8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 11, 2014

FIRST BANCORP.

(Exact Name of Registrant as Specified in its Charter)

001-14793

(Commission File Number)

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

1519 Ponce de Leon

San Juan, Puerto Rico 00908-0146

(Address of Principal Executive Offices) (Zip Code)

(787) 729 8200

(Registrant’s Telephone Number, including Area Code)

Not applicable

(Former name or former address, if changed since last report)

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

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

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

Information about First BanCorp’s financial condition as of September 30, 2014 is incorporated by reference herein from the investor presentation attached hereto as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure.

The executive officers of First BanCorp intend to use the materials filed herewith, in whole or in part, in one or more meetings with investors and analysts. A copy of the investor presentation is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(a) Exhibits

Exhibit No.	Description
99.1	First BanCorp Investor Presentation dated December 2014

SIGNATURE

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

Date: December 11, 2014	FIRST BANCORP
	By:	/s/ Orlando Berges
	Name:	Orlando Berges
	Title:	Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	First BanCorp Investor Presentation dated December 2014

EX-99.1

First BanCorp

Investor Presentation

December 2014

Exhibit 99.1

Disclaimer

1

This

presentation

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

(“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,

the

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

the

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/or

future

downgrades

of

the

long-term

debt

ratings

of

the

Puerto

Rico

government,

which

could

adversely

affect

economic

conditions

in

Puerto

Rico;

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

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.

A turn-around story underscored by steady improvement and organic market share gains in

the core franchise, operating within a challenging macro environment. 

Strong, tenured leadership team with a commitment to increasing shareholder value, while

fulfilling our vision to be the most highly regarded financial institution in the markets we

serve. 

Improving operating results, together with ongoing efforts to improve efficiencies and further

build-out our core franchise, are our priorities.

Improving our risk profile and maintaining a strong capital position remain central to our

operating philosophy.

Opportunities for additional branch consolidation and market share expansion.

Outlook enhanced by the increasing interest of foreign investment in Puerto Rico and

potential benefits for the underlying economy.

Share price continues to trail capital formation and profitability as TBV ended 3Q14 at

$5.81/share.  Our DTA valuation allowance is $505 million, or $2.37/share assuming 100%

recapture.

2

The Value of First BanCorp

Eastern

Caribbean:      

7% of Assets

Franchise Overview

Founded in 1948

Headquartered in San Juan, Puerto

Rico with operations in PR, Eastern

Caribbean (Virgin Islands) and Florida

–

~2,500 FTE employees

(1)

2nd largest financial holding company

in Puerto Rico with attractive business

mix and substantial loan market share

Florida presence with focus on

serving south Florida region

The largest depository institution  in

the US Virgin Islands with

approximately 40% market share

164 ATM machines and largest ATM

network  in the Eastern Caribbean

Region

(2)

A well diversified operation with over

650,000 retail & commercial

customers

Well diversified with significant competitive strengths

As of  September 30, 2014.

1) FTE = Full Time Equivalent.

2) Eastern Caribbean Region or ECR includes United States and British Virgin Islands.

3) Data as of September 30, 2014. Core deposits excludes brokered CDs.

3

Total Assets -

$12.6B

Total Loans -

$9.4B

Total Deposits -

$9.7B

12 bank branches

1 Loan Production Office

SE Florida:

10% of Assets

30% of core

deposits

(3)

15% of core

deposits

(3)

12 bank branches

2 First Express branches

Franchise Overview

($ in millions)

Well positioned Puerto Rico institution in a consolidating market

Source: PR Market Share Report prepared with data provided by the Commissioner of Financial Institutions of Puerto Rico as of  9/30/14.

1) Puerto Rico only.

2) Calculated as institution bank branches within a mile of an FBP branch as a percentage of total institution branches.

3) Alphabetical order.

