position of the Holding Company only as of March 31, 2018 and December 31, 2017, and the results of its operations for the quarters ended March 31, 2018 and 2017.

Statements of Financial Condition
	As of March 31,			As of December 31,
	2018		2017
(In thousands)
Assets
Cash and due from banks	$	16,866	$	20,864
Money market investments		6,111		6,111
Other investment securities		285		285
Loans held for investment, net		178		191
Investment in First Bank Puerto Rico, at equity		2,015,111		2,028,641
Investment in First Bank Insurance Agency, at equity		14,933		12,400
Investment in FBP Statutory Trust I		1,963		2,698
Investment in FBP Statutory Trust II		3,561		3,561
Other assets		5,671		3,799
Total assets	$	2,064,679	$	2,078,550
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	184,150	$	208,635
Accounts payable and other liabilities		3,425		818
Total liabilities		187,575		209,453
Stockholders' equity		1,877,104		1,869,097
Total liabilities and stockholders' equity	$	2,064,679	$	2,078,550

Statements of Income
	Quarter Ended
	March 31,		March 31,
	2018		2017
	(In thousands)
Income:
Interest income on money market investments	$	5	$	5
Dividends from banking subsidiary		21,584		1,930
Other income		63		62
		21,652		1,997
Expense:
Other borrowings		2,085		1,963
Other operating expenses		596		967
		2,681		2,930
Gain on early extinguishment of debt		2,316		-
Income (loss) income before income taxes and equity in undistributed
earnings of subsidiaries		21,287		(933)
Equity in undistributed earnings of subsidiaries		11,861		26,474
Net income	$	33,148	$	25,541
Other comprehensive (loss) income, net of tax		(24,047)		10,696
Comprehensive income	$	9,101	$	36,237

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2018

SUBSEQUENT EVENTS

NOTE 27 – SUBSEQUENT EVENTS

The Corporation has performed an evaluation of events occurringsubsequent to March 31, 2018; management has determined that there were 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)

3 Months Ended

Mar. 31, 2018

Schedule of Earning Per Share [Table Text Block]

	The calculations of earnings per common share for the quarters ended March 31, 2018 and 2017 are as follows:
		Quarter Ended
		March 31,		March 31,
		2018		2017
(In thousands, except per share information)
Net income		$	33,148	$	25,541
Less: Preferred stock dividends			(669)		(669)
Net income attributable to common stockholders		$	32,479	$	24,872
Weighted-Average Shares:
	Average common shares outstanding		214,646		213,340
	Average potential dilutive common shares		1,648		4,033
	Average common shares outstanding-assuming dilution		216,294		217,373
Earnings per common share:
	Basic	$	0.15	$	0.12
	Diluted	$	0.15	$	0.11

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2018

Restricted Stock Activity Under Omnibus Plan

	The following table summarizes the restricted stock activity in the first quarter of 2018 under the Omnibus Plan:
		Quarter Ended
		March 31, 2018
		Number of
		shares of		Weighted-Average
		restricted		Grant Date
		stock		Fair Value
Non-vested shares at beginning of period		1,816,968	$	2.76
Granted		341,189		6.29
Vested		(1,061,476)		2.02
Non-vested shares at March 31, 2018		1,096,681	$	4.58

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INVESTMENT SECURITIES (Tables)

3 Months Ended

Mar. 31, 2018

Investment Securities Available for Sale

	March 31, 2018
	Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI		Gross				Fair value
					Unrealized						Weighted-
					gains		losses				average yield %
(Dollars in thousands)
U.S. Treasury securities:
Due within one year	$	49,799	$	-	$	-	$	22	$	49,777	1.55
After 1 to 5 years		7,465		-		-		73		7,392	1.29
U.S. government-sponsored
agencies obligations:
Due within one year		72,484		-		-		242		72,242	1.08
After 1 to 5 years		309,459		-		-		4,996		304,463	1.42
After 5 to 10 years		133,471		-		26		2,736		130,761	2.74
After 10 years		39,190		-		-		254		38,936	2.07
Puerto Rico government
obligations:
After 5 to 10 years		4,052		-		22		-		4,074	3.14
After 10 years		4,035		-		-		1,301		2,734	6.97
United States and Puerto
Rico government
obligations		619,955		-		48		9,624		610,379	1.76
Mortgage-backed securities:
Freddie Mac ("FHLMC") certificates:
After 5 to 10 years		43,037		-		12		1,305		41,744	1.96
After 10 years		262,934		-		-		8,379		254,555	2.28
		305,971		-		12		9,684		296,299	2.23
Ginnie Mae ("GNMA") certificates:
After 1 to 5 years		136		-		3		-		139	2.77
After 5 to 10 years		65,098		-		683		137		65,644	3.04
After 10 years		140,314		-		4,492		986		143,820	3.81
		205,548		-		5,178		1,123		209,603	3.57
Fannie Mae ("FNMA") certificates:
After 1 to 5 years		15,735		-		177		195		15,717	2.89
After 5 to 10 years		109,562		-		-		4,279		105,283	1.76
After 10 years		531,560		-		1,818		14,320		519,058	2.52
		656,857		-		1,995		18,794		640,058	2.40
Collateralized mortgage obligations
guaranteed by the FHLMC
and GNMA
After 1 to 5 years		8,154		-		8		11		8,151	2.53
After 10 years		34,619		-		321		-		34,940	2.53
		42,773		-		329		11		43,091	2.53
Other mortgage pass-through
trust certificates:
After 10 years		21,309		5,235		-		-		16,074	4.49
Total mortgage-backed
securities		1,232,458		5,235		7,514		29,612		1,205,125	2.60
Total investment securities
available for sale	$	1,852,413	$	5,235	$	7,562	$	39,236	$	1,815,504	2.32

		December 31, 2017
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI		Gross				Fair value
						Unrealized						Weighted-
						gains		losses				average yield%
(Dollars in thousands)
U.S. Treasury securities:
	After 1 to 5 years	$	7,458	$	-	$	-	$	57	$	7,401	1.29
U.S. government-sponsored
agencies obligations:
	Due within one year		122,471		-		-		319		122,152	1.06
	After 1 to 5 years		309,472		-		28		3,735		305,765	1.42
	After 5 to 10 years		133,451		-		117		319		133,249	2.72
	After 10 years		40,769		-		1		149		40,621	1.84
Puerto Rico government
obligations:
	After 5 to 10 years		4,071		-		47		-		4,118	3.14
	After 10 years		3,972		-		-		1,277		2,695	6.97
United States and Puerto
Rico government
obligations			621,664		-		193		5,856		616,001	1.70
Mortgage-backed securities:
FHLMC certificates:
	After 5 to 10 years		18,658		-		14		63		18,609	2.14
	After 10 years		297,733		-		217		4,853		293,097	2.23
			316,391		-		231		4,916		311,706	2.23
GNMA certificates:
	After 1 to 5 years		81		-		1		-		82	3.23
	After 5 to 10 years		69,661		-		1,244		-		70,905	3.05
	After 10 years		145,067		-		5,910		334		150,643	3.81
			214,809		-		7,155		334		221,630	3.56
FNMA certificates:
	After 1 to 5 years		20,831		-		294		109		21,016	2.69
	After 5 to 10 years		49,934		-		-		818		49,116	1.83
	After 10 years		613,129		-		3,180		6,401		609,908	2.43
			683,894		-		3,474		7,328		680,040	2.39
Collateralized mortgage obligations
	issued or guaranteed by
	FHLMC and GNMA:
	After 1 to 5 years		5,918		-		14		-		5,932	2.21
	After 5 to 10 years		2,556		-		11		-		2,567	2.23
	After 10 years		35,331		-		231		-		35,562	2.22
			43,805		-		256		-		44,061	2.22
Other mortgage pass-through
trust certificates:
	After 10 years		22,791		5,731		-		-		17,060	2.44
Total mortgage-backed
	securities		1,281,690		5,731		11,116		12,578		1,274,497	2.54
Other
Due within one year			100		-		-		-		100	1.48
Equity Securities (1)			424		-		-		6		418	2.11
Total investment securities
	available for sale	$	1,903,878	$	5,731	$	11,309	$	18,440	$	1,891,016	2.27
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

Available-for-Sale Investments' Fair Value and Gross Unrealized Losses

	As of March 31, 2018
	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	$	-	$	-	$	2,734	$	1,301	$	2,734	$	1,301
U.S. Treasury and U.S. government
agenciesʼ obligations		238,248		3,306		360,298		5,017		598,546		8,323
Mortgage-backed securities:
FNMA		354,552		7,690		259,076		11,104		613,628		18,794
FHLMC		138,510		2,916		157,598		6,768		296,108		9,684
GNMA		68,490		1,123		-		-		68,490		1,123
Collateralized mortgage obligations
issued or guaranteed by
FHLMC and GNMA		5,907		11		-		-		5,907		11
Other mortgage pass-through
trust certificates		-		-		16,074		5,235		16,074		5,235
	$	805,707	$	15,046	$	795,780	$	29,425	$	1,601,487	$	44,471
	As of December 31, 2017
	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	$	-	$	-	$	2,695	$	1,277	$	2,695	$	1,277
U.S. Treasury and U.S. government
agenciesʼ obligations		136,459		494		362,050		4,085		498,509		4,579
Mortgage-backed securities:
FNMA		189,699		1,705		274,963		5,623		464,662		7,328
FHLMC		91,174		590		166,331		4,326		257,505		4,916
GNMA		39,145		334		-		-		39,145		334
Other mortgage pass-through
trust certificates		-		-		17,060		5,731		17,060		5,731
Equity securities (1)		-		-		407		6		407		6
	$	456,477	$	3,123	$	823,506	$	21,048	$	1,279,983	$	24,171
(1) As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

OTTI Losses on Available-for-Sale Debt Securities

		Quarter ended March 31,
		2018		2017
	(In thousands)
	Total other-than-temporary impairment losses	$	-	$	(12,231)
	Portion of other-than-temporary impairment recognized in OCI		-		-
	Net impairment losses recognized in earnings (1)	$	-	$	(12,231)
	_________
(1)	Credit losses on Puerto Rico government debt securities, recorded in the first quarter of 2017.

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
	December 31,		recognized in earnings on		March 31,
	2017		securities that have been		2018
	Balance		previously impaired		Balance
(In thousands)
Available-for-sale securities
Private label MBS	$	6,792	$	-	$	6,792

	Cumulative OTTI credit losses recognized in earnings on securities still held
			Credit impairments
	December 31,		recognized in earnings on		March 31,
	2016		securities that have been		2017
	Balance		previously impaired		Balance
(In thousands)
Available for sale securities
Puerto Rico government obligations	$	22,189	$	12,231	$	34,420
Private label MBS		6,792	$	-		6,792
Total OTTI credit losses for available-for-sale
debt securities	$	28,981	$	12,231	$	41,212

Significant Assumptions in Valuation of Private Label MBS

	As of		As of
	March 31, 2018		December 31, 2017
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	14.5%	14.5%	14.0%	14.0%
Prepayment rate	15.2%	7.5% - 24.5%	16.4%	12.0% - 29.0%
Projected Cumulative Loss Rate	4%	0% - 9%	3%	0% - 6.8%

Held To Maturity Securities [Text Block]

		March 31, 2018
		Amortized cost						Fair value
				Gross Unrealized
										Weighted-
				gains		losses				average yield%
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	3,712	$	-	$	161	$	3,551	5.39
	After 5 to 10 years		39,523		-		2,703		36,820	5.35
	After 10 years		107,251		-		12,766		94,485	5.21
Total investment securities
	held to maturity	$	150,486	$	-	$	15,630	$	134,856	5.25

		December 31, 2017
		Amortized cost						Fair value
				Gross Unrealized
										Weighted
				gains		losses				average-yield%
Puerto Rico Municipal Bonds:
	After 1 to 5 years	$	3,853	$	-	$	173	$	3,680	5.38
	After 5 to 10 years		39,523		-		3,048		36,475	5.28
	After 10 years		107,251		-		16,374		90,877	4.93
Total investment securities
	held to maturity	$	150,627	$	-	$	19,595	$	131,032	5.03

Held to maturity Securities [Member]

Available-for-Sale Investments' Fair Value and Gross Unrealized Losses

	As of March 31, 2018
	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	$	-	$	-	$	134,856	$	15,630	$	134,856	$	15,630
	As of December 31, 2017
	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	$	-	$	-	$	131,032	$	19,595	$	131,032	$	19,595

XML

LOAN PORTFOLIO (Tables)

3 Months Ended

Mar. 31, 2018

Loan Portfolio Held for Investment

			As of		As of
		March 31,		December 31,
			2018		2017
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	3,267,868	$	3,290,957
Commercial loans:
Construction loans (1)			79,150		111,397
Commercial mortgage loans (1)			1,552,503		1,614,972
Commercial and Industrial loans (2)			2,061,773		2,083,253
Total Commercial loans			3,693,426		3,809,622
Finance leases			262,863		257,462
Consumer loans			1,471,733		1,492,435
Loans held for investment (2)			8,695,890		8,850,476
Allowance for loan and lease losses			(225,856)		(231,843)
Loans held for investment, net		$	8,470,034	$	8,618,633
__________
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).
(2)	As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, 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 were as follows:
		As of		As of
		March 31,		December 31,
		2018		2017
(In thousands)
Non-performing loans:
Residential mortgage		$	171,380	$	178,291
Commercial mortgage (1)			115,179		156,493
Commercial and Industrial			85,325		85,839
Construction:
Land			14,949		15,026
Construction-commercial (1)			-		35,100
Construction-residential			1,287		1,987
Consumer:
Auto loans			13,453		10,211
Finance leases			1,801		1,237
Other consumer loans			8,603		5,370
Total non-performing loans held for investment (2)(3)(4)		$	411,977	$	489,554
_______________
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).
(2)	Excludes $64.9 million and $8.3 million of non-performing loans held for sale as of March 31, 2018 and December 31, 2017, respectively.
(3)	Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $155.3 million and $158.2 million as of March 31, 2018 and December 31, 2017, 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.
(4)	Non-performing loans exclude $366.4 million and $374.7 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with the modified terms and in accrual status as of March 31, 2018 and December 31, 2017, respectively.

Corporation's Aging of Loans Held for Investment Portfolio

The Corporation’s aging of the loans held for investment portfolio is as follows:
As of March 31, 2018
		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due (1)		Total Past Due		Purchased Credit-Impaired Loans		Current		Total loans held for investment		90 days past due and still accruing
(In thousands)
Residential mortgage:
FHA/VA and other government-guaranteed
loans (2)(3)(4)		$	-	$	3,665	$	107,693	$	111,358	$	-	$	35,927	$	147,285	$	107,693
Other residential mortgage loans (4)			-		57,505		186,535		244,040		151,067		2,725,476		3,120,583		15,155
Commercial:
Commercial and Industrial loans			13,137		2,419		86,095		101,651		-		1,960,122		2,061,773		770
Commercial mortgage loans (4)			-		49,807		119,156		168,963		4,214		1,379,326		1,552,503		3,977
Construction:
Land (4)			-		12		17,108		17,120		-		9,330		26,450		2,159
Construction-commercial			-		1,012		-		1,012		-		45,227		46,239		-
Construction-residential (4)			-		-		2,488		2,488		-		3,973		6,461		1,201
Consumer:
Auto loans			32,438		7,891		13,453		53,782		-		784,711		838,493		-
Finance leases			5,843		2,216		1,801		9,860		-		253,003		262,863		-
Other consumer loans			13,701		4,577		10,434		28,712		-		604,528		633,240		1,831
Total loans held for investment		$	65,119	$	129,104	$	544,763	$	738,986	$	155,281	$	7,801,623	$	8,695,890	$	132,786
_____________
(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 $30.6 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 March 31, 2018.
(3)	As of March 31, 2018, includes $73.3 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 and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans, and construction-residential loans past due 30-59 days as of March 31, 2018 amounted to $6.8 million, $122.0 million, $5.2 million, $0.6 million, and $0.2 million respectively.

As of December 31, 2017
		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due (1)		Total Past Due		Purchased Credit- Impaired Loans		Current		Total loans held for investment		90 days past due and still accruing (2) (3)
(In thousands)
Residential mortgage:
FHA/VA and other government-guaranteed
loans (2)(3)(4)		$	-	$	6,792	$	102,815	$	109,607	$	-	$	29,332	$	138,939	$	102,815
Other residential mortgage loans (4)			-		92,502		193,750		286,252		153,991		2,711,775		3,152,018		15,459
Commercial:
Commercial and Industrial loans			8,971		576		88,156		97,703		-		1,985,550		2,083,253		2,317
Commercial mortgage loans (4)			-		7,525		163,180		170,705		4,183		1,440,084		1,614,972		6,687
Construction:
Land (4)			-		124		15,177		15,301		-		11,630		26,931		151
Construction-commercial			-		-		35,100		35,100		-		41,456		76,556		-
Construction-residential			-		95		1,987		2,082		-		5,828		7,910		-
Consumer:
Auto loans			57,560		23,783		10,211		91,554		-		752,777		844,331		-
Finance leases			10,549		3,484		1,237		15,270		-		242,192		257,462		-
Other consumer loans			10,776		5,052		9,361		25,189		-		622,915		648,104		3,991
Total loans held for investment		$	87,856	$	139,933	$	620,974	$	848,763	$	158,174	$	7,843,539	$	8,850,476	$	131,420
____________
(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 $29.9 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 December 31, 2017.
(3)	As of December 31, 2017, includes $62.1 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 on two or more monthly payments. FHA/VA and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, and land loans past due 30-59 days as of December 31, 2017 amounted to $6.0 million, $224.0 million, $9.0 million, and $2.5 million, respectively.

Corporation's Credit Quality Indicators by Loan

The Corporation’s credit quality indicators by loan type as of March 31, 2018 and December 31, 2017 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
March 31, 2018
(In thousands)
Commercial mortgage		$	269,926	$	2,117	$	-	$	272,043	$	1,552,503
Construction:
Land			15,971		391		-		16,362		26,450
Construction-commercial			-		-		-		-		46,239
Construction-residential			1,287		-		-		1,287		6,461
Commercial and Industrial			144,205		7,745		729		152,679		2,061,773
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness Category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2017
(In thousands)
Commercial mortgage		$	257,503	$	4,166	$	-	$	261,669	$	1,614,972
Construction:
Land			15,971		490		-		16,461		26,931
Construction-commercial			35,100		-		-		35,100		76,556
Construction-residential			1,987		-		-		1,987		7,910
Commercial and Industrial			154,416		3,854		676		158,946		2,083,253
_________
(1)	Excludes non-peforming loans held for sale of $64.9 million ($27.2 million commercial mortgage, $30.0 million construction-commercial, and $7.7 million construction-land) and $8.3 million (construction-land) as of March 31, 2018 and December 31, 2017, respectively.

March 31, 2018		Consumer Credit Exposure-Credit Risk Profile Based on Payment Activity
		Residential Real-Estate				Consumer
		FHA/VA/ Guaranteed (1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	147,285	$	2,798,136	$	825,040	$	261,062	$	624,637
Purchased Credit-Impaired (2)			-		151,067		-		-		-
Non-performing			-		171,380		13,453		1,801		8,603
Total		$	147,285	$	3,120,583	$	838,493	$	262,863	$	633,240
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as 90 days past-due loans and still accruing as opposed to non-performing loans since the principal repayment is insured. This balance includes $30.6 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 March 31, 2018.
(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 analyses.
December 31, 2017		Consumer Credit Exposure-Credit Risk Profile Based on Payment Activity
			Residential Real-Estate			Consumer
		FHA/VA/ Guaranteed (1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	138,939	$	2,819,736	$	834,120	$	256,225	$	642,734
Purchased Credit-Impaired (2)			-		153,991		-		-		-
Non-performing			-		178,291		10,211		1,237		5,370
Total		$	138,939	$	3,152,018	$	844,331	$	257,462	$	648,104
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as 90 days past due loans and still accruing as opposed to non-performing loans since the principal repayment is insured. This balance includes $29.9 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 December 31, 2017.
(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 analyses.

Impaired Loans

The following tables present information about impaired loans held for investment, excluding PCI loans, which are reported separately as discussed below:
Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment		Interest Income Recognized On Accrual Basis		Interest Income Recognized On Cash Basis
(In thousands)
As of March 31, 2018
With no related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		94,817		126,672		-		95,274		723		170
Commercial:
Commercial mortgage loans		60,811		99,837		-		61,445		82		37
Commercial and Industrial loans		24,712		27,679		-		24,825		246		11
Construction:
Land		-		-		-		-		-		-
Construction-commercial		-		-		-		-		-		-
Construction-residential		-		-		-		-		-		-
Consumer:
Auto loans		387		387		-		394		2		-
Finance leases		-		-		-		-		-		-
Other consumer loans		2,266		3,051		-		2,327		29		17
	$	182,993	$	257,626	$	-	$	184,265	$	1,082	$	235
With a related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		322,793		359,048		22,546		324,110		3,654		231
Commercial:
Commercial mortgage loans		101,315		117,838		13,451		102,304		661		47
Commercial and Industrial loans		95,066		117,400		14,375		92,382		302		20
Construction:
Land		11,815		20,001		1,432		11,864		25		8
Construction-commercial		-		-		-		-		-		-
Construction-residential		252		355		52		252		-		-
Consumer:
Auto loans		20,424		20,424		3,379		20,943		397		-
Finance leases		1,876		1,876		84		1,958		35		-
Other consumer loans		9,746		10,092		1,611		9,913		283		27
	$	563,287	$	647,034	$	56,930	$	563,726	$	5,357	$	333
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		417,610		485,720		22,546		419,384		4,377		401
Commercial:
Commercial mortgage loans		162,126		217,675		13,451		163,749		743		84
Commercial and Industrial loans		119,778		145,079		14,375		117,207		548		31
Construction:
Land		11,815		20,001		1,432		11,864		25		8
Construction-commercial		-		-		-		-		-		-
Construction-residential		252		355		52		252		-		-
Consumer:
Auto loans		20,811		20,811		3,379		21,337		399		-
Finance leases		1,876		1,876		84		1,958		35		-
Other consumer loans		12,012		13,143		1,611		12,240		312		44
	$	746,280	$	904,660	$	56,930	$	747,991	$	6,439	$	568

Impaired Loans
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Average Recorded Investment
(In thousands)
As of December 31, 2017
With no related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		116,818		154,048		-		120,241
Commercial:
Commercial mortgage loans		65,100		100,612		-		86,563
Commercial and Industrial loans		28,292		31,254		-		28,567
Construction:
Land		48		49		-		48
Construction-commercial		-		-		-		-
Construction-residential		-		-		-		-
Consumer:
Auto loans		267		267		-		290
Finance leases		-		-		-		-
Other consumer loans		2,521		3,688		-		2,745
	$	213,046	$	289,918	$	-	$	238,454
With a related specific allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		316,616		349,284		22,086		318,606
Commercial:
Commercial mortgage loans		87,814		124,084		9,783		93,720
Commercial and Industrial loans		90,008		112,005		12,359		92,666
Construction:
Land		11,865		19,973		1,402		14,126
Construction-commercial		35,101		38,595		560		35,996
Construction-residential		252		355		55		252
Consumer:
Auto loans		22,338		22,338		3,665		24,328
Finance leases		2,184		2,184		104		2,428
Other consumer loans		11,084		11,830		1,396		11,579
	$	577,262	$	680,648	$	51,410	$	593,701
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		433,434		503,332		22,086		438,847
Commercial:
Commercial mortgage loans		152,914		224,696		9,783		180,283
Commercial and Industrial loans		118,300		143,259		12,359		121,233
Construction:
Land		11,913		20,022		1,402		14,174
Construction-commercial		35,101		38,595		560		35,996
Construction-residential		252		355		55		252
Consumer:
Auto loans		22,605		22,605		3,665		24,618
Finance leases		2,184		2,184		104		2,428
Other consumer loans		13,605		15,518		1,396		14,324
	$	790,308	$	970,566	$	51,410	$	832,155
Interest income of approximately $6.9 million ($6.4 million on an accrual basis and $0.5 million on a cash basis) was recognized on impaired loans for the first quarter of 2017.

