SAN JUAN, Puerto Rico--(BUSINESS WIRE)--April 24, 2014--First BanCorp. (the “Corporation”) (NYSE: FBP), the bank holding company for FirstBank Puerto Rico (“FirstBank” or “the Bank”), today reported net income of $17.1 million for the first quarter of 2014, or $0.08 per diluted share, compared to $14.8 million, or $0.07 per diluted share, for the fourth quarter of 2013 and a net loss of $72.6 million, or $0.35 per diluted share, for the first quarter of 2013.

Aurelio Alemán, President and Chief Executive Officer of First BanCorp., commented: “Our main focus for 2014 continues to be asset quality as we continue to face economic headwinds in Puerto Rico. We are pleased with our core operating performance during the first quarter achieving improvements in our core franchise metrics; net income improved to $17.1 million, or 15.5%, from $14.8 million in the fourth quarter, pre-tax pre-provision income improved to $56.9 million, or 19.5%, from $47.6 million in the fourth quarter mainly driven by our expense management initiatives and reduction in credit cost. We also achieved slight expansion in our net interest margin due to higher yields on our commercial loan portfolio. We continue to strengthen our franchise through growth in core deposits as our non-brokered deposits, excluding government deposits, increased $102.2 million to $6.1 billion.

While our core metrics continue to improve, we are still addressing our remaining legacy credits. Total non-performing assets increased by $5.3 million this quarter, while non-performing assets to total assets ratio remained flat at 5.7%. Our provision and net charge-offs increased this quarter largely due to the write-downs of collateral, mainly driven by updated appraisals associated with four commercial loans in Puerto Rico and de-risking activity in our adversely classified book. We remain focused on our dual track of improving franchise metrics and credit quality as we continue to strengthen our capital position with earnings generation contributing to our strong capital base. We are optimistic about the steps taken by the government to address the fiscal situation and with the initiatives to stabilize the economy.”

This press release includes certain other non-GAAP financial measures, including adjusted pre-tax, pre-provision income, adjusted net interest income and margin, and certain capital ratios and should be read in conjunction with the accompanying tables (Exhibit A), which are an integral part of this press release.

One metric that management believes is useful in analyzing performance is the level of earnings adjusted to exclude tax expense, the provision for loan and lease losses, securities gains or losses, fair value adjustments on derivatives measured at fair value and equity in earnings or loss of unconsolidated entity, which is a non-GAAP financial measure. In addition, from time to time, earnings are adjusted also for items judged by management to be outside of ordinary banking activities and/or for items that, while they may be associated with ordinary banking activities, are so unusually large that management believes that a complete analysis of the Corporation’s performance requires consideration also of results that exclude such amounts (for additional information about this non-GAAP financial measure, see “Adjusted Pre-Tax, Pre-Provision Income” in “Basis of Presentation”).

The following table reconciles income (loss) before income taxes to adjusted pre-tax, pre-provision income for the last five quarters including adjusted pre-tax, pre-provision income of $56.9 million in the first quarter of 2014, up $9.3 million from the prior quarter:


(Dollars in thousands)	Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2014			2013			2013			2013			2013

Income (loss) before income taxes	$	17,970		$	15,634		$	19,616		$	(123,562	)	$	(71,011	)
Add: Provision for loan and lease losses		31,915			22,969			22,195			87,464			111,123
Add: Net loss on investments and impairments		-			-			-			42			117
Less: Unrealized gain on derivative instruments		(313	)		(355	)		(232	)		(708	)		(400	)
Add: Bulk sales related expenses and other professional fees related to the terminated preferred stock exchange offer

		-			-			-			3,198			5,096
Add: Loss on certain OREO properties sold as part of the bulk sale of non-performing residential mortgage assets
		-			-			-			1,879			-
Add: Secondary offering costs (1)		-			-			1,669			-			-
Add: Credit card processing platform conversion costs		-			-			1,715			-			-
Add: National gross receipt tax (2)		-			-			-			1,656			-
Less: National gross receipt tax - outside Puerto Rico (3)		-			(473	)		-			-			-
Add: Branch consolidations and restructuring expenses/valuation adjustments		718			1,421			-			-			-
Add: Write-off collateral pledged to Lehman and related expenses		-			2,500			-			66,574			-
Add/Less: Equity in loss (earnings) of unconsolidated entity		6,610			5,893			5,908			(648	)		5,538
Adjusted pre-tax, pre-provision income (4)	$	56,900		$	47,589		$	50,871		$	35,895		$	50,463

Change from most recent prior quarter-amount	$	9,311		$	(3,282	)	$	14,976		$	(14,568	)	$	(3,998	)
Change from most recent prior quarter-percentage		19.6	%		-6.5	%		41.7	%		-28.9	%		-7.3	%

(1) Offering of common stock by certain of the Corporation's existing stockholders.
(2) Represents the impact of the national gross receipts tax corresponding to the first quarter of 2013, recorded during the second quarter after enactment of Act No. 40.
(3) Represents the impact of the national gross receipts tax related to the trade or business outside of Puerto Rico that was reversed in the fourth quarter of 2013 after enactment of Act No. 117.
(4) See "Basis of Presentation" for definition.

The increase in adjusted pre-tax, pre-provision income from the 2013 fourth quarter primarily reflected:

Adjusted non-interest expenses in the last two quarters exclude: (i) expenses and valuation adjustments related to branch consolidations and other restructuring efforts; (ii) a loss contingency recorded in the fourth quarter of 2013 related to attorneys’ fees granted by the court to Barclays Capital in connection with the denial of the Corporation’s Summary Judgment on its claim to recover assets pledged to Lehman, which the Corporation appealed; and (iii) the impact of the national gross receipts tax related to the trade or business outside of Puerto Rico that was reversed in the fourth quarter of 2013 after enactment of Act No. 117 that introduced amendments to the 2013 Tax Burden Adjustment and Redistribution Act (“Act 40”).

See Basis of Presentation section below for reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.

Adjusted non-interest income excludes the equity in earnings (loss) of unconsolidated entity, and valuation adjustments recorded in the fourth quarter of 2013 on fixed assets that are no longer used for operations after the consolidation of certain branches in Florida. See Basis of Presentation section below for reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.

Net interest income, excluding fair value adjustments on derivatives and financial liabilities measured at fair value (“valuations”), and net interest income on a tax-equivalent basis are non-GAAP measures. (See “Basis of Presentation – Net Interest Income, Excluding Valuations and on a Tax-Equivalent Basis” below for additional information.) The following table reconciles net interest income in accordance with GAAP to net interest income, excluding valuations, and net interest income on a 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 a tax-equivalent basis.


(Dollars in thousands)
	Quarter Ended
	March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013
Net Interest Income
Interest Income - GAAP	$	160,571		$	162,690		$	162,203		$	160,670		$	160,225
Unrealized gain on
derivative instruments		(313	)		(355	)		(232	)		(708	)		(400	)
Interest income excluding valuations		160,258			162,335			161,971			159,962			159,825
Tax-equivalent adjustment		5,223			5,122			4,420			3,038			1,595
Interest income on a tax-equivalent basis excluding valuations		165,481			167,457			166,391			163,000			161,420

Interest Expense - GAAP		29,251			30,031			31,298			33,782			35,732

Net interest income - GAAP	$	131,320		$	132,659		$	130,905		$	126,888		$	124,493

Net interest income excluding valuations	$	131,007		$	132,304		$	130,673		$	126,180		$	124,093

Net interest income on a tax-equivalent basis excluding valuations	$	136,230		$	137,426		$	135,093		$	129,218		$	125,688

Average Balances
Loans and leases	$	9,662,735		$	9,665,013		$	9,639,612		$	9,820,781		$	10,077,907
Total securities and other short-term investments		2,816,253			2,719,241			2,719,973			2,768,659			2,675,755
Average Interest-Earning Assets	$	12,478,988		$	12,384,254		$	12,359,585		$	12,589,440		$	12,753,662

Average Interest-Bearing Liabilities	$	10,542,793		$	10,450,671		$	10,409,792		$	10,583,702		$	10,652,144

Average Yield/Rate
Average yield on interest-earning assets - GAAP		5.22	%		5.21	%		5.21	%		5.12	%		5.10	%
Average rate on interest-bearing liabilities - GAAP		1.13	%		1.14	%		1.19	%		1.28	%		1.36	%
Net interest spread - GAAP		4.09	%		4.07	%		4.02	%		3.84	%		3.74	%
Net interest margin - GAAP		4.27	%		4.25	%		4.20	%		4.04	%		3.96	%

