UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
____________
FORM
10-Q
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2026
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the transition period from ___________________ to___________________
COMMISSION FILE NUMBER
001-14793
FIRST BANCORP
.
(EXACT NAME OF REGISTRANT AS SPECIFIEDIN ITS CHARTER)
Puerto Rico
66-0561882
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1519 Ponce de León Avenue
,
Stop 23
San Juan
,
Puerto Rico
(Address of principal executive offices)
00908
(Zip Code)
(
787
)
729-8200
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock ($0.10 par value per share)
FBP
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filedall reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subjectto such filing requirements for the past 90
days.
Yes
☑
No
☐
Indicate by check mark whether the registrant has submittedelectronically every Interactive Data File required to be submittedpursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or forsuch shorter period that the registrant was requiredto submit such files).
Yes
☑
No
☐
Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company.See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” inRule 12b-2 of
the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not touse the extended transition period for complying with anynew or revised
financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes
☐
No
☑
Indicate the number of shares outstanding of each of theissuer’s classes of common stock, as of the latest practicable date.
Common stock:
154,684,352
shares outstanding as of May 4, 2026.
2
FIRST BANCORP.
INDEX PAGE
PARTI. FINANCIAL INFORMATION
PAGE
Item 1.
Financial Statements:
ConsolidatedStatementsofFinancialCondition(Unaudited)asofMarch31,2026and
December 31, 2025
Consolidated Statements of Income (Unaudited) – Quartersended March 31,2026 and 2025
ConsolidatedStatementsofComprehensiveIncome(Unaudited)–QuartersendedMarch31,
2026 and 2025
ConsolidatedStatementsofCashFlows(Unaudited)–QuartersendedMarch31,2026and
2025
ConsolidatedStatementsofChangesinStockholders’Equity(Unaudited)–Quartersended
March 31, 2026 and 2025
Notes to Consolidated Financial Statements (Unaudited)
Item 2.
Management’s Discussion and Analysisof Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
PARTII. OTHER INFORMATION
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Item 5.
Unregistered Sales of Equity Securities and Use of Proceeds
Other Information
Item 6.
Exhibits
SIGNATURES
3
Forward-Looking Statements
This QuarterlyReport onForm 10-Q(this “Form10-Q”) containsforward-looking statementswithin themeaning ofSection 27A
of the Securities Act of 1933, asamended (the “Securities Act”), andSection 21E of the Securities ExchangeAct of 1934, as amended
(the “Exchange Act”),which are subject tothe safe harbor createdby such sections. Whenused in this Form10-Q or future filingsby
FirstBanCorp.(the“Corporation,”“we,”“us,”or“our”)withtheU.S.SecuritiesandExchangeCommission(the“SEC”),inthe
Corporation’s pressreleases or in other public orstockholder communications made bythe Corporation, or in oral statementsmade on
behalfoftheCorporationby,orwiththeapprovalof,anauthorizedexecutiveofficeroftheCorporation,thewordsorphrases
“would,”“intends,”“will,”“expect,”“should,”“plans,”“forecast,”“anticipate,”“lookforward,”“believes,”andothertermsof
similar meaning or import, or thenegatives of these terms or variationsof them, in connection withany discussion of future operating,
financial or other performance are meant to identify “forward-lookingstatements.”
The Corporation cautions readersnot to place undue reliance onany such “forward-looking statements,” whichspeak only as of the
date madeor,with respectto suchforward-looking statementscontained inthis Form10-Q, thedate hereof,and advisesreaders that
any suchforward-looking statementsare notguarantees offuture performanceand involvecertain risks,uncertainties, estimates,and
assumptionsby usthat aredifficultto predict.Variousfactors, someof whichare beyondourcontrol,could causeactual resultsto
differ materially from those expressed in, or impliedby, such forward-lookingstatements.
Factorsthatcouldcauseresultstodiffermateriallyfromthoseexpressedin,orimpliedby,theCorporation’sforward-looking
statements include, but are notlimited to, risks described orreferenced in Part I, Item 1A,“Risk Factors,” in the Corporation’sAnnual
Report on Form 10-K for the fiscal year ended December 31, 2025 (“the 2025Annual Report on Form 10-K”), and the following:
●
the effectof changesin theinterest rateenvironmentand inflationlevels onthe level,compositionand performanceof the
Corporation’sassets andliabilities, andcorrespondingeffects onthe Corporation’snet interestincome, netinterest margin,
loan originations, deposit attrition, overall results of operations, and liquidityposition;
●
volatilityinthefinancialservicesindustry,whichcouldresultin,amongotherthings,bankdepositrunoffs,liquidity
constraints, and increased regulatory requirements and costs;
●
the effect of continued changes in the fiscal, monetary,and trade policies and regulations of the United States (“U.S.”) federal
government, thePuerto Ricogovernment andother governments,including thosedetermined bythe Boardof Governorsof
the Federal ReserveSystem (the “FederalReserve Board”), the FederalReserve Bank of NewYork(the “FED”), theFederal
DepositInsuranceCorporation(the“FDIC”),government-sponsoredhousingagenciesandregulatorsinPuertoRico,the
U.S., andthe U.S.VirginIslands (the“USVI”) andBritish VirginIslands (the“BVI”), thatmay affectthe futureresults of
the Corporation;
●
uncertainty asto theability ofthe Corporation’sbanking subsidiary,FirstBank PuertoRico (“FirstBank”or the“Bank”), to
retain its coredeposits andgenerate sufficientcash flow throughits wholesale fundingsources, such assecurities sold under