Activity for Impaired loans

	The following table shows the activity for impaired loans and the related specific reserve during the first quarter of 2018 and 2017:
		Quarter ended
		March 31, 2018		March 31, 2017
Impaired Loans:		(In thousands)
Balance at beginning of period		$	790,308	$	887,905
Loans determined impaired during the period			61,408		19,628
Charge-offs (1) (2)			(17,213)		(17,404)
Loans sold, net of charge-offs			(4,121)		(53,245)
Increases to existing impaired loans			6,998		541
Foreclosures			(11,675)		(9,457)
Loans no longer considered impaired			(1,507)		(892)
Loans transferred to held for sale			(57,213)		-
Paid in full or partial payments			(20,705)		(19,878)
Balance at end of period		$	746,280	$	807,198
(1)	The first quarter of 2018 includes charge-offs totaling $9.7 million associated with the $57.2 million in non-performing loans transferred to held for sale.
(2)	The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line as further discussed below.

Activity for Specific Reserve

	Quarter ended
	March 31, 2018		March 31, 2017
Specific Reserve:	(In thousands)
Balance at beginning of period	$	51,410	$	64,421
Provision for loan losses		22,703		18,862
Net charge-offs		(17,183)		(16,972)
Balance at end of period	$	56,930	$	66,311

Carrying Value of Acquired Loans

The carrying amounts of PCI loans were as follows:
	As of
		March 31,		December 31,
		2018		2017
(In thousands)
Residential mortgage loans	$	151,067	$	153,991
Commercial mortgage loans		4,214		4,183
Total PCI loans	$	155,281	$	158,174
Allowance for loan losses		(11,251)		(11,251)
Total PCI loans, net of allowance for loan losses	$	144,030	$	146,923

Accretable Yield

Changes in the accretable yield of PCI loans for the quarters ended March 31, 2018 and 2017 were as follows:
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	103,682	$	116,462
Accretion recognized in earnings		(2,623)		(2,797)
Balance at end of period	$	101,059	$	113,665

Selected Information on TDRs Includes Recorded Investment by Loan Class and Modification Type

Selected information on TDR loans held for investment that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs held for investment:
		March 31, 2018
		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Forbearance Agreement		Other (1)		Total
(In thousands)
Troubled Debt Restructurings:
Non- FHA/VA Residential Mortgage loans		$	24,390	$	8,396	$	255,731	$	-	$	-	$	61,463	$	349,980
Commercial Mortgage loans			6,518		36,411		30,739		-		2,020		10,146		85,834
Commercial and Industrial loans			2,497		20,448		15,705		-		3,197		54,418		96,265
Construction loans:
Land			17		3,860		2,177		-		-		324		6,378
Construction-commercial (2)			-		-		-		-		-		-		-
Construction-residential			-		-		-		-		-		217		217
Consumer loans - Auto			-		1,235		12,944		-		-		6,632		20,811
Finance leases			-		196		1,680		-		-		-		1,876
Consumer loans - Other			952		1,775		6,356		166		-		1,766		11,015
Total Troubled Debt Restructurings (2)		$	34,374	$	72,321	$	325,332	$	166	$	5,217	$	134,966	$	572,376
(1)	Other concessions granted by the Corporation included 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)	Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

		December 31, 2017
		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Forbearance Agreement		Other (1)		Total
(In thousands)
Troubled Debt Restructurings:
Non- FHA/VA Residential Mortgage loans		$	25,964	$	8,318	$	267,578	$	-	$	-	$	62,070	$	363,930
Commercial Mortgage loans			6,563		2,094		31,870		-		-		10,285		50,812
Commercial and Industrial loans			2,510		20,648		16,049		-		6,623		48,282		94,112
Construction loans:
Land			18		3,941		2,186		-		-		331		6,476
Construction-commercial			-		-		-		35,100		-		-		35,100
Construction-residential			-		-		-		-		-		217		217
Consumer loans - Auto			-		1,347		14,233		-		-		7,025		22,605
Finance leases			-		238		1,946		-		-		-		2,184
Consumer loans - Other			892		2,097		6,891		217		-		1,686		11,783
Total Troubled Debt Restructurings		$	35,947	$	38,683	$	340,753	$	35,317	$	6,623	$	129,896	$	587,219
(1)	Other concessions granted by the Corporation included 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 held for investment activity:
		Quarter Ended
		March 31, 2018		March 31, 2017
(In thousands)
Beginning Balance of TDRs		$	587,219	$	647,048
New TDRs			43,419		40,899
Increases to existing TDRs			6,771		424
Charge-offs post modification (1) (2)			(9,171)		(14,662)
Sales, net of charge-offs			-		(53,245)
Foreclosures			(7,043)		(4,371)
TDR transferred to held for sale, net of charge-off			(30,000)		-
Paid-off and partial payments			(18,819)		(13,729)
Ending balance of TDRs		$	572,376	$	602,364
(1)	The first quarter of 2018 includes a charge-off of $5.1 million associated with a $30.0 million construction loan transferred to held for sale.
(2)	The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line.

Breakdown Between Accrual and Nonaccrual Status of TDRs

The following table provides a breakdown of the TDR loans held for investment by those in accrual and non-accrual status:
		As of March 31, 2018
		Accrual		Non-accrual (1)(2)		Total TDRs
	(In thousands)
Non-FHA/VA Residential Mortgage loans		$	272,659	$	77,321	$	349,980
Commercial Mortgage loans			24,010		61,824		85,834
Commercial and Industrial loans			43,251		53,014		96,265
Construction loans:
Land			1,197		5,181		6,378
Construction-commercial (2)			-		-		-
Construction-residential			-		217		217
Consumer loans - Auto			14,082		6,729		20,811
Finance leases			1,653		223		1,876
Consumer loans - Other			9,570		1,445		11,015
Total Troubled Debt Restructurings		$	366,422	$	205,954	$	572,376
(1)	Included in non-accrual loans are $53.2 million in loans that are performing under the terms of the restructuring agreement but are reported in nonaccrual 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)	Excludes a $30.0 million non-performing construction loans transferred to held for sale during the first quarter of 2018.

		As of December 31, 2017
		Accrual		Non-accrual (1)		Total TDRs
(In thousands)
Non-FHA/VA Residential Mortgage loans		$	280,729	$	83,201	$	363,930
Commercial Mortgage loans			23,329		27,483		50,812
Commercial and Industrial loans			41,536		52,576		94,112
Construction loans:
Land			1,291		5,185		6,476
Construction-commercial			-		35,100		35,100
Construction-residential			-		217		217
Consumer loans - Auto			15,548		7,057		22,605
Finance leases			1,968		216		2,184
Consumer loans - Other			10,294		1,489		11,783
Total Troubled Debt Restructurings		$	374,695	$	212,524	$	587,219
(1)	Included in non-accrual loans are $88.6 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.

Schedule Of Troubled Debt Restructurings Table [Text Block]

Loan modifications that are considered TDR loans completed during the first quarters of 2018 and 2017 were as follows:
	Quarter ended March 31, 2018
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(Dollars in thousands)
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	24	$	2,608	$	2,614
Commercial Mortgage loans	3		36,746		36,758
Commercial and Industrial loans	3		2,597		2,582
Consumer loans - Auto	45		680		680
Consumer loans - Other	136		785		785
Total Troubled Debt Restructurings	211	$	43,416	$	43,419

	Quarter ended March 31, 2017
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(Dollars in thousands)
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	40	$	4,650	$	4,508
Commercial Mortgage loans	6		22,438		22,198
Commercial and Industrial loans	3		10,748		10,748
Construction loans:
Land	1		25		28
Consumer loans - Auto	152		2,247		2,247
Finance leases	8		186		186
Consumer loans - Other	210		969		984
Total Troubled Debt Restructurings	420	$	41,263	$	40,899

Loan Modifications Considered Troubled Debt Restructurings Defaulted

Loan modifications considered TDR loans that defaulted during the quarters ended March 31, 2018 and March 31, 2017, and had become TDR during the 12-month period preceding the default date, were as follows:
	Quarter ended March 31,
	2018			2017
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
(Dollars in thousands)
Non-FHA/VA Residential Mortgage loans	4	$	387	3	$	277
Commercial Mortgage loans	-		-	1		57
Consumer loans - Auto	2		23	4		61
Finance leases	1		22	-		-
Consumer loans - Other	11		54	17		61
Total	18	$	486	25	$	456

Loan Restructuring and Effect on Allowance for Loan and Lease Losses

(In thousands)	March 31, 2018			March 31, 2017
Principal balance deemed collectible at end of period	$	35,553	$	36,564
Amount charged off	$	-	$	-
Charges to the provision for loan losses	$	1,412	$	915
Allowance for loan losses at end of period	$	5,258	$	6,056

Past Due Purchased Credit Impaired Table [Text Block]

	The following tables present PCI loans by past due status as of March 31, 2018 and December 31, 2017:
As of March 31, 2018		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
										Current
(In thousands)
Residential mortgage loans		$	-	$	8,291	$	27,025	$	35,316	$	115,751	$	151,067
Commercial mortgage loans			-		-		3,234		3,234		980		4,214
Total (1)		$	-	$	8,291	$	30,259	$	38,550	$	116,731	$	155,281
_____________
(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 March 31, 2018 amounted to $13.5 million and $0.2 million, respectively.
As of December 31, 2017		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
										Current
(In thousands)
Residential mortgage loans		$	-	$	16,600	$	26,471	$	43,071	$	110,920	$	153,991
Commercial mortgage loans			-		355		2,834		3,189		994		4,183
Total (1)		$	-	$	16,955	$	29,305	$	46,260	$	111,914	$	158,174
_____________
(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 December 31, 2017 amounted to $28.1 million and $0.2 million, respectively

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 were as follows:
	Quarter ended		Quarter ended
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	158,174	$	165,818
Accretion		2,623		2,797
Collections		(3,396)		(4,593)
Foreclosures		(2,120)		(922)
Ending balance	$	155,281	$	163,100
Allowance for loan losses		(11,251)		(6,857)
Ending balance, net of allowance for loan losses	$	144,030	$	156,243

Allowance For Credit Losses On Purchased Credit Impaired Loans Table [Text Block]

Changes in the allowance for loan losses related to PCI loans were as follows:
	Quarter ended		Quarter ended
	March 31, 2018		March 31, 2017
(In thousands)
Balance at beginning of period	$	11,251	$	6,857
Provision for loan losses		-		-
Balance at the end of period	$	11,251	$	6,857

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ALLOWANCE FOR LOAN AND LEASE LOSSES (Tables)

3 Months Ended

Mar. 31, 2018

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 March 31, 2018
Allowance for loan and lease losses:
Beginning balance	$	58,975	$	48,493	$	48,871	$	4,522	$	70,982	$	231,843
Charge-offs		(3,371)		(6,810)		(1,930)		(5,177)		(12,072)		(29,360)
Recoveries		335		49		62		13		2,370		2,829
Provision		447		8,661		656		4,764		6,016		20,544
Ending balance	$	56,386	$	50,393	$	47,659	$	4,122	$	67,296	$	225,856
Ending balance: specific reserve for
impaired loans	$	22,546	$	13,451	$	14,375	$	1,484	$	5,074	$	56,930
Ending balance: purchased credit-impaired loans (1)	$	10,873	$	378	$	-	$	-	$	-	$	11,251
Ending balance: general allowance	$	22,967	$	36,564	$	33,284	$	2,638	$	62,222	$	157,675
Loans held for investment:
Ending balance	$	3,267,868	$	1,552,503	$	2,061,773	$	79,150	$	1,734,596	$	8,695,890
Ending balance: impaired loans	$	417,610	$	162,126	$	119,778	$	12,067	$	34,699	$	746,280
Ending balance: purchased credit-
impaired loans	$	151,067	$	4,214	$	-	$	-	$	-	$	155,281
Ending balance: loans with general allowance	$	2,699,191	$	1,386,163	$	1,941,995	$	67,083	$	1,699,897	$	7,794,329

(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended March 31, 2017
Allowance for loan and lease losses:
Beginning balance		$	33,980	$	57,261	$	61,953	$	2,562	$	49,847	$	205,603
Charge-offs			(8,225)		(1,362)		(12,052)		(63)		(11,192)		(32,894)
Recoveries			749		30		875		445		2,981		5,080
Provision (release)			9,271		12,539		(4,806)		942		7,496		25,442
Ending balance		$	35,775	$	68,468	$	45,970	$	3,886	$	49,132	$	203,231
Ending balance: specific reserve for
impaired loans		$	8,551	$	36,638	$	12,711	$	2,835	$	5,576	$	66,311
Ending balance: purchased credit-impaired loans (1)		$	6,545	$	312	$	-	$	-	$	-	$	6,857
Ending balance: general allowance		$	20,679	$	31,518	$	33,259	$	1,051	$	43,556	$	130,063
Loans held for investment:
Ending balance		$	3,272,598	$	1,596,176	$	2,108,532	$	137,887	$	1,707,156	$	8,822,349
Ending balance: impaired loans		$	432,798	$	193,035	$	86,059	$	51,801	$	43,505	$	807,198
Ending balance: purchased credit-
impaired loans		$	158,940	$	4,160	$	-	$	-	$	-	$	163,100
Ending balance: loans with general allowance		$	2,680,860	$	1,398,981	$	2,022,473	$	86,086	$	1,663,651	$	7,852,051
(1)	Refer to Note 7 - 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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LOANS HELD FOR SALE (Tables)

3 Months Ended

Mar. 31, 2018

Portfolio of Loans Held for Sale

		As of
		March 31, 2018		December 31, 2017
(In thousands)
Residential mortgage loans		$	26,430	$	24,690
Construction loans (1)			37,732		8,290
Commercial mortgage loans (1)			27,213		-
Total (1)		$	91,375	$	32,980
(1)	During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sales consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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OTHER REAL ESTATE OWNED (Tables)

3 Months Ended

Mar. 31, 2018

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:
		March 31,			December 31,
		2018		2017
(In thousands)
OREO
OREO balances, carrying value:
Residential (1)		$	60,240	$	54,381
Commercial			83,911		82,871
Construction			10,488		10,688
Total		$	154,639	$	147,940
(1)	Excludes $17.8 million and $21.3 million as of March 31, 2018 and December 31, 2017, 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)

3 Months Ended

Mar. 31, 2018

Notional Amounts of All Derivative Instruments

The following table summarizes the notional amounts of all derivative instruments:
	Notional Amounts (1)
	As of		As of
	March 31,		December 31,
(In thousands)	2018		2017
Undesignated economic hedges:
Interest rate contracts:
Written interest rate cap agreements	$	90,510	$	91,010
Purchased interest rate cap agreements		90,510		91,010
Forward Contracts:
Sale of TBA GNMA MBS pools		25,000		26,000
	$	206,020	$	208,020
(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 for derivative instruments their fair values and location in the consolidated statements of financial condition:
	Asset Derivatives					Liability Derivatives
	Statement of	March 31,		December 31,			March 31,		December 31,
	Financial	2018		2017			2018		2017
	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	$	668	$	305
Purchased interest rate cap agreements	Other assets		668		305	Accounts payable and other liabilities		-		-
Forward Contracts:
Sales of TBA GNMA MBS pools	Other assets		3		7	Accounts payable and other liabilities		67		19
		$	671	$	312		$	735	$	324

Effect of Derivative Instruments on Statement of Income (Loss)

The following table summarizes the effect of derivative instruments on the statement of income:
		(Loss)
	Location of Loss		Quarter Ended
	Recognized in Statement	March 31,
	of Income on Derivatives	2018		2017
			(In thousands)
UNDESIGNATED ECONOMIC HEDGES:
Interest rate contracts:
Written and purchased interest rate cap agreements	Interest income - Loans	$	-	$	(1)
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage Banking Activities		(52)		(56)
Total loss on derivatives		$	(52)	$	(57)

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OFFSETTING OF ASSETS AND LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2018

Text Block [Abstract]

Offsetting of assets and liabilties

Offsetting of Financial Assets and Derivative Assets
As of March 31, 2018
							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
(In thousands)											Net Amount
Description
Derivatives	$	668	$	-	$	668	$	(45)	$	(623)	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,668	$	(200,000)	$	668	$	(45)	$	(623)	$	-
As of December 31, 2017
							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
											Net Amount
(In thousands)
Description
Derivatives	$	305	$	-	$	305	$	(305)	$	-	$	-
Securities purchased under agreements to resell		200,000		(200,000)		-		-		-		-
Total	$	200,305	$	(200,000)	$	305	$	(305)	$	-	$	-

Offsetting of Financial Liabilities and Derivative Liabilities
As of March 31, 2018
							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
(In thousands)											Net Amount
Description
Securities sold under agreements to repurchase	$	400,000	$	(200,000)	$	200,000	$	(200,000)	$	-	$	-
As of December 31, 2017
							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
											Net Amount
(In thousands)
Description
Securities sold under agreements to repurchase	$	500,000	$	(200,000)	$	300,000	$	(300,000)	$	-	$	-

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GOODWILL AND OTHER INTANGIBLES (Tables)

3 Months Ended

Mar. 31, 2018

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 statements of financial condition:
	As of		As of
	March 31,		December 31,
	2018		2017
(Dollars in thousands)
Core deposit intangible:
Gross amount, beginning of period	$	51,664	$	51,664
Accumulated amortization (1)		(46,580)		(46,186)
Net carrying amount	$	5,084	$	5,478
Remaining amortization period		6.8 years		7.0 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization (2)		(17,039)		(16,465)
Net carrying amount	$	7,426	$	8,000
Remaining amortization period		3.6 years		3.9 years
Insurance customer relationship intangible:
Gross amount	$	1,067	$	1,067
Accumulated amortization (3)		(330)		(292)
Net carrying amount	$	737	$	775
Remaining amortization period		4.7 years		5.0 years
(1) For the quarters ended March 31, 2018 and 2017, the amortization expense of core deposit intangibles amounted to $0.4 million and $0.5 million, respectively.
(2) For each of the quarters ended March 31, 2018 and 2017, the amortization expense of the purchased credit card relationship intangible amounted to $0.6 million.
(3) For each of the quarters ended March 31, 2018 and 2017, the amortization expense of the insurance customer relationship intangible amounted to $38 thousand.

	The estimated aggregate annual amortization expense related to the intangible assets for future periods is as follows:
			Amount
			(In thousands)
2018		$	2,585
2019			3,088
2020			2,851
2021			2,658
2020			915
2023 and after			1,150

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS (Tables)

3 Months Ended

Mar. 31, 2018

Changes in Servicing Assets

The changes in servicing assets are shown below:
		Quarter ended
		March 31,		March 31,
		2018		2017
(In thousands)
Balance at beginning of period		$	25,255	$	26,244
Capitalization of servicing assets			887		875
Amortization			(737)		(788)
Adjustment to fair value			713		(160)
Other (1)			17		159
Balance at end of period		$	26,135	$	26,330
(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
	March 31,		March 31,
	2018		2017
(In thousands)
Balance at beginning of period	$	1,451	$	461
Temporary impairment charges		17		160
OTTI of servicing assets		(65)		(621)
Recoveries		(730)		-
Balance at end of period	$	673	$	-

Components of Net Servicing Income

	The components of net servicing income are shown below:
		Quarter ended
		March 31,		March 31,
		2018		2017
			(In thousands)
Servicing fees		$	2,120	$	2,024
Late charges and prepayment penalties			120		99
Adjustment for loans repurchased			17		159
Other			-		(7)
Servicing income, gross			2,257		2,275
Amortization and impairment of servicing assets			(24)		(948)
Servicing income, net		$	2,233	$	1,327

Weighted-Averages of Key Economic Assumptions in Valuation Model

	(Dollars in thousands)
Carrying amount of servicing assets	$	26,135
Fair value	$	30,720
Weighted-average expected life (in years)		8.56
Constant prepayment rate (weighted-average annual rate)		5.89%
Decrease in fair value due to 10% adverse change	$	725
Decrease in fair value due to 20% adverse change	$	1,421
Discount rate (weighted-average annual rate)		11.23%
Decrease in fair value due to 10% adverse change	$	1,503
Decrease in fair value due to 20% adverse change	$	2,876

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DEPOSITS (Tables)

3 Months Ended

Mar. 31, 2018

Summary of Deposit Balances

The following table summarizes deposit balances as of the dates indicated:
	March 31,			December 31,
	2018		2017
(In thousands)
Type of account:
Non-interest bearing checking accounts	$	2,019,823	$	1,833,665
Savings accounts		2,413,446		2,401,385
Interest-bearing checking accounts		1,242,957		1,207,511
Certificates of deposit		2,434,162		2,429,585
Brokered certificates of deposit (CDs)		956,077		1,150,485
	$	9,066,465	$	9,022,631

Brokered Certificates Of Deposit Mature

Brokered CDs mature as follows:
	March 31, 2018
(In thousands)
Three months or less	$	133,119
Over three months to six months		149,170
Over six months to one year		265,986
Over one year but less than three years		316,191
Three to five years		90,231
Over five years		1,380
Total	$	956,077

Components of Interest Expense on Deposits

The following are the components of interest expense on deposits:
	Quarter Ended
	March 31,			March 31,
	2018			2017
(In thousands)
Interest expense on deposits	$	16,607	$	15,468
Accretion of premium from acquisition		(3)		(23)
Amortization of broker placement fees		367		527
Interest expense on deposits	$	16,971	$	15,972

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Tables)

3 Months Ended

Mar. 31, 2018

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase (repurchase agreements) consisted of the following:
		March, 31		December 31,
		2018		2017
(Dollars in thousands)
Short-term fixed-rate repurchase agreement with a rate of 1.53%		$	-	$	100,000
Long-term fixed-rate repurchase agreements, interest ranging from 1.96% to 2.26% (1)(2)			200,000		200,000
		$	200,000	$	300,000
(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 March 31, 2018, includes $200 million with an average rate of 2.11% that lenders have the right to call before their contractual maturities at various dates beginning on May 6, 2018. Subsequent to March 31, 2018, no lender has exercised its call option on repurchase agreements.