Average yield on interest-earning assets excluding valuations		5.21	%		5.20	%		5.20	%		5.10	%		5.08	%
Average rate on interest-bearing liabilities excluding valuations		1.13	%		1.14	%		1.19	%		1.28	%		1.36	%
Net interest spread excluding valuations		4.08	%		4.06	%		4.01	%		3.82	%		3.72	%
Net interest margin excluding valuations		4.26	%		4.24	%		4.19	%		4.02	%		3.95	%

Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations		5.38	%		5.36	%		5.34	%		5.19	%		5.13	%
Average rate on interest-bearing liabilities excluding valuations		1.13	%		1.14	%		1.19	%		1.28	%		1.36	%
Net interest spread on a tax-equivalent basis and excluding valuations		4.25	%		4.22	%		4.15	%		3.91	%		3.77	%
Net interest margin on a tax-equivalent basis and excluding valuations		4.43	%		4.40	%		4.34	%		4.12	%		4.00	%

Net interest income, excluding valuations, amounted to $131.0 million, a decrease of $1.3 million when compared to the fourth quarter of 2013. The reduction in net interest income was mainly due to:

Partially offsetting the aforementioned items was an increase of 2 basis points in the net interest margin, excluding valuations, to 4.26% for the first quarter of 2014 from 4.24% for the fourth quarter of 2013 mainly due to:

The provision for loan and lease losses for the first quarter of 2014 was $31.9 million, compared to $23.0 million for the fourth quarter of 2013. The provision for commercial and industrial loans increased by $4.7 million, compared to the provision for the fourth quarter of 2013, mainly due to charge-offs on collateral dependent impaired loans and a higher general reserve. The provision for consumer loans increased by $3.9 million, compared to the provision for the fourth quarter of 2013, mainly related to an increase in the general reserve for credit cards and auto loans. The Corporation recorded a loan loss reserve release of $0.9 million for commercial mortgage loans compared to a reserve release of $11.5 million recorded for the fourth quarter of 2013. The reserve release for the prior quarter reflects, among other things, the impact of a $4.5 million recovery related to a large commercial mortgage loan paid off in Florida while the current quarter’s reserve release is mostly attributable to lower historical loss rates used to determine the general reserve. In addition, there was a reserve release of $8.0 million for construction loans mainly related to the overall decrease in the size of this portfolio, including certain non-performing loans paid-off in Florida. The provision for residential mortgage loans decreased by $2.1 million as it was not necessary to replenish the allowance related to impaired charged-off residential mortgage loans. See Credit Quality discussion below for additional information regarding the allowance for loan and lease losses.


		Quarter Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
(In thousands)		2014			2013			2013			2013			2013

	Service charges on deposit accounts	$	3,203		$	3,162		$	3,157		$	3,098		$	3,380
	Mortgage banking activities		3,368			3,906			3,521			4,823			4,580
	Net loss on investments and impairments		-			-			-			(42	)		(117	)
	Broker-dealer income		459			97			-			-			-
	Impairment - collateral pledged to Lehman		-			-			-			(66,574	)		-
	Branch consolidations - valuation adjustments fixed assets		-			(529	)		-			-			-
	Other operating income		10,930			11,742			9,290			6,384			11,324
	Equity in (loss) earnings of unconsolidated entity		(6,610	)		(5,893	)		(5,908	)		648			(5,538	)

	Non-interest income (loss)	$	11,350		$	12,485		$	10,060		$	(51,663	)	$	13,629

Non-interest income for the first quarter of 2014 amounted to $11.4 million, compared to $12.5 million for the fourth quarter of 2013. The decrease was primarily due to:


		Quarter Ended
		March 31,		December 31,		September 30,		June 30,		March 31,
(In thousands)		2014		2013		2013		2013		2013

	Employees' compensation and benefits	$	32,942	$	31,062	$	32,823	$	33,116	$	33,554
	Occupancy and equipment		13,628		15,229		15,134		14,946		15,070
	Deposit insurance premium		9,822		10,495		10,479		11,430		11,517
	Other insurance and supervisory fees		1,168		957		1,034		1,269		1,289
	Taxes, other than income taxes		4,547		4,076		4,693		6,239		2,989
	Professional fees :
	Collections, appraisals and other credit related fees		1,345		2,198		2,780		2,520		1,924
	Outsourcing technology services		4,214		4,202		4,338		4,258		1,346
	Other professional fees		4,481		4,845		4,086		3,782		2,903
	Credit and debit card processing expenses		3,824		4,869		2,682		2,281		3,077
	Credit card processing platform conversion costs		-		-		1,715		-		-
	Branch consolidations and restructuring expenses		718		892		-		-		-
	Business promotion		3,973		5,251		3,478		3,831		3,220
	Communications		1,879		1,836		1,866		1,885		1,814
	Net loss on OREO operations		5,837		13,321		7,052		12,950		7,310
	Secondary offering costs		-		-		1,669		-		-
	Terminated preferred stock exchange offer expenses		-		-		-		115		1,218
	Bulk sales expenses		-		-		-		4,962		3,878
	Loss contingency for attorneys' fees - Lehman litigation		-		2,500		-		-		-
	Other		4,407		4,808		5,325		7,739		6,901
	Total	$	92,785	$	106,541	$	99,154	$	111,323	$	98,010

Non-interest expenses in the first quarter of 2014 amounted to $92.8 million, a decrease of $13.7 million from $106.5 million for the fourth quarter of 2013. The main drivers of the decrease were:

The income tax expense for the first quarter of 2014 amounted to $0.9 million compared to $0.8 million for the fourth quarter of 2013. The increase primarily reflects higher taxable income of profitable subsidiaries. Under the Puerto Rico Internal Revenue Code, the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns and, thus, the Corporation is not able to utilize losses from one subsidiary to offset gains in another subsidiary. As of March 31, 2014, the deferred tax asset, net of a valuation allowance of $519.3 million, amounted to $8.3 million.


(Dollars in thousands)		March 31,			December 31,			September 30,			June 30,			March 31,
		2014			2013			2013			2013			2013
Non-performing loans held for investment:
	Residential mortgage	$	172,796		$	161,441		$	142,002		$	133,937		$	311,495
	Commercial mortgage		145,535			120,107			127,374			136,737			136,708
	Commercial and Industrial		113,996			114,833			127,584			131,906			141,045
	Construction		50,387			58,866			64,241			68,204			59,810
	Consumer and Finance leases		39,061			40,302			37,184			35,416			33,652
	Total non-performing loans held for investment		521,775			495,549			498,385			506,200			682,710

OREO			138,622			160,193			133,284			139,257			181,479
Other repossessed property			15,587			14,865			14,125			11,503			9,913
Other assets (1)			-			-			-			-			64,543
	Total non-performing assets, excluding loans held for sale	$	675,984		$	670,607		$	645,794		$	656,960		$	938,645

Non-performing loans held for sale			54,755			54,801			80,234			94,951			147,995
	Total non-performing assets, including loans held for sale (2)	$	730,739		$	725,408		$	726,028		$	751,911		$	1,086,640

Past-due loans 90 days and still accruing		$	118,049		$	120,082		$	127,735		$	113,061		$	125,384
Non-performing loans held for investment to total loans held for investment			5.45	%		5.14	%		5.24	%		5.36	%		7.14	%
Non-performing loans to total loans			5.98	%		5.67	%		6.01	%		6.21	%		8.45	%
Non-performing assets, excluding non-performing loans held for sale, to total assets, excluding non-performing loans held for sale
			5.30	%		5.32	%		5.08	%		5.17	%		7.30	%
Non-performing assets to total assets			5.70	%		5.73	%		5.68	%		5.87	%		8.35	%

(1) Collateral pledged to Lehman Brothers, Inc.
(2) Amount excludes purchased credit impaired loans with a carrying value as of March 31, 2014 of approximately $3.4 million acquired as part of the credit card portfolio acquired from FIA Card Services ("FIA").