agreementstorepurchase,FederalHomeLoanBank(“FHLB”)advances,andbrokeredcertificatesofdeposit(“CDs”),
which may require us to sell investment securities at a loss;
●
adverse changesin general politicaland economicconditions in PuertoRico, the U.S.,and the USVIand the BVI,including
in the interestrate environment, unemploymentrates, market liquidityand volatility,trade policies, housingabsorption rates,
realestatemarkets,andU.S.capitalmarkets,whichmayaffectfundingsources,loanportfolioperformanceandcredit
quality,marketpricesofinvestmentsecurities,anddemandfortheCorporation’sproductsandservices,and whichmay
reduce the Corporation’s revenuesand earnings and the value of the Corporation’sassets;
●
the impact oflitigation or thethreat of litigationor other disputeresolutions,including any adversesettlements or judgments
againsttheCorporation,andthepotentialresultingliabilities,costs,negativepublicityorotherreputationalharm;andthe
effects of asserted and unasserted claims and the extent ofavailable insurance coverage;
●
the impactof governmentfinancial assistancefor hurricanerecovery andother disasterrelief oneconomic activityin Puerto
Rico, and the timing and pace of disbursements of funds earmarked fordisaster relief;
●
the abilityof theCorporation,FirstBank,andthird-partyservice providersto identifyand preventcyber-securityincidents,
suchasdatasecuritybreaches,ransomware,malware,“denialofservice”attacks,“hacking,”identitytheft,andstate-
sponsoredcyberthreats,andtheoccurrenceofandresponsetoanyincidentsthatoccur,whichmayresultinmisuseor
misappropriationofconfidentialorproprietaryinformation,disruption,ordamagetooursystemsorthoseofthird-party
service providers on which we rely,increased costs and losses and/or adverse effectsto our reputation;
4
●
generalcompetitivefactorsandothermarketrisksaswellastheimplementationofexistingorplannedstrategicgrowth
opportunities,includingrisks,uncertainties,andotherfactorsoreventsrelatedtoanybusinessacquisitions,dispositions,
strategicpartnerships,strategicoperationalinvestments,includingsystemsconversions,andanyanticipatedefficienciesor
other expected results related thereto;
●
uncertainty regardingthe implementationof PuertoRico’sdebt restructuringplan (“Planof Adjustment”or “PoA”)and the
revised fiscal plan for Puerto Rico, as certified on June6, 2025 (the “2025 Fiscal Plan”) by the oversightboard established by
the PuertoRico Oversight,Management,and EconomicStability Act(“PROMESA”),or anyrevisionsto it,on ourclients
and loan portfolios, and any potential impact of future economic or politicaldevelopments and tax regulations in Puerto Rico;
●
theimpactofchangesinaccountingstandards,ordeterminationsandassumptionsinapplyingthosestandards,andof
forecasts of economic variables considered for the determination ofthe allowance for credit losses (“ACL”);
●
the ability of FirstBank to realize the benefits of its net deferred tax assets;
●
the ability of FirstBank to generate sufficient cash flow to pay dividendsto the Corporation;
●
environmental, social, and governance (“ESG”) matters, includingour climate-related initiatives and commitments,as well as
the impact and potential cost to us of any policies, legislation, or initiatives in oppositionto our ESG policies;
●
the impacts of naturalor man-made disasters, widespreadhealth emergencies, geopoliticalconflicts (including sanctions, war
orarmedconflict,suchastheongoingconflictinUkraine,ongoingconflictsintheMiddleEast,suchasthewarinIran,
recentconflictsinSouthAmerica,thepossibleexpansionofsuchconflictsinsurroundingareasandpotentialgeopolitical
consequences,andthethreatofconflictfromneighboringcountriesinourregion),terroristattacks,orothercatastrophic
externalevents,includingimpactsofsucheventsongeneraleconomicconditionsandontheCorporation’sassumptions
regarding forecasts of economic variables;
●
theriskthatadditionalportionsoftheunrealizedlosses intheCorporation’sdebtsecurities portfolioaredeterminedtobe
credit-related, resultingin additionalcharges tothe provisionfor creditlosses onthe Corporation’sdebt securitiesportfolio,
andthe potentialfor additionalcredit lossesthat couldemergefrom furtherdowngrades ofthe U.S.’sLong-TermForeign-
Currency Issuer Default Rating and negative ratings outlooks;
●
theimpactsofapplicablelegislative,tax,orregulatorychangesorchangesinlegislative,tax,orregulatorypriorities,
includingasaresultoftheOneBigBeautifulBillAct,signedintolawonJuly4,2025,thereductioninstaffingatU.S.
governmental agencies,the effects ofU.S. federal governmentshutdowns and politicalimpasses, and uncertaintiesregarding
the U.S. debt ceiling and federal budget, on the Corporation’sfinancial condition or performance;
●
theriskofpossiblefailureorcircumventionoftheCorporation’sinternalcontrolsandproceduresandtheriskthatthe
Corporation’s risk managementpolicies may not be adequate;
●
the risk that the FDIC mayfurther increase the deposit insurancepremium and/or require further specialassessments, causing
an additional increase in the Corporation’snon-interest expenses;
●
any need to recognize impairments on the Corporation’sfinancial instruments, goodwill, and other intangible assets;
●
the riskthat theimpactof theoccurrenceof anyof theseuncertainties onthe Corporation’scapital wouldprecludefurther
growth of FirstBank and preclude the Corporation’sBoard of Directors (the “Board”) from declaring dividends; and
●
uncertainty asto whetherFirstBank willbe ableto continueto satisfyits regulatorsregarding,among otherthings, itsasset
quality,liquidityplans,maintenanceofcapitallevels,andcompliancewithapplicablelaws,regulationsandrelated
requirements.
TheCorporationdoesnotundertaketoandspecificallydisclaimsanyobligationtoupdateany“forward-lookingstatements”to
reflectoccurrencesorunanticipatedeventsorcircumstancesafterthedateofsuchstatements,exceptasrequiredbythefederal
securities laws.