Schedule of Repurchase Agreement Maturity

Repurchase agreements mature as follows:
		March 31, 2018
		(In thousands)
	Three to four years		200,000
	Total	$	200,000

Repurchase Agreements Grouped by Counterparty

Repurchase agreements as of March 31, 2018, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	JP Morgan Chase	$	200,000	46

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) (Tables)

3 Months Ended

Mar. 31, 2018

Summary of Advances from FHLB

The following is a summary of the advances from the FHLB:
		March 31,		December 31,
		2018		2017
	(In thousands)
	Long-term fixed-rate advances from FHLB, with a weighted-average
	interest rate of 1.91%	$	715,000	$	715,000

Advances from FHLB Mature

Advances from FHLB mature as follows:
		March 31,
		2018
	(In thousands)
	Over three months to six months	$	25,000
	Over six months to one year		70,000
	Over one to three years		300,000
	Over three to five years		320,000
	Total	$	715,000

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OTHER BORROWINGS (Tables)

3 Months Ended

Mar. 31, 2018

Components of Other Borrowings

	March 31,		December 31,
	2018		2017
	(In thousands)
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (4.92% as of March 31, 2018
and 4.35% as of December 31, 2017) (1)	$	65,593	$	90,078
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (4.70% as of March 31, 2018
and 4.12% as of December 31, 2017)		118,557		118,557
	$	184,150	$	208,635
(1) Refer to Note 14, - "Non-Consolidated Variable Interest Entities and Servicing Assets-Trust Preferred Securities," for additional information about the Corporation repurchase and cancellation in the first quarter of 2018 of $23.8 million in trust-preferred securities associated with these junior subordinated debentures.

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FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2018

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 March 31, 2018								As of December 31, 2017
		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 (1)		$	-	$	-	$	-	$	-	$	418	$	-	$	-	$	418
U.S. Treasury Securities			57,169		-		-		57,169		7,401		-		-		7,401
Noncallable U.S. agency debt			-		329,170		-		329,170		-		361,971		-		361,971
Callable U.S. agency debt and MBS			-		1,406,283		-		1,406,283		-		1,497,253		-		1,497,253
Puerto Rico government obligations			-		4,074		2,734		6,808		-		4,118		2,695		6,813
Private label MBS			-		-		16,074		16,074		-		-		17,060		17,060
Other investments			-		-		-		-		-		-		100		100
Equity securities (1)			413		-		-		413		-		-		-		-
Derivatives, included in assets:
Purchased interest rate cap agreements			-		668		-		668		-		305		-		305
Forward contracts			-		3		-		3		-		7		-		7
Liabilities:
Derivatives, included in liabilities:
Written interest rate cap agreement			-		668		-		668		-		305		-		305
Forward contracts			-		67		-		67		-		19		-		19
(1)	As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities. As of December 31, 2017, equity securities had a net unrealized loss of $6 thousand.

Fair Value of Assets and Liabilities Measured on Recurring Basis

		Quarter ended March 31,
		2018		2017
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	19,855		22,914
Total gains (losses) (realized/unrealized):
Included in other comprehensive income			472		518
Principal repayments and amortization			(1,519)		(2,050)
Ending balance		$	18,808	$	21,382
(1)	Amounts mostly related to private label MBS.

Impairment or Valuation Adjustments were Recorded for Assets Recognized at Fair Value

As of March 31, 2018, 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 March 31, 2018						(Losses) Gains recorded for the Quarter Ended March 31, 2018
		Level 1		Level 2		Level 3
(In thousands)
Loans receivable (1)		$	-	$	-	$	392,493	$	(4,224)
Other real estate owned (2)			-		-		154,639		(287)
Mortgage servicing rights (3)			-		-		26,135		713
Loans held for sale (4)			-		-		64,945		(6,203)
(1)	Consists mainly of impaired commercial and construction loans. The impairments were generally measured based on the fair value of the collateral. The fair values were 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 values were 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 5.89%, Discount Rate 11.23%.
(4)	The value of these loans was primarily derived from external appraisals, adjusted for specific characteristics of the loans.

As of March 31, 2017, 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 March 31, 2017						(Losses) recorded for the Quarter Ended March 31, 2017
		Level 1		Level 2		Level 3
(In thousands)
Loans receivable (1)		$	-	$	-	$	430,162	$	(15,211)
Other real estate owned (2)			-		-		137,784		(4,180)
Mortgage servicing rights (3)			-		-		26,330		(160)
(1)	Consists mainly of impaired commercial and construction loans. The impairments were generally measured based on the fair value of the underlying collateral. The fair values were 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 values were 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 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 6.17%, Discount Rate 11.20%.

Estimated Fair Value and Carrying Value of Financial Instruments

The following tables present the carrying value, estimated fair value and estimated fair value level of the hierarchy of financial instruments as of March 31, 2018 and December 31, 2017:
	Total Carrying Amount in Statement of Financial Condition March 31, 2018		Fair Value Estimate March 31, 2018		Level 1		Level 2		Level 3
(In thousands)
Assets:
Cash and due from banks and money
market investments (amortized cost)	$	843,824	$	843,824	$	843,824	$	-	$	-
Investment securities available
for sale (fair value)		1,815,504		1,815,504		57,169		1,739,527		18,808
Investment securities held to maturity (amortized cost)		150,486		134,856		-		-		134,856
Equity Securities (fair value)		413		413		413		-		-
Other investment securities (amortized cost)		43,119		43,119		-		43,119		-
Loans held for sale (lower of cost or market)		91,375		91,736		-		26,791		64,945
Loans held for investment (amortized cost)		8,695,890
Less: allowance for loan and lease losses		(225,856)
Loans held for investment, net of allowance	$	8,470,034		8,262,128		-		-		8,262,128
Derivatives, included in assets (fair value)		668		668		-		668		-
Liabilities:
Deposits (amortized cost)		9,066,465		9,070,024		-		9,070,024		-
Securities sold under agreements
to repurchase (amortized cost)		200,000		226,076		-		226,076		-
Advances from FHLB (amortized cost)		715,000		701,079		-		701,079		-
Other borrowings (amortized cost)		184,150		171,378		-		-		171,378
Derivatives, included in liabilities (fair value)		735		735		-		735		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2017		Fair Value Estimate December 31, 2017		Level 1		Level 2		Level 3
(In thousands)
Assets:
Cash and due from banks and money
market investments (amortized cost)	$	716,395	$	716,395	$	716,395	$	-	$	-
Investment securities available
for sale (fair value)		1,891,016		1,891,016		7,819		1,863,342		19,855
Investment securities held to maturity (amortized cost)		150,627		131,032		-		-		131,032
Other investment securities (amortized cost)		43,119		43,119		-		43,119		-
Loans held for sale (lower of cost or market)		32,980		34,979		-		25,237		9,742
Loans held for investment (amortized cost)		8,850,476		-		-		-		-
Less: allowance for loan and lease losses		(231,843)		-		-		-		-
Loans held for investment, net of allowance	$	8,618,633		8,372,865		-		-		8,372,865
Derivatives, included in assets (fair value)		312		312		-		312		-
Liabilities:
Deposits (amortized cost)		9,022,631		9,026,600		-		9,026,600		-
Securities sold under agreements
to repurchase (amortized cost)		300,000		325,913		-		325,913		-
Advances from FHLB (amortized cost)		715,000		707,272		-		707,272		-
Other borrowings (amortized cost)		208,635		189,424		-		-		189,424
Derivatives, included in liabilities (fair value)		324		324		-		324		-

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 are as follows:
	March 31, 2018
	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 Flows	Weighted average prepayment rate of 5.89%; weighted average discount rate of 11.23%

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) as of March 31, 2018:
	March 31, 2018
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	16,074	Discounted cash flows	Discount rate	14.5%
				Prepayment rate	7.5% - 24.5% (Weighted Average 15.2%)
				Projected Cumulative Loss Rate	0.00% - 9.0% (Weighted Average 4.0%)
Puerto Rico government obligations		2,734	Discounted cash flows	Discount rate	6.24%
				Prepayment rate	3.00%

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

3 Months Ended

Mar. 31, 2018

Disaggregation Of Revenue Table [TextBlock]

(In thousands)		Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended March 31, 2018:
Net interest income (1)		$	21,205	$	51,049	$	18,920	$	12,518	$	13,392	$	7,609	$	124,693
Service charges and fees on deposit accounts			-		3,165		1,092		-		134		697		5,088
Insurance commissions			-		3,144		-		-		12		199		3,355
Merchant-related income			-		645		161		-		-		185		991
Credit and debit card fees			-		4,169		255		-		128		542		5,094
Other service charges and fees			33		800		300		-		1,039		82		2,254
Not in scope of Topic 606 (1)			4,051		7		(549)		2,378		95		20		6,002
Total non-interest income			4,084		11,930		1,259		2,378		1,408		1,725		22,784
Total Revenue		$	25,289	$	62,979	$	20,179	$	14,896	$	14,800	$	9,334	$	147,477
(1)	Most of the Corporation’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities, as well as other noninterest income from loans, leases, investment securities and derivative financial instruments.

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

3 Months Ended

Mar. 31, 2018

Supplemental Cash Flow Information

	Quarter Ended March 31,
	2018		2017
(In thousands)
Cash paid for:
Interest on borrowings	$	24,353	$	22,001
Non-cash investing and financing activities:
Additions to OREO		15,867		13,597
Additions to auto and other repossessed assets		17,508		11,516
Capitalization of servicing assets		887		875
Loan securitizations		54,382		60,525
Loans held for investment transferred to held for sale		67,937		-
Property plant and equipment transferred to other assets		-		1,185

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2018

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 March 31, 2018:
Interest income	$	32,321	$	42,550	$	32,337	$	14,254	$	19,527	$	8,429	$	149,418
Net (charge) credit for transfer of funds		(11,116)		15,222		(13,417)		9,974		(663)		-		-
Interest expense		-		(6,723)		-		(11,710)		(5,472)		(820)		(24,725)
Net interest income		21,205		51,049		18,920		12,518		13,392		7,609		124,693
Provision for loan and lease losses		(381)		(5,793)		(6,800)		-		(1,459)		(6,111)		(20,544)
Non-interest income		4,084		11,930		1,259		2,378		1,408		1,725		22,784
Direct non-interest expenses		(7,720)		(26,901)		(6,714)		(948)		(7,956)		(7,622)		(57,861)
Segment income (loss)	$	17,188	$	30,285	$	6,665	$	13,948	$	5,385	$	(4,399)	$	69,072
Average earnings assets	$	2,293,482	$	1,566,795	$	2,632,220	$	2,470,830	$	1,709,918	$	571,199	$	11,244,444
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended March 31, 2017:
Interest income	$	33,958	$	42,917	$	29,411	$	13,757	$	15,789	$	9,396	$	145,228
Net (charge) credit for transfer of funds		(11,698)		4,909		(9,318)		16,233		(126)		-		-
Interest expense		-		(5,900)		-		(11,806)		(4,195)		(778)		(22,679)
Net interest income		22,260		41,926		20,093		18,184		11,468		8,618		122,549
(Provision) release for loan and lease losses		(8,936)		(7,142)		(8,055)		-		35		(1,344)		(25,442)
Non-interest income (loss)		3,586		13,379		1,237		(12,170)		505		1,706		8,243
Direct non-interest expenses		(9,879)		(27,418)		(9,367)		(1,207)		(7,859)		(6,750)		(62,480)
Segment income	$	7,031	$	20,745	$	3,908	$	4,807	$	4,149	$	2,230	$	42,870
Average earnings assets	$	2,500,750	$	1,775,931	$	2,548,936	$	2,157,882	$	1,393,215	$	617,820	$	10,994,534

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
		March 31,
		2018		2017
Net income:
Total income for segments and other		$	69,072	$	42,870
Other operating expenses (1)			(28,166)		(25,402)
Income before income taxes			40,906		17,468
Income tax (expense) benefit			(7,758)		8,073
Total consolidated net income		$	33,148	$	25,541
Average assets:
Total average earning assets for segments		$	11,244,444	$	10,994,534
Average non-earning assets			947,460		886,492
Total consolidated average assets		$	12,191,904	$	11,881,026
(1)	Expenses pertaining to corporate administrative functions that support the operating segment 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)

3 Months Ended

Mar. 31, 2018

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 March 31, 2018 and December 31, 2017 were as follows:
		Regulatory Requirements
		Actual			For Capital Adequacy Purposes			To be Well-Capitalized-General Thresholds
		Amount		Ratio	Amount		Ratio	Amount		Ratio
(Dollars in thousands)
As of March 31, 2018
Total Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,990,146	22.98%	$	692,691	8.0%		N/A	N/A
FirstBank		$	1,950,261	22.52%	$	692,671	8.0%	$	865,838	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.		$	1,665,842	19.24%	$	389,639	4.5%		N/A	N/A
FirstBank		$	1,532,690	17.70%	$	389,627	4.5%	$	562,795	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,701,946	19.66%	$	519,518	6.0%		N/A	N/A
FirstBank		$	1,840,690	21.26%	$	519,503	6.0%	$	692,671	8.0%
Leverage ratio
First BanCorp.		$	1,701,946	14.18%	$	480,078	4.0%		N/A	N/A
FirstBank		$	1,840,690	15.35%	$	479,527	4.0%	$	599,408	5.0%
As of December 31, 2017
Total Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,989,873	22.53%	$	706,432	8.0%		N/A	N/A
FirstBank		$	1,947,627	22.06%	$	706,218	8.0%	$	882,772	10.0%
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
First BanCorp.		$	1,674,164	18.96%	$	397,368	4.5%		N/A	N/A
FirstBank		$	1,562,431	17.70%	$	397,248	4.5%	$	573,802	6.5%
Tier I Capital (to
Risk-Weighted Assets)
First BanCorp.		$	1,675,282	18.97%	$	529,824	6.0%		N/A	N/A
FirstBank		$	1,835,445	20.79%	$	529,663	6.0%	$	706,218	8.0%
Leverage ratio
First BanCorp.		$	1,675,282	14.03%	$	477,643	4.0%		N/A	N/A
FirstBank		$	1,835,445	15.39%	$	477,056	4.0%	$	596,320	5.0%

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FIRST BANCORP. (Holding Company Only) Financial Information (Tables)

3 Months Ended

Mar. 31, 2018

Statements of Financial Condition

Statements of Financial Condition
	As of March 31,			As of December 31,
	2018		2017
(In thousands)
Assets
Cash and due from banks	$	16,866	$	20,864
Money market investments		6,111		6,111
Other investment securities		285		285
Loans held for investment, net		178		191
Investment in First Bank Puerto Rico, at equity		2,015,111		2,028,641
Investment in First Bank Insurance Agency, at equity		14,933		12,400
Investment in FBP Statutory Trust I		1,963		2,698
Investment in FBP Statutory Trust II		3,561		3,561
Other assets		5,671		3,799
Total assets	$	2,064,679	$	2,078,550
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	184,150	$	208,635
Accounts payable and other liabilities		3,425		818
Total liabilities		187,575		209,453
Stockholders' equity		1,877,104		1,869,097
Total liabilities and stockholders' equity	$	2,064,679	$	2,078,550

Statements of Income (Loss)

Statements of Income
	Quarter Ended
	March 31,		March 31,
	2018		2017
	(In thousands)
Income:
Interest income on money market investments	$	5	$	5
Dividends from banking subsidiary		21,584		1,930
Other income		63		62
		21,652		1,997
Expense:
Other borrowings		2,085		1,963
Other operating expenses		596		967
		2,681		2,930
Gain on early extinguishment of debt		2,316		-
Income (loss) income before income taxes and equity in undistributed
earnings of subsidiaries		21,287		(933)
Equity in undistributed earnings of subsidiaries		11,861		26,474
Net income	$	33,148	$	25,541
Other comprehensive (loss) income, net of tax		(24,047)		10,696
Comprehensive income	$	9,101	$	36,237

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) $ in Thousands	Mar. 31, 2018 USD ($)
Significant Accounting Policies [Line Items]
Callable Debt Securities Held At Premium	$ 4,300
Callable Debt Securities Unamortized Premium	$ 50

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UPDATE ON IMPACTS OF NATURAL DISASTERS- Additional information (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Liability For Catastrophe Claims Line [Items]
Financing Receivable Allowance For Credit Losses		$ 225,856	$ 203,231	$ 231,843	$ 205,603
Loans And Leases Receivable Impaired Nonperforming Nonaccrual Of Interest	[1],[2],[3]	411,977		489,554
Marketing And Advertising Expense		2,576	3,281
Financing Receivable Allowance For Credit Losses Write Offs		29,360	$ 32,894
Hurricane [Member]
Liability For Catastrophe Claims Line [Items]
Financing Receivable Allowance For Credit Losses		62,100
Loss And Expenses Catastrophic Events		1,600
Disaster Response Plan Costs		9,400
Net Loan Loss Reserve Release		6,400
Insurance Claim Receivable		5,300
Increase Decrease In Deposits Excluding Brokered Certificates Of Deposits		$ 238,300
Percentage Of Non Interest Bearing Demand Deposits		10.00%
Increase Decrease In Non Interest Bearing Demand Deposits		$ 186,200
Increase Decrease In Non Interest Bearing Deposits From September		$ 433,700
Percentage Of Non Interest Bearing Demand Deposits From September		27.00%
Increase Decrease In Deposits Excluding Brokered Certificates Of DepositsFrom September		$ 599,800
Residential Mortgage [Member]
Liability For Catastrophe Claims Line [Items]
Loans And Leases Receivable Impaired Nonperforming Nonaccrual Of Interest		171,380		178,291
Consumer Loan [Member]
Liability For Catastrophe Claims Line [Items]
Loans And Leases Receivable Impaired Nonperforming Nonaccrual Of Interest		8,603		$ 5,370
Construction Loans [Member] | Hurricane [Member]
Liability For Catastrophe Claims Line [Items]
Financing Receivable Allowance For Credit Losses Write Offs		$ 2,800

[1] Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $155.3 million and $158.2 million as of March 31, 2018 and December 31, 2017, 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] Excludes $64.9 million and $8.3 million of non-performing loans held for sale as of March 31, 2018 and December 31, 2017, respectively.

[3] Non-performing loans exclude $366.4 million and $374.7 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with the modified terms and in accrual status as of March 31, 2018 and December 31, 2017, respectively.