The following table sets forth an analysis of the allowance for loan and lease losses during the periods indicated:


		Quarter Ended
(Dollars in thousands)		March 31,			December 31,			September 30,			June 30,				March 31,
		2014			2013			2013			2013				2013

Allowance for loan and lease losses, beginning of period		$	285,858		$	289,379		$	301,047		$	342,531			$	435,414
Provision for loan and lease losses			31,915			22,969			22,195			87,464		(1)		111,123		(5)
Net charge-offs of loans:
	Residential mortgage		(6,353	)		(4,544	)		(8,457	)		(103,418	)	(2)		(11,580	)	(6)
	Commercial mortgage		(5,775	)		2,605			(5,918	)		(3,253	)			(56,036	)	(7)
	Commercial and Industrial		(21,796	)		(9,146	)		(5,718	)		(5,520	)			(84,829	)	(8)
	Construction		(353	)		(435	)		71			(2,368	)	(3)		(38,515	)	(9)
	Consumer and finance leases		(16,718	)		(14,970	)		(13,841	)		(14,389	)			(13,046	)
Net charge-offs			(50,995	)		(26,490	)		(33,863	)		(128,948	)	(4)		(204,006	)	(10)
Allowance for loan and lease losses, end of period		$	266,778		$	285,858		$	289,379		$	301,047			$	342,531

Allowance for loan and lease losses to period end total loans held for investment			2.79%			2.97%			3.04%			3.19%				3.58%
Net charge-offs (annualized) to average loans outstanding during the period			2.11%			1.10%			1.41%			5.25%				8.10%
Net charge-offs (annualized), excluding charge-offs related to loans sold and loans transferred to held for sale, to average loans outstanding during the period			2.11%			1.10%			1.41%			1.29%				2.87%
Provision for loan and lease losses to net charge-offs during the period		0.63x			0.87x			0.66x			0.68x				0.54x
Provision for loan and lease losses to net charge-offs during the period, excluding impact of loans sold and loans transferred to held for sale		0.63x			0.87x			0.66x			0.63x				0.68x
(1) Includes provision of $67.9 million associated with the bulk sale of non-performing residential assets.
(2) Includes net charge-offs totaling $97.9 million associated with the bulk sale of non-performing residential assets.
(3) Includes net charge-offs totaling $31 thousand associated with the bulk sale of non-performing residential assets.
(4) Includes net charge-offs totaling $98.0 million associated with the bulk sale of non-performing residential assets.
(5) Includes provision of $64.1 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale.
(6) Includes net charge-offs totaling $1.0 million associated with the bulk sale of adversely classified commercial assets.
(7) Includes net charge-offs of $54.6 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale.
(8) Includes net charge-offs totaling $44.7 million associated with the bulk sale of adversely classified commercial assets.
(9) Includes net charge-offs of $34.2 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale.
(10) Includes net charge-offs of $134.5 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale.

The following table sets forth information concerning the composition of the Corporation’s allowance for loan and lease losses as of March 31, 2014 and December 31, 2013 by loan category and by whether the allowance and related provisions were calculated individually for impairment purposes or through a general valuation allowance:


(Dollars in thousands)	Residential Mortgage Loans			Commercial (including Commercial Mortgage, C&I, and Construction loans)			Consumer and Finance Leases			Total

As of March 31, 2014
Impaired loans:
Principal balance of loans, net of charge-offs	$	419,308		$	430,149		$	29,931		$	879,388
Allowance for loan and lease losses		17,273			64,085			3,208			84,566
Allowance for loan and lease losses to principal balance		4.12	%		14.90	%		10.72	%		9.62	%

PCI loans:
Carrying value of PCI loans		-			-			3,383			3,383
Allowance for PCI loans		-			-			-			-
Allowance for PCI loans to carrying value		-			-			-			-

Loans with general allowance:
Principal balance of loans		2,128,793			4,516,283			2,038,938			8,684,014
Allowance for loan and lease losses		13,235			109,428			59,549			182,212
Allowance for loan and lease losses to principal balance		0.62	%		2.42	%		2.92	%		2.10	%

Total loans held for investment:
Principal balance of loans	$	2,548,101		$	4,946,432		$	2,072,252		$	9,566,785
Allowance for loan and lease losses		30,508			173,513			62,757			266,778
Allowance for loan and lease losses to principal balance		1.20	%		3.51	%		3.03	%		2.79	%

As of December 31, 2013

Impaired loans:
Principal balance of loans, net of charge-offs	$	410,994		$	479,193		$	28,925		$	919,112
Allowance for loan and lease losses		18,125			81,019			3,457			102,601
Allowance for loan and lease losses to principal balance		4.41	%		16.91	%		11.95	%		11.16	%

PCI loans:
Carrying value of PCI loans		-			-			4,791			4,791
Allowance for PCI loans		-			-			-			-
Allowance for PCI loans to carrying value		-			-			-			-

Loans with general allowance:
Principal balance of loans		2,138,014			4,541,450			2,032,803			8,712,267
Allowance for loan and lease losses		14,985			113,228			55,044			183,257
Allowance for loan and lease losses to principal balance		0.70	%		2.49	%		2.71	%		2.10	%

Total loans held for investment:
Principal balance of loans	$	2,549,008		$	5,020,643		$	2,066,519		$	9,636,170
Allowance for loan and lease losses		33,110			194,247			58,501			285,858
Allowance for loan and lease losses to principal balance		1.30	%		3.87	%		2.83	%		2.97	%

The following table presents annualized net charge-offs to average loans held-in-portfolio:


		Quarter Ended
		March 31,		December 31,		September 30,		June 30,			March 31,
		2014		2013		2013		2013			2013

	Residential mortgage	1.00	%	0.72	%	1.31	%	14.78	%	(1)	1.65	%	(4)

	Commercial mortgage	1.27	%	-0.57	%	1.23	%	0.79	%		12.06	%	(5)

	Commercial and Industrial	2.90	%	1.21	%	0.81	%	0.72	%		11.16	%	(6)

	Construction	0.65	%	0.81	%	-0.11	%	3.43	%	(2)	44.66	%	(7)

	Consumer and finance leases	3.23	%	2.91	%	2.71	%	2.83	%		2.59	%

	Total loans	2.11	%	1.10	%	1.41	%	5.25	%	(3)	8.10	%	(8)

(1) Includes net charge-offs totaling $97.9 million associated with the bulk sale of non-performing residential assets. The ratio of residential mortgage net charge-offs to average loans, excluding charge-offs associated with the bulk sale of non-performing residential assets, was 0.84%.
(2) Includes net charge-offs totaling $31 thousand associated with the bulk sale of non-performing residential assets. The ratio of construction net charge-offs to average loans, excluding charge-offs associated with the bulk sale of non-performing residential assets, was 3.39%.
(3) Includes net charge-offs totaling $98.0 million associated with the bulk sale of non-performing residential assets. The ratio of total net charge-offs to average loans, excluding charge-offs associated with the bulk sale of non-performing residential assets, was 1.29%.
(4) Includes net charge-offs totaling $1.0 million associated with the bulk sale of adversely classified commercial assets. The ratio of residential mortgage net charge-offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets, was 1.50%.
(5) Includes net charge-offs of $54.6 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale in the first quarter of 2013. The ratio of commercial mortgage net charge-offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale, was 0.34%.
(6) Includes net charge-offs totaling $44.7 million associated with the bulk sale of adversely classified commercial assets. The ratio of commercial and industrial net charge-offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets, was 5.47%.
(7) Includes net charge-offs of $34.2 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale in the first quarter of 2013. The ratio of construction loan net charge-offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale, was 7.74%.
(8) Includes net charge-offs of $134.5 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale in the first quarter of 2013. The ratio of total net charge-offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale, was 2.87%.

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

Total assets were approximately $12.8 billion as of March 31, 2014, up $162.5 million from December 31, 2013.

Total loan originations, including refinancings and draws from existing revolving and non-revolving commitments, amounted to approximately $770.6 million, compared to $885.8 million in the fourth quarter of 2013. These figures exclude the credit card utilization activity. The decrease was mainly related to lower disbursements on facilities granted to government entities in both Puerto Rico and the Virgin Islands, a decrease of $112.6 million. In addition, the economic environment in Puerto Rico has affected the residential mortgage originations volume that decreased by $10.8 million to $151.1 million compared to originations for the fourth quarter of 2013.

Total liabilities were approximately $11.6 billion as of March 31, 2014, up $122.5 million from December 31, 2013.