4

Puerto Rico Total Assets

(1)

Puerto Rico Total Loans

(1)

Puerto Rico Deposits, Net of Brokered

(1)

Strong and uniquely positioned franchise in

densely populated regions of core operating

footprint

Strong market share in loan portfolios

facilitates customer relationship expansion and

cross-sell to increase deposit share

Long-term opportunity for additional

consolidation

Branch overlap of greater than 40% with six

Puerto Rico institutions

(2)

1-mile branch overlap

(3)

58

44

100%

40

49

43

Portfolio

Balance

Market

Share

Portfolio

Balance

Market

Share

Portfolio

Balance

Market

Share

1

Banco Popular

$25,164

41.4%

1

Banco Popular

$18,743

40.8%

1

Banco Popular

$18,104

45.8%

2

FirstBank

9,692

16.0%

2

FirstBank

7,735

16.8%

2

Banco Santander

4,803

12.2%

3

Oriental Bank

7,165

11.8%

3

Oriental Bank

4,959

10.8%

3

Oriental Bank

4,408

11.2%

4

Scotiabank

5,925

9.8%

4

Banco Santander

4,603

10.0%

4

FirstBank

4,082

10.3%

5

Banco Santander

5,899

9.7%

5

Scotiabank

4,388

9.5%

5

Scotiabank

3,612

9.1%

6

Doral Bank

3,821

6.3%

6

Other

2,806

6.1%

6

Citibank

2,595

6.6%

7

Citibank

2,501

4.1%

7

Doral Bank

1,994

4.3%

7

Doral Bank

1,449

3.7%

8

Banco Cooperativo

522

0.9%

8

Citibank

583

1.3%

8

Banco Cooperativo

432

1.1%

9

BBU

66

0.1%

9

Banco Cooperativo

168

0.4%

9

BBU

35

0.1%

Total

$60,754

100%

Total

$45,982

100%

Total

$39,520

100%

Institutions

Institutions

Institutions

5

Consumer Banking

Mortgage Banking

Commercial Lending

•

Focus on small to middle market

commercial and corporate

borrowers across FBP’s

footprint.   Complimented by full

suite of deposit and business

products.

•

Balanced risk/return profile to

manage concentration

risk/earnings.

•

Growth opportunities centered

in south Florida region and

expanding lending teams.

•

Building stronger transaction

banking services to target

market share opportunities.

•

Emphasis on cross-sell and core

deposit gathering with recent

launch of new products and

services.

•

Average origination

(1)

volume

over past 4 quarters of $469

million.

•

Attractive branch network across

densely populated regions in

Puerto Rico, south Florida and the

V.I.

•

Full suite of leading edge deposit

products. Increased emphasis on

transaction processing.

•

Well-diversified, high-yielding

consumer portfolio: auto finance -

#1 market share among banks;

personal loans;  and credit card

portfolio.

•

Earnings growth focused on

ongoing market share gains and

product penetration via cross-

selling activities —notably tied to

mortgage, credit cards, personal

loans and auto finance.

•

Average

origination

(1)

volume

ove

r past

4

quarters

of

$269

million.

Diversified business model across all regions

Franchise Overview

1) Originations include purchases, refinancings, and draws from existing revolving and non-revolving commitments.