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BUSINESS COMBINATION- Additional information (Detail) - USD ($) $ in Thousands	1 Months Ended
	Feb. 27, 2015	Mar. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Branches Doral	10
Contractually outstanding principal and interest at acquisition		$ 192,000	$ 196,600
Callable Debt Securities Held At Premium		4,300
Callable Debt Securities Unamortized Premium		$ 50

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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
	Mar. 31, 2018	Mar. 31, 2017
Net Income (Loss):
Net income	$ 33,148	$ 25,541
Dividends on preferred stock	(669)	(669)
Net income (loss) attributable to common stockholders	$ 32,479	$ 24,872
Weighted-Average Shares:
Basic weighted-average common shares outstanding	214,646	213,340
Average potential common shares	1,648	4,033
Diluted weighted-average number of common shares outstanding	216,294	217,373
Income (loss) per common share:
Basic	$ 0.15	$ 0.12
Diluted	$ 0.15	$ 0.11
Retained Earnings [Member]
Net Income (Loss):
Net income	$ 33,148	$ 25,541
Dividends on preferred stock	$ (669)	$ (669)

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EARNINGS PER COMMON SHARE - Additional Information (Detail)	Dec. 31, 2017 shares
Earnings Per Share Diluted [Line Items]
Unvested shares of restricted stock	1,816,968

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STOCK-BASED COMPENSATION - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017	Apr. 29, 2008
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares of restricted stock		341,189
Vested	[1]	1,061,476
Stock based compensation expense unrecognized related to nonvested shares of restricted stock		$ 3.9
Period for cost recognition not yet recognized		1 year 8 months 12 days
Weighted-Average Grant Date Fair Value of Stocks		$ 6.29
Holding Period By The Us Treasury Of Outstanding Common Stock		2 years	2 years
Repurchased of common stock		383,087	98,300
U S Treasury And Government [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Class Of Warrant Or Right Outstanding		1,285,899
Percentage of forfeited stock		50.00%
Senior Executives
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares		154,187	135,692
Share based compensation cost		$ 0.8
Weighted-Average Grant Date Fair Value of Stocks		$ 5.8	$ 6.31
Repurchased of common stock		56,131	45,710
Management [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares of restricted stock			949,332
Restricted stock vesting period		2 years	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		7,063,074
Troubled Asset Relief Program [Member] | Senior Management [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of Share vested during period		50.00%
Restricted Stock Forfeitures Percentage		50.00%
Troubled Asset Relief Program [Member] | Management [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares of restricted stock			838,332
Fair Value Of Restricted Stock Granted			$ 2.71
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation cost		$ 1.1	$ 0.9
Repurchased of common stock		326,956	52,590
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Forfeited In Period		2,370,571
Retirement Eligible Shares		20,447
Performance Shares [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation cost		$ 0.2
Stock based compensation expense unrecognized related to nonvested shares of restricted stock		$ 1.7
Performance Shares [Member] | Omnibus Plan [Member] | Executive Officers [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted shares		304,408
Retirement Eligible Shares		29,171
Restricted Stock Vesting After Two Years Member [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of Share vested during period		50.00%
Restricted Stock Vesting After Three Years Member [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of Share vested during period		50.00%
Performance Shares Vesting After Minimum Threshold [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance Share Based Awards Percentage		50.00%
Minimum performance threshold [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance Share Based Awards Percentage		80.00%

[1]

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STOCK-BASED COMPENSATION - Restricted Stock Activity Under Omnibus Plan (Detail)	3 Months Ended
	Mar. 31, 2018 $ / 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	1,816,968
Granted shares of restricted stock | shares	341,189
Vested | shares	(1,061,476)	[1]
Weighted-Average Grant Date Fair Value, beginning of period | $ / shares	$ 2.76
Weighted-Average Grant Date Fair Value of Stocks | $ / shares	6.29
Weighted-Averages Grant Date Fair Value, Vested | $ / shares	2.02	[1]
Weighted-Average Grant Date Fair Value, end of period | $ / shares	$ 4.58
Omnibus Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of non-vested shares of restricted stock, end of period | shares	1,096,681

[1]

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INVESTMENT SECURITIES - Investment Securities Available for Sale (Detail) - USD ($)		Mar. 31, 2018	Dec. 31, 2017
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 1,852,413,000	$ 1,903,878,000
Noncredit Loss Component of OTTI Recorded in OCI		5,235,000	5,731,000
Gross unrealized gain		7,562,000	11,309,000
Gross unrealized loss		39,236,000	18,440,000
Fair value		$ 1,815,504,000	$ 1,891,016,000
Weighted average yield		2.32%	2.27%
United States And Puerto Rico Government Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 619,955,000	$ 621,664,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		48,000	193,000
Gross unrealized loss		9,624,000	5,856,000
Fair value		$ 610,379,000	$ 616,001,000
Weighted average yield		1.76%	1.70%
Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 1,232,458,000	$ 1,281,690,000
Noncredit Loss Component of OTTI Recorded in OCI		5,235,000	5,731,000
Gross unrealized gain		7,514,000	11,116,000
Gross unrealized loss		29,612,000	12,578,000
Fair value		$ 1,205,125,000	$ 1,274,497,000
Weighted average yield		2.60%	2.54%
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		$ 305,971,000	$ 316,391,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		12,000	231,000
Gross unrealized loss		9,684,000	4,916,000
Fair value		$ 296,299,000	$ 311,706,000
Weighted average yield		2.23%	2.23%
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		$ 205,548,000	$ 214,809,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		5,178,000	7,155,000
Gross unrealized loss		1,123,000	334,000
Fair value		$ 209,603,000	$ 221,630,000
Weighted average yield		3.57%	3.56%
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		$ 656,857,000	$ 683,894,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		1,995,000	3,474,000
Gross unrealized loss		18,794,000	7,328,000
Fair value		$ 640,058,000	$ 680,040,000
Weighted average yield		2.40%	2.39%
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		$ 42,773,000	$ 43,805,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		329,000	256,000
Gross unrealized loss		11,000	0
Fair value		$ 43,091,000	$ 44,061,000
Weighted average yield		2.53%	2.22%
Due Within One Year [Member] | U S Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 49,799,000
Noncredit Loss Component of OTTI Recorded in OCI		0
Gross unrealized gain		0
Gross unrealized loss		22,000
Fair value		$ 49,777,000
Weighted average yield		1.55%
Due Within One Year [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 72,484,000	$ 122,471,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	0
Gross unrealized loss		242,000	319,000
Fair value		$ 72,242,000	$ 122,152,000
Weighted average yield		1.08%	1.06%
After One To Five Years [Member] | U S Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 7,465,000	$ 7,458,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	0
Gross unrealized loss		73,000	57,000
Fair value		$ 7,392,000	$ 7,401,000
Weighted average yield		1.29%	1.29%
After One To Five Years [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 309,459,000	$ 309,472,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	28,000
Gross unrealized loss		4,996,000	3,735,000
Fair value		$ 304,463,000	$ 305,765,000
Weighted average yield		1.42%	1.42%
After One To Five Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Weighted average yield		0.00%
After One To Five Years [Member] | Other Available For Sale Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost			$ 100,000
Noncredit Loss Component of OTTI Recorded in OCI			0
Gross unrealized gain			0
Gross unrealized loss			0
Fair value			$ 100,000
Weighted average yield			1.48%
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		$ 136,000	$ 81,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		3,000	1,000
Gross unrealized loss		0	0
Fair value		$ 139,000	$ 82,000
Weighted average yield		2.77%	3.23%
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		$ 15,735,000	$ 20,831,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		177,000	294,000
Gross unrealized loss		195,000	109,000
Fair value		$ 15,717,000	$ 21,016,000
Weighted average yield		2.89%	2.69%
After One To Five 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		$ 8,154,000	$ 5,918,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		8,000	14,000
Gross unrealized loss		11,000	0
Fair value		$ 8,151,000	$ 5,932,000
Weighted average yield		2.53%	2.21%
After Five To Ten Years [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 133,471,000	$ 133,451,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		26,000	117,000
Gross unrealized loss		2,736,000	319,000
Fair value		$ 130,761,000	$ 133,249,000
Weighted average yield		2.74%	2.72%
After Five To Ten Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 4,052,000	$ 4,071,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		22,000	47,000
Gross unrealized loss		0	0
Fair value		$ 4,074,000	$ 4,118,000
Weighted average yield		3.14%	3.14%
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		$ 43,037,000	$ 18,658,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		12,000	14,000
Gross unrealized loss		1,305,000	63,000
Fair value		$ 41,744,000	$ 18,609,000
Weighted average yield		1.96%	2.14%
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		$ 65,098,000	$ 69,661,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		683,000	1,244,000
Gross unrealized loss		137,000	0
Fair value		$ 65,644,000	$ 70,905,000
Weighted average yield		3.04%	3.05%
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		$ 109,562,000	$ 49,934,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	0
Gross unrealized loss		4,279,000	818,000
Fair value		$ 105,283,000	$ 49,116,000
Weighted average yield		1.76%	1.83%
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			$ 2,556,000
Noncredit Loss Component of OTTI Recorded in OCI			0
Gross unrealized gain			11,000
Gross unrealized loss			0
Fair value			$ 2,567,000
Weighted average yield			2.23%
After Ten Years [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 39,190,000	$ 40,769,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	1,000
Gross unrealized loss		254,000	149,000
Fair value		$ 38,936,000	$ 40,621,000
Weighted average yield		2.07%	1.84%
After Ten Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost		$ 4,035,000	$ 3,972,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	0
Gross unrealized loss		1,301,000	1,277,000
Fair value		$ 2,734,000	$ 2,695,000
Weighted average yield		6.97%	6.97%
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		$ 262,934,000	$ 297,733,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		0	217,000
Gross unrealized loss		8,379,000	4,853,000
Fair value		$ 254,555,000	$ 293,097,000
Weighted average yield		2.28%	2.23%
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		$ 140,314,000	$ 145,067,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		4,492,000	5,910,000
Gross unrealized loss		986,000	334,000
Fair value		$ 143,820,000	$ 150,643,000
Weighted average yield		3.81%	3.81%
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		$ 531,560,000	$ 613,129,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		1,818,000	3,180,000
Gross unrealized loss		14,320,000	6,401,000
Fair value		$ 519,058,000	$ 609,908,000
Weighted average yield		2.52%	2.43%
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		$ 34,619,000	$ 35,331,000
Noncredit Loss Component of OTTI Recorded in OCI		0	0
Gross unrealized gain		321,000	231,000
Gross unrealized loss		0	0
Fair value		$ 34,940,000	$ 35,562,000
Weighted average yield		2.53%	2.22%
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		$ 21,309,000	$ 22,791,000
Noncredit Loss Component of OTTI Recorded in OCI		5,235,000	5,731,000
Gross unrealized gain		0	0
Gross unrealized loss		0	0
Fair value		$ 16,074,000	$ 17,060,000
Weighted average yield		4.49%	2.44%
Equity Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	[1]		$ 424,000
Noncredit Loss Component of OTTI Recorded in OCI	[1]		0
Gross unrealized gain	[1]		0
Gross unrealized loss	[1]		6,000
Fair value	[1]		$ 418,000
Weighted average yield	[1]		2.11%

[1] As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

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INVESTMENT SECURITIES - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2017	May 17, 2017	Dec. 31, 2016
Schedule Of Investments [Line Items]
Percentage Of Debt Securities Government And Government Sponsored Agencies	98.00%
Maximum loan to value ratio	80.00%
Proceeds From Maturities Prepayments And Calls Of Available For Sale Securities	$ 100,195		$ 53,830
Total investment securities available for sale	1,815,504			$ 1,891,016
Fair value	1,815,504			1,891,016
Amortized cost	$ 1,852,413			$ 1,903,878
Weighted average yield	2.32%			2.27%
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	$ 0		$ 12,231
Interest Receivable	44,093			$ 57,172
Other Than Temporary Impairment Credit Losses Recognized In Earnings Credit Losses On Debt Securities Held			$ 41,212			$ 28,981
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			15.00%
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			41.00%
Mortgage Backed Securities Issued By Private Enterprises [Member]
Schedule Of Investments [Line Items]
Other Than Temporary Impairment Credit Losses Recognized In Earnings Credit Losses On Debt Securities Held	$ 6,792		$ 6,792	$ 6,792		6,792
Puerto Rico Government obligations [Member]
Schedule Of Investments [Line Items]
Proceeds from sale of available-for-sale securities		$ 23,400
Other Than Temporary Impairment Losses Investments Portion Recognized In Earnings Net			12,200
Percentage Of Held To Maturity Securities	70.00%
Other Than Temporary Impairment Credit Losses Recognized In Earnings Credit Losses On Debt Securities Held	$ 34,400		$ 34,420			$ 22,189
Puerto Rico Government obligations [Member] | Puerto Rico Government Debt Securities Other Than Temporary Impairment [Member]
Schedule Of Investments [Line Items]
Amortized cost					$ 23,000

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INVESTMENT SECURITIES - Narratives (Detail)	Mar. 31, 2018 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		Mar. 31, 2018	Dec. 31, 2017
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months		$ 805,707	$ 456,477
Unrealized Losses Less than 12 months		15,046	3,123
Fair Value 12 months or more		795,780	823,506
Unrealized Losses 12 months or more		29,425	21,048
Total Fair Value		1,601,487	1,279,983
Total Unrealized Losses		44,471	24,171
Equity Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	[1]		0
Unrealized Losses Less than 12 months	[1]		0
Fair Value 12 months or more	[1]		407
Unrealized Losses 12 months or more	[1]		6
Total Fair Value	[1]		407
Total Unrealized Losses	[1]		6
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		2,734	2,695
Unrealized Losses 12 months or more		1,301	1,277
Total Fair Value		2,734	2,695
Total Unrealized Losses		1,301	1,277
Debt Securities [Member] | US States And Political Subdivisions Member [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months		238,248	136,459
Unrealized Losses Less than 12 months		3,306	494
Fair Value 12 months or more		360,298	362,050
Unrealized Losses 12 months or more		5,017	4,085
Total Fair Value		598,546	498,509
Total Unrealized Losses		8,323	4,579
Mortgage Backed Securities [Member] | Collateralized Mortgage Obligations Member
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months		5,907
Unrealized Losses Less than 12 months		11
Fair Value 12 months or more		0
Unrealized Losses 12 months or more		0
Total Fair Value		5,907
Total Unrealized Losses		11
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		16,074	17,060
Unrealized Losses 12 months or more		5,235	5,731
Total Fair Value		16,074	17,060
Total Unrealized Losses		5,235	5,731
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		68,490	39,145
Unrealized Losses Less than 12 months		1,123	334
Fair Value 12 months or more		0	0
Unrealized Losses 12 months or more		0	0
Total Fair Value		68,490	39,145
Total Unrealized Losses		1,123	334
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		354,552	189,699
Unrealized Losses Less than 12 months		7,690	1,705
Fair Value 12 months or more		259,076	274,963
Unrealized Losses 12 months or more		11,104	5,623
Total Fair Value		613,628	464,662
Total Unrealized Losses		18,794	7,328
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		138,510	91,174
Unrealized Losses Less than 12 months		2,916	590
Fair Value 12 months or more		157,598	166,331
Unrealized Losses 12 months or more		6,768	4,326
Total Fair Value		296,108	257,505
Total Unrealized Losses		$ 9,684	$ 4,916

[1] As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities.

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INVESTMENT SECURITIES - OTTI Losses on Available-for-Sale Debt Securities (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Schedule Of Available For Sale Securities [Line Items]
Total other-than-temporary impairment losses		$ 0	$ (12,231)
Net impairment losses recognized in earnings		0	(12,231)
Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Total other-than-temporary impairment losses		0	(12,231)
Portion of loss previously recognized in other comprehensive income	[1]	0	0
Net impairment losses recognized in earnings	[1]	$ 0	(12,231)
US States And Political Subdivisions Member [Member]
Schedule Of Available For Sale Securities [Line Items]
Net impairment losses recognized in earnings			$ (12,200)

[1] Credit losses on Puerto Rico government debt securities, recorded in the first quarter of 2017.

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INVESTMENT SECURITIES - Roll-Forward of Credit Losses on Debt Securities Held by Corporation (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
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
Additions:
Credit losses on debt securities for which an OTTI was previously recognized		12,231
Reductions:
Ending balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI		41,212
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	6,792
Additions:
Credit losses on debt securities for which an OTTI was previously recognized	0	0
Reductions:
Ending balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	6,792	6,792
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
Additions:
Credit losses on debt securities for which an OTTI was previously recognized		12,231
Reductions:
Ending balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	$ 34,400	$ 34,420

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INVESTMENT SECURITIES - Significant Assumptions in Valuation of Private Label MBS (Detail)	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Schedule Of Investments [Line Items]
Fair Value Inputs Discount Rate	14.50%	14.00%
Fair Value Inputs Prepayment Rate	15.20%	16.40%
Weighted Average, Projected Cumulative Loss Rate	4.00%	3.00%
Minimum [Member]
Schedule Of Investments [Line Items]
Fair Value Inputs Discount Rate		12.88%
Fair Value Inputs Prepayment Rate	7.50%	12.00%
Weighted Average, Projected Cumulative Loss Rate	0.00%	0.00%
Maximum [Member]
Schedule Of Investments [Line Items]
Fair Value Inputs Discount Rate		14.43%
Fair Value Inputs Prepayment Rate	24.50%	29.00%
Weighted Average, Projected Cumulative Loss Rate	9.00%	6.80%

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INVESTMENT SECURITIES - Investment Securities Held to Maturity (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Schedule Of Held To Maturity Securities [Line Items]
Held To Maturity Securities		$ 150,627
Held To Maturity Securities Fair Value	$ 134,856	131,032
US States And Political Subdivisions Member [Member] | P R
Schedule Of Held To Maturity Securities [Line Items]
Held To Maturity Securities	150,486	150,627
Held To Maturity Securities Accumulated Unrecognized Holding Gain	0	0
Held To Maturity Securities Accumulated Unrecognized Holding Loss	15,630	19,595
Held To Maturity Securities Fair Value	$ 134,856	$ 131,032
Held To Maturity Securities Debt Maturities Average Yield	5.25%	5.03%
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	$ 3,712	$ 3,853
Held To Maturity Securities Accumulated Unrecognized Holding Gain	0	0
Held To Maturity Securities Accumulated Unrecognized Holding Loss	161	173
Held To Maturity Securities Fair Value	$ 3,551	$ 3,680
Held To Maturity Securities Debt Maturities Average Yield	5.39%	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	$ 39,523	$ 39,523
Held To Maturity Securities Accumulated Unrecognized Holding Gain	0	0
Held To Maturity Securities Accumulated Unrecognized Holding Loss	2,703	3,048
Held To Maturity Securities Fair Value	$ 36,820	$ 36,475
Held To Maturity Securities Debt Maturities Average Yield	5.35%	5.28%
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	$ 107,251	$ 107,251
Held To Maturity Securities Accumulated Unrecognized Holding Gain	0	0
Held To Maturity Securities Accumulated Unrecognized Holding Loss	12,766	16,374
Held To Maturity Securities Fair Value	$ 94,485	$ 90,877
Held To Maturity Securities Debt Maturities Average Yield	5.21%	4.93%

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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	Mar. 31, 2018	Dec. 31, 2017
Schedule Of Held To Maturity Securities [Line Items]
Held to maturity less than twelve months fair value	$ 0	$ 0
Held to maturity less than twelve months unrealized losses	0	0
Held to maturity securities twelve months or longer fair value	134,856	131,032
Held to maturity securities twelve month or longer unrealized losses	15,630	19,595
Held to maturity unrealized loss position fair value	134,856	131,032
Held to maturity unrealized loss position aggregate losses	$ 15,630	$ 19,595

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OTHER EQUITY SECURITIES - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Schedule Of Other Assets [Line Items]
Capital stock par value	$ 100
Book value of investment in FHLB stock	$ 40,900		$ 40,900
Dividend income from FHLB stock	700	$ 500
Carrying value of other equity security	2,200		$ 2,200
Other Equity Securities Fair Value	400
Market to Market loss on equity securities reclassified as per ASU201601	$ 7

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LOAN PORTFOLIO - Loan Portfolio Held for Investment (Detail) - USD ($) $ in Thousands	Mar. 31, 2018		Dec. 31, 2017	Mar. 31, 2017
Financial Information [Line Items]
Loans held for investment	$ 8,695,890	[1]	$ 8,850,476	$ 8,822,349
Less: allowance for loan and lease losses	(225,856)		(231,843)
Loans held for investment, net	8,470,034		8,618,633
Construction Loans [Member]
Financial Information [Line Items]
Loans held for investment	79,150	[2]	111,397
Residential Mortgage [Member]
Financial Information [Line Items]
Loans held for investment	3,267,868		3,290,957
Commercial Real Estate Portfolio Segment [Member]
Financial Information [Line Items]
Loans held for investment	1,552,503	[2]	1,614,972
Commercial Portfolio Segment [Member]
Financial Information [Line Items]
Loans held for investment	3,693,426		3,809,622
Commercial And Industrial Sector [Member]
Financial Information [Line Items]
Loans held for investment	2,061,773	[1]	2,083,253
Other Consumer Loans [Member]
Financial Information [Line Items]
Loans held for investment	1,471,733		1,492,435
Finance Leases [Member]
Financial Information [Line Items]
Loans held for investment	$ 262,863		$ 257,462

[1] As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

[2] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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LOAN PORTFOLIO - Loan Portfolio Held for Investment (Parenthetical) (Detail) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Financial Information [Line Items]
Commercian Loans Collaterized By Real Estate	$ 823.2	$ 833.5

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LOAN PORTFOLIO - Loans Held for Investment on Which Accrual of Interest Income had been Discontinued (Detail) - USD ($) $ in Thousands		Mar. 31, 2018		Dec. 31, 2017
Non-performing loans:
Total non-performing loans held for investment	[1],[2],[3]	$ 411,977		$ 489,554
Residential Mortgage [Member]
Non-performing loans:
Total non-performing loans held for investment		171,380		178,291
Commercial Mortgage [Member]
Non-performing loans:
Total non-performing loans held for investment		115,179	[4]	156,493
Commercial And Industrial [Member]
Non-performing loans:
Total non-performing loans held for investment		85,325		85,839
Consumer Auto Loans [Member]
Non-performing loans:
Total non-performing loans held for investment		13,453		10,211
Finance Leases [Member]
Non-performing loans:
Total non-performing loans held for investment		1,801		1,237
Consumer Retail Banking [Member]
Non-performing loans:
Total non-performing loans held for investment		8,603		5,370
Residential Construction [Member]
Non-performing loans:
Total non-performing loans held for investment		1,287		1,987
Commercial Construction [Member]
Non-performing loans:
Total non-performing loans held for investment		0	[4]	35,100
Land Construction [Member]
Non-performing loans:
Total non-performing loans held for investment		$ 14,949		$ 15,026

[1] Amount excludes purchased-credit impaired ("PCI") loans with a carrying value of approximately $155.3 million and $158.2 million as of March 31, 2018 and December 31, 2017, 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] Excludes $64.9 million and $8.3 million of non-performing loans held for sale as of March 31, 2018 and December 31, 2017, respectively.

[3] Non-performing loans exclude $366.4 million and $374.7 million of Troubled Debt Restructuring ("TDR") loans that are in compliance with the modified terms and in accrual status as of March 31, 2018 and December 31, 2017, respectively.