5
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, 2026
December 31, 2025
(In thousands, except for share information)
ASSETS
Cash and due from banks
$
549,199
$
657,149
Money market investments:
Time deposit with another financial institution
1,000
750
Other short-term investments
700
700
Total money market investments
1,700
1,450
Available-for-sale debt securities, at fair value (amortized cost of$
5,022,891
as of March 31, 2026 and $
4,901,982
as of December 31, 2025; ACL of $
839
as of March 31, 2026 and $
763
as of December 31, 2025)
4,668,697
4,554,032
Held-to-maturity debt securities, at amortizedcost, net of ACL of $
641
as of March 31, 2026 and $
733
as of December 31, 2025 (fair value of$
253,485
as of March 31, 2026 and $
262,055
as of December 31, 2025)
256,881
264,563
Equity securities
46,432
44,753
Total investment securities
4,972,010
4,863,348
Loans held for investment, net of ACL of$
245,060
as of March 31, 2026 and $
249,037
as of December 31, 2025
12,846,017
12,876,319
Mortgage loans held for sale, at lower ofcost or market
12,805
16,697
Total loans, net
12,858,822
12,893,016
Accrued interest receivable on loans andinvestments
67,722
71,351
Premises and equipment, net
127,865
126,920
Other real estate owned (“OREO”)
6,344
7,522
Deferred tax asset, net
143,565
149,012
Goodwill
38,611
38,611
Other intangible assets
3,240
3,458
Other assets
317,027
321,055
Total assets
$
19,086,105
$
19,132,892
LIABILITIES
Non-interest-bearing deposits
$
5,554,751
$
5,549,416
Interest-bearing deposits
11,041,070
11,120,727
Total deposits
16,595,821
16,670,143
Short-term borrowings
90,000
-
Long-term borrowings
200,000
290,000
Accounts payable and other liabilities
233,045
205,884
Total liabilities
17,118,866
17,166,027
Commitments and contingencies (SeeNote 18)
(nil)
(nil)
STOCKHOLDERS’ EQUITY
Common stock, $
0.10
par value,
2,000,000,000
shares authorized;
223,663,116
shares issued;
154,693,926
shares outstanding as of March 31, 2026and
156,618,996
shares outstanding as of December31, 2025
22,366
22,366
Additional paid-in capital
952,773
963,543
Retained earnings, includes legal surplusreserve of $
262,534
as of each of March 31, 2026 andDecember 31, 2025
2,325,256
2,268,011
Treasury stock (at cost),
68,969,190
shares as of March 31, 2026 and
67,044,120
shares as of December 31, 2025
(972,438)
(932,505)
Accumulated other comprehensive loss,net of tax of $
7,986
as of each of March 31, 2026 andDecember 31, 2025
(360,718)
(354,550)
Total stockholders’ equity
1,967,239
1,966,865
Total liabilities and stockholders’ equity
$
19,086,105
$
19,132,892
The accompanying notes are an integral partof these statements.
6
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Quarter Ended March 31,
2026
2025
(In thousands, except per share information)
Interest and dividend income:
Loans
$
241,521
$
241,332
Investment securities
32,698
23,528
Money market investments and interest-bearing cash accounts
5,630
12,205
Total interest and dividend income
279,849
277,065
Interest expense:
Deposits
55,931
58,497
Short-term borrowings
58
76
Long-term borrowings
2,904
6,095
Total interest expense
58,893
64,668
Net interest income
220,956
212,397
Provision for credit losses - expense (benefit):
Loans and finance leases
17,170
24,837
Unfunded loan commitments
107
(63)
Debt securities
(4)
36
Provision for credit losses - expense
17,273
24,810
Net interest income after provision for credit losses
203,683
187,587
Non-interest income:
Service charges and fees on deposit accounts
9,932
9,640
Mortgage banking activities
4,043
3,177
Insurance commission income
5,944
5,805
Card and processing income
11,758
11,475
Other non-interest income
6,008
5,637
Total non-interest income
37,685
35,734
Non-interest expenses:
Employees’ compensation and benefits
65,299
62,137
Occupancy and equipment
22,063
22,630
Business promotion
3,555
3,278
Professional service fees
12,912
11,486
Taxes, other than income taxes
6,184
5,878
FDIC deposit insurance
2,058
2,236
Net gain on OREO operations
(937)
(1,129)
Credit and debit card processing expenses
7,327
5,110
Communications
2,288
2,245
Other non-interest expenses
6,356
9,151
Total non-interest expenses
127,105
123,022
Income before income taxes
114,263
100,299
Income tax expense
25,485
23,240
Net income
$
88,778
$
77,059
Net income attributable to common stockholders
$
88,778
$
77,059
Net income per common share:
Basic
$
0.57
$
0.47
Diluted
$
0.57
$
0.47
The accompanying notes are an integral partof these statements.
7
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Quarter Ended March 31,
2026
2025
(In thousands)
Net income
$
88,778
$
77,059
Other comprehensive (loss) income, net of tax:
Available-for-sale debt securities:
Net unrealized holding (losses) gains on debt securities
(1)
(6,168)
84,061
Other comprehensive (loss) income for the period, net of tax
(6,168)
84,061
Total comprehensive income
$
82,610
$
161,120
(1)
Net unrealized holding (losses) gains on available-for-saledebt securities have no tax effect because securitiesare either tax-exempt, held by an InternationalBanking Entity
(“IBE”), or have a full deferred tax assetvaluation allowance.
The accompanying notes are an integral partof these statements.