Executing for Earnings Growth

Targeted strategies for growth

6

Puerto Rico Market Share

Puerto Rico

Opportunities for ongoing market share gains

Largest opportunity on deposit products, electronic

banking & transaction services

Growth in selected loan products for balanced

risk/return to manage risk concentration and diversify

income sources

FirstBank-branded credit card portfolio continues to

broaden and deepen relationships, while diversifying

revenue stream

SE Florida

Expansion prospects in Florida given long-term

demographic trends

Continue focus in core deposit growth, commercial

and transaction banking and conforming residential

mortgages

Lending  teams generating growth in loan portfolio

Virgin Islands

Solidify leadership position by further increasing

customer share of wallet

16.8%

16.0%

11.8%

10.3%

21.8%

19.9%

18.9%

17.1%

16.3%

8.4%

18.5%

11.1%

7.3%

4.4%

Total Loans

Total Assets

Branches

Deposits, net of brokered

Small Loans

Commercial Loans

Auto Loans & Leasing

Credit Cards

Residential Mortgage

Personal Loans

POS Terminals

ATM Terminals

Debit Cards

ACH Transactions

2

3Q 2014

4

2

2

2

2

4

2

2

4

2

3

3

6

Improved Profitability; Focus Remains on Credit

Third Quarter 2014

Profitability

•

Net income of $23.2 million, or $0.11 per diluted share, up 9% compared to $21.2 million in 2Q 2014.

•

Year-over-year 3Q net income increased $7.2 million compared to 3Q 2013 net income of $15.9 million.

•

Net interest margin decreased by 7 basis points to 4.14%.

•

Pre-tax, pre-provision income of $50.8 million up from $48.6 million in 2Q 2014.

Asset  Quality

•

Total NPAs decreased by $12.9 million compared to 2Q 2014. No large nonperforming loan sales were

completed during the quarter.

•

OREO inventory balance declined $9.0 million due to sales of $12.2 million completed in 3Q 2014. 

•

Inflows

to

nonperforming

loans

decreased

by

$59.1

million

or

42%

compared

to

2Q

2014. 

•

Provision

for

loan

and

lease

losses

of

$27.0

million

compared

to

$26.7

million

in

2Q

2014

a

$0.3

million

increase.

•

Net charge-offs of $42.7 million, including $16.0 million charge-off related to two collateral dependent

commercial and industrial relationships in Puerto Rico.

Core Deposits

•

Deposits, net of government and brokered, increased by $76.6 million in 3Q 2014.

•

Government deposits increased $28.9 million in 3Q 2014.

•

Brokered certificates of deposit (CDs) decreased by $33.1 million in 3Q 2014.

Capital

•

3Q 2014 Capital position was further strengthened:

Risk Based Capital Ratio 18.6% compared to 18.1% in 2Q 2014;

Tier 1 Ratio 17.3%  compared to 16.8% in 2Q 2014; and

Leverage Ratio 12.3% compared to 12.0% in 2Q 2014.

•

Book value per common share of  $6.05 compared to $5.97 in 2Q 2014 and $5.59 in 3Q 2013.

•

Tangible book value per common share of $5.81 compared to $5.72 in 2Q 2014 and $5.32 in 3Q 2013.

•

Deferred Tax Asset valuation allowance of $505 million.

7

Ongoing Improvement in Risk Profile

8

Net Charge-offs (NCO)

Non-performing Assets (NPA)

NPAs are down over $1 billion, or 56%, since the peak in 1Q 2010.

Commercial NPLs are being carried at 57.9% of unpaid principal balance,

net of specific reserves.  Commercial REOs are carried at approximately

42% of UPB.

Focus remains on controlling migration and the reduction of

nonperforming assets, including the disposition of $185 million of HFS

and OREO.

We continue to move many complex credit cases to a position in which

the asset can be marketed and sold.

(1)

($ in millions)

1) Excludes $165 million of net charge-offs associated with the bulk sale to CPG in 2010.

2)

Excludes

$232

million

of

net-charge

offsassociated

with

the

bulkasset

salesand

transfer

of

loans

in

2013. 

3) September 30, 2014.

4)

Net

Carrying

Amount

=

%

of

carrying

value

net

of

reserves

andaccumulated

charge-offs.