[4] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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LOAN PORTFOLIO - Loans Held for Investment on Which Accrual of Interest Income had been Discontinued (Parenthetical) (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale	[1]	$ 91,375	$ 32,980
Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Purchased credit impaired loans, fair value		$ 155,300	$ 158,200

[1] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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LOAN PORTFOLIO - Corporation's Aging of Loans Held for Investment Portfolio (Detail) - USD ($) $ in Thousands	Mar. 31, 2018		Dec. 31, 2017		Mar. 31, 2017	Dec. 31, 2016
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	$ 738,986		$ 848,763
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	155,281		158,174		$ 163,100	$ 165,818
Financing Receivable, Current	7,801,623		7,843,539
Loans held for investment	8,695,890	[1]	8,850,476		$ 8,822,349
90 days past due and still accruing	132,786		131,420	[2],[3],[4]
Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	129,104		139,933
Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	65,119		87,856
Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	544,763	[5]	620,974	[6]
Fha Va And Other Government Guaranteed Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	111,358	[7],[8]	109,607	[2],[3],[4]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0	[7],[8]	0	[2],[3],[4]
Financing Receivable, Current	35,927	[7],[8]	29,332	[2],[3],[4]
Loans held for investment	147,285	[7],[8]	138,939	[2],[3],[4]
90 days past due and still accruing	107,693	[7],[8]	102,815	[2],[3],[4]
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	3,665	[7],[8]	6,792	[2],[3],[4]
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	[7],[8]	0	[2],[3],[4]
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	107,693	[5],[7],[8]	102,815	[2],[3],[4],[6]
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	151,067	[7]	153,991	[2]
Loans held for investment	3,267,868		3,290,957
Commercial And Industrial [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	101,651		97,703
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0		0
Financing Receivable, Current	1,960,122		1,985,550
Loans held for investment	2,061,773		2,083,253
90 days past due and still accruing	770		2,317	[4]
Commercial And Industrial [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	2,419		576
Commercial And Industrial [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	13,137		8,971
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	86,095	[5]	88,156	[6]
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	168,963	[7]	170,705	[2]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	4,214	[7]	4,183	[2]
Financing Receivable, Current	1,379,326	[7]	1,440,084	[2]
Loans held for investment	1,552,503	[7]	1,614,972	[2]
90 days past due and still accruing	3,977	[7]	6,687	[2],[3],[4]
Commercial Mortgage Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	49,807	[7]	7,525	[2]
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	[2]
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	119,156	[5],[7]	163,180	[2],[6]
Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment	79,150	[9]	111,397
Auto loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	53,782		91,554
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0		0
Financing Receivable, Current	784,711		752,777
Loans held for investment	838,493		844,331
90 days past due and still accruing	0		0	[4]
Auto loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	7,891		23,783
Auto loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	32,438		57,560
Auto loans [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	13,453	[5]	10,211	[6]
Finance Leases [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	9,860		15,270
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0		0
Financing Receivable, Current	253,003		242,192
Loans held for investment	262,863		257,462
90 days past due and still accruing	0		0	[4]
Finance Leases [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	2,216		3,484
Finance Leases [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	5,843		10,549
Finance Leases [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	1,801	[5]	1,237	[6]
Consumer Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	28,712		25,189
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0		0
Financing Receivable, Current	604,528		622,915
Loans held for investment	633,240		648,104
90 days past due and still accruing	1,831		3,991	[4]
Consumer Loan [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	4,577		5,052
Consumer Loan [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	13,701		10,776
Consumer Loan [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	10,434	[5]	9,361	[6]
Commercial Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	1,012		35,100
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0		0
Financing Receivable, Current	45,227		41,456
Loans held for investment	46,239		76,556
90 days past due and still accruing	0		0	[4]
Commercial Construction [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	1,012		0
Commercial Construction [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0		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	0	[5]	35,100	[6]
Residential Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	2,488	[7]	2,082	[2]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0	[7]	0	[2]
Financing Receivable, Current	3,973	[7]	5,828	[2]
Loans held for investment	6,461	[7]	7,910	[2]
90 days past due and still accruing	1,201	[7]	0	[2],[4]
Residential Construction [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[7]	95	[2]
Residential Construction [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[7]	0	[2]
Residential Construction [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	2,488	[5],[7]	1,987	[2],[6]
Land Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	17,120	[7]	15,301	[2]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	0	[7]	0	[2]
Financing Receivable, Current	9,330	[7]	11,630	[2]
Loans held for investment	26,450	[7]	26,931	[2]
90 days past due and still accruing	2,159	[7]	151	[2],[3],[4]
Land Construction [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	12	[7]	124	[2]
Land Construction [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[7]	0	[2]
Land Construction [Member] | Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	17,108	[5],[7]	15,177	[2],[6]
Other Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	244,040	[7]	286,252	[2]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount	151,067	[7]	153,991	[2]
Financing Receivable, Current	2,725,476	[7]	2,711,775	[2]
Loans held for investment	3,120,583	[7]	3,152,018	[2]
90 days past due and still accruing	15,155	[7]	15,459	[2]
Other Residential Mortgage Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	57,505	[7]	92,502	[2]
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	[7]	0	[2]
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	$ 186,535	[5],[7]	$ 193,750	[2],[6]

[1] As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

[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 on two or more monthly payments. FHA/VA and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, and land loans past due 30-59 days as of December 31, 2017 amounted to $6.0 million, $224.0 million, $9.0 million, and $2.5 million, respectively.

[3] As of December 31, 2017, includes $62.1 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] 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 $29.9 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 December 31, 2017.

[5] 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.

[6] 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.

[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 and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans, and construction-residential loans past due 30-59 days as of March 31, 2018 amounted to $6.8 million, $122.0 million, $5.2 million, $0.6 million, and $0.2 million respectively.

[8] As of March 31, 2018, includes $73.3 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.

[9] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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LOAN PORTFOLIO - Corporation's Aging of Loans Held for Investment Portfolio (Parenthetical) (Detail) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2018 USD ($) numberofpayments	Dec. 31, 2017 USD ($) numberofpayments
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	$ 73.3	$ 62.1
Minimum Number of Payments in Arrears to Consider Commercial Mortgage and Construction Loan as Past Due | numberofpayments	2	2
Residential mortgage loans insured by FHA or guaranteed by the VA	$ 30.6	$ 29.9
Period of residential mortgage loan that are no longer accruing interest	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	$ 6.8	$ 6.0
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	122.0	224.0
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	5.2	9.0
Residential Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	0.2
Land Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	$ 0.6	$ 2.5

XML

LOAN PORTFOLIO - Corporation's Credit Quality Indicators by Loan (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans		$ 1,552,503	$ 1,614,972
Commercial and Industrial loans		2,061,773	2,083,253
Land		26,450	26,931
Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		6,461	7,910
Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		46,239	76,556
Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans		269,926	257,503
Commercial and Industrial loans		144,205	154,416
Land		15,971	15,971
Substandard [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		1,287	1,987
Substandard [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans		0	35,100
Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans		2,117	4,166
Commercial and Industrial loans		7,745	3,854
Land		391	490
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		729	676
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]	272,043	261,669
Commercial and Industrial loans	[1]	152,679	158,946
Land	[1]	16,362	16,461
Total Adversely Classified [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	[1]	1,287	1,987
Total Adversely Classified [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	[1]	$ 0	$ 35,100

[1] Excludes non-peforming loans held for sale of $64.9 million ($27.2 million commercial mortgage, $30.0 million construction-commercial, and $7.7 million construction-land) and $8.3 million (construction-land) as of March 31, 2018 and December 31, 2017, respectively.

XML

LOAN PORTFOLIO - Credit Risk Payment Activity (Detail) - USD ($) $ in Thousands	Mar. 31, 2018		Dec. 31, 2017		Mar. 31, 2017
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	$ 8,695,890	[1]	$ 8,850,476		$ 8,822,349
Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	3,120,583	[2]	3,152,018	[3]
Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	838,493		844,331
Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	262,863		257,462
Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	1,471,733		1,492,435
Residential Real Estate [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	147,285	[4]	138,939	[5]
Residential Real Estate [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	3,120,583		3,152,018
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	147,285	[4]	138,939	[5]
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	2,798,136		2,819,736
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	[4],[6]	0	[5],[7]
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	151,067	[6]	153,991	[7]
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	[4]	0	[5]
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	171,380		178,291
Consumer [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	838,493		844,331
Consumer [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	262,863		257,462
Consumer [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	633,240		648,104
Consumer [Member] | Performing Financing Receivable [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	825,040		834,120
Consumer [Member] | Performing Financing Receivable [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	261,062		256,225
Consumer [Member] | Performing Financing Receivable [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	624,637		642,734
Consumer [Member] | Purchased Credit Impaired [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[6]	0	[7]
Consumer [Member] | Purchased Credit Impaired [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[6]	0	[7]
Consumer [Member] | Purchased Credit Impaired [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[6]	0	[7]
Consumer [Member] | Nonperforming Financing Receivable [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	13,453		10,211
Consumer [Member] | Nonperforming Financing Receivable [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	1,801		1,237
Consumer [Member] | Nonperforming Financing Receivable [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	$ 8,603		$ 5,370

[1] As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

[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 and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans, and construction-residential loans past due 30-59 days as of March 31, 2018 amounted to $6.8 million, $122.0 million, $5.2 million, $0.6 million, and $0.2 million respectively.

[3] 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 on two or more monthly payments. FHA/VA and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, and land loans past due 30-59 days as of December 31, 2017 amounted to $6.0 million, $224.0 million, $9.0 million, and $2.5 million, respectively.

[4] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as 90 days past-due loans and still accruing as opposed to non-performing loans since the principal repayment is insured. This balance includes $30.6 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 March 31, 2018.

[5] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as 90 days past due loans and still accruing as opposed to non-performing loans since the principal repayment is insured. This balance includes $29.9 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 December 31, 2017.

[6] 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 analyses.

[7] 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 analyses.

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LOAN PORTFOLIO - Credit Risk Payment Activity (Parenthetical) (Detail) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 2018	Dec. 31, 2017
Financing Receivable Recorded Investment [Line Items]
Residential mortgage loans insured by FHA or guaranteed by the VA		$ 30,600	$ 29,900
Period of residential mortgage loan that are no longer accruing interest		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	[1]	$ 91,375	$ 32,980

[1] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

XML

LOAN PORTFOLIO - Impaired loans (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	$ 182,993		$ 213,046
Unpaid Principal Balance with no Related Allowance	257,626		289,918
Average Recorded Investment No Related Allowance	184,265		238,454
Interest Income with no Related Allowance Accrual Basis	1,082
Interest Income with No Related Allowance Cash Basis	235
Recorded Investment with Related Allowance	563,287		577,262
Unpaid Principal Balance with Related Allowance	647,034		680,648
Related Allowance	56,930	$ 66,311	51,410	$ 64,421
Average Recorded Investment With Related Allowance	563,726		593,701
Interest Income with Related Allowance Accrual Basis	5,357
Interest Income with Realted Allowance Cash Basis	333
Recorded Investment	746,280	807,198	790,308	$ 887,905
Unpaid Principal Balance	904,660		970,566
Average Recorded Investments	747,991		832,155
Interest Income on Impaired Loans Accrual Basis	6,439	6,400
Interest Income on Impaired Loans Cash Basis	568	500
Fhava Guaranteed Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0
Unpaid Principal Balance with no Related Allowance	0		0
Average Recorded Investment No Related Allowance	0		0
Interest Income with no Related Allowance Accrual Basis	0
Interest Income with No Related Allowance Cash Basis	0
Recorded Investment with Related Allowance	0		0
Unpaid Principal Balance with Related Allowance	0		0
Related Allowance	0		0
Average Recorded Investment With Related Allowance	0		0
Interest Income with Related Allowance Accrual Basis	0
Interest Income with Realted Allowance Cash Basis	0
Recorded Investment	0		0
Unpaid Principal Balance	0		0
Average Recorded Investments	0		0
Interest Income on Impaired Loans Accrual Basis	0
Interest Income on Impaired Loans Cash Basis	0
Other Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	94,817		116,818
Unpaid Principal Balance with no Related Allowance	126,672		154,048
Average Recorded Investment No Related Allowance	95,274		120,241
Interest Income with no Related Allowance Accrual Basis	723
Interest Income with No Related Allowance Cash Basis	170
Recorded Investment with Related Allowance	322,793		316,616
Unpaid Principal Balance with Related Allowance	359,048		349,284
Related Allowance	22,546		22,086
Average Recorded Investment With Related Allowance	324,110		318,606
Interest Income with Related Allowance Accrual Basis	3,654
Interest Income with Realted Allowance Cash Basis	231
Recorded Investment	417,610		433,434
Unpaid Principal Balance	485,720		503,332
Average Recorded Investments	419,384		438,847
Interest Income on Impaired Loans Accrual Basis	4,377
Interest Income on Impaired Loans Cash Basis	401
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	60,811		65,100
Unpaid Principal Balance with no Related Allowance	99,837		100,612
Average Recorded Investment No Related Allowance	61,445		86,563
Interest Income with no Related Allowance Accrual Basis	82
Interest Income with No Related Allowance Cash Basis	37
Recorded Investment with Related Allowance	101,315		87,814
Unpaid Principal Balance with Related Allowance	117,838		124,084
Related Allowance	13,451		9,783
Average Recorded Investment With Related Allowance	102,304		93,720
Interest Income with Related Allowance Accrual Basis	661
Interest Income with Realted Allowance Cash Basis	47
Recorded Investment	162,126		152,914
Unpaid Principal Balance	217,675		224,696
Average Recorded Investments	163,749		180,283
Interest Income on Impaired Loans Accrual Basis	743
Interest Income on Impaired Loans Cash Basis	84
Commercial And Industrial Loan [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	24,712		28,292
Unpaid Principal Balance with no Related Allowance	27,679		31,254
Average Recorded Investment No Related Allowance	24,825		28,567
Interest Income with no Related Allowance Accrual Basis	246
Interest Income with No Related Allowance Cash Basis	11
Recorded Investment with Related Allowance	95,066		90,008
Unpaid Principal Balance with Related Allowance	117,400		112,005
Related Allowance	14,375		12,359
Average Recorded Investment With Related Allowance	92,382		92,666
Interest Income with Related Allowance Accrual Basis	302
Interest Income with Realted Allowance Cash Basis	20
Recorded Investment	119,778		118,300
Unpaid Principal Balance	145,079		143,259
Average Recorded Investments	117,207		121,233
Interest Income on Impaired Loans Accrual Basis	548
Interest Income on Impaired Loans Cash Basis	31
Construction Loans [Member]
Financing Receivable Impaired [Line Items]
Related Allowance	1,484	2,835
Recorded Investment	12,067	$ 51,801
Consumer Auto Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	387		267
Unpaid Principal Balance with no Related Allowance	387		267
Average Recorded Investment No Related Allowance	394		290
Interest Income with no Related Allowance Accrual Basis	2
Interest Income with No Related Allowance Cash Basis	0
Recorded Investment with Related Allowance	20,424		22,338
Unpaid Principal Balance with Related Allowance	20,424		22,338
Related Allowance	3,379		3,665
Average Recorded Investment With Related Allowance	20,943		24,328
Interest Income with Related Allowance Accrual Basis	397
Interest Income with Realted Allowance Cash Basis	0
Recorded Investment	20,811		22,605
Unpaid Principal Balance	20,811		22,605
Average Recorded Investments	21,337		24,618
Interest Income on Impaired Loans Accrual Basis	399
Interest Income on Impaired Loans Cash Basis	0
Finance Leases [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0
Unpaid Principal Balance with no Related Allowance	0		0
Average Recorded Investment No Related Allowance	0		0
Interest Income with no Related Allowance Accrual Basis	0
Interest Income with No Related Allowance Cash Basis	0
Recorded Investment with Related Allowance	1,876		2,184
Unpaid Principal Balance with Related Allowance	1,876		2,184
Related Allowance	84		104
Average Recorded Investment With Related Allowance	1,958		2,428
Interest Income with Related Allowance Accrual Basis	35
Interest Income with Realted Allowance Cash Basis	0
Recorded Investment	1,876		2,184
Unpaid Principal Balance	1,876		2,184
Average Recorded Investments	1,958		2,428
Interest Income on Impaired Loans Accrual Basis	35
Interest Income on Impaired Loans Cash Basis	0
Other Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	2,266		2,521
Unpaid Principal Balance with no Related Allowance	3,051		3,688
Average Recorded Investment No Related Allowance	2,327		2,745
Interest Income with no Related Allowance Accrual Basis	29
Interest Income with No Related Allowance Cash Basis	17
Recorded Investment with Related Allowance	9,746		11,084
Unpaid Principal Balance with Related Allowance	10,092		11,830
Related Allowance	1,611		1,396
Average Recorded Investment With Related Allowance	9,913		11,579
Interest Income with Related Allowance Accrual Basis	283
Interest Income with Realted Allowance Cash Basis	27
Recorded Investment	12,012		13,605
Unpaid Principal Balance	13,143		15,518
Average Recorded Investments	12,240		14,324
Interest Income on Impaired Loans Accrual Basis	312
Interest Income on Impaired Loans Cash Basis	44
Commercial Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0
Unpaid Principal Balance with no Related Allowance	0		0
Average Recorded Investment No Related Allowance	0		0
Interest Income with no Related Allowance Accrual Basis	0
Interest Income with No Related Allowance Cash Basis	0
Recorded Investment with Related Allowance	0		35,101
Unpaid Principal Balance with Related Allowance	0		38,595
Related Allowance	0		560
Average Recorded Investment With Related Allowance	0		35,996
Interest Income with Related Allowance Accrual Basis	0
Interest Income with Realted Allowance Cash Basis	0
Recorded Investment	0		35,101
Unpaid Principal Balance	0		38,595
Average Recorded Investments	0		35,996
Interest Income on Impaired Loans Accrual Basis	0
Interest Income on Impaired Loans Cash Basis	0
Residential Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0
Unpaid Principal Balance with no Related Allowance	0		0
Average Recorded Investment No Related Allowance	0		0
Interest Income with no Related Allowance Accrual Basis	0
Interest Income with No Related Allowance Cash Basis	0
Recorded Investment with Related Allowance	252		252
Unpaid Principal Balance with Related Allowance	355		355
Related Allowance	52		55
Average Recorded Investment With Related Allowance	252		252
Interest Income with Related Allowance Accrual Basis	0
Interest Income with Realted Allowance Cash Basis	0
Recorded Investment	252		252
Unpaid Principal Balance	355		355
Average Recorded Investments	252		252
Interest Income on Impaired Loans Accrual Basis	0
Interest Income on Impaired Loans Cash Basis	0
Land Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		48
Unpaid Principal Balance with no Related Allowance	0		49
Average Recorded Investment No Related Allowance	0		48
Interest Income with no Related Allowance Accrual Basis	0
Interest Income with No Related Allowance Cash Basis	0
Recorded Investment with Related Allowance	11,815		11,865
Unpaid Principal Balance with Related Allowance	20,001		19,973
Related Allowance	1,432		1,402
Average Recorded Investment With Related Allowance	11,864		14,126
Interest Income with Related Allowance Accrual Basis	25
Interest Income with Realted Allowance Cash Basis	8
Recorded Investment	11,815		11,913
Unpaid Principal Balance	20,001		20,022
Average Recorded Investments	11,864		$ 14,174
Interest Income on Impaired Loans Accrual Basis	25
Interest Income on Impaired Loans Cash Basis	$ 8

XML

LOAN PORTFOLIO - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018		Jun. 30, 2017	Mar. 31, 2017		Dec. 31, 2017		Dec. 31, 2016	Jun. 30, 2015
Accounts Notes And Loans Receivable [Line Items]
Interest Income Impaired Loans					$ 6,900
Interest Income on Impaired Loans Accrual Basis		$ 6,439			6,400
Contractually outstanding principal and interest at acquisition		192,000					$ 196,600
Financing Receivable Significant Purchases		14,500
Securitization of mortgage loans into mortgage backed securities		54,400
Total gross loans held for investment portfolio		8,695,890	[1]		8,822,349		8,850,476
Total TDR loans		572,376	[2]		602,364		587,219		$ 647,048
Outstanding unfunded commitments on TDR loans		1,900
Provsion of PCI Loans		0			0
Loans held for sale	[3]	91,375					32,980
Proceeds From Sale Of Loans Held For Investment		13,274			53,245
Government Guaranteed Residential Mortgage Loans Indirect Exposure		115,900
Puerto Rico Housing Finance Authority Restricted Net Position										$ 77,400
Threshold Mortgage Loans Principal Amount Puerto Rico Housing Financing Authority		75,000								$ 552,000
Interest Paid		24,353			22,001
Financing Receivable Allowance For Credit Losses Write Offs Impaired Loans		17,213	[4]		17,404	[5]
Impaired Financing Receivable Related Allowance		56,930			66,311		51,410		$ 64,421
Mortgage Loans In Process Of Foreclosure Amount		152,300
Provision For Loan Lease And Other Losses		20,544			25,442
Financing Receivable Allowance For Credit Losses Write Offs		29,360			32,894
Proceeds From Principal Repayments On Loans And Leases Held For Investment		590,753			669,615
Charge Offs Taken On Previosuly Established Reserve		4,100
Puerto Rico Tourism Development Fund [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		116,200					120,200
Financing Receivable Commercial Governments Book Value		61,600					70,800
Proceeds From Principal Repayments On Loans And Leases Held For Investment		4,000		$ 7,600
Puerto Rico Electric PowerAuthority [Member]
Accounts Notes And Loans Receivable [Line Items]
Classified and non-performing loans sold					64,000
Reserves allocated to bulk sale					10,200
Incremental losses					600
Allowance For Loan And Lease Losses Write Offs Net Loans Sold					10,700
Proceeds From Sale Of NonPerforming Assets Sold					53,200
Classified an non performing loan sold					75,000
GNMA
Accounts Notes And Loans Receivable [Line Items]
Loans repurchased		1,100			10,700
FNMA and FHLMC
Accounts Notes And Loans Receivable [Line Items]
Financing Receivable Significant Sales		20,100
Loans repurchased		3			6
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Total gross loans held for investment portfolio		3,267,868			3,272,598
Impaired Financing Receivable Related Allowance		22,546			8,551
Provision For Loan Lease And Other Losses		447			9,271
Financing Receivable Allowance For Credit Losses Write Offs		3,371			8,225
Government Guaranteed Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		62,100					62,100
Mortgage Loans In Process Of Foreclosure Amount		22,700
Loans in trial [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		500
Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		205,954	[6],[7]				212,524	[8]
Loans held for sale		64,900					8,300
Troubled Debt Restructurings [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale		30,000
Loans Split [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		35,553			36,564
Financing receivable loans restructured recorded investment accruals		3,100
Non Fha Va Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR loans		349,980					363,930
Commercial And Industrial Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		548
Total TDR loans		96,265					94,112
Impaired Financing Receivable Related Allowance		14,375					12,359
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		743
Total TDR loans		85,834					50,812
Charge-offs of loans transferred to loans held for sale		4,600
Book value of loans transferred to held for sale		27,200
Impaired Financing Receivable Related Allowance		13,451					9,783
Commercial Mortgage Loans [Member] | Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale		27,200
Commercial Mortgage Loans [Member] | Puerto Rico Tourism Development Fund [Member]
Accounts Notes And Loans Receivable [Line Items]
Book value of loans transferred to held for sale		27,200
Outstanding Balance Of Loans Transferred To Held For Sale		50,400
Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total gross loans held for investment portfolio		79,150			137,887
Total TDR loans		6,600
Charge-offs of loans transferred to loans held for sale		5,100
Book value of loans transferred to held for sale		30,000
Impaired Financing Receivable Related Allowance		1,484			2,835
Provision For Loan Lease And Other Losses		4,764			942
Financing Receivable Allowance For Credit Losses Write Offs		5,177			63
Consumer Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
Total gross loans held for investment portfolio		1,734,596			1,707,156
Total TDR loans		33,700
Impaired Financing Receivable Related Allowance		5,074			5,576
Provision For Loan Lease And Other Losses		6,016			7,496
Financing Receivable Allowance For Credit Losses Write Offs		12,072			$ 11,192
Commercial Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		0
Total TDR loans		0	[2]				35,100
Impaired Financing Receivable Related Allowance		0					560
Commercial Construction [Member] | Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale		30,000
Residential Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		0
Total TDR loans		217					217
Impaired Financing Receivable Related Allowance		52					55
Land Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income on Impaired Loans Accrual Basis		25
Total TDR loans		6,378					6,476
Impaired Financing Receivable Related Allowance		1,432					1,402
Land Construction [Member] | Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale		7,700					8,300
Loans Tranferred To Held For Sale [Member]
Accounts Notes And Loans Receivable [Line Items]
Charge-offs of loans transferred to loans held for sale		9,700
Additional losses loans transferred to loans held for sale		5,600
Book value of loans transferred to held for sale		$ 57,200
P R
Accounts Notes And Loans Receivable [Line Items]
Credit risk concentration		75.00%
Outstanding of credit facilities granted		$ 54,800					55,900
P R | Puerto Rico Government and Political Subdivisions [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		33,100
P R | Public Corporations [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		15,000
P R | Government [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		6,700
P R | Commercial And Industrial Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
Charge-offs of loans sold		1,300
Classified an non performing loan sold		$ 5,600
V I
Accounts Notes And Loans Receivable [Line Items]
Credit risk concentration		6.00%
Outstanding of credit facilities granted		$ 76,700					70,400
V I | Public Corporations [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		53,500
V I | Government [Member]
Accounts Notes And Loans Receivable [Line Items]
Outstanding of credit facilities granted		$ 23,200
U S
Accounts Notes And Loans Receivable [Line Items]
Credit risk concentration		19.00%
U S | Commercial And Industrial Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
Proceeds From Sale Of Loans Held For Investment		$ 9,200
Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Purchased credit impaired loans, fair value		155,300					158,200
Mortgage Loans In Process Of Foreclosure Amount		18,200
Credit Impaired Loans [Member] | Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Financing Receivable Recorded Investment 30 To 59 Days Past Due Mortgage		$ 13,500					$ 28,100

[1] As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

[2] Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

[3] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

[4] The first quarter of 2018 includes charge-offs totaling $9.7 million associated with the $57.2 million in non-performing loans transferred to held for sale.