8
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Quarter ended March 31,
2026
2025
(In thousands)
Cash flows from operating activities:
Net income
$
88,778
$
77,059
Adjustments to reconcile net income to net cash provided by operatingactivities:
Depreciation and amortization
4,066
4,453
Amortization of intangible assets
218
1,252
Provision for credit losses
17,273
24,810
Deferred income tax expense
5,448
2,010
Stock-based compensation
3,923
3,739
Unrealized gain on derivative instruments
(272)
(130)
Net gain on sales of loans and loans held for sale valuationadjustments
(1,837)
(708)
Net amortization (accretion) of discounts, premiums, anddeferred loan fees and costs
127
(394)
Originations and purchases of loans held for sale
(36,749)
(44,824)
Sales and repayments of loans held for sale
42,998
46,192
Amortization of broker placement fees
191
160
Net (accretion) amortization of premiums and discounts on investmentsecurities
(4,155)
1,073
Decrease in accrued interest receivable
968
8,081
Decrease in accrued interest payable
(1,581)
(3,864)
Decrease (increase) in other assets
12,541
(240)
Decrease in other liabilities
(10,849)
(10,450)
Net cash provided by operating activities
121,088
108,219
Cash flows from investing activities:
Net repayments on loans held for investment
620
32,663
Proceeds from sales of loans held for investment
-
2,475
Proceeds from sales of repossessed assets
13,153
12,238
Purchases of available-for-sale debt securities
(767,685)
(12,264)
Proceeds from principal repayments and maturities of available-for-saledebt securities
690,519
347,267
Proceeds from principal repayments of held-to-maturity debt securities
8,046
5,384
Additions to premises and equipment
(5,173)
(1,485)
Net (purchases) redemptions of equity securities
(1,699)
7,276
Net cash (used in) provided by investing activities
(62,219)
393,554
Cash flows from financing activities:
Net decrease in deposits
(79,866)
(49,685)
Repayments of long-term borrowings
(90,000)
(229,040)
Proceeds from short-term borrowings
90,000
-
Repurchase of outstanding common stock
(54,626)
(24,872)
Dividends paid on common stock
(32,077)
(29,316)
Net cash used in financing activities
(166,569)
(332,913)
Net (decrease) increase in cash and cash equivalents
(107,700)
168,860
Cash and cash equivalents at beginning of year
658,599
1,159,415
Cash and cash equivalents at end of year
$
550,899
$
1,328,275
Cash and cash equivalents include:
Cash and due from banks
$
549,199
$
1,327,075
Money market investments
1,700
1,200
$
550,899
$
1,328,275
The accompanying notes are an integral part of these statements.
9
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’EQUITY
(Unaudited)
Quarter Ended March 31,
2026
2025
(In thousands, except per share information)
Common Stock
$
22,366
$
22,366
Additional Paid-In Capital:
Balance at beginning of period
963,543
964,964
Stock-based compensation expense
3,923
3,739
Common stock reissued under stock-based compensation plan
(14,693)
(11,356)
Restricted stock forfeited
-
33
Balance at end of period
952,773
957,380
Retained Earnings:
Balance at beginning of period
2,268,011
2,038,812
Net income
88,778
77,059
Dividends on common stock ($
0.20
per share and $
0.18
per share for the quarters ended
March 31, 2026 and 2025, respectively)
(31,533)
(29,595)
Balance at end of period
2,325,256
2,086,276
Treasury Stock (at cost):
Balance at beginning of period
(932,505)
(790,350)
Common stock repurchases (See Note 10)
(54,626)
(25,158)
Common stock reissued under stock-based compensation plan
14,693
11,356
Restricted stock forfeited
-
(33)
Balance at end of period
(972,438)
(804,185)
Accumulated Other Comprehensive Loss, net of tax:
Balance at beginning of period
(354,550)
(566,556)
Other comprehensive (loss) income, net of tax
(6,168)
84,061
Balance at end of period
(360,718)
(482,495)
Total stockholders’ equity
$
1,967,239
$
1,779,342
The accompanying notes are an integral part of these statements.
10
FIRST BANCORP.
INDEX TO NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
PAGE
Note 1 –
Basis of Presentation and Significant Accounting Policies
Note 2 –
Debt Securities
Note 3 –
Loans Held for Investment
Note 4
–
Allowance for Credit Losses for Loans and Finance Leases
Note 5 –
Other Real Estate Owned (“OREO”)
Note 6 –
Deposits
Note 7 –
Borrowings
Note 8 –
Earnings per Common Share
Note 9 –
Stock-Based Compensation
Note 10 –
Stockholders’ Equity
Note 11 –
Accumulated Other Comprehensive Loss
Note 12 –
Employee Benefit Plans
Note 13 –
Income Taxes
Note 14
–
Fair Value
Note 15
–
Revenue from Contracts with Customers
Note 16 –
Segment Information
Note 17 –
Supplemental Statementsof Cash Flows Information
Note 18 –
Regulatory Matters, Commitments, and Contingencies
Note 19 –
First BanCorp. (Holding Company Only) Financial Information
11
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS
(Unaudited)
NOTE 1 – BASISOF PRESENTATION ANDSIGNIFICANTACCOUNTINGPOLICIES
TheConsolidatedFinancialStatements(unaudited)forthequarterendedMarch31,2026(the“unauditedconsolidatedfinancial
statements”)ofFirstBanCorp.(the“Corporation”)havebeenpreparedinconformitywiththeaccountingpoliciesstatedinthe
Corporation’s Audited Consolidated Financial Statements for the fiscal year ended December31, 2025 (the “audited consolidated financial
statements”) included in the 2025 Annual Report on Form 10-K, as updated by the information contained in this report. Certain information
and note disclosures normally included inthe financial statements prepared inaccordance with generally accepted accountingprinciples in
the United States of America (“GAAP”) have beencondensed or omitted from these statements pursuant to therules and regulations of the
SEC and,accordingly, thesefinancial statementsshould beread inconjunction withthe auditedconsolidated financialstatements, which
are includedin the 2025Annual Report onForm 10-K. Alladjustments (consistingonly of normalrecurring adjustments) thatare, in the
opinion of management, necessary fora fair presentation of thestatement of financial position, results ofoperations and cash flows forthe
interim periodshavebeen reflected.Allsignificantintercompanyaccountsandtransactionshavebeeneliminatedin consolidation.The
Corporation evaluates subsequent events through the date offiling with the SEC.