(2)

Commercial NPLs (Includes HFS)

(3)

2010

2011

2012

2013

2014

1,639 

1,551 

1,506 

1,239  1,233 

1,208 

1,184 

1,138 

1,119 

1,066 

1,008 

976 

683 

506 

498 

496 

522 

565 

560 

150 

150 

163 

163 

172 

176 

188 

194 

213 

242 

251 

260 

256 

151 

147 

175 

154 

138 

130 

159 

148 

95 

80 

55 

55 

55 

55 

1,790

1,701

1,669

1,562

1,410

1,390

1,377

1,337

1,332

1,308

1,259

1,238

1,087

752

726

725

731

757

744

9.5%

10.0%

9.3%

10.2%

10.2%

9.6%

8.4%

5.7%

5.7%

5.7%

6.1%

5.9%

$0

$400

$800

$1,200

$1,600

$2,000

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

NPLs Held for Sale

Repossessed Assets & Other

Loans Held for Investment

NPAs / Assets

63

39

37

29

17

54

38

35

56

52

142

118

67

68

71

186

101

41

7

6

$445 

$295 

$180 

$161 

$146 

$0

$100

$200

$300

$400

$500

2010

2011

2012

2013

2014 YTD

Construction

Commercial

Consumer

Residential

Product

Book

Value

Accum.

Charge-offs

Reserves

Net Carrying

Amount

(4)

C&I

$130.9

$64.3

$17.7

58.0%

Const.

77.9

99.5

3.2

42.1%

CRE

176.8

62.7

10.3

69.5%

Total

$385.6

$226.5

$31.2

57.9%

Proactively

managing

asset

quality

Despite softening in our market, we continue

selectively pursuing high quality loans:

Slight increase in residential mortgages.

Reduction in the commercial book includes a

reduction in outstanding loans to government

entities and a C&I loan paid in full in Puerto Rico.

YTD Origination and renewal activity at healthy levels

$2.65 billion compared to the same period 2013 of

$2.74 billion:

Decline in consumer demand reflected in origination

volumes.  Consumer originations of $792 million YTD

2014 compared to  $877 million same period 2013. 

Reduction in auto sales is reflected in loan

originations.

The FL market continues to produce good levels of

commercial originations. The Fl market increased

from 10% to 13% of total commercial loans from 3Q

13 to 3Q 14.

Executing within a more challenging market

environment in Puerto Rico during 2014 and continue

building on Florida growth opportunities.

9

Loan Portfolio

1) Originations include purchases, refinancings, and draws from existing revolving and non-revolving commitments.

Business Model Driven by Strong Origination Capabilities

Loan Originations

(1)

($ in millions)

Rebuilding and replacing to achieve higher quality portfolio

Loans Held for Sale

Commercial

Construction

Consumer & Finance Leases

Residential Mortgage

3Q 14 Consumer Loan Composition

Well Balanced Loan Portfolio Mix

10

3Q 14 Commercial Loan Composition

3Q 14 Residential Loan by Geography

Diversified sources of revenue

Our well-diversified business model within

commercial, consumer and residential across

three unique regions allows us to be agile when

responding to growth opportunities.

Commercial represents 48%, residential

represents 30% and consumer represents 22%

of the total loan portfolio.

24% of Residential portfolio is located outside of

Puerto Rico

1)

Loan

portfolio

mix

percentages

exclude

$80

million

loans

held

for

sale.

Core deposit growth strategy continues producing positive

results; $1.5 billion since 2009.

Florida continues to be a strong funding source.

Focus remains on cross-selling opportunities.

2014 core deposits declined due to an anticipated

reduction in government deposits.

Cost of deposits, net of brokered CDs, decreased to 0.72%.

Continue to improve by reducing reliance on brokered CDs:

$3.1 billion (31% of deposits) today vs. $7.6 billion

(60%) in 2009.

11

Core Deposits

(1)

Total Deposit Composition

Cost of Deposits

(1)

Brokered CDs    

32%

Non-interest

bearing              

9%

Interest bearing    

59%

3Q 2014

1) Total Deposits excluding Brokered CDs.