[5] The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line as further discussed below.

[6] Excludes a $30.0 million non-performing construction loans transferred to held for sale during the first quarter of 2018.

[7] Included in non-accrual loans are $53.2 million in loans that are performing under the terms of the restructuring agreement but are reported in nonaccrual 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.

[8] Included in non-accrual loans are $88.6 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.

XML

LOAN PORTFOLIO - Activity for Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018		Mar. 31, 2017
Impaired Loans:
Balance at beginning of period	$ 790,308		$ 887,905
Loans determined impaired during the period	61,408		19,628
Charge-offs	(17,213)	[1]	(17,404)	[2]
Loans sold, net charge-offs	(4,121)		(53,245)
Increases to impaired loans (disbursements)	6,998		541
Foreclosures	(11,675)		(9,457)
Loans no longer considered impaired	(1,507)		(892)
Paid in full or partial payments	(20,705)		(19,878)
Transfer Of Impaired Loans Held For Sale To Portfolio Loans	(57,213,000)		0
Balance at end of period	$ 746,280		$ 807,198

[1] The first quarter of 2018 includes charge-offs totaling $9.7 million associated with the $57.2 million in non-performing loans transferred to held for sale.

[2] The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line as further discussed below.

XML

LOAN PORTFOLIO - Activity for Specific Reserve (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Specific Reserve:
Balance at beginning of period	$ 51,410	$ 64,421
Provision for loan losses	22,703	18,862
Financing Receivable Allowance For Credit Losses Net Write Offs Impaired Loans	(17,183)	(16,972)
Balance at end of period	$ 56,930	$ 66,311

XML

LOAN PORTFOLIO- Carrying Value of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2018		Dec. 31, 2017		Mar. 31, 2017	Dec. 31, 2016
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	$ 155,281		$ 158,174		$ 163,100	$ 165,818
Allowance for loan losses Purchased Credit Impaired	(11,251)		(11,251)		(6,857)	$ (6,857)
Purchased Credit Impaired Loans, Net	144,030		146,923		$ 156,243
Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	151,067	[1]	153,991	[2]
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	$ 4,214	[1]	$ 4,183	[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 and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans, and construction-residential loans past due 30-59 days as of March 31, 2018 amounted to $6.8 million, $122.0 million, $5.2 million, $0.6 million, and $0.2 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 on two or more monthly payments. FHA/VA and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, and land loans past due 30-59 days as of December 31, 2017 amounted to $6.0 million, $224.0 million, $9.0 million, and $2.5 million, respectively.

XML

LOAN PORTFOLIO- Corporation's Aging of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	Mar. 31, 2018		Dec. 31, 2017		Mar. 31, 2017
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	$ 738,986		$ 848,763
Financing Receivable, Current	7,801,623		7,843,539
Loans held for investment	8,695,890	[1]	8,850,476		$ 8,822,349
90 days past due and still accruing	132,786		131,420	[2],[3],[4]
Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	129,104		139,933
Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	65,119		87,856
Financing Receivables Equal To Greater Than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	544,763	[5]	620,974	[6]
Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	38,550		46,260
Financing Receivable, Current	116,731		111,914
Loans held for investment	155,281		158,174
Purchased Credit Impaired Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	8,291		16,955
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	30,259		29,305
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment	3,267,868		3,290,957
30-59 Days past due Mortgages	122,000		224,000
Residential Mortgage [Member] | Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	35,316	[7]	43,071	[8]
Financing Receivable, Current	115,751	[7]	110,920	[8]
Loans held for investment	151,067	[7]	153,991	[8]
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	8,291	[7]	16,600	[8]
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	[7]	0	[8]
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	27,025	[7]	26,471	[8]
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	168,963	[9]	170,705	[2]
Financing Receivable, Current	1,379,326	[9]	1,440,084	[2]
Loans held for investment	1,552,503	[9]	1,614,972	[2]
90 days past due and still accruing	3,977	[9]	6,687	[2],[3],[4]
30-59 Days past due Mortgages	5,200		9,000
Commercial Mortgage Loans [Member] | Financing Receivables 60 To 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	49,807	[9]	7,525	[2]
Commercial Mortgage Loans [Member] | Financing Receivables 30 To 59 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	0	[9]	0	[2]
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	119,156	[5],[9]	163,180	[2],[6]
Commercial Mortgage Loans [Member] | Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total Past Due	3,234	[7]	3,189	[8]
Financing Receivable, Current	980	[7]	994	[8]
Loans held for investment	4,214	[7]	4,183	[8]
30-59 Days past due Mortgages	200		200
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	[7]	355	[8]
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	[7]	0	[8]
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	$ 3,234	[7]	$ 2,834	[8]

[1] As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

[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 on two or more monthly payments. FHA/VA and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, and land loans past due 30-59 days as of December 31, 2017 amounted to $6.0 million, $224.0 million, $9.0 million, and $2.5 million, respectively.

[3] As of December 31, 2017, includes $62.1 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] 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 $29.9 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 December 31, 2017.

[5] 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.

[6] 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.

[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 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 March 31, 2018 amounted to $13.5 million and $0.2 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 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 December 31, 2017 amounted to $28.1 million and $0.2 million, respectively

[9] 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 and other government-guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans, and construction-residential loans past due 30-59 days as of March 31, 2018 amounted to $6.8 million, $122.0 million, $5.2 million, $0.6 million, and $0.2 million respectively.

XML

LOAN PORTFOLIO - Accretable Yield Related to Purchased Credit Impaired Loans (Detail) - Class Of Loans [Domain] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Accretable Yield [Line Items]
Accretable yield at acquisition	$ 103,682	$ 116,462
Accretion recognized in earnings	(2,623)	(2,797)
Accretable yield at the end of the period	$ 101,059	$ 113,665

XML

LOAN PORTFOLIO -Changes in Carrying Amount Of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable Impaired [Line Items]
Beggining balance: purchased credit-impaired loans	$ 158,174	$ 165,818
Accretion	2,623	2,797
Purchased Credit Impaired Loans Foreclosures	(2,120)	(922)
Sop Collections	(3,396)	(4,593)
Ending balance: purchased credit-impaired loans	155,281	163,100
Allowance for loan losses Purchased Credit Impaired	(11,251)	(6,857)	$ (11,251)	$ (6,857)
Ending balance: purchased credit-impaired loans, net	$ 144,030	$ 156,243

XML

LOAN PORTFOLIO -Changes in the allowance for loan losses related to purchased credit impaired doans (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities [Abstract]
Allowance for loan losses Purchased Credit Impaired	$ 11,251	$ 6,857
Provsion of PCI Loans	0	0
Allowance for loan losses Purchased Credit Impaired	$ 11,251	$ 6,857

XML

LOAN PORTFOLIO - Selected Information on TDRs Includes Recorded Investment by Loan Class and Modification Type (Detail) - USD ($)	Mar. 31, 2018		Dec. 31, 2017		Mar. 31, 2017	Dec. 31, 2016
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 572,376,000	[1]	$ 587,219,000		$ 602,364,000	$ 647,048,000
Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	34,374,000	[1]	35,947,000
Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	72,321,000	[1]	38,683,000
Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	325,332,000	[1]	340,753,000
Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	166,000	[1]	35,317,000
Foberance Agrrements [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	5,217,000	[1]	6,623,000
Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	134,966,000	[1],[2]	129,896,000	[3]
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	349,980,000		363,930,000
Non Fha Va Residential Mortgage Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	24,390,000		25,964,000
Non Fha Va Residential Mortgage Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	8,396,000		8,318,000
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	255,731,000		267,578,000
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] | Foberance Agrrements [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	61,463,000	[2]	62,070,000	[3]
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	85,834,000		50,812,000
Commercial Mortgage Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,518,000		6,563,000
Commercial Mortgage Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	36,411,000		2,094,000
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	30,739,000		31,870,000
Commercial Mortgage Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1]	0
Commercial Mortgage Loans [Member] | Foberance Agrrements [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,020,000		0
Commercial Mortgage Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	10,146,000	[2]	10,285,000	[3]
Commercial And Industrial Loan [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	96,265,000		94,112,000
Commercial And Industrial Loan [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,497,000		2,510,000
Commercial And Industrial Loan [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	20,448,000		20,648,000
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	15,705,000		16,049,000
Commercial And Industrial Loan [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0		0
Commercial And Industrial Loan [Member] | Foberance Agrrements [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,197,000		6,623,000
Commercial And Industrial Loan [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	54,418,000	[2]	48,282,000	[3]
Construction Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,600,000
Consumer Auto Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	20,811,000		22,605,000
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	1,235,000		1,347,000
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	12,944,000		14,233,000
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] | Foberance Agrrements [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	6,632,000	[2]	7,025,000	[3]
Finance Leases [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,876,000		2,184,000
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	196,000		238,000
Finance Leases [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,680,000		1,946,000
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] | Foberance Agrrements [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	[2]	0	[3]
Other Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	11,015,000		11,783,000
Other Consumer Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	952,000		892,000
Other Consumer Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,775,000		2,097,000
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	6,356,000		6,891,000
Other Consumer Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	166,000		217,000
Other Consumer Loans [Member] | Foberance Agrrements [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0		0
Other Consumer Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,766,000	[2]	1,686,000	[3]
Commercial Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1]	35,100,000
Commercial Construction [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1]	0
Commercial Construction [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1]	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	[1]	0
Commercial Construction [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1]	35,100,000
Commercial Construction [Member] | Foberance Agrrements [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1]	0
Commercial Construction [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[1],[2]	0	[3]
Residential Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	217,000		217,000
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		0
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] | Foberance Agrrements [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	217,000	[2]	217,000	[3]
Land Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,378,000		6,476,000
Land Construction [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	17,000		18,000
Land Construction [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,860,000		3,941,000
Land Construction [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,177,000		2,186,000
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] | Foberance Agrrements [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	$ 324,000	[2]	$ 331,000	[3]

[1] Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

[2] Other concessions granted by the Corporation included 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.

[3] Other concessions granted by the Corporation included 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.

XML

LOAN PORTFOLIO - Corporation's TDR Activity (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018		Mar. 31, 2017
Schedule Of Financing Receivables [Line Items]
Beginning Balance of TDRs	$ 587,219		$ 647,048
New TDRs	43,419		40,899
Increases to existing TDRs (disbursements)	6,771		424
Charge-offs post modification	(9,171)	[1]	(14,662)	[2]
Sales	0		(53,245)
Foreclosures	(7,043)		(4,371)
TDRs transferred to loans held for sale	(30,000)		0
Paid-off and partial payments	(18,819)		(13,729)
Ending balance of TDRs	$ 572,376	[3]	$ 602,364

[1] The first quarter of 2018 includes a charge-off of $5.1 million associated with a $30.0 million construction loan transferred to held for sale.

[2] The first quarter of 2017 includes a charge-off of $10.7 million related to the sale of the PREPA credit line as further discussed below.

[3] Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

XML

LOAN PORTFOLIO - Breakdown Between Accrual and Nonaccrual Status of TDRs (Detail) - USD ($) $ in Thousands	Mar. 31, 2018		Dec. 31, 2017		Mar. 31, 2017	Dec. 31, 2016
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 572,376	[1]	$ 587,219		$ 602,364	$ 647,048
Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	205,954	[2],[3]	212,524	[4]
Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	366,422		374,695
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	349,980		363,930
Non Fha Va Residential Mortgage Loans [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	77,321	[2],[3]	83,201	[4]
Non Fha Va Residential Mortgage Loans [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	272,659		280,729
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	85,834		50,812
Commercial Mortgage Loans [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	61,824	[2],[3]	27,483	[4]
Commercial Mortgage Loans [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	24,010		23,329
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	96,265		94,112
Commercial And Industrial Loan [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	53,014	[2],[3]	52,576	[4]
Commercial And Industrial Loan [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	43,251		41,536
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	20,811		22,605
Consumer Auto Loans [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,729	[2],[3]	7,057	[4]
Consumer Auto Loans [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	14,082		15,548
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,876		2,184
Finance Leases [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	223	[2],[3]	216	[4]
Finance Leases [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,653		1,968
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	11,015		11,783
Other Consumer Loans [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,445	[2],[3]	1,489	[4]
Other Consumer Loans [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	9,570		10,294
Commercial Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[2]	35,100
Commercial Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[2],[3]	35,100	[4]
Commercial Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[2]	0
Residential Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	217	[2],[3]	217
Residential Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	217	[3]	217	[4]
Residential Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	0		0
Land Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,378		6,476
Land Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	5,181	[2],[3]	5,185	[4]
Land Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 1,197		$ 1,291

[1] Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

[2] Excludes a $30.0 million non-performing construction loans transferred to held for sale during the first quarter of 2018.

[3] Included in non-accrual loans are $53.2 million in loans that are performing under the terms of the restructuring agreement but are reported in nonaccrual 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.

[4] Included in non-accrual loans are $88.6 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.

XML

LOAN PORTFOLIO - Breakdown Between Accrual and Nonaccrual Status of TDRs (Parenthetical) (Detail) - USD ($) $ in Thousands	Mar. 31, 2018		Dec. 31, 2017		Mar. 31, 2017	Dec. 31, 2016
Financing Receivable Modifications [Line Items]
Total TDR loans	$ 572,376	[1]	$ 587,219		$ 602,364	$ 647,048
Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Total TDR loans	205,954	[2],[3]	212,524	[4]
Performing Financing Receivable [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Total TDR loans	$ 53,200		$ 88,600

[1] Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

[2] Excludes a $30.0 million non-performing construction loans transferred to held for sale during the first quarter of 2018.

[3] Included in non-accrual loans are $53.2 million in loans that are performing under the terms of the restructuring agreement but are reported in nonaccrual 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.

[4] Included in non-accrual loans are $88.6 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.

XML

LOAN PORTFOLIO - Loan Modifications are Considered TDRs (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) numberofcontracts	Mar. 31, 2017 USD ($) numberofcontracts
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	211	420
Pre-Modification Outstanding Recorded Investment	$ 43,416	$ 41,263
Post-Modification Outstanding Recorded Investment	$ 43,419	$ 40,899
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	24	40
Pre-Modification Outstanding Recorded Investment	$ 2,608	$ 4,650
Post-Modification Outstanding Recorded Investment	$ 2,614	$ 4,508
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	3	6
Pre-Modification Outstanding Recorded Investment	$ 36,746	$ 22,438
Post-Modification Outstanding Recorded Investment	$ 36,758	$ 22,198
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	3	3
Pre-Modification Outstanding Recorded Investment	$ 2,597	$ 10,748
Post-Modification Outstanding Recorded Investment	$ 2,582	$ 10,748
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	45	152
Pre-Modification Outstanding Recorded Investment	$ 680	$ 2,247
Post-Modification Outstanding Recorded Investment	$ 680	$ 2,247
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts		8
Pre-Modification Outstanding Recorded Investment		$ 186
Post-Modification Outstanding Recorded Investment		$ 186
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	136	210
Pre-Modification Outstanding Recorded Investment	$ 785	$ 969
Post-Modification Outstanding Recorded Investment	$ 785	$ 984
Land Construction [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts		1
Pre-Modification Outstanding Recorded Investment		$ 25
Post-Modification Outstanding Recorded Investment		$ 28

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LOAN PORTFOLIO - Loan Modifications Considered Troubled Debt Restructurings Defaulted (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) numberofcontracts	Mar. 31, 2017 USD ($) numberofcontracts
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	18	25
Recorded Investment | $	$ 486	$ 456
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	4	3
Recorded Investment | $	$ 387	$ 277
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	0	1
Recorded Investment | $	$ 0	$ 57
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	2	4
Recorded Investment | $	$ 23	$ 61
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	11	17
Recorded Investment | $	$ 54	$ 61
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts | numberofcontracts	1	0
Recorded Investment | $	$ 22	$ 0

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LOAN PORTFOLIO - Loan Restructuring and Effect on Allowance for Loan and Lease Losses (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018		Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 572,376	[1]	$ 602,364	$ 587,219	$ 647,048
Charges to the provision for loan losses	20,544		25,442
Allowance for loan losses at the end of the period	225,856			231,843
Loans Split [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	35,553		36,564
Amount charged-off	0		0
Charges to the provision for loan losses	1,412		915
Allowance for loan losses at the end of the period	5,258		$ 6,056
Accrual [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 366,422			$ 374,695

[1] Excludes TDRs held for sale amounting to $30.0 million as of March 31, 2018.

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LOAN PORTFOLIO - Narratives (Detail)	1 Months Ended
	Feb. 27, 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
	Mar. 31, 2018		Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	$ 231,843		$ 205,603
Charge-offs	(29,360)		(32,894)
Recoveries	2,829		5,080
Provision For Loan Lease And Other Losses	20,544		25,442
Ending balance	225,856		203,231
Balance at end of period	56,930		66,311
Allowance for loan losses Purchased Credit Impaired	11,251		6,857
Ending balance: general allowance	157,675		130,063
Ending balance	8,695,890	[1]	8,822,349
Ending balance: impaired loans	746,280		807,198	$ 790,308	$ 887,905
Ending balance: purchased credit-impaired loans	155,281		163,100
Ending balance: loans with general allowance	7,794,329		7,852,051
Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	11,251	[2]	6,857
Ending balance: purchased credit-impaired loans	155,281		163,100
Residential Mortgage [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	58,975		33,980
Charge-offs	(3,371)		(8,225)
Recoveries	335		749
Provision For Loan Lease And Other Losses	447		9,271
Ending balance	56,386		35,775
Balance at end of period	22,546		8,551
Ending balance: general allowance	22,967		20,679
Ending balance	3,267,868		3,272,598
Ending balance: impaired loans	417,610		432,798
Ending balance: loans with general allowance	2,699,191		2,680,860
Residential Mortgage [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	10,873	[2]	6,545
Ending balance: purchased credit-impaired loans	151,067		158,940
Commercial Mortgage [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	48,493		57,261
Charge-offs	(6,810)		(1,362)
Recoveries	49		30
Provision For Loan Lease And Other Losses	8,661		12,539
Ending balance	50,393		68,468
Balance at end of period	13,451		36,638
Ending balance: general allowance	36,564		31,518
Ending balance	1,552,503		1,596,176
Ending balance: impaired loans	162,126		193,035
Ending balance: loans with general allowance	1,386,163		1,398,981
Commercial Mortgage [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	378	[2]	312
Ending balance: purchased credit-impaired loans	4,214		4,160
Commercial And Industrial Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	48,871		61,953
Charge-offs	(1,930)		(12,052)
Recoveries	62		875
Provision For Loan Lease And Other Losses	656		(4,806)
Ending balance	47,659		45,970
Balance at end of period	14,375		12,711
Ending balance: general allowance	33,284		33,259
Ending balance	2,061,773		2,108,532
Ending balance: impaired loans	119,778		86,059
Ending balance: loans with general allowance	1,941,995		2,022,473
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	[2]	0
Ending balance: purchased credit-impaired loans	0		0
Construction Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	4,522		2,562
Charge-offs	(5,177)		(63)
Recoveries	13		445
Provision For Loan Lease And Other Losses	4,764		942
Ending balance	4,122		3,886
Balance at end of period	1,484		2,835
Ending balance: general allowance	2,638		1,051
Ending balance	79,150		137,887
Ending balance: impaired loans	12,067		51,801
Ending balance: loans with general allowance	67,083		86,086
Construction Loans [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	0	[2]	0
Ending balance: purchased credit-impaired loans	0		0
Consumer Loan [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	70,982		49,847
Charge-offs	(12,072)		(11,192)
Recoveries	2,370		2,981
Provision For Loan Lease And Other Losses	6,016		7,496
Ending balance	67,296		49,132
Balance at end of period	5,074		5,576
Ending balance: general allowance	62,222		43,556
Ending balance	1,734,596		1,707,156
Ending balance: impaired loans	34,699		43,505
Ending balance: loans with general allowance	1,699,897		1,663,651
Consumer Loan [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses Purchased Credit Impaired	0	[2]	0
Ending balance: purchased credit-impaired loans	$ 0		$ 0