The results of operations for thequarter ended March 31,2026 are not necessarilyindicative of the results tobe expected for the entire
year.
Adoption of New Accounting Requirements
Standard
Description
Effective Date
Effect on the financial statements
ASU 2025-05, “Financial
Instruments – Credit Losses
(Topic 326): Measurement
of Credit Losses for
Accounts Receivable and
Contract Assets”
In July 2025, the FASB issued ASU 2025-
05, which provides a practical expedient for
current accounts receivable and current
contract assets accounted for pursuant to
ASC Topic 606. Such practical expedient, if
elected, allows an entity to assume that
current economic conditions as of the
reporting date remain unchanged over their
remaining lives.
Effective for annual reporting
periods beginning after December
15, 2025, and interim reporting
periods within those annual
reporting periods. Prospective
application is required.
Although ASU 2025-05 became
effective during the first quarter of
2026, the adoption of this ASU did
not have an impact on the
Corporation’s financial position or
results of operations, as the
Corporation did not elect the
practical expedient provided therein.
Recently Issued Accounting Standards Not YetEffective or Not YetAdopted
For issued accountingstandards not yet effectiveor not yet adopted,see Note 1 –“Nature of Business andSummary of Significant
Accounting Policies,” to the audited consolidated financial statements includedin the 2025 Annual Report on Form 10-K.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
12
NOTE 2 – DEBT SECURITIES
Available-for-SaleDebt Securities
The amortizedcost, grossunrealized gainsand losses,ACL, estimatedfair value,and weighted-averageyield ofavailable-for-sale
debt securities by contractual maturities as of March 31, 2026 andDecember 31, 2025 were as follows:
March 31, 2026
Amortized cost
(1)
Gross Unrealized
ACL
Fair Value
(2)
Weighted-
Gains
Losses
average yield%
(Dollars in thousands)
U.S. Treasury securities:
Due within one year
$
497,272
$
2
$
20
$
-
$
497,254
3.65
U.S. government-sponsored entities (“GSEs”) obligations:
Due within one year
455,779
9
6,614
-
449,174
0.98
After 1 to 5 years
381,229
-
11,614
-
369,615
2.08
After 5 to 10 years
14,995
-
130
-
14,865
4.75
After 10 years
6,298
-
35
-
6,263
3.95
Puerto Rico government obligation:
After 10 years
(3)
2,655
-
738
308
1,609
-
United States and Puerto Rico government obligations
1,358,228
11
19,151
308
1,338,780
2.32
Mortgage-backed securities (“MBS”):
Residential MBS:
U.S. Agencies MBS
2,408,684
1,360
259,497
-
2,150,547
1.89
U.S. Agencies collateralized mortgage
obligations (“CMOs”)
1,017,683
2,196
41,833
-
978,046
4.10
Private label MBS
4,847
-
1,203
531
3,113
5.95
Total Residential MBS
(4)
3,431,214
3,556
302,533
531
3,131,706
2.55
U.S. Agencies Commercial MBS
(4)
233,449
299
35,537
-
198,211
2.42
Total MBS
3,664,663
3,855
338,070
531
3,329,917
2.54
Total available-for-sale debt securities
$
5,022,891
$
3,866
$
357,221
$
839
$
4,668,697
2.48
December 31, 2025
Amortized cost
(1)
Gross Unrealized
ACL
Fair value
(2)
Weighted-
Gains
Losses
average yield%
(Dollars in thousands)
U.S. Treasury securities:
Due within one year
$
497,159
$
183
$
-
$
-
$
497,342
3.85
U.S. GSEs’ obligations:
Due within one year
402,352
17
4,659
-
397,710
0.92
After 1 to 5 years
500,025
5
16,114
-
483,916
1.45
After 5 to 10 years
14,996
-
11
-
14,985
4.75
After 10 years
6,547
-
46
-
6,501
3.97
Puerto Rico government obligation:
After 10 years
(3)
2,700
-
762
318
1,620
-
United States and Puerto Rico government obligations
1,423,779
205
21,592
318
1,402,074
2.18
MBS:
Residential MBS:
U.S. Agencies MBS
2,401,704
2,360
256,589
-
2,147,475
1.80
U.S. Agencies CMOs
833,330
4,123
39,299
-
798,154
3.95
Private label MBS
5,072
-
1,361
445
3,266
5.92
Total Residential MBS
(4)
3,240,106
6,483
297,249
445
2,948,895
2.36
U.S Agencies Commercial MBS
(4)
238,097
508
35,542
-
203,063
2.42
Total MBS
3,478,203
6,991
332,791
445
3,151,958
2.36
Total available-for-sale debt securities
$
4,901,982
$
7,196
$
354,383
$
763
$
4,554,032
2.31
(1)
Excludes accruedinterest receivableon available-for-saledebt securitiesthat totaled$
11.4
million and$
9.4
million asof March31, 2026and December31, 2025,respectively,reportedas partof accruedinterest
receivable on loans and investment securities in the consolidated statements of financial condition, and excluded from the estimate of credit losses.