Favorable Funding Mix Shift

Successful deposit growth over recent years

Brokered CDs    

60%

Non-interest

bearing              

6%

Interest bearing    

34%

4Q 2009

($ in millions)

1.88%

1.56%

1.34%

0.97%

0.81%

0.72%

0.50%

1.00%

1.50%

2.00%

2009

2010

2011

2012

2013

3Q 2014

Total Deposits, Net of Brokered

Income Statement

3Q 2013

4Q 2013

1Q 2014

2Q 2014

3Q 2014

GAAP Net Interest Income

130.9

$             

132.7

$             

131.3

$             

129.9

$             

127.7

$             

Provision for loan and lease losses

22.2

23.0

31.9

26.7

27.0

Non-interest income

16.0

18.4

18.0

16.6

16.2

Equity in (losses) gains of unconsolidated entities

(5.9)

(5.9)

(6.6)

(0.7)

-

Non-interest expense

99.2

106.5

92.8

98.1

93.6

Pre-tax net income

19.6

15.6

18.0

21.0

23.3

Income tax (expense) benefit

(3.7)

(0.8)

(0.9)

0.3

0.1

Net income

15.9

$                 

14.8

$                 

17.1

$                 

21.2

$                 

23.2

$                 

Adjusted Pre-tax pre-provision earnings

50.9

$                 

47.6

$                 

56.9

$                 

48.6

$                 

50.8

$                 

Net Interest Margin, (GAAP) (%)

4.20%

4.25%

4.27%

4.21%

4.14%

Net income per common share-basic

0.08

$                 

0.07

$                 

0.08

$                 

0.11

$                 

0.11

$                 

Tangible book value per common share

5.32

$                 

5.30

$                 

5.48

$                 

5.72

$                 

5.81

$                 

Improving Core Performance

Opportunities for earnings growth

($ in millions, except per share results)

1)

See reconciliation on page 20.

(1)

12

Opportunity for revenue expansion and earnings growth

Potential for NIM expansion as low interest rate environment effects both liquidity reinvestment and floating rate loan yields.

Additional income opportunities through replacement of NPLs with

performing loans and reduced provisioning needs.

Future earnings potential with a reduction in high costs associated with managing NPLs and OREO.

Potential for additional loan growth opportunities as macro environment in Puerto Rico improves.

Long-term potential for value creation from consolidation in Puerto Rico.

Net income of $23.2 million in 3Q 2014; highest net income since

return to profitability.

Pre-tax pre-provision income of $50.8 million

(1) 

average 5 quarters of $51 million.

Earnings Continue to Drive Capital Growth

13

Healthy capital levels

Tier 1 Common of $1.3 billion or 14.4% and Tier 1 capital of 17.3%.

Book value per common share of $6.05 compared to $5.59 in 3Q 2013.

Tangible book value per common share of $5.81

(1)

compared to $5.32 in 3Q 2013.

Deferred Tax Asset Valuation Allowance of $505m; Adjusted Tangible Book Value

(2)

of $8.18 / share.

1)

See reconciliation to total equity on page 21. 

2)

Assuming

100%

reversal

of

Deferred

Tax

Asset

Valuation

Allowance

of

$505m;

shares

outstanding

of

213m.

See

reconciliation

to

adjusted

tangible

book

value

on

page

21.

A turn-around story underscored by steady improvement and organic market share gains in

the core franchise, operating within a challenging macro environment. 

Strong, tenured leadership team with a commitment to increasing shareholder value, while

fulfilling our vision to be the most highly regarded financial institution in the markets we

serve. 

Improving operating results, together with ongoing efforts to improve efficiencies and further

build-out our core franchise, are our priorities.

Improving our risk profile and maintaining a strong capital position remain central to our

operating philosophy.

Opportunities for additional branch consolidation and market share expansion.

Outlook enhanced by the increasing interest of foreign investment in Puerto Rico and

potential benefits for the underlying economy.

Share price continues to trail capital formation and profitability as TBV ended 3Q14 at

$5.81/share.  Our DTA valuation allowance is $505 million, or $2.37/share assuming 100%

recapture

(1)

.