[1] As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

[2] Refer to Note 7 - 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 ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018		Mar. 31, 2017	Dec. 31, 2017
Financing Receivable Allowance For Credit Losses [Line Items]
Reserve for unfunded loan commitments	$ 600			$ 700
Loans And Leases Receivable Gross Carrying Amount	8,695,890	[1]	$ 8,822,349	8,850,476
Provision For Loan And Lease Losses	$ 20,544		25,442
P R
Financing Receivable Allowance For Credit Losses [Line Items]
Concentration Risk Percentage 1	75.00%
V I
Financing Receivable Allowance For Credit Losses [Line Items]
Concentration Risk Percentage 1	6.00%
Commercial And Industrial [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Loans And Leases Receivable Gross Carrying Amount	$ 2,061,773			2,083,253
Construction Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Loans And Leases Receivable Gross Carrying Amount	79,150	[2]		111,397
Commercial Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Loans And Leases Receivable Gross Carrying Amount	3,693,426			3,809,622
Residential Mortgage [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Loans And Leases Receivable Gross Carrying Amount	3,267,868			3,290,957
Consumer Loan [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Loans And Leases Receivable Gross Carrying Amount	633,240			648,104
Commercial And Industrial Sector [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Loans And Leases Receivable Gross Carrying Amount	2,061,773	[1]		2,083,253
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Loans And Leases Receivable Gross Carrying Amount	1,552,503	[2]		$ 1,614,972
Residential Mortgage [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Loans And Leases Receivable Gross Carrying Amount	$ 3,267,868		$ 3,272,598

[1] As of March 31, 2018 and December 31, 2017, includes $823.2 million and $833.5 million, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

[2] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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LOANS HELD FOR SALE - Portfolio of Loans Held for Sale (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Accounts Notes And Loans Receivable [Line Items]
Total	[1]	$ 91,375	$ 32,980
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Residential mortgage loans		26,430	24,690
Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Construction loans	[1]	37,732	8,290
Commercial Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Commercial Mortgage loans	[1]	$ 27,213	$ 0

[1] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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LOANS HELD FOR SALE - Additional Information (Details) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale	[1]	$ 91,375	$ 32,980

[1] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

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OTHER REAL ESTATE OWNED- Other real estate owned (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Other Real Estate And Foreclosed Assets [Line Items]
Other real estate owned		$ 154,639	$ 147,940
Residential Real Estate [Member]
Other Real Estate And Foreclosed Assets [Line Items]
Other real estate owned	[1]	60,240	54,381
Commercial Real Estate [Member]
Other Real Estate And Foreclosed Assets [Line Items]
Other real estate owned		83,911	82,871
Construction Real Estate [Member]
Other Real Estate And Foreclosed Assets [Line Items]
Other real estate owned		$ 10,488	$ 10,688

[1] Excludes $17.8 million and $21.3 million as of March 31, 2018 and December 31, 2017, 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	Mar. 31, 2018	Dec. 31, 2017
Other Real Estate And Foreclosed Assets [Abstract]
Transfers From Loans to Other Receivable	$ 17.8	$ 21.3

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Notional Amounts of All Derivative Instruments (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Economic undesignated hedges:
Notional amount of derivatives	[1]	$ 206,020	$ 208,020
Nondesignated [Member] | Interest Rate Cap [Member] | Purchase
Economic undesignated hedges:
Notional amount of derivatives	[1]	90,510	91,010
Nondesignated [Member] | Interest Rate Cap [Member] | Written
Economic undesignated hedges:
Notional amount of derivatives	[1]	90,510	91,010
Nondesignated [Member] | Forward Contracts [Member]
Economic undesignated hedges:
Notional amount of derivatives	[1]	$ 25,000	$ 26,000

[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	Mar. 31, 2018	Dec. 31, 2017
Other Assets [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in assets	$ 671	$ 312
Other Assets [Member] | Interest Rate Cap [Member] | Purchase
Derivatives Fair Value [Line Items]
Derivatives, included in assets	668	305
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	3	7
Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	735	324
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	668	305
Other Liabilities [Member] | Forward Contracts [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	$ 67	$ 19

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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
	Mar. 31, 2018	Mar. 31, 2017
Economic undesignated hedges:
Total gain (loss) on derivatives	$ (52)	$ (57)
Interest Income Loans [Member] | Interest Rate Swap [Member]
Economic undesignated hedges:
Total gain (loss) on derivatives	0	(1)
Mortgage Banking Activities [Member] | Forward Contracts [Member]
Economic undesignated hedges:
Total gain (loss) on derivatives	$ (52)	$ (56)

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Interest Rate Swaps (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Pay fixed/receive floating :
Notional amount	[1]	$ 206,020	$ 208,020

[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	Mar. 31, 2018	Dec. 31, 2017
Offsetting [Abstract]
Gross amount recognized of derivative asset	$ 668	$ 305
Gross amount of derivatives assets offset	0	0
Net asset amount of assets presented in the Statement of Financial Condition	668	305
Obligation to return Financial instrument, derivatives assets	(45)	(305)
Obligation to return Cash Collateral, derivative assets	623	0
Net derivative asset amount not offset	0	0
Gross amount recognized of derivative liabilities		0
Gross amount of derivative liabilities offset		0
Net derivative liability amount offset presented		0
Right to claim Cash Collateral, derivatives liabilities		0
Net derivatives liability amount not offset		0
Gross amount recognized of repurchase agreements	400,000	500,000
Gross amount of repurchase agreements offset	(200,000)	(200,000)
Net repurchase agreements amount offset presented	200,000	300,000
Right to claim Financial instrument, repurchase agreements	(200,000)	(300,000)
Right to claim Cash Collateral, repurchase agreements	0	0
Net repurchase agreements amount not offset	0	0
Gross amount recognized of liabilities		500,000
Net liabilities amount offset presented		300,000
Right to claim Cash Collateral, liabilties		0
Net liability amount not offset		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	200,668	200,305
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	668	305
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Collateral Obligation To Return Securities	(45)	(305)
Derivative Asset Securities Purchased Under Agreements To Resell Securities Borrowed Collateral Obligation To Return Cash	(623)	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 ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Jun. 30, 2012
Finite Lived Intangible Assets [Line Items]
Goodwill	$ 28,100,000		$ 28,100,000
Amortization expense	1,006,000	$ 1,121,000
Purchased Credit Card Relationship Intangible [Member]
Finite Lived Intangible Assets [Line Items]
Purchase credit card relationship intangible amount	$ 24,465,000		$ 24,465,000	$ 24,500,000
Amortization period of purchased credit card relationship intangible	3 years 7 months 6 days		3 years 10 months 24 days
Amortization expense	$ 600,000	600,000
Core Deposits [Member]
Finite Lived Intangible Assets [Line Items]
Purchase credit card relationship intangible amount	$ 51,664,000		$ 51,664,000
Amortization period of purchased credit card relationship intangible	6 years 9 months 18 days		7 years
Amortization expense	$ 400,000	500,000
Business Combination Finite Lived Intangible Assets Net	3,600,000
Customer Related Intangible Assets [Member]
Finite Lived Intangible Assets [Line Items]
Purchase credit card relationship intangible amount	$ 1,067,000		$ 1,067,000
Amortization period of purchased credit card relationship intangible	4 years 8 months 12 days		5 years
Amortization expense	$ 38,000	$ 38,000

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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
		Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2012
Goodwill And Intangible Assets Disclosure [Abstract]
Finite Lived Intangible Assets Amortization Expense Year Two		$ 3,088
Finite Lived Intangible Assets Amortization Expense Year Three		2,851
Finite Lived Intangible Assets Amortization Expense Year Four		2,658
Finite Lived Intangible Assets Amortization Expense After Year Five		1,150
Finite Lived Intangible Assets Amortization Expense Remainder Of Fiscal Year		2,585
Finite Lived Intangible Assets Amortization Expense Year Five		915
Core Deposits [Member]
Finite Lived Intangible Assets [Line Items]
Gross amount		51,664	$ 51,664
Accumulated amortization	[1]	(46,580)	(46,186)
Net carrying amount		$ 5,084	$ 5,478
Remaining amortization period		6 years 9 months 18 days	7 years
Purchased Credit Card Relationship Intangible [Member]
Finite Lived Intangible Assets [Line Items]
Gross amount		$ 24,465	$ 24,465	$ 24,500
Accumulated amortization	[2]	(17,039)	(16,465)
Net carrying amount		$ 7,426	$ 8,000
Remaining amortization period		3 years 7 months 6 days	3 years 10 months 24 days
Customer Related Intangible Assets [Member]
Finite Lived Intangible Assets [Line Items]
Gross amount		$ 1,067	$ 1,067
Accumulated amortization	[3]	(330)	(292)
Net carrying amount		$ 737	$ 775
Remaining amortization period		4 years 8 months 12 days	5 years

[1] (1) For the quarters ended March 31, 2018 and 2017, the amortization expense of core deposit intangibles amounted to $0.4 million and $0.5 million, respectively.

[2] (2) For each of the quarters ended March 31, 2018 and 2017, the amortization expense of the purchased credit card relationship intangible amounted to $0.6 million.

[3] (3) For each of the quarters ended March 31, 2018 and 2017, the amortization expense of the insurance customer relationship intangible amounted to $38 thousand.

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - additional Information (Detail) - USD ($) $ in Millions	1 Months Ended			3 Months Ended
	Feb. 16, 2011	Sep. 30, 2004	Apr. 30, 2004	Mar. 31, 2018	Jun. 30, 2016
Servicing Liabilities At Fair Value [Line Items]
Principal amount of corporation serviced loans securitized through GNMA				$ 1,700.0
Balance of amortization with third party				21.3
Carrying value with third party				$ 16.1
Percentage of weighted average yield with third party				4.49%
Maturity period of loan acquired	7 years
Percentage of priority interest to be received on invested capital				12.00%
Payment to be made on pro rata basis				65.00%
Percentage of variation in assumptions				10.00%
Debt Instrument Description Of Variable Rate Basis				90-day LIBOR
Interest Expense Accrued Trust Preferred Securities					$ 31.2
Trust Preferred Securities Repurchases				$ 23.8
Trust Preferred Securties Discount				10.00%
Trust Preferred Securities Winning Bid				90.00%
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			$ 100.0
Proceeds of the issuance, together with proceeds of the purchase			3.1
Principal amount of corporation's junior subordinated deferrable debentures			$ 103.1
Subordinated Borrowing Due Date				Jun. 17, 2034
Fbp Statutory Trust Two [Member]
Servicing Liabilities At Fair Value [Line Items]
Variable rate trust preferred securities		$ 125.0
Proceeds of the issuance, together with proceeds of the purchase		3.9
Principal amount of corporation's junior subordinated deferrable debentures		$ 128.9
Subordinated Borrowing Due Date				Sep. 20, 2034
Cpg Gs [Member]
Servicing Liabilities At Fair Value [Line Items]
Loans Sold to CPG	$ 269.3
Cash realized on sale of loan	88.5
Loans acquired on exchange of loan held for sale	$ 136.1
Description of loan	30-day LIBOR plus 300 basis points
Carrying amount of loan provided				$ 4.1
Line of credit facility provided to fund unfunded commitments	$ 80.0
Working capital line of credit to fund certain expenses	$ 20.0
Revolver agreement of credit facility provided amount outstanding				$ 6.8
Prlp [Member]
Servicing Liabilities At Fair Value [Line Items]
Percentage of ownership investment in unconsolidated entity	65.00%
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
	Mar. 31, 2018	Mar. 31, 2017
Variable Interest Entity [Line Items]
Revenues	$ 147,477
Net income	$ 33,148	$ 25,541

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Changes in Servicing Assets (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Servicing Assets At Amortized Value [Line Items]
Balance at beginning of period		$ 25,255	$ 26,244
Capitalization of servicing assets		887	875
Amortization		(737)	(788)
Adjustment To Servicing Assets For Loans Repurchased	[1]	17	159
Adjustment to fair value		713	(160)
Balance at end of period		$ 26,135	$ 26,330

[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
	Mar. 31, 2018	Mar. 31, 2017
Valuation Allowance For Impairment Of Recognized Servicing Assets [Line Items]
Balance at beginning of period	$ 1,451	$ 461
Temporary impairment charges	17	160
OTTI of servicing assets	(65)	(621)
Recoveries	(730)	0
Balance at end of period	$ 673	$ 0

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Components of Net Servicing Income (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Servicing fees		$ 2,120	$ 2,024
Late charges and prepayment penalties		120	99
All Other Fees		0	(7)
Adjustment To Servicing Assets For Loans Repurchased	[1]	17	159
Servicing income, gross		2,257	2,275
Amortization and impairment of servicing assets		(24)	(948)
Servicing income, net		$ 2,233	$ 1,327

[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 - Key Economic Assumptions Used in Determining Fair Value at Time of Sale of Loans (Detail)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Government Guaranteed Mortgage Loans [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	5.60%	6.00%
Discount rate	12.00%	12.00%
Conventional Loan [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	6.20%	6.30%
Discount rate	10.00%	10.00%
Conventional Non Conforming Mortgage Loans [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	9.10%	9.50%
Discount rate	14.30%	14.30%

XML

NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Weighted-Averages of Key Economic Assumptions in Valuation Model (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Carrying amount of servicing assets	$ 26,135	$ 25,255	$ 26,330	$ 26,244
Fair value	$ 30,720
Weighted-average expected life	8 years 6 months
Constant prepayment rate	5.89%
Decrease in fair value due to 10% adverse change	$ 725
Decrease in fair value due to 20% adverse change	$ 1,421
Discount rate	11.23%
Decrease in fair value due to 10% adverse change	$ 1,503
Decrease in fair value due to 20% adverse change	$ 2,876

XML

DEPOSITS - Summary of Deposit Balances (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Deposits [Line Items]
Non-interest bearing checking accounts	$ 2,019,823	$ 1,833,665
Savings accounts	2,413,446	2,401,385
Interest-bearing checking accounts	1,242,957	1,207,511
Certificates of deposit	2,434,162	2,429,585
Brokered certificates of deposit	956,077	1,150,485
Total deposits	$ 9,066,465	$ 9,022,631

XML

DEPOSITS - Brokered Certificates Of Deposit Mature (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	$ 956,077	$ 1,150,485
One to ninety days
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	133,119
Over three month to six months
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	149,170
Over six months to one year
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	265,986
One to three year
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	316,191
Three to five years
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	90,231
Over five years
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	$ 1,380

XML

DEPOSITS - Components of Interest Expense on Deposits (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Deposits [Line Items]
Interest expense on deposits	$ 16,607	$ 15,468
Accretion Of Premium From Acquisitions	(3)	(23)
Amortization of broker placement fees	367	527
Interest expense on deposits	$ 16,971	$ 15,972

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Securities Sold Under Agreements to Repurchase (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Repurchase agreements		$ 200,000	$ 300,000
long term debt [member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Repurchase agreements	[1],[2]	200,000	200,000
short term debt [member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Repurchase agreements		$ 0	$ 100,000

[1] As of March 31, 2018, includes $200 million with an average rate of 2.11% that lenders have the right to call before their contractual maturities at various dates beginning on May 6, 2018. Subsequent to March 31, 2018, no lender has exercised its call option on repurchase agreements.

[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		Mar. 31, 2018	Dec. 31, 2017
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Securities sold under agreements to repurchase		$ 200,000	$ 300,000
long term debt [member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Securities sold under agreements to repurchase	[1],[2]	$ 200,000	200,000
short term debt [member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate		1.53%
Securities sold under agreements to repurchase		$ 0	$ 100,000
Callable Repurchase Agreements [Member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Securities sold under agreements to repurchase		$ 200,000
Maximum [Member] | long term debt [member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate		2.26%
Minimum [Member] | long term debt [member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate		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		2.11%

[1] As of March 31, 2018, includes $200 million with an average rate of 2.11% that lenders have the right to call before their contractual maturities at various dates beginning on May 6, 2018. Subsequent to March 31, 2018, no lender has exercised its call option on repurchase agreements.

[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	Mar. 31, 2018	Dec. 31, 2017
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	$ 200,000	$ 300,000
Maturity Over Four to Five Years [Member]
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	$ 200,000

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Schedule of Repurchase Agreement Maturity (Parenthetical) (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	$ 200,000	$ 300,000

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Repurchase Agreements Grouped by Counterparty (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
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	$ 300,000
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	46 years
Dean Witter Morgan Stanley [Member]
Repurchase Agreement Counterparty [Line Items]
Weighted-Average Maturity	6 months 29 days

XML

ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Summary of Advances from FHLB (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
long term debt [member]
Short Term Debt [Line Items]
Fixed-rate advances from FHLB	$ 715,000	$ 715,000

XML

ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Summary of Advances from FHLB (Parenthetical) (Detail)	Mar. 31, 2018	Dec. 31, 2017
Weighted Average [Member] | long term debt [member]
Short Term Debt [Line Items]
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Interest Rate at Period End	1.91%	1.91%

XML

ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Advances from FHLB Mature (Detail) $ in Thousands	Mar. 31, 2018 USD ($)
Federal Home Loan Bank Advances Maturity [Domain]
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	$ 715,000
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	70,000
Over one to three years
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	300,000
Over three months to six months
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	25,000
Over three years to five years
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	$ 320,000

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Additional Information (Detail) $ in Millions	Mar. 31, 2018 USD ($)
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Credit facility based on collateral pledged	$ 689.5

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OTHER BORROWINGS - Components of Other Borrowings (Detail) - USD ($) $ in Thousands	Mar. 31, 2018		Dec. 31, 2017
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034	$ 184,150		$ 208,635
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Seventy Five [Member]
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034	65,593	[1]	90,078
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Fifty Percent [Member]
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034	$ 118,557		$ 118,557

[1] (1) Refer to Note 14, - "Non-Consolidated Variable Interest Entities and Servicing Assets-Trust Preferred Securities," for additional information about the Corporation repurchase and cancellation in the first quarter of 2018 of $23.8 million in trust-preferred securities associated with these junior subordinated debentures.

XML

OTHER BORROWINGS - Components of Other Borrowings (Parenthetical) (Detail)	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
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	4.92%	4.35%
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	4.70%	4.12%
Subordinated Borrowing Due Date	Sep. 20, 2034
Callable step-rate notes rate	2.50%

XML

STOCKHOLDERS' EQUITY - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2018 USD ($) numberofstocks $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Mar. 31, 2017 shares
Class Of Stock [Line Items]
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, par value | $ / shares	$ 0.1	$ 0.1
Common stock, shares issued	220,877,719	220,382,343
Common stock, shares outstanding	216,390,329	216,278,040
Granted shares of restricted stock	341,189
Corporation has authorized shares of preferred stock	50,000,000	50,000,000
Preferred stock, par value | $ / shares	$ 1
Number of preferred stock series | numberofstocks	5
Stock repurchase plan treasury stock	4,487,390	4,104,303
Repurchased of common stock	383,087		98,300
Liquidation value per share | $ / shares	$ 25
Legal surplus reserve amount | $	$ 59,693,000	$ 59,693,000
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Number		1,816,968
Legal Surplus Amount Additions | $		$ 7,300,000
Omnibus Plan [Member]
Class Of Stock [Line Items]
Restricted stock available for issuance	7,063,074
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Nonvested Number	1,096,681
Restricted Stock [Member]
Class Of Stock [Line Items]
Repurchased of common stock	326,956		52,590
FirstBank [Member]
Class Of Stock [Line Items]
Legal surplus reserve rate	10.00%
Original amount contributed in percentage	20.00%
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

STOCKHOLDERS' EQUITY - Exchange offer with respect to Series A through E preferred stock (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
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
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
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Income Tax Contingency [Line Items]
Valuation allowance	$ 186,100
Percentage of dividend received deduction from controlled subsidiaries	100.00%
Percentage of dividend received from other taxable domestic corporations	85.00%
Income tax expense	$ 7,758	$ (8,073)
Deferred Tax Assets Net	$ 289,300
Minimum percentage of bank net taxable income for paying Income tax at normal rate	20.00%
Effective Tax Rate Pretax Losses	27.00%	24.00%
Effective Income Tax Rate Continuing Operations	19.00%	13.00%
Effective Income Tax Rate Excluding Discrete Items	23.00%	25.00%
Corporate tax rate	35.00%
Tax Reform Corporate Tax Rate	21.00%
Tax Reform Tax Rate Repatriation Of Liquid Assets	15.50%
Tax Reform Tax Rate On Base Erotions Payments	10.00%
Tax Reform Tax Rate Global Intangible Low Tax Income	10.50%
Change in tax rate	21.00%
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]
Income tax expense	$ 1,600
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
FirstBank [Member]
Income Tax Contingency [Line Items]
Valuation allowance	$ 150,000		$ 294,700
Deferred Tax Assets Net	289,200		$ 150,700
Valuation Allowance Deferred Tax Asset Change In Amount	13,900
FirstBank Insurance [Member]
Income Tax Contingency [Line Items]
Deferred Tax Asset Change In Amount	$ 700

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FAIR VALUE - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017
Securities available for sale
Investment securities available for sale		$ 1,815,504	$ 1,891,016
Forward Contracts [Member]
Derivatives, included in liabilities:
Derivatives, included in liabilities		67	19
Equity Securities [Member]
Securities available for sale
Investment securities available for sale	[1]	0	418
U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale		57,169	7,401
Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale		329,170	361,971
Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale		1,406,283	1,497,253
US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale		6,808	6,813
Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale		16,074	17,060
Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets		668	305
Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities		668	305
Forward And Future Contracts [Member]
Derivatives, included in assets:
Derivatives, included in assets		3	7
Other Available For Sale Securities [Member]
Securities available for sale
Investment securities available for sale		0	100
Other investments [Member]
other investment
Other investments	[1]	413	0
Fair Value Inputs Level 1 [Member]
other investment
Other investments		413
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	[1]	0	418
Fair Value Inputs Level 1 [Member] | U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale		57,169	7,401
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]
Derivatives, included in assets:
Derivatives, included in assets		0	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 1 [Member] | Other investments [Member]
other investment
Other investments	[1]	413	0
Fair Value Inputs Level 2 [Member]
other investment
Other investments		0
Fair Value Inputs Level 2 [Member] | Forward Contracts [Member]
Derivatives, included in liabilities:
Derivatives, included in liabilities		67	19
Fair Value Inputs Level 2 [Member] | Equity Securities [Member]
Securities available for sale
Investment securities available for sale	[1]	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		329,170	361,971
Fair Value Inputs Level 2 [Member] | Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale		1,406,283	1,497,253
Fair Value Inputs Level 2 [Member] | US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale		4,074	4,118
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		668	305
Fair Value Inputs Level 2 [Member] | Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities		668	305
Fair Value Inputs Level 2 [Member] | Forward And Future Contracts [Member]
Derivatives, included in assets:
Derivatives, included in assets		3	7
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 2 [Member] | Other investments [Member]
other investment
Other investments	[1]	0	0
Fair Value Inputs Level 3 [Member]
other investment
Other investments		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	[1]	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		2,734	2,695
Fair Value Inputs Level 3 [Member] | Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale		16,074	17,060
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]
Derivatives, included in assets:
Derivatives, included in assets		0	0
Fair Value Inputs Level 3 [Member] | Other Available For Sale Securities [Member]
Securities available for sale
Investment securities available for sale		0	100
Fair Value Inputs Level 3 [Member] | Other investments [Member]
other investment
Other investments	[1]	$ 0	$ 0

[1] As of January 1, 2018, the Corporation adopted ASU 2016-01, resulting in the reclassification of equity securities from available-for-sale investment securities to other investment securities. As of December 31, 2017, equity securities had a net unrealized loss of $6 thousand.