Total stockholders’ equity amounted to $1.3 billion as of March 31, 2014, an increase of $40.0 million from December 31, 2013, mainly driven by:

The Corporation’s total capital, Tier 1 capital, and leverage ratios as of March 31, 2014 were 17.50%, 16.23%, and 11.74%, respectively, compared to total capital, Tier 1 capital and leverage ratios of 17.06%, 15.78%, and 11.71%, respectively, as of the end of the fourth quarter of 2013. Meanwhile, the total capital, Tier 1 capital, and leverage ratios as of March 31, 2014 of our banking subsidiary, FirstBank Puerto Rico, were 17.12%, 15.85%, and 11.47%, respectively, compared to total capital, Tier 1 capital, and leverage ratios of 16.67%, 15.40%, and 11.44%, respectively, as of the end of the prior quarter. All of the regulatory capital ratios for the Bank are well above the minimum required under the consent order entered into with the FDIC and the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico. Given such consent order, however, the Bank cannot be considered to be a well-capitalized institution.

Based on our current interpretation of the international regulatory capital requirements adopted by the Basel Committee on Banking Supervision (known as “Basel 3”), we anticipate that, when these are effective, we will exceed the fully phased-in minimum capital ratios these rules establish.

The Corporation’s tangible common equity ratio increased to 8.97% as of March 31, 2014 from 8.71% as of December 31, 2013, and the Tier 1 common equity to risk-weighted assets ratio increased to 13.19% as of March 31, 2014 from 12.72% as of December 31, 2013.

The following table is a reconciliation of the Corporation’s tangible common equity and tangible assets over the last five quarters to the comparable GAAP items:


(In thousands, except ratios and per share information)
		March 31,			December 31,			September 30,			June 30,			March 31,
		2014			2013			2013			2013			2013
Tangible Equity:
	Total equity - GAAP	$	1,255,898		$	1,215,858		$	1,220,593		$	1,222,328		$	1,403,999
	Preferred equity		(56,810	)		(63,047	)		(63,047	)		(63,047	)		(63,047	)
	Goodwill		(28,098	)		(28,098	)		(28,098	)		(28,098	)		(28,098	)
	Purchased credit card relationship		(18,942	)		(19,787	)		(20,718	)		(21,649	)		(22,580	)
	Core deposit intangible		(6,591	)		(6,981	)		(7,570	)		(8,158	)		(8,746	)

	Tangible common equity	$	1,145,457		$	1,097,945		$	1,101,160		$	1,101,376		$	1,281,528

Tangible Assets:
	Total assets - GAAP	$	12,819,428		$	12,656,925		$	12,787,450		$	12,803,169		$	13,005,876
	Goodwill		(28,098	)		(28,098	)		(28,098	)		(28,098	)		(28,098	)
	Purchased credit card relationship		(18,942	)		(19,787	)		(20,718	)		(21,649	)		(22,580	)
	Core deposit intangible		(6,591	)		(6,981	)		(7,570	)		(8,158	)		(8,746	)

	Tangible assets	$	12,765,797		$	12,602,059		$	12,731,064		$	12,745,264		$	12,946,452

	Common shares outstanding		208,968			207,069			207,043			206,982			206,228

	Tangible common equity ratio		8.97	%		8.71	%		8.65	%		8.64	%		9.90	%
	Tangible book value per common share	$	5.48		$	5.30		$	5.32		$	5.32		$	6.21

The following table reconciles stockholders’ equity (GAAP) to Tier 1 common equity based on current applicable bank regulatory requirements (known as “Basel 1”):


(Dollars in thousands)		As of
		March 31,			December 31,			September 30,			June 30,			March 31,
		2014			2013			2013			2013			2013

Tier 1 Common Equity:
	Total equity - GAAP	$	1,255,898		$	1,215,858		$	1,220,593		$	1,222,328		$	1,403,999
	Qualifying preferred stock		(56,810	)		(63,047	)		(63,047	)		(63,047	)		(63,047	)
	Unrealized loss (gain) on available-for-sale securities (1)		56,180			78,734			58,485			40,142			(19,868	)
	Disallowed deferred tax asset (2)		(25	)		-			(43	)		-			-
	Goodwill		(28,098	)		(28,098	)		(28,098	)		(28,098	)		(28,098	)
	Core deposit intangible		(6,591	)		(6,981	)		(7,570	)		(8,158	)		(8,746	)
	Other disallowed assets		(23	)		(23	)		(410	)		(569	)		(2,515	)
	Tier 1 common equity	$	1,220,531		$	1,196,443		$	1,179,910		$	1,162,598		$	1,281,725

	Total risk-weighted assets	$	9,255,697		$	9,405,798		$	9,402,910		$	9,467,699		$	9,721,502

	Tier 1 common equity to risk-weighted assets ratio		13.19	%		12.72	%		12.55	%		12.28	%		13.18	%

1- Tier 1 capital excludes net unrealized gains (losses) on available-for-sale debt securities and net unrealized gains on available-for-sale equity securities with readily determinable fair values, in accordance with regulatory risk-based capital guidelines. In arriving at Tier 1 capital, institutions are required to deduct net unrealized losses on available-for-sale equity securities with readily determinable fair values, net of tax.

2- Approximately $9 million of the Corporation's deferred tax assets as of March 31, 2014 (December 31, 2013 - $7 million; September 30, 2013 - $7.7 million; June 30, 2013 - $10 million; March 31, 2013 - $10 million) was included without limitation in regulatory capital pursuant to the risk-based capital guidelines, while approximately $25 thousand of such assets as of March 31, 2014 (December 31, 2013 - $0; September 30, 2013 - $43 thousand; June 30, 2013 - $0; March 31, 2013 - $0) exceeded the limitation imposed by these guidelines and, as "disallowed deferred tax assets," was deducted in arriving at Tier 1 capital. According to regulatory capital guidelines, the deferred tax assets that are dependent upon future taxable income are limited for inclusion in Tier 1 capital to the lesser of: (i) the amount of such deferred tax asset that the entity expects to realize within one year of the calendar quarter-end date, based on its projected future taxable income for that year, or (ii) 10% of the amount of the entity's Tier 1 capital. Approximately $0.8 million of the Corporation's other net deferred tax liability as of March 31, 2014 (December 31, 2013 - $0.3 million deferred tax asset; September 30, 2013 - $0.3 million deferred tax liability; June 30, 2013 - $3 million deferred tax liability; March 31, 2013 - $6 million deferred tax liability) represented primarily the deferred tax effects of unrealized gains and losses on available-for-sale debt securities, which are permitted to be excluded prior to deriving the amount of net deferred tax assets subject to limitation under the guidelines.

As of March 31, 2014, the Corporation had $454.2 million of credit facilities granted to the Puerto Rico Government, its municipalities and public corporations, of which $403.9 million was outstanding, compared to $397.8 million outstanding as of December 31, 2013. Approximately $200.3 million of the granted credit facilities outstanding consisted of loans to municipalities in Puerto Rico for which, in most cases, the good faith, credit and unlimited taxing power of the applicable municipality has been pledged to their repayment. Approximately $84.5 million consisted of loans to public corporations that obtain revenues from rates charged for services or products, such as electric power, and approximately $119.2 million consists of loans to the central government or units of the central government. In addition, the Corporation had $201.7 million outstanding in financings to the hotel industry in Puerto Rico guaranteed by the Puerto Rico Tourism Development Fund.

The Corporation had outstanding $76.2 million in obligations of the Puerto Rico government as part of its available-for-sale investment securities portfolio carried on its books at a fair value of $61.4 million as of March 31, 2014. During the first quarter of 2014, the fair value of the Puerto Rico government obligations held by the Corporation increased by $4.8 million.

As of March 31, 2014, the Corporation had $550.3 million of public sector deposits in Puerto Rico, compared to $546.5 million as of December 31, 2013. Approximately 21% came from municipalities in Puerto Rico and 79% came from public corporations and the central government. In April 2014, the government withdrew approximately $106.6 million.