14

The Value of First BanCorp

1)

See reconciliation on page 21

Appendix

2009

3Q 2014

Change ('09-'14)

% improvement

NPAs

$1,711

$744

$966

56%

NPAs/assets

8.7%

5.9%

282 bps

Tier 1 Common

4.1%

14.4%

1029 bps

120%

TCE / TA

3.2%

9.8%

662 bps

98%

Core deposits

$5,108

$6,640

$1,532

30%

NIM

2.69%

4.14%

145 bps

Our Turnaround Story

($ in millions)

De-Risking of Balance Sheet

Capital

Enhanced Franchise Value

16

June 2010:

Written

Agreement

with the FED and

Consent Order

with

FDIC

July 2010:

The U.S.

Treasury

exchanged

TARP for

convertible

preferred

August 2010:

Exchange of

89% Perpetual

Preferred Stock

for Common

February 2011:

Sale of non-

performing

loans with a

book value of

$269 million

Feb-April 2011:

Sale of $330

million of MBS

and  $518

million of

performing

residential

mortgages

March 2013:

Sale of non-performing

loans with a book value

of $217.7 million and

entered two separate

agreements for sale of

NPLs with a book value

of $99 million

2010

2011

2014

October 2011:

Conversion of

the shares held

by the U.S.

Treasury into

32.9 million

shares of

common stock

May 2012:

Acquisition of a

$406 million

portfolio of

FirstBank-

branded credit

cards from FIA

June 2013:

Write-off of $66.6

million collateral

pledged to

Lehman, sale of

NPLs with book

value of $203.8

million and $19.2

million of OREO

October 2011:

Private placement

of $525 million in

common stock. 

Lead investors

included Thomas H.

Lee & Oaktree

2012

1) Represents change in dollar amount. 

(1)

(1)

(1)

(1)

August 2013:

Completed

secondary

offering reducing

ownership interest

of U S Treasury

and PE Investors

2013

September 2014:

Achieved five

consecutive   

quarters of

profitability. 

Average PPPT 

income over

five quarters

$51 million

September 2014:

UST announced on

September

9    

its  first predefined

written trading

plan, in which it

will be selling it’s

position in FBP.

December 2014:

UST released a

report that as of

12/5/14 it had

sold 4.4 million

shares. UST

ownership at

7.7%.

th

Non-performing Assets

1) Collateral pledged with Lehman Brothers Special Financing, Inc.

17

($ in thousands)

2009

2010

2011

2012

2013

1Q 2014

2Q 2014

3Q 2014

Non-performing loans held for investment:

  Residential mortgage

441,642

$   

392,134

$   

338,208

$   

313,626

$   

161,441

$   

172,796

$   

175,404

$   

185,025

$   

  Commercial mortgage

196,535

217,165

240,414

214,780

120,107

145,535

166,218

169,967

  Commercial & industrial

241,316

317,243

270,171

230,090

114,833

113,996

143,669

130,917

  Construction

634,329

263,056

250,022

178,190

58,866

50,387

38,830

30,111

  Consumer & finance leases

50,041

49,391

39,547

38,875

40,302

39,061

40,510

43,496

   Total non-performing loans held for investment

1,563,863

1,238,989

1,138,362

975,561

495,549

521,775

564,631

559,516

OREO

69,304

84,897

114,292

185,764

160,193

138,622

121,842

112,803

Other repossessed property

12,898

14,023

15,392

10,107

14,865

15,587

16,114

17,467

Other assets

(1)

64,543

64,543

64,543

64,543

-

-

-

-

  Total non-performing assets, excluding loans held for sale

1,710,608

1,402,452

1,332,589

1,235,975

670,607

675,984

702,587

689,786

Non-performing loans held for sale

-

159,321

4,764

2,243

54,801

54,755

54,755

54,641

  Total non-performing assets

1,710,608

$

1,561,773

$

1,337,353

$

1,238,218

$

725,408

$   

730,739

$   

757,342

$   

744,427

$   

Quarterly Migration Trends

($ in thousands)