(2)
Includes $
226.4
million (amortized cost - $
247.2
million) and $
230.2
million (amortized cost - $
251.0
million) as of March 31,2026 and December 31, 2025,respectively, that waspledged at the FHLB ascollateral for
borrowings and letters of credit, as well as $
2.4
billion (amortized cost - $
2.6
billion) and $
2.5
billion (amortized cost - $
2.7
billion) as of March 31, 2026 and December 31, 2025, respectively,pledged as collateral for the
uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.
(3)
Consists of aresidential pass-through MBSissued by thePuerto Rico HousingFinance Authority ("PRHFA")that is collateralizedby certain secondmortgages originated undera program launchedby the PuertoRico
government in 2010 and is in nonaccrual status based on the delinquency status of the underlying second mortgage loans collateral.
(4)
The weighted-average remainingcontractual life ofresidential MBS andcommercial MBS was
16.9
years and
28.8
years, respectively,as of March31, 2026, comparedto
16.3
years and
29.1
years, respectively,as of
December 31, 2025.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
13
Duringthe firstquarter of2026,the Corporationpurchasedapproximately$
807.6
millionin available-for-saledebtsecurities, of
which $
437.0
million wereU.S. agencies’residential MBSand debentureswith anaverage yieldof
4.57
%; and$
370.6
million were
U.S. Treasury securities with an average yieldof
3.65
%.
ThefollowingtablespresentthefairvalueandgrossunrealizedlossesoftheCorporation’savailable-for-saledebtsecurities,
aggregated byinvestment categoryand length oftime that individualsecurities havebeen in acontinuous unrealizedloss position, as
of March 31, 2026 and December 31, 2025. The tables also include debt securities forwhich an ACL was recorded.
As of March 31, 2026
Less than 12 months
12 months or more
Total
Unrealized
Unrealized
Unrealized
Fair Value
Losses
Fair Value
Losses
Fair Value
Losses
(In thousands)
U.S. Treasury and U.S. GSEs’ obligations
$
484,473
$
874
$
673,704
$
17,539
$
1,158,177
$
18,413
Puerto Rico government obligation
-
-
1,609
738
(1)
1,609
738
MBS:
Residential MBS:
U.S. Agencies MBS
275,950
1,221
1,770,602
258,276
2,046,552
259,497
U.S. Agencies CMOs
423,478
1,895
163,247
39,938
586,725
41,833
Private label
-
-
3,113
1,203
(1)
3,113
1,203
U.S. Agencies Commercial MBS
10,570
58
136,084
35,479
146,654
35,537
$
1,194,471
$
4,048
$
2,748,359
$
353,173
$
3,942,830
$
357,221
(1)
Unrealized losses do not include the credit loss component recordedas part of the ACL. As of March 31, 2026, thePRHFA bond and private label MBShad an ACL of $
0.3
million and
$
0.5
million, respectively.
As of December 31, 2025
Less than 12 months
12 months or more
Total
Unrealized
Unrealized
Unrealized
Fair Value
Losses
Fair Value
Losses
Fair Value
Losses
(In thousands)
U.S. Treasury and U.S. GSEs’ obligations
$
91,584
$
100
$
796,505
$
20,730
$
888,089
$
20,830
Puerto Rico government obligation
-
-
1,620
762
(1)
1,620
762
MBS:
Residential MBS:
U.S. Agencies MBS
52,599
148
1,851,881
256,441
1,904,480
256,589
U.S. Agencies CMOs
74,773
402
170,490
38,897
245,263
39,299
Private label
-
-
3,266
1,361
(1)
3,266
1,361
U.S. Agencies Commercial MBS
2,810
150
138,412
35,392
141,222
35,542
$
221,766
$
800
$
2,962,174
$
353,583
$
3,183,940
$
354,383
(1)
Unrealized losses donot include the creditloss component recordedas part of theACL. As of December31, 2025, the PRHFAbond and privatelabel MBS had anACL of $
0.3
million
and $0.5 million, respectively.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
14
Assessment for Credit Losses
The Corporationexpects nocredit losses ondebt securitiesissued byU.S. governmentagencies, U.S.GSEs andthe U.S. Treasury
given the explicitand implicit guaranteesprovided by theU.S. federal government.Because the declinein fair valueis attributable to
changes in interest rates, and not credit quality,and because,as of March 31, 2026, the Corporation did not have theintent to sell these
debt securities and determinedthat it was likely thatit will not be requiredto sell these securities beforetheir anticipated recovery,the
Corporationdoesnotconsiderimpairmentsonthesesecuritiestobecreditrelated.TheCorporation’screditlossassessmentwas
concentrated mainly on private labelMBS and on the Puerto Ricogovernment debt security,for which credit losses are evaluatedon a
quarterly basis.