First BanCorp’s senior management will host an earnings conference call and live webcast on Friday, April 25, 2014, at 10:00 a.m. (Eastern Time). The call may be accessed via a live Internet webcast through the investor relations section of the Corporation’s web site: www.firstbankpr.com or through a dial-in telephone number at (888) 317-6016 or (412) 317–6016 for international callers. The Corporation recommends that listeners go to the web site at least 15 minutes prior to the call to download and install any necessary software. Following the webcast presentation, a question and answer session will be made available to research analysts and institutional investors. A replay of the webcast will be archived in the investor relations section of First BanCorp’s web site, www.firstbankpr.com, until April 25, 2015. A telephone replay will be available one hour after the end of the conference call through 9:00 a.m. Eastern time May 27, 2014 at (877) 344-7529 or (412) 317-0088 for international callers. The conference number is 10044468.

This press release may contain “forward-looking statements” concerning the Corporation’s future economic performance. The words or phrases “expect,” “anticipate,” “look forward,” “should,” “believes” and similar expressions are meant to identify “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by such sections. The Corporation wishes to caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and to advise readers that various factors, including, but not limited to, the following could cause actual results to differ materially from those expressed in, or implied by such forward-looking statements: uncertainty about whether the Corporation and FirstBank will be able to fully comply with the written agreement dated June 3, 2010 that the Corporation entered into with the Federal Reserve Bank of New York (the “New York Fed”) and the consent order dated June 2, 2010 that FirstBank entered into with the FDIC and the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico (the “FDIC Order”) that, among other things, require FirstBank to maintain certain capital levels and reduce its special mention, classified, delinquent, and non-performing assets; the risk of being subject to possible additional regulatory actions; uncertainty as to the availability of certain funding sources, such as brokered CDs; the Corporation’s reliance on brokered CDs and its ability to obtain, on a periodic basis, approval from the FDIC to issue brokered CDs to fund operations and provide liquidity in accordance with the terms of the FDIC Order; the risk of not being able to fulfill the Corporation’s cash obligations or resume paying dividends to the Corporation’s stockholders in the future due to the Corporation’s inability to receive approval from the New York Fed or the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) to receive dividends from FirstBank or FirstBank’s failure to generate sufficient cash flow to make a dividend payment to the Corporation; the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and their impact on the credit quality of the Corporation’s loans and other assets, which has contributed and may continue to contribute to, among other things, high levels of non-performing assets, charge-offs, and provisions and may subject the Corporation to further risk from loan defaults and foreclosures; the ability of FirstBank to realize the benefit of its deferred tax asset; adverse changes in general economic conditions in Puerto Rico, the U.S., and the U.S. Virgin Islands and British Virgin Islands, including the interest rate environment, market liquidity, housing absorption rates, real estate prices, and disruptions in the U.S. capital markets, which may reduce interest margins, impact funding sources, and affect demand for all of the Corporation’s products and services and reduce the Corporation’s revenues, earnings, and the value of the Corporation’s assets; an adverse change in the Corporation’s ability to attract new clients and retain existing ones; a decrease in demand for the Corporation’s products and services and lower revenues and earnings because of the continued recession in Puerto Rico, the current fiscal problems and budget deficit of the Puerto Rico government and recent credit downgrades of the Puerto Rico government; a credit default by the Puerto Rico government or any of its public corporations or other instrumentalities, and recent and any future additional downgrades of the long-term debt ratings of the Puerto Rico government, which could exacerbate Puerto Rico’s adverse economic conditions; the risk that any portion of the unrealized losses in the Corporation’s investment portfolio is determined to be other-than-temporary, including unrealized losses on Puerto Rico government obligations; uncertainty about regulatory and legislative changes for financial services companies in Puerto Rico, the U.S., and the U.S. Virgin Islands and British Virgin Islands, which could affect the Corporation’s financial condition or performance and could cause the Corporation’s actual results for future periods to differ materially from prior results and anticipated or projected results; changes in the fiscal and monetary policies and regulations of the U.S. federal government, including those determined by the Federal Reserve Board, the New York Fed, the FDIC, government-sponsored housing agencies, and regulators in Puerto Rico and the U.S. and British Virgin Islands; 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 further 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 additional impairments on financial instruments, goodwill, or other intangible assets relating to acquisitions; the risks that downgrades in the credit ratings of the Corporation’s long-term senior debt will adversely affect the Corporation’s ability to access necessary external funds; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on the Corporation’s businesses, business practices, and cost of operations; the risk of losses in the value of investments in unconsolidated entities that the Corporation does not control; 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.

This press release contains non-GAAP financial measures. Non-GAAP financial measures are set forth when management believes they will be helpful to an understanding of the Corporation’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the text or in the attached tables to this earnings release.

The tangible common equity ratio and tangible book value per common share are non-GAAP 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. Tangible assets are total assets less goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible. Management and many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase method of accounting for mergers and acquisitions. 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.

The Tier 1 common equity to risk-weighted assets ratio is calculated by dividing (a) Tier 1 capital less non-common elements including qualifying perpetual preferred stock and qualifying trust preferred securities by (b) risk-weighted assets, which assets are calculated in accordance with current applicable bank regulatory requirements (Basel 1). The Tier 1 common equity ratio is not required by GAAP or on a recurring basis by applicable bank regulatory requirements. Management is currently monitoring this ratio, along with the other ratios discussed above, in evaluating the Corporation’s capital levels and believes that, at this time, the ratio may be of interest to investors.

Adjusted pre-tax, pre-provision income is a non-GAAP performance metric that management believes is useful in analyzing underlying performance trends, particularly in times of economic stress. Adjusted pre-tax, pre-provision income, as defined by management, represents net (loss) income excluding income tax expense (benefit), the provision for loan and lease losses, gains on sale and other than temporary impairment (OTTI) of investment securities, fair value adjustments on derivatives, and liabilities measured at fair value, equity in earnings or loss of unconsolidated entity as well as certain items identified as unusual, non-recurring or non-operating.

In addition, from time to time, adjusted pre-tax, pre-provision income will reflect the omission of revenue or expense items that management judges to be outside of ordinary banking activities and/or of items that, while they may be associated with ordinary banking activities, are so unusually large that management believes that a complete analysis of the Corporation’s performance requires consideration also of adjusted pre-tax, pre-provision income that excludes such amounts.

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. The presentation of net interest income excluding valuations provides additional information about the Corporation’s net interest income and facilitates comparability and analysis. The changes in the fair value of derivative instruments have no effect on interest due or interest earned on interest-bearing liabilities or interest-earning assets, respectively. The tax-equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a marginal income tax rate. Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at statutory rates. Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread, and net interest margin on a fully tax-equivalent basis. This adjustment puts all earning assets, most notably tax-exempt securities and certain loans, on a common basis that facilitates comparison of results to results of peers.

Financial measures adjusted to exclude the effect of attorneys’ fees related to the Lehman litigation, expenses related to branch consolidations and other restructuring expenses and related valuation adjustments, equity in earnings (loss) of unconsolidated entity, and certain other adjustments.

To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation provides additional measures of adjusted non-interest expenses and adjusted non-interest income. Adjusted non-interest expenses exclude attorneys’ fees related to the Lehman litigation recorded in the fourth quarter of 2013, expenses in the first quarter of 2014 and fourth quarter of 2013 related to branch consolidations in Florida, the Virgin Islands, and Puerto Rico, and expenses associated with the restructuring of some business units, and the impact of the national gross receipts tax related to the trade or business outside of Puerto Rico that was reversed in the fourth quarter of 2013 after enactment of Act No. 117 that introduced amendments to Act 40, which was enacted on June 30, 2013. Adjusted non-interest income excludes equity in earnings (loss) of unconsolidated entity and a valuation adjustment to fixed assets that are no longer used for operations after branch consolidations in Florida. Management believes that these non-GAAP measures enhance the ability of analysts and investors to analyze trends in the Corporation’s business and to better 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. The following table shows reconciliations of these non-GAAP financial measures to the corresponding measures calculated and presented in accordance with GAAP.