XML

FAIR VALUE - Fair Value of Assets and Liabilities Measured on Recurring Basis (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Total gains or (losses) (realized/unrealized):
Principal Repayments	[1]	$ (1,519)	$ (2,050)
Available for Sale Securities
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance	[1]	19,855	22,914
Total gains or (losses) (realized/unrealized):
Included in earnings	[1]	0	0
Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Asset Gain Loss Included In Other Comprehensive Income Loss	[1]	472	518
Ending balance	[1]	$ 18,808	$ 21,382

[1] Amounts mostly related to private label MBS.

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	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate used for calculation of mortgage servicing rights value	14.50%	14.00%
Fair value input prepayment rate	15.20%	16.40%
Private Label Mbs [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 16,074
Discount rate used for calculation of mortgage servicing rights value	14.48%
US States And Political Subdivisions Member [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 2,734
Unobservable input prepayment rate	3.00%
Available for sale Securities [Member] | US States And Political Subdivisions Member [Member] | Discounted Cash Flow [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Discount rate used for calculation of mortgage servicing rights value	6.24%
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		12.88%
Fair value input prepayment rate	7.50%	12.00%
Minimum [Member] | Private Label Mbs [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value input prepayment rate	7.50%
Fair value projected Cumulative Loss Rate	0.00%
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		14.43%
Fair value input prepayment rate	24.50%	29.00%
Maximum [Member] | Private Label Mbs [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value input prepayment rate	24.50%
Fair value projected Cumulative Loss Rate	9.00%
Weighted Average [Member] | Private Label Mbs [Member] | Discounted Cash Flow [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Unobservable input prepayment rate	15.20%
Fair value projected Cumulative Loss Rate	4.00%

XML

FAIR VALUE - Change in unrealized losses included in earnings (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Available for Sale Securities
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Included in earnings	[1]	$ 0	$ 0

[1] Amounts mostly related to private label MBS.

XML

FAIR VALUE - Impairment of Valuation Adjustments were Recorded for Assets Recognized at Fair Value (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018		Mar. 31, 2017		Dec. 31, 2017	Dec. 31, 2016
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Mortgage servicing rights		$ 26,135		$ 26,330		$ 25,255	$ 26,244
Loans Receivable [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Adjustment	[1]			(15,211)
Other Real Estate Owned [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Adjustment	[2]			(4,180)
Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Adjustment	[3]			(160)
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	[4]	(4,224)
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	[5]	(287)
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	[6]	713
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	[7]	(6,203)
Fair Value Inputs Level 1 [Member] | Fair Value Measurements Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans receivable		0	[4]	0	[1]
Other Real Estate Owned		0	[5]	0	[2]
Mortgage servicing rights		0	[6]	0	[3]
Loans held for sale	[7]	0
Fair Value Inputs Level 2 [Member] | Fair Value Measurements Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans receivable		0	[4]	0	[1]
Other Real Estate Owned		0	[5]	0	[2]
Mortgage servicing rights		0	[6]	0	[3]
Loans held for sale	[7]	0
Fair Value Inputs Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans receivable	[1]			430,162
Other Real Estate Owned	[2]			137,784
Mortgage servicing rights	[3]			$ 26,330
Fair Value Inputs Level 3 [Member] | Fair Value Measurements Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans receivable	[4]	392,493
Other Real Estate Owned	[5]	154,639
Mortgage servicing rights	[6]	26,135
Loans held for sale	[7]	$ 64,945

[1] Consists mainly of impaired commercial and construction loans. The impairments were generally measured based on the fair value of the underlying collateral. The fair values were 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 values were 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 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 6.17%, Discount Rate 11.20%.

[4] Consists mainly of impaired commercial and construction loans. The impairments were generally measured based on the fair value of the collateral. The fair values were 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.

[5] The fair values were 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.

[6] 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 5.89%, Discount Rate 11.23%.

[7] The value of these loans was primarily derived from external appraisals, adjusted for specific characteristics of the loans.

XML

FAIR VALUE - Impairment of Valuation Adjustments were Recorded for Assets Recognized at Fair Value (Parenthetical) (Detail) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
		Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Repayment rate used for the calculation of mortgage servicing rights value		15.20%		16.40%
Discount rate used for calculation of mortgage servicing rights value		14.50%		14.00%
Loans held for sale	[1]	$ 91,375		$ 32,980
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		5.89%	6.17%
Discount rate used for calculation of mortgage servicing rights value		11.23%	11.20%

[1] During the first quarter of 2018, the Corporation transferred $57.2 million (net of fair value write-downs of $9.7 million) in non-performing loans to held for sale. Loans transferred to held for sale consisted of a $30.0 million non-performing construction loan (net of a $5.1 million fair value write-down) and two non-performing commercial mortgage loans totaling $27.2 million (net of fair value write-downs of $4.6 million).

XML

FAIR VALUE - Fair Value (Detail) - USD ($) $ in Thousands		Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017
Assets:
Investment securities available for sale		$ 1,815,504	$ 1,891,016
Held To Maturity Securities			150,627
Other equity securities		400
Less: allowance for loan and lease losses		(225,856)	(231,843)
Liabilities:
Other borrowings		184,150	208,635
Fair Value Inputs Level 1 [Member]
Assets:
Other investments		413
Fair Value Inputs Level 2 [Member]
Assets:
Other investments		0
Fair Value Inputs Level 3 [Member]
Assets:
Loans held for investment, net of allowance	[1]			$ 430,162
Other investments		0
Carrying Reported Amount Fair Value Disclosure [Member]
Assets:
Cash and due from banks and money market investments		843,824	716,395
Investment securities available for sale		1,815,504	1,891,016
Held To Maturity Securities		150,486	150,627
Other equity securities		43,119	43,119
Loans held for sale		91,375	32,980
Loans, held for investment		8,695,890	8,850,476
Less: allowance for loan and lease losses		(225,856)	(231,843)
Loans held for investment, net of allowance		8,470,034	8,618,633
Derivatives, included in assets		668	312
Other investments		413
Liabilities:
Deposits		9,066,465	9,022,631
Securities sold under agreements to repurchase		200,000	300,000
Advances from FHLB		715,000	715,000
Other borrowings		184,150	208,635
Derivatives, included in liabilities		735	324
Estimate Of Fair Value Fair Value Disclosure [Member]
Assets:
Cash and due from banks and money market investments		843,824	716,395
Investment securities available for sale		1,815,504	1,891,016
Held To Maturity Securities		134,856	131,032
Other equity securities		43,119	43,119
Loans held for sale		91,736	34,979
Loans held for investment, net of allowance		8,262,128	8,372,865
Derivatives, included in assets		668	312
Other investments		413
Liabilities:
Deposits		9,070,024	9,026,600
Securities sold under agreements to repurchase		226,076	325,913
Advances from FHLB		701,079	707,272
Other borrowings		171,378	189,424
Derivatives, included in liabilities		735	324
Estimate Of Fair Value Fair Value Disclosure [Member] | Fair Value Inputs Level 1 [Member]
Assets:
Cash and due from banks and money market investments		843,824	716,395
Investment securities available for sale		57,169	7,819
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		1,739,527	1,863,342
Held To Maturity Securities		0	0
Other equity securities		43,119	43,119
Loans held for sale		26,791	25,237
Loans held for investment, net of allowance		0	0
Derivatives, included in assets		668	312
Liabilities:
Deposits		9,070,024	9,026,600
Securities sold under agreements to repurchase		226,076	325,913
Advances from FHLB		701,079	707,272
Other borrowings		0	0
Derivatives, included in liabilities		735	324
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		18,808	19,855
Held To Maturity Securities		134,856	131,032
Other equity securities		0	0
Loans held for sale		64,945	9,742
Loans held for investment, net of allowance		8,262,128	8,372,865
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		171,378	189,424
Derivatives, included in liabilities		$ 0	$ 0

[1] Consists mainly of impaired commercial and construction loans. The impairments were generally measured based on the fair value of the underlying collateral. The fair values were 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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REVENUE FROM CONTRACT WITH CUSTOMERS (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018		Mar. 31, 2017	Dec. 31, 2017
Segment Reporting Information [Line Items]
Interest Income Expense Net		$ 124,693	[1]	$ 122,549
Service Charges And Fees On Deposits		5,088
Insurance commission income		3,355
Other fees and commissions credit cards		5,094
Other fees		2,254
Other income not in scope of Topic 606	[1]	6,002
Merchant Related Income		991
Total non interest income		22,784		8,243
Revenues		147,477
contract liability		$ 2,300			$ 2,400
Term Of Contract		10 years
Mortgage Banking [Member]
Segment Reporting Information [Line Items]
Interest Income Expense Net		$ 21,205	[1]	22,260
Service Charges And Fees On Deposits		0
Insurance commission income		0
Other fees and commissions credit cards		0
Other fees		33
Other income not in scope of Topic 606	[1]	4,051
Merchant Related Income		0
Total non interest income		4,084		3,586
Revenues		25,289
Consumer Retail Banking [Member]
Segment Reporting Information [Line Items]
Interest Income Expense Net	[1]	51,049
Service Charges And Fees On Deposits		3,165
Insurance commission income		3,144
Other fees and commissions credit cards		4,169
Other fees		800
Other income not in scope of Topic 606	[1]	7
Merchant Related Income		645
Total non interest income		11,930
Revenues		62,979
Commercial And Corporate [Member]
Segment Reporting Information [Line Items]
Interest Income Expense Net		18,920	[1]	20,093
Service Charges And Fees On Deposits		1,092
Insurance commission income		0
Other fees and commissions credit cards		255
Other fees		300
Other income not in scope of Topic 606	[1]	(549)
Merchant Related Income		161
Total non interest income		1,259		1,237
Revenues		20,179
Treasury And Investments [Member]
Segment Reporting Information [Line Items]
Interest Income Expense Net		12,518	[1]	18,184
Service Charges And Fees On Deposits		0
Insurance commission income		0
Other fees and commissions credit cards		0
Other fees		0
Other income not in scope of Topic 606	[1]	2,378
Merchant Related Income		0
Total non interest income		2,378		(12,170)
Revenues		14,896
United States Operations [Member]
Segment Reporting Information [Line Items]
Interest Income Expense Net		13,392	[1]	11,468
Service Charges And Fees On Deposits		134
Insurance commission income		12
Other fees and commissions credit cards		128
Other fees		1,039
Other income not in scope of Topic 606	[1]	95
Merchant Related Income		0
Total non interest income		1,408		505
Revenues		14,800
Virgin Islands Operations [Member]
Segment Reporting Information [Line Items]
Interest Income Expense Net		7,609	[1]	8,618
Service Charges And Fees On Deposits		697
Insurance commission income		199
Other fees and commissions credit cards		542
Other fees		82
Other income not in scope of Topic 606	[1]	20
Merchant Related Income		185
Total non interest income		1,725		$ 1,706
Revenues		$ 9,334

[1] Most of the Corporation’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities, as well as other noninterest income from loans, leases, investment securities and derivative financial instruments.

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REVENUE FROM CONTACTS WITH CUSTOMERS - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
entity wide
contract liability	$ 2,300	$ 2,400
Term Of Contract	10 years
Decrease in contract liability	$ 100
Revenues	147,477
insurance commission income [Member]
entity wide
Revenues	$ 2,100

XML

SUPPLEMENTAL CASH FLOW INFORMATION - Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash paid for:
Interest on borrowings	$ 24,353	$ 22,001
Income tax	0	0
Non-cash investing and financing activities:
Additions to other real estate owned	15,867	13,597
Additions to auto repossesions	17,508	11,516
Loan securitizations	54,382	60,525
Capitalization of servicing assets	887	875
Loans held for investment transferred to held for sale	67,937	0
Property Plant And Equipment Transferred To Other Assets	$ 0	$ 1,185

XML

SEGMENT INFORMATIO - Information about reportable segments (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018		Mar. 31, 2017
Segment Reporting Information [Line Items]
Interest income	$ 149,418		$ 145,228
Net (charge) credit for transfer of funds	0		0
Interest expense	(24,725)		(22,679)
Net interest income	124,693	[1]	122,549
(Provision) release for loan and lease losses	(20,544)		(25,442)
Non-interest income (loss)	22,784		8,243
Direct non-interest expenses	(57,861)		(62,480)
Segment income	69,072		42,870
Average earnings assets	11,244,444		10,994,534
Mortgage Banking [Member]
Segment Reporting Information [Line Items]
Interest income	32,321		33,958
Net (charge) credit for transfer of funds	(11,116)		(11,698)
Interest expense	0		0
Net interest income	21,205	[1]	22,260
(Provision) release for loan and lease losses	(381)		(8,936)
Non-interest income (loss)	4,084		3,586
Direct non-interest expenses	(7,720)		(9,879)
Segment income	17,188		7,031
Average earnings assets	2,293,482		2,500,750
Consumer Retail Banking [Member]
Segment Reporting Information [Line Items]
Interest income	42,550		42,917
Net (charge) credit for transfer of funds	15,222		4,909
Interest expense	(6,723)		(5,900)
Net interest income	51,049		41,926
(Provision) release for loan and lease losses	(5,793)		(7,142)
Non-interest income (loss)	11,930		13,379
Direct non-interest expenses	(26,901)		(27,418)
Segment income	30,285		20,745
Average earnings assets	1,566,795		1,775,931
Commercial And Corporate [Member]
Segment Reporting Information [Line Items]
Interest income	32,337		29,411
Net (charge) credit for transfer of funds	(13,417)		(9,318)
Interest expense	0		0
Net interest income	18,920	[1]	20,093
(Provision) release for loan and lease losses	(6,800)		(8,055)
Non-interest income (loss)	1,259		1,237
Direct non-interest expenses	(6,714)		(9,367)
Segment income	6,665		3,908
Average earnings assets	2,632,220		2,548,936
Treasury And Investments [Member]
Segment Reporting Information [Line Items]
Interest income	14,254		13,757
Net (charge) credit for transfer of funds	9,974		16,233
Interest expense	(11,710)		(11,806)
Net interest income	12,518	[1]	18,184
(Provision) release for loan and lease losses	0		0
Non-interest income (loss)	2,378		(12,170)
Direct non-interest expenses	(948)		(1,207)
Segment income	13,948		4,807
Average earnings assets	2,470,830		2,157,882
United States Operations [Member]
Segment Reporting Information [Line Items]
Interest income	19,527		15,789
Net (charge) credit for transfer of funds	(663)		(126)
Interest expense	(5,472)		(4,195)
Net interest income	13,392	[1]	11,468
(Provision) release for loan and lease losses	(1,459)		35
Non-interest income (loss)	1,408		505
Direct non-interest expenses	(7,956)		(7,859)
Segment income	5,385		4,149
Average earnings assets	1,709,918		1,393,215
Virgin Islands Operations [Member]
Segment Reporting Information [Line Items]
Interest income	8,429		9,396
Net (charge) credit for transfer of funds	0		0
Interest expense	(820)		(778)
Net interest income	7,609	[1]	8,618
(Provision) release for loan and lease losses	(6,111)		(1,344)
Non-interest income (loss)	1,725		1,706
Direct non-interest expenses	(7,622)		(6,750)
Segment income	(4,399)		2,230
Average earnings assets	$ 571,199		$ 617,820

[1] Most of the Corporation’s revenue is not within the scope of ASU No. 2014-09, Revenue from Contracts with Customers. The guidance explicitly excludes net interest income from financial assets and liabilities, as well as other noninterest income from loans, leases, investment securities and derivative financial instruments.

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SEGMENT INFORMATION - Reconciliation of Reportable Segment Financial Information (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Net Income (Loss):
Segment income		$ 69,072	$ 42,870
Other operating expenses	[1]	(28,166)	(25,402)
(Loss) income before income taxes		40,906	17,468
Income tax benefit (expense)		(7,758)	8,073
Net income		33,148	25,541
Average assets:
Total average earning assets for segments		11,244,444	10,994,534
Average non-earning assets		947,460	886,492
Total consolidated average assets		$ 12,191,904	$ 11,881,026

[1] Expenses pertaining to corporate administrative functions that support the operating segment 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 ($) $ in Millions	1 Months Ended	3 Months Ended
	Jul. 31, 2013	Mar. 31, 2018	Dec. 31, 2017	Nov. 21, 2017
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Commitments		$ 1,200.0
Banking Organizations Basel Advanced Approach Asset Requirement				$ 250,000.0
Foreign Subsidiaries Basel Advanced Approach Asset Requirement				$ 10,000.0
Credit Cards [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Commitments		650.5
Commercial And Financial Standby Letters Of Credit [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Commitments		$ 43.3
Basel III [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital Conservation Buffer	2.50%
Common Equity Tier1 Capital To Risk Weight Assets Ratio	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		15.35%	15.39%
Tier 1 risk based capital ratio		21.26%	20.79%
Total Risk Based Capital Ratio		22.52%	22.06%
Tier 1 risk based capital ratio to be considered well capitalzed under PCA		8.00%	8.00%
Total risk based capital to be considered well capitalized under PCA		10.00%	10.00%
Leverage ratio to be considered well capitalized under PCA		5.00%	5.00%
Common Equity Tier1 Capital To Risk Weight Assets Ratio		17.70%	17.70%

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REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES- Regulatory Capital Positions (Detail) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Holding Company [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital	$ 1,990,146	$ 1,989,873
Tier One Risk Based Capital	1,701,946	1,675,282
Tier One Leverage Capital	1,701,946	1,675,282
Capital Required For Capital Adequacy	692,691	706,432
Tier One Risk Based Capital Required For Capital Adequacy	519,518	529,824
Tier One Leverage Capital Required For Capital Adequacy	$ 480,078	$ 477,643
Capital To Risk Weighted Assets	22.98%	22.53%
Tier One Risk Based Capital To Risk Weighted Assets	19.66%	18.97%
Tier One Leverage Capital To Average Assets	14.18%	14.03%
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	19.24%	18.96%
Common Equity Tier 1 Capital To Risk Weight Assets	$ 1,665,842	$ 1,674,164
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	$ 389,639	$ 397,368
FirstBank [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital	1,950,261	1,947,627
Tier One Risk Based Capital	1,840,690	1,835,445
Tier One Leverage Capital	1,840,690	1,835,445
Capital Required For Capital Adequacy	692,671	706,218
Tier One Risk Based Capital Required For Capital Adequacy	519,503	529,663
Tier One Leverage Capital Required For Capital Adequacy	479,527	477,056
Capital Required To Be Well Capitalized	865,838	882,772
Tier One Risk Based Capital Required To Be Well Capitalized	$ 692,671	$ 706,218
Capital To Risk Weighted Assets	22.52%	22.06%
Tier One Risk Based Capital To Risk Weighted Assets	21.26%	20.79%
Tier One Leverage Capital To Average Assets	15.35%	15.39%
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	$ 599,408	$ 596,320
Common Equity Tier1 Capital To Risk Weight Assets Ratio	17.70%	17.70%
Common Equity Tier 1 Capital To Risk Weight Assets	$ 1,532,690	$ 1,562,431
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	$ 389,627	$ 397,248
Common Equity Tier 1 Capital To Risk Weight Assets Well Capitalized	$ 562,795	$ 573,802
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	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017
ASSETS
Cash and due from banks	$ 743,409	$ 705,980	$ 414,034
Money market investments	100,415	10,415	10,088
Investment securities available for sale, at market:
Other investment securities	1,572,766	1,540,893
Carrying Value Of Other Equity Security	2,200	2,200
Loans Receivable, net	8,561,409	8,651,613
Other assets	443,784	461,491
Total assets	12,200,386	12,261,268
Liabilities:
Other borrowings	184,150	208,635
Accounts payable and other liabilities	157,667	145,905
Total liabilities	10,323,282	10,392,171
Stockholders Equity	1,877,104	1,869,097	$ 1,823,017
Total liabilities and stockholders' equity	12,200,386	12,261,268
Holding Company [Member]
ASSETS
Cash and due from banks	16,866	20,864
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	178	191
Other assets	5,671	3,799
Total assets	2,064,679	2,078,550
Liabilities:
Other borrowings	184,150	208,635
Accounts payable and other liabilities	3,425	818
Total liabilities	187,575	209,453
Stockholders Equity	1,877,104	1,869,097
Total liabilities and stockholders' equity	2,064,679	2,078,550
Holding Company [Member] | Investment In Banking Subsidiary [Member]
Investment securities available for sale, at market:
Equity Method Investments	2,015,111	2,028,641
Holding Company [Member] | Non Banking Subsidiary [Member]
Investment securities available for sale, at market:
Equity Method Investments	14,933	12,400
Holding Company [Member] | Statutory Trust One [Member]
Investment securities available for sale, at market:
Equity Method Investments	1,963	2,698
Holding Company [Member] | Statutory Trust Two [Member]
Investment securities available for sale, at market:
Equity Method Investments	$ 3,561	$ 3,561

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FIRST BANCORP. (Holding Company Only) Financial Information - Statements of Loss (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income:
Interest income on investment securities	$ 13,987	$ 13,302
Other Interest And Dividend Income	2,256	484
Expense:
Gains Losses On Extinguishment Of Debt	2,316	0
Segment income	69,072	42,870
Income tax benefit (expense)	(7,758)	8,073
Net income	33,148	25,541
Other comprehensive income (loss), net of tax	(24,047)	10,696
Comprehensive (loss) income	9,101	36,237
Holding Company [Member]
Income:
Other Interest And Dividend Income	5	5
Other income	63	62
Total interest income	21,652	1,997
Expense:
Notes payable and other borrowings	2,085	1,963
Other operating expenses	596	967
Total operating expenses	2,681	2,930
Gains Losses On Extinguishment Of Debt	2,316	0
Segment income	21,287	(933)
Equity in undistributed earnings (losses) of subsidiaries	11,861	26,474
Net income	33,148	25,541
Other comprehensive income (loss), net of tax	(24,047)	10,696
Comprehensive (loss) income	9,101	36,237
Investment In Banking Subsidiary [Member] | Holding Company [Member]
Income:
Dividend Income From Subsidiaries	$ 21,584	$ 1,930