The followingtable presentsa roll-forwardof the ACLon available-for-saledebt securitiesby majorsecurity typefor the quarters
ended March 31, 2026 and 2025:
Quarter Ended March 31,
2026
2025
Private label
MBS
Puerto Rico
Government
Obligation
Total
Private label
MBS
Puerto Rico
Government
Obligation
Total
(In thousands)
Beginning balance
$
445
$
318
$
763
$
176
$
345
$
521
Provision for credit losses – expense (benefit)
98
(10)
88
-
(5)
(5)
Net charge-offs
(12)
-
(12)
-
-
-
ACL on available-for-sale debt securities
$
531
$
308
$
839
$
176
$
340
$
516
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
15
Held-to-Maturity Debt Securities
Theamortizedcost,grossunrecognizedgainsandlosses,estimatedfairvalue,ACL,weighted-averageyieldandcontractual
maturities of held-to-maturity debt securities as of March 31, 2026 andDecember 31, 2025 were as follows:
March 31, 2026
Amortized cost
(1) (2)
Gross Unrecognized
Fair value
Weighted-
Gains
Losses
ACL
average yield%
(Dollars in thousands)
Government bonds:
Due within one year
$
1,071
$
20
$
2
$
1,089
$
2
4.75
After 1 to 5 years
53,409
1,858
146
55,121
364
6.85
After 5 to 10 years
10,438
665
147
10,956
87
4.49
After 10 years
14,870
96
-
14,966
188
7.13
Total government bonds
79,788
2,639
295
82,132
641
6.57
MBS:
Residential MBS:
U.S. Agencies MBS
86,675
-
3,064
83,611
-
4.00
U.S. Agencies CMOs
21,146
-
541
20,605
-
3.40
Total Residential MBS
(3)
107,821
-
3,605
104,216
-
3.89
U.S. Agencies Commercial MBS
(3)
69,913
-
2,776
67,137
-
2.14
Total MBS
177,734
-
6,381
171,353
-
3.20
Total held-to-maturity debt securities
$
257,522
$
2,639
$
6,676
$
253,485
$
641
4.24
December 31, 2025
Amortized cost
(1) (2)
Gross Unrecognized
Fair value
Weighted-
Gains
Losses
ACL
average yield%
(Dollars in thousands)
Government bonds:
Due within one year
$
1,044
$
42
$
3
$
1,083
$
2
4.94
After 1 to 5 years
54,611
1,921
131
56,401
437
7.05
After 5 to 10 years
10,376
653
159
10,870
95
4.78
After 10 years
14,870
22
6
14,886
199
7.46
Total government bonds
80,901
2,638
299
83,240
733
6.81
MBS:
Residential MBS:
U.S. Agencies MBS
89,798
-
2,245
87,553
-
3.99
U.S. Agencies CMOs
21,653
-
392
21,261
-
3.40
Total Residential MBS
(3)
111,451
-
2,637
108,814
-
3.87
U.S. Agencies Commercial MBS
(3)
72,944
-
2,943
70,001
-
2.13
Total MBS
184,395
-
5,580
178,815
-
3.19
Total held-to-maturity debt securities
$
265,296
$
2,638
$
5,879
$
262,055
$
733
4.29
(1)
Excludes accrued interest receivable on held-to-maturity debt securities that totaled $
1.8
million and $
3.2
million as of March 31, 2026 and December 31, 2025, respectively, reported as part of accrued interestreceivable
on loans and investment securities in the consolidated statements of financial condition, and excluded from the estimate of credit losses.
(2)
Includes $
136.9
million (fairvalue - $
135.1
million) and $
153.0
million (fairvalue - $
150.9
million) as ofMarch 31,2026 and December31, 2025, respectively,that serves ascollateral forthe uninsured portionof
government deposits. The secured parties are not permitted to sell or repledge the collateral.
(3)
The weighted-average remaining contractuallife of residential MBSand commercial MBS was
20.9
years and
11.6
years, respectively, asof March 31,2026, compared to
21.0
years and
11.9
years, respectively, asof
December 31,2025.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
16
ThefollowingtablespresenttheCorporation’sheld-to-maturitydebtsecurities’fairvalueandgrossunrecognizedlosses,
aggregated bycategory and lengthof time thatindividual securities hadbeen in acontinuous unrecognizedloss position, asof March
31, 2026 and December 31, 2025, including debt securities for whichan ACL was recorded:
As of March 31, 2026
Less than 12 months
12 months or more
Total
Unrecognized
Unrecognized
Unrecognized
Fair Value
Losses
Fair Value
Losses
Fair Value
Losses
(In thousands)
Government bonds
$
-
$
-
$
16,663
$
295
$
16,663
$
295
MBS:
Residential MBS:
U.S. Agencies MBS
13,948
224
69,663
2,840
83,611
3,064
U.S. Agencies CMOs
-
-
20,605
541
20,605
541
U.S. Agencies Commercial MBS
-
-
67,137
2,776
67,137
2,776
Total held-to-maturity debt securities
$
13,948
$
224
$
174,068
$
6,452
$
188,016
$
6,676
As of December 31, 2025
Less than 12 months
12 months or more
Total
Unrecognized
Unrecognized
Unrecognized
Fair Value
Losses
Fair Value
Losses
Fair Value
Losses
(In thousands)
Government bonds
$
-
$
-
$
21,460
$
299
$
21,460
$
299
MBS:
Residential MBS:
U.S Agencies MBS
-
-
87,553
2,245
87,553
2,245
U.S. Agencies CMOs
-
-
21,261
392
21,261
392
U.S. Agencies Commercial MBS
-
-
70,001
2,943
70,001
2,943
Total held-to-maturity debt securities
$
-
$
-
$
200,275
$
5,879
$
200,275
$
5,879
TheCorporationclassifiestheheld-to-maturitydebtsecuritiesportfoliointothefollowingmajorsecuritytypes:MBSissuedor
guaranteedbyGSEsandunderlyingcollateralandgovernmentbonds,primarilyconsistingofPuertoRicomunicipalbonds.The
Corporation does notrecognize anACL for MBSissued or guaranteedby GSEssince they arehighly rated bymajor rating agenciesand
have along historyof nocredit losses.In thecase ofgovernment bonds,the Corporationdetermines theACL basedon theproduct ofa
cumulative probabilityof defaultand loss-givendefault, andthe amortizedcost basisof thebonds overtheir remainingexpected lifeas
described in Note 1 – “Nature of Business and Summary of Significant Accounting Policies” to the audited financial statements included in
the 2025 Annual Report on Form 10-K.