(Dollars in thousands)

2013 Fourth Quarter

As Reported
(GAAP)

Branches
consolidation and
optimization
expenses/valuation
adjustments

Attorney Fees
Lehman
litigation

National gross
receipts tax
reversal

Equity in loss of
unconsolidated
entity

Adjusted
(Non-GAAP)

Non-interest income

12,485

528

5,893

18,906

Non-interest expenses

106,541

893

2,500

(473

)

103,621


FIRST BANCORP
Condensed Consolidated Statements of Financial Condition

	As of
	March 31,			December 31,
(In thousands, except for share information)	2014			2013
ASSETS

Cash and due from banks	$	824,547		$	454,302

Money market investments:
Time deposits with other financial institutions		300			300
Other short-term investments		16,650			201,069
Total money market investments		16,950			201,369

Investment securities available for sale, at fair value		2,031,944			1,978,282


Other equity securities		28,691			28,691

Total investment securities		2,060,635			2,006,973

Investment in unconsolidated entity		669			7,279


Loans, net of allowance for loan and lease losses of $266,778 (December 31, 2013 - $285,858)		9,300,007			9,350,312
Loans held for sale, at lower of cost or market		78,912			75,969
Total loans, net		9,378,919			9,426,281

Premises and equipment, net		169,189			166,946
Other real estate owned		138,622			160,193
Accrued interest receivable on loans and investments		49,020			54,012
Other assets		180,877			179,570
Total assets	$	12,819,428		$	12,656,925

LIABILITIES

Deposits:
Non-interest-bearing deposits	$	905,650		$	851,212
Interest-bearing deposits		9,097,035			9,028,712
Total deposits		10,002,685			9,879,924

Securities sold under agreements to repurchase		900,000			900,000
Advances from the Federal Home Loan Bank (FHLB)		300,000			300,000
Other borrowings		231,959			231,959
Accounts payable and other liabilities		128,886			129,184
Total liabilities		11,563,530			11,441,067

STOCKHOLDERS' EQUITY

Preferred Stock, authorized 50,000,000 shares: issued 22,004,000 shares; outstanding 2,272,395 (December 31, 2013 - 2,521,872 shares outstanding); aggregate liquidation value $56,810 (December 31, 2013 - $63,047)

		56,810			63,047

Common stock, $0.10 par value, authorized 2,000,000,000 shares; issued, 209,578,959 (December 31, 2013 - 207,635,157 shares issued)
		20,958			20,764
Less: Treasury stock (at par value)		(61	)		(57	)

Common stock outstanding, 208,967,883 shares outstanding
(December 31, 2013 - 207,068,978 shares outstanding)		20,897			20,707
Additional paid-in capital		894,247			888,161
Retained earnings		340,141			322,679
Accumulated other comprehensive loss		(56,197	)		(78,736	)
Total stockholders' equity		1,255,898			1,215,858
Total liabilities and stockholders' equity	$	12,819,428		$	12,656,925


FIRST BANCORP
Condensed Consolidated Statements of Income (Loss)

	Quarter Ended
	March 31,			December 31,			March 31,
(In thousands, except per share information)	2014			2013			2013

Net interest income:
Interest income	$	160,571		$	162,690		$	160,225
Interest expense		29,251			30,031			35,732
Net interest income		131,320			132,659			124,493
Provision for loan and lease losses		31,915			22,969			111,123
Net interest income after provision for loan and lease losses		99,405			109,690			13,370

Non-interest income:
Service charges on deposit accounts		3,203			3,162			3,380
Mortgage banking activities		3,368			3,906			4,580
Net loss on investments and impairments		-			-			(117	)
Equity in loss of unconsolidated entity		(6,610	)		(5,893	)		(5,538	)
Other non-interest income		11,389			11,310			11,324
Total non-interest income		11,350			12,485			13,629

Non-interest expenses:
Employees' compensation and benefits		32,942			31,476			33,554
Occupancy and equipment		14,346			15,708			15,070
Business promotion		3,973			5,251			3,357
Professional fees		10,040			11,245			11,133
Taxes, other than income taxes		4,547			4,076			2,989
Insurance and supervisory fees		10,990			11,452			12,806
Net loss on other real estate owned operations		5,837			13,321			7,310
Other non-interest expenses		10,110			14,012			11,791
Total non-interest expenses		92,785			106,541			98,010

Income (loss) before income taxes		17,970			15,634			(71,011	)
Income tax expense		(887	)		(845	)		(1,622	)

Net income (loss)	$	17,083		$	14,789		$	(72,633	)

Net income (loss) attributable to common stockholders	$	17,462		$	14,789		$	(72,633	)

Earnings (loss) per common share:

Basic	$	0.08		$	0.07		$	(0.35	)
Diluted	$	0.08		$	0.07		$	(0.35	)

First BanCorp. is the parent corporation of FirstBank Puerto Rico, a state-chartered commercial bank with operations in Puerto Rico, the Virgin Islands and Florida, and of FirstBank Insurance Agency. First BanCorp. and FirstBank Puerto Rico operate within U.S. banking laws and regulations. The Corporation operates a total of 144 branches, stand-alone offices, and in-branch service centers throughout Puerto Rico, the U.S. and British Virgin Islands, and Florida. Among the subsidiaries of FirstBank Puerto Rico are First Federal Finance Corp., a small loan company; FirstBank Puerto Rico Securities, a broker-dealer subsidiary; First Management of Puerto Rico; and FirstMortgage, Inc., a mortgage origination company. In the U.S. Virgin Islands, FirstBank operates First Express, a small loan company. First BanCorp’s shares of common stock trade on the New York Stock Exchange under the symbol FBP. Additional information about First BanCorp. may be found at www.firstbankpr.com.


(In thousands, except for per share and financial ratios)		Quarter Ended
		March 31,			December 31,			March 31,
		2014			2013			2013
Condensed Income Statements:
	Total interest income	$	160,571		$	162,690		$	160,225
	Total interest expense		29,251			30,031			35,732
	Net interest income		131,320			132,659			124,493
	Provision for loan and lease losses		31,915			22,969			111,123
	Non-interest income		11,350			12,485			13,629
	Non-interest expenses		92,785			106,541			98,010
	Income (loss) before income taxes		17,970			15,634			(71,011	)
	Income tax expense		(887	)		(845	)		(1,622	)
	Net income (loss)		17,083			14,789			(72,633	)
	Net income (loss) attributable to common stockholders		17,462			14,789			(72,633	)


Per Common Share Results:
	Net earnings (loss) per share basic	$	0.08		$	0.07		$	(0.35	)
	Net earnings (loss) per share diluted	$	0.08		$	0.07		$	(0.35	)
	Cash dividends declared	$	-		$	-		$	-
	Average shares outstanding		205,732			205,634			205,465
	Average shares outstanding diluted		206,876			207,235			205,465
	Book value per common share	$	5.74		$	5.57		$	6.50
	Tangible book value per common share (1)	$	5.48		$	5.30		$	6.21

Selected Financial Ratios (In Percent):

Profitability:
	Return on Average Assets		0.54			0.46			(2.25	)
	Interest Rate Spread (2)		4.25			4.22			3.77
	Net Interest Margin (2)		4.43			4.40			4.00
	Return on Average Total Equity		5.55			4.75			(19.82	)
	Return on Average Common Equity		5.85			5.01			(20.70	)
	Average Total Equity to Average Total Assets		9.77			9.76			11.37
	Total capital		17.50			17.06			17.44
	Tier 1 capital		16.23			15.78			16.15
	Leverage		11.74			11.71			12.06
	Tangible common equity ratio (1)		8.97			8.71			9.90
	Tier 1 common equity to risk-weight assets (1)		13.19			12.72			13.18
	Dividend payout ratio		-			-			-
	Efficiency ratio (3)		65.03			73.40			70.96

Asset Quality:
	Allowance for loan and lease losses to loans held for investment		2.79			2.97			3.58
	Net charge-offs (annualized) to average loans (4)		2.11			1.10			8.10
	Provision for loan and lease losses to net charge-offs		62.59			86.71			54.47
	Non-performing assets to total assets		5.70			5.73			8.35
	Non-performing loans held for investment to total loans held for investment		5.45			5.14			7.14
	Allowance to total non-performing loans held for investment		51.13			57.69			50.17
	Allowance to total non-performing loans held for investment excluding residential real estate loans
			76.45			85.56			92.27

Other Information:
	Common Stock Price: End of period	$	5.44		$	6.19		$	6.23


1- Non-GAAP measure. See pages 14-15 for GAAP to Non-GAAP reconciliations.
2- On a tax-equivalent basis and excluding fair value valuations (Non-GAAP measure). See page 4 for GAAP to Non-GAAP reconciliations and refer to discussions in Table 2 below.
3- Non-interest expenses to the sum of net interest income and non-interest income. The denominator includes non-recurring income and changes in the fair value of derivative instruments.
4- The net charge-offs to average loans ratio, excluding the impact associated with a bulk loan sale and the transfer of loans to held for sale, was 2.87% for the quarter ended March 31, 2013.
5- The provision for loan and lease losses to net charge-offs ratio, excluding the impact associated with the bulk loan sale and the transfer of loans to held for sale, was 67.61% for the quarter ended March 31, 2013.