18

Residential

Mortgage

Commercial

Mortgage

Commercial &

Industrial

Construction

Consumer

Total

Beginning balance

175,404

$          

166,218

$          

143,669

$          

38,830

$            

40,510

$            

564,631

$          

    Plus:

         Additions to non-performing

35,645

11,985

13,967

122

19,392

81,111

    Less:

        Non-performing loans transferred to OREO

(2,216)

(1,058)

(2,124)

(749)

(103)

(6,250)

        Non-performing loans charged-off

(4,445)

(2,292)

(17,570)

(7,689)

(13,773)

(45,769)

        Loans returned to accrual status / collections

(19,363)

(4,886)

(7,025)

(403)

(2,530)

(34,207)

Ending balance

185,025

$          

169,967

$          

130,917

$          

30,111

$            

43,496

$            

559,516

$          

Residential

Mortgage

Commercial

Mortgage

Commercial &

Industrial

Construction

Consumer

Total

Beginning balance

172,796

$          

145,535

$          

113,996

$          

50,387

$            

39,061

$            

521,775

$          

    Plus:

         Additions to non-performing

29,981

36,039

54,557

1,791

17,891

140,259

    Less:

        Non-performing loans transferred to OREO

(1,083)

(575)

(2,041)

(45)

-

(3,744)

        Non-performing loans charged-off

(3,965)

(13,422)

(12,449)

(2,509)

(11,231)

(43,576)

        Loans returned to accrual status / collections

(22,325)

(1,359)

(10,394)

(10,794)

(5,211)

(50,083)

Ending balance

175,404

$          

166,218

$          

143,669

$          

38,830

$            

40,510

$            

564,631

$          

September 30, 2014

June 30, 2014

Puerto Rico Government Exposure

19

As of September 30, 2014

($ in millions)

Total asset exposure to the Puerto Rico

Government as of September 30, 2014 was

$377 million a $91.4 million decrease from

4Q 2013.

In addition, there is $200 million of indirect

exposure to the Tourism Development

Fund supporting hotel projects.

Total Government Deposits as of

September 30, 2014 were $251 million.

Time deposits declined $238 million

compared to 4Q 2013.

Transaction accounts decreased $57.4 million

compared to 4Q 2013.

Government Unit

Time

Deposits

Transaction

Accounts

Total

Federal Funds

-

$              

8.9

$            

8.9

$            

Municipalities

20.6

117.2

137.7

Public Agencies

2.2

100.6

102.8

Public Corporations

-

1.3

1.3

  Total Deposits

22.7

$         

228.1

$       

250.8

$       

Total

Government Unit

Outstanding

Investment Portfolio

61.1

$            

Central Government:

Commonwealth Appropriations

17.0

Federal Funds

7.7

  Total Central Government (3 Loans)

24.8

Public Corporations:

Operating Revenues

86.1

Rental Income

4.0

  Total Public Corporations (3 Loans)

90.1

Municipalities (9 Loans)

Property Tax Revenues

201.4

Total Direct Government Exposure

377.4

$          

Source of Repayment

(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 receipt tax related to the trade or business outside of Puerto Rico that was reversed in the fourth quarter after enactment of Act No. 117.