Table 2 – Quarterly Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax-Equivalent Basis and Excluding Valuations)


(Dollars in thousands)
	Average volume						Interest income (1) / expense						Average rate (1)
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
Quarter ended	2014		2013		2013		2014		2013		2013		2014		2013		2013

Interest-earning assets:
Money market & other short-term investments	$	744,326	$	609,398	$	779,412	$	500	$	433	$	539	0.27	%	0.28	%	0.28	%
Government obligations (2)		342,851		342,769		325,835		2,058		2,045		1,851	2.43	%	2.37	%	2.30	%
Mortgage-backed securities		1,700,350		1,737,331		1,536,027		16,092		16,908		9,515	3.84	%	3.86	%	2.51	%
FHLB stock		28,406		28,466		33,117		341		311		415	4.87	%	4.33	%	5.08	%
Equity securities		320		1,277		1,364		-		-		-	0.00	%	0.00	%	0.00	%
Total investments (3)		2,816,253		2,719,241		2,675,755		18,991		19,697		12,320	2.73	%	2.87	%	1.87	%
Residential mortgage loans		2,549,924		2,536,086		2,814,973		34,958		35,345		38,004	5.56	%	5.53	%	5.48	%
Construction loans		216,539		214,528		344,983		2,015		1,690		2,617	3.77	%	3.13	%	3.08	%
C&I and commercial mortgage loans		4,825,369		4,854,366		4,899,586		51,312		51,443		47,849	4.31	%	4.20	%	3.96	%
Finance leases		246,229		243,659		237,245		5,190		5,195		5,086	8.55	%	8.46	%	8.69	%
Consumer loans		1,824,674		1,816,374		1,781,120		53,015		54,087		55,544	11.78	%	11.81	%	12.65	%
Total loans (4) (5)		9,662,735		9,665,013		10,077,907		146,490		147,760		149,100	6.15	%	6.07	%	6.00	%
Total interest-earning assets	$	12,478,988	$	12,384,254	$	12,753,662	$	165,481	$	167,457	$	161,420	5.38	%	5.36	%	5.13	%

Interest-bearing liabilities:
Brokered CDs	$	3,185,520	$	3,110,888	$	3,437,601	$	7,607	$	7,686	$	11,798	0.97	%	0.98	%	1.39	%
Other interest-bearing deposits		5,925,314		5,907,094		5,672,033		12,692		13,186		13,746	0.87	%	0.89	%	0.98	%
Other borrowed funds		1,131,959		1,131,959		1,131,959		8,128		8,308		8,163	2.91	%	2.91	%	2.92	%
FHLB advances		300,000		300,730		410,551		824		851		2,025	1.11	%	1.12	%	2.00	%
Total interest-bearing liabilities (6)	$	10,542,793	$	10,450,671	$	10,652,144	$	29,251	$	30,031	$	35,732	1.13	%	1.14	%	1.36	%
Net interest income							$	136,230	$	137,426	$	125,688
Interest rate spread													4.25	%	4.22	%	3.77	%
Net interest margin													4.43	%	4.40	%	4.00	%

1- On a tax-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 of 39% and adding to it the cost of interest-bearing liabilities. When adjusted to a tax-equivalent basis, yields on taxable and exempt assets are comparable. Changes in the fair value of derivative instruments and unrealized gains or losses on liabilities measured at fair value are excluded from interest income and interest expense because the changes in valuation do not affect interest paid or received.
2- Government obligations include debt issued by government-sponsored agencies.
3- Unrealized gains and losses on available-for-sale securities are excluded from the average volumes.
4- Average loan balances include the average of total non-performing loans.
5- Interest income on loans includes $3.0 million, $3.0 million and $3.6 million for the quarters ended March 31, 2014, December 31, 2013, and March 31, 2013, respectively, of income from prepayment penalties and late fees related to the Corporation's loan portfolio.
6- Unrealized gains and losses on liabilities measured at fair value are excluded from the average volumes.


Table 3 - Non-Interest Income
		Quarter Ended
		March 31,			December 31,			March 31,
(In thousands)		2014			2013			2013

	Service charges on deposit accounts	$	3,203		$	3,162		$	3,380
	Mortgage banking activities		3,368			3,906			4,580
	Insurance income		2,571			1,124			2,020
	Broker-dealer income		459			97			-
	Branch consolidations - valuation adjustments fixed assets		-			(529	)		-
	Other operating income		8,359			10,618			9,304

	Non-interest income before net loss on investments,
	and equity in loss of unconsolidated entity		17,960			18,378			19,284

	OTTI on debt securities		-			-			(117	)
	Net loss on investments		-			-			(117	)


	Equity in loss of unconsolidated entity		(6,610	)		(5,893	)		(5,538	)
		$	11,350		$	12,485		$	13,629

Table 4 - Non-Interest Expenses
		Quarter Ended
		March 31,			December 31,			March 31,
(In thousands)		2014			2013			2013

	Employees' compensation and benefits	$	32,942		$	31,062		$	33,554
	Occupancy and equipment		13,628			15,229			15,070
	Deposit insurance premium		9,822			10,495			11,517
	Other insurance and supervisory fees		1,168			957			1,289
	Taxes, other than income taxes		4,547			4,076			2,989
	Professional fees:
	Collections, appraisals and other credit related fees		1,345			2,198			1,924
	Outsourcing technology services		4,214			4,202			1,346
	Other professional fees		4,481			4,845			2,903
	Credit and debit card processing expenses		3,824			4,869			3,077
	Credit card processing platform conversion costs		-			-			-
	Branch consolidations and other restructuring expenses		718			892			-
	Business promotion		3,973			5,251			3,220
	Communications		1,879			1,836			1,814
	Net loss on REO operations		5,837			13,321			7,310
	Terminated preferred stock exchange offer expenses		-			-			1,218
	Bulk sales expenses		-			-			3,878
	Loss contingency for attorneys' fees - Lehman litigation		-			2,500			-
	Other		4,407			4,808			6,901
	Total	$	92,785		$	106,541		$	98,010


(In thousands)		As of March 31, 2014
		Puerto Rico		Virgin Islands		United States		Consolidated

Residential mortgage loans		$	1,905,568	$	343,088	$	299,445	$	2,548,101

Commercial loans:
	Construction loans		100,520		31,448		20,611		152,579
	Commercial mortgage loans		1,434,719		73,752		337,545		1,846,016
	Commercial and Industrial loans		2,362,825		144,455		204,682		2,711,962
	Loans to a local financial institution collateralized by real estate mortgages		235,875		-		-		235,875
Commercial loans			4,133,939		249,655		562,838		4,946,432

Finance leases			246,814		-		-		246,814

Consumer loans			1,743,059		49,047		33,332		1,825,438
Loans held for investment			8,029,380		641,790		895,615		9,566,785

Loans held for sale			31,983		45,287		1,642		78,912
	Total loans	$	8,061,363	$	687,077	$	897,257	$	9,645,697



(In thousands)		As of December 31, 2013
		Puerto Rico		Virgin Islands		United States		Consolidated

Residential mortgage loans		$	1,906,982	$	348,816	$	293,210	$	2,549,008

Commercial loans:
	Construction loans		105,830		33,744		29,139		168,713
	Commercial mortgage loans		1,464,085		74,271		285,252		1,823,608
	Commercial and Industrial loans		2,436,709		125,757		225,784		2,788,250
	Loans to a local financial institution collateralized by real estate mortgages		240,072		-		-		240,072
Commercial loans			4,246,696		233,772		540,175		5,020,643

Finance leases			245,323		-		-		245,323

Consumer loans			1,739,478		49,689		32,029		1,821,196
Loans held for investment			8,138,479		632,277		865,414		9,636,170

Loans held for sale			35,394		40,575		-		75,969
	Total loans	$	8,173,873	$	672,852	$	865,414	$	9,712,139


(Dollars in thousands)		March 31,			December 31,
		2014			2013
Non-performing loans held for investment:
	Residential mortgage	$	172,796		$	161,441
	Commercial mortgage		145,535			120,107
	Commercial and Industrial		113,996			114,833
	Construction		50,387			58,866
	Consumer and Finance leases		39,061			40,302
	Total non-performing loans held for investment		521,775			495,549

REO			138,622			160,193
Other repossessed property			15,587			14,865
Other assets (1)			-			-
	Total non-performing assets, excluding loans held for sale	$	675,984		$	670,607

Non-performing loans held for sale			54,755			54,801
	Total non-performing assets, including loans held for sale (2)	$	730,739		$	725,408

Past-due loans 90 days and still accruing		$	118,049		$	120,082
Allowance for loan and lease losses		$	266,778		$	285,858
Allowance to total non-performing loans held for investment			51.13	%		57.69	%
Allowance to total non-performing loans held for investment, excluding residential real estate loans			76.45	%		85.56	%

(1) Collateral pledged to Lehman Brothers, Inc.
(2) Amount excludes purchased credit impaired loans with a carrying value as of March 31, 2014 of approximately $3.4 million acquired as part of the credit card portfolio acquired from FIA.


(In thousands)		March 31,		December 31,
		2014		2013
Puerto Rico:
Non-performing loans held for investment:
	Residential mortgage	$	150,787	$	139,771
	Commercial mortgage		120,907		101,255
	Commercial and Industrial		109,506		109,224
	Construction		41,781		43,522
	Finance leases		3,706		3,082
	Consumer		32,877		34,660
	Total non-performing loans held for investment		459,564		431,514

REO			116,493		123,851
Other repossessed property			15,543		14,806
	Total non-performing assets, excluding loans held for sale	$	591,600	$	570,171
Non-performing loans held for sale			14,750		14,796
	Total non-performing assets, including loans held for sale (1)	$	606,350	$	584,967
Past-due loans 90 days and still accruing		$	115,826	$	118,097

Virgin Islands:
Non-performing loans held for investment:
	Residential mortgage	$	9,233	$	8,439
	Commercial mortgage		7,780		6,827
	Commercial and Industrial		4,490		5,609
	Construction		8,606		11,214
	Consumer		823		514
	Total non-performing loans held for investment		30,932		32,603

REO			14,525		14,894
Other repossessed property			3		5
	Total non-performing assets, excluding loans held for sale	$	45,460	$	47,502
Non-performing loans held for sale			40,005		40,005
	Total non-performing assets, including loans held for sale	$	85,465	$	87,507
Past-due loans 90 days and still accruing		$	2,223	$	1,985

United States:
Non-performing loans held for investment:
	Residential mortgage	$	12,776	$	13,231
	Commercial mortgage		16,848		12,025
	Commercial and Industrial		-		-
	Construction		-		4,130
	Consumer		1,655		2,046
	Total non-performing loans held for investment		31,279		31,432

REO			7,604		21,448
Other repossessed property			41		54
	Total non-performing assets, excluding loans held for sale	$	38,924	$	52,934
Non-performing loans held for sale			-		-
	Total non-performing assets, including loans held for sale	$	38,924	$	52,934
Past-due loans 90 days and still accruing		$	-	$	-

(1) Amount excludes purchased credit impaired loans with a carrying value as of March 31, 2014 of approximately $3.4 million acquired as part of the credit card portfolio acquired from FIA.


	Quarter Ended
(Dollars in thousands)	March 31,			December 31,			March 31,
	2014			2013			2013

Allowance for loan and lease losses, beginning of period	$	285,858		$	289,379		$	435,414
Provision for loan and lease losses		31,915			22,969			111,123		(1)
Net charge-offs of loans:
Residential mortgage		(6,353	)		(4,544	)		(11,580	)	(2)
Commercial mortgage		(5,775	)		2,605			(56,036	)	(3)
Commercial and Industrial		(21,796	)		(9,146	)		(84,829	)	(4)
Construction		(353	)		(435	)		(38,515	)	(5)
Consumer and finance leases		(16,718	)		(14,970	)		(13,046	)
Net charge-offs		(50,995	)		(26,490	)		(204,006	)	(6)
Allowance for loan and lease losses, end of period	$	266,778		$	285,858		$	342,531

Allowance for loan and lease losses to period end total loans held for investment		2.79%			2.97%			3.58%
Net charge-offs (annualized) to average loans outstanding during the period		2.11%			1.10%			8.10%
Net charge-offs (annualized), excluding charge-offs related to loans sold and loans transferred to held for sale, to average loans outstanding during the period
		2.11%			1.10%			2.87%
Provision for loan and lease losses to net charge-offs during the period	0.63x			0.87x			0.54x
Provision for loan and lease losses to net charge-offs during the period, excluding impact of loans sold and the transfer of loans to held for sale	0.63x			0.87x			0.68x
(1) Includes provision of $64.1 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale.
(2) Includes net charge-offs totaling $1.0 million associated with the bulk sale of adversely classified commercial assets.
(3) Includes net charge-offs of $54.6 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale.
(4) Includes net charge-offs totaling $44.7 million associated with the bulk sale of adversely classified commercial assets.
(5) Includes net charge-offs of $34.2 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale.
(6) Includes net charge-offs of $134.5 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale.


		Quarter Ended		Year ended
		March 31,		December 31,			December 31,		December 31,		December 31,
		2014		2013			2012		2011		2010

	Residential mortgage	1.00	%	4.77	%	(1)	1.32	%	1.32	%	1.80	%	(6)

	Commercial mortgage	1.27	%	3.44	%	(2)	1.41	%	3.21	%	5.02	%	(7)

	Commercial and Industrial	2.90	%	3.52	%	(3)	1.21	%	1.57	%	2.16	%	(8)

	Construction	0.65	%	15.11	%	(4)	10.49	%	16.33	%	23.80	%	(9)

	Consumer and finance leases	3.23	%	2.76	%		1.92	%	2.33	%	2.98	%

	Total loans	2.11	%	4.01	%	(5)	1.74	%	2.68	%	4.76	%	(10)

(1) Includes net charge-offs totaling $99.0 million associated with the bulk loan sales. The ratio of residential mortgage net charge-offs to average loans, excluding charge-offs associated with the bulk loan sales, was 1.13%.
(2) Includes net charge-offs of $54.6 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale in the first quarter of 2013. The ratio of commercial mortgage net charge-offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale, was 0.45%.
(3) Includes net charge-offs totaling $44.7 million associated with the bulk sale of adversely classified commercial assets. The ratio of commercial and industrial net charge-offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets, was 2.04%.
(4) Includes net charge-offs of $34.2 million associated with the bulk loan sales and the transfer of loans to held for sale. The ratio of construction loan net charge-offs to average loans, excluding charge-offs associated with the bulk loan sales and the transfer of loans to held for sale, was 2.91%.
(5) Includes net charge-offs of $232.4 million associated with the bulk loan sales and the transfer of loans to held for sale. The ratio of total net charge-offs to average loans, excluding charge-offs associated with the bulk loan sales and the transfer of loans to held for sale, was 1.68%.
(6) Includes net charge-offs totaling $7.8 million associated with non-performing residential mortgage loans sold in a bulk sale.
(7) Includes net charge-offs totaling $29.5 million associated with the transfer of loans to held for sale in the fourth quarter of 2010. The ratio of commercial mortgage net charge-offs to average loans, excluding charge-offs associated with the transfer of loans to held for sale, was 3.38%.
(8) Includes net charge-offs totaling $8.6 million associated with the transfer of loans to held for sale in the fourth quarter of 2010. The ratio of commercial and industrial net charge-offs to average loans, excluding charge-offs associated with the transfer of loans to held for sale, was 1.98%.
(9) Includes net charge-offs totaling $127.0 million associated with the transfer of loans to held for sale in the fourth quarter of 2010. The ratio of construction net charge-offs to average loans, excluding charge-offs associated with the transfer of loans to held for sale, was 18.93%.
(10) Includes net charge-offs totaling $165.1 million associated with the transfer of loans to held for sale in the fourth quarter of 2010. The ratio of total net charge-offs to average loans, excluding charge-offs associated with the transfer of loans to held for sale, was 3.60%.

CONTACT:
First BanCorp.
John B. Pelling III, 305-577-6000 Ext. 162
Investor Relations Officer
john.pelling@firstbankpr.com