Adjusted Pre-tax, Pre-provision Income Reconciliation

20

($ in thousands)

3Q 2013

4Q 2013

1Q 2014

2Q 2014

3Q 2014

Income (loss) before income taxes

19,616

$        

15,634

$        

17,970

$        

20,949

$        

23,264

$        

Add: Provision for loan and lease losses

22,195

22,969

31,915

26,744

26,999

Add: Net loss on investments and impairments

-

-

-

(291)

245

Less: Unrealized gain (loss) on derivatives instruments and

liabilities measured at fair value

(232)

(355)

(313)

(262)

(418)

Add: Acquisition of mortgage loans from Doral related expenses

-

-

-

576

659

Add: Secondary offering costs (1)

1,669

-

-

-

-

Add: Credit card processing platform conversion costs

1,715

-

-

-

-

Add: National gross receipt tax (2)

-

-

-

-

-

Less: National gross receipt tax - outside Puerto Rico (3)

-

(473)

-

-

-

Add: Branch consolidations and other restructuring

expenses/valuation adjustments

-

1,421

718

236

-

Add: Write-off collateral pledged to Lehman and related expenses

-

2,500

-

-

-

Add: Equity in losses (earnings) of unconsolidated entities

5,908

5,893

6,610

670

-

Adjusted pre-tax, pre-provision income

50,871

$        

47,589

$        

56,900

$        

48,622

$        

50,750

$        

Quarter Ended

3Q 2013

4Q 2013

1Q 2014

2Q 2014

3Q 2014

Tangible equity:

Total equity - GAAP

1,221

$             

1,216

$             

1,256

$             

1,306

$             

1,324

$             

Preferred equity

(63)

(63)

(57)

(36)

(36)

Goodwill

(28)

(28)

(28)

(28)

(28)

Purchased credit card relationship

(21)

(20)

(19)

(18)

(17)

Core deposit intangible

(8)

(7)

(7)

(6)

(6)

Tangible common equity

1,101

$             

1,098

$             

1,145

$             

1,218

$             

1,237

$             

Common shares outstanding

207

207

209

213

213

Tangible book value per common share

5.32

$                 

5.30

$                 

5.48

$                 

5.72

$                 

5.81

$                 

Deferred tax valuation allowance

520

$                  

523

$                  

519

$                  

511

$                  

505

$                  

Deferred tax valuation allowance per share

2.51

2.53

2.48

2.40

2.37

Adjusted tangible book value per share

7.83

$                 

7.83

$                 

7.97

$                 

8.12

$                 

8.18

$                 

Tangible Book Value Per Share Reconciliation

21

($ in millions, except for per share data)

1) Assuming 100% recapture of valuation allowance.

(1)

Stock Profile

22

Trading Symbol:

•

FBP

Exchange:

•

NYSE

Share

Price

(12/9/14):

•

$5.88

Shares Outstanding          

(as of October 31, 2014):

•

213,004,449

Market Capitalization

(10/31/14):

•

$1.2 billion

1

Yr.

Average

Daily

Volume:

•

834,628

Price

(12/9/14)

to

Tangible

Book

(9/30/14):

•

1.01x

Price

(12/9/14)

to

Adjusted

Tangible

Book

(1)

(9/30/14):

•

0.72x

5% of more Beneficial Ownership

Beneficial Owner

Amount

Percent of

Class

Entities affiliated with Thomas H. Lee

Partners, L.P.

41,851,067

19.6%

Entities managed by Oaktree Capital

Management, L.P.

41,851,066

19.6%

United States Department of the

Treasury

(2)

16,577,452

7.7%

1) Assuming 100% reversal of Deferred Tax Valuation Allowance of $505m; shares outstanding of 213m.

2) Includes the U.S. Treasury warrant that entitles it to purchase up to 1,285,899 shares of Common Stock at an exercise price of $3.29 per share, as adjusted as 

a result of the issuance of shares of Common Stock in the Corporation’s $525m private placement of Common Stock completed in October 2011. The exercise 

price and the number of shares issuable upon exercise of the warrant are subject to further adjustments under certain circumstances to prevent dilution. The 

warrant has a 10-year term from its issue date and is exercisable in whole or in part at any time.  On December  9, 2014, the UST released a report showing that 

it had sold 4.4 million shares through its First Predefined Written Trading Plan announced on September 9, 2014 and lasting 90 days.  The reduction is reflected 

in the total.