ThefollowingtablepresentstheactivityintheACLforheld-to-maturitydebtsecuritiesbymajorsecuritytypeforthequarters
ended March 31, 2026 and 2025:
Government Bonds
Quarter Ended March 31,
2026
2025
(In thousands)
Beginning balance
$
733
$
802
Provision for credit losses - (benefit) expense
(92)
41
ACL on held-to-maturity debt securities
$
641
$
843
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
17
Credit Quality Indicators:
Theheld-to-maturitydebtsecuritiesportfolioconsistedofGSEs’MBS,forwhichtheCorporationexpectsnocreditlosses,and
financing arrangementswith thegovernment issuedin bond form,which areaccounted for assecurities butare underwrittenas loans
withfeaturesthataretypicallyfoundincommercialloans.Accordingly,theCorporationmonitorsthecreditqualityofthese
governmentbonds throughthe useof internalcredit-risk ratings,whichare generallyupdatedon aquarterlybasis. TheCorporation
considersa governmentbond asa criticizedasset ifits riskratingis SpecialMention,Substandard,Doubtful, orLoss. Government
bonds that do not meet the criteriafor classification as criticized assets areconsidered to be Pass-rated securities.For the definitions of
the internal-credit ratings,see Note 2— “Debt Securities,”to the auditedfinancial statements includedin the 2025Annual Report on
Form 10-K.
The Corporation’sLoan Review Groupreports to the RiskManagement Committeeand administratively tothe Chief Risk Officer.
ItperformsannualreviewsoftheBank’scommercialloanportfolios,includingtheabove-mentionedgovernmentbonds.These
reviews assessthe accuracyof loanrisk ratingsand compliancewith lendingpolicies andprocedures.The monitoringperformed by
thisgrouphelpsevaluatecreditrisk,adherencetounderwritingstandards,andtheeffectivenessofcreditmanagement,while
identifying anydeficiencies. Based onits findings,it recommends correctiveactions, as needed.Results of thecredit process reviews
are reported to the Risk Management Committee.
As of March 31, 2026 and December 31, 2025, all government bonds classifiedas held-to-maturity were classified as Pass.
No
held-to-maturity debt securities wereon nonaccrual status, 90days past due andstill accruing, or past dueas of March 31, 2026
andDecember31,2025.Asecurityisconsideredtobepastdueonceitis30dayscontractuallypastdueunderthetermsofthe
agreement.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
18
NOTE 3 – LOANS HELD FOR INVESTMENT
Thefollowing tableprovides informationabouttheloanportfolio heldforinvestment byportfolio segmentanddisaggregated by
geographic locationsas of the indicateddates:
As of March 31,
As of December 31,
2026
2025
(In thousands)
Puerto Rico and Virgin Islands region:
Residential mortgage loans, mainly secured by first mortgages
$
2,378,388
$
2,377,604
Construction loans
192,977
263,640
Commercial mortgage loans
1,826,549
1,763,927
Commercial and Industrial (“C&I”) loans
2,494,701
2,519,002
Consumer loans
3,653,100
3,703,019
Loans held for investment
$
10,545,715
$
10,627,192
Florida region:
Residential mortgage loans, mainly secured by first mortgages
$
536,510
$
530,698
Construction loans
2,290
1,928
Commercial mortgage loans
800,564
790,325
C&I loans
1,200,142
1,169,356
Consumer loans
5,856
5,857
Loans held for investment
$
2,545,362
$
2,498,164
Total:
Residential mortgage loans, mainly secured by first mortgages
$
2,914,898
$
2,908,302
Construction loans
195,267
265,568
Commercial mortgage loans
2,627,113
2,554,252
C&I loans
(1)
3,694,843
3,688,358
Consumer loans
3,658,956
3,708,876
Loans held for investment
(2)
13,091,077
13,125,356
ACL on loans and finance leases
(245,060)
(249,037)
Loans held for investment, net
$
12,846,017
$
12,876,319
(1)
As of March 31, 2026 andDecember 31, 2025, includes $
871.1
million and $
887.5
million, respectively, of commercial loansthat were secured by real estate and
for which the primary source of repayment at origination wasnot dependent upon such real estate.
(2)
Includes accretable fair value net purchase discounts of $
17.8
million and $
18.4
million as of March 31, 2026 and December 31, 2025, respectively.
Variousloans wereassigned ascollateral forborrowings, governmentdeposits, certaintime depositsaccounts, andrelated unused
commitments. The carryingvalue of loans pledgedas collateral amountedto $
5.7
billion as of eachof March 31,2026 and December
31, 2025. Asof each ofMarch 31, 2026and December 31,2025, loans pledgedas collateral include$
2.1
billion that werepledged at
the FHLB ascollateral for borrowingsand letters ofcredit; $
3.4
billion pledgedas collateral tosecure borrowing capacityat the FED
DiscountWindowasofeachofMarch31,2026andDecember31,2025;$
125.3
millionpledgedtosecureascollateralforthe
uninsuredportionof governmentdepositsas ofMarch 31,2026,compared to$
126.1
million asof December31, 2025;and $
107.6
million pledged to secure certain time deposits accounts as of March 31, 2026,compared to $
111.2
million as of December 31, 2025
.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
19
The Corporation’saging ofthe loanportfolio heldfor investment,as wellas informationabout nonaccrualloans withno ACL,by
portfolio classes as of March 31, 2026 and December 31, 2025 are as follows:
As of March 31, 2026
Days Past Due and Accruing
Current
(1)
30-59
60-89
90+
(2) (3) (4)
Nonaccrual
(5)
Total loans held
for investment
Nonaccrual Loans
with no ACL
(6)
(In thousands)
Residential mortgage loans, mainly secured by first mortgages:
FHA/VA government-guaranteedloans
(1)
(2) (4)
$
70,773
$
-
$
2,034
$
15,532
$
-
$
88,339
$
-
Conventional residential mortgage loans
(1) (3) (5)
2,767,996
-
24,963
5,529
28,071
2,826,559
-
Commercial loans:
Construction loans
189,786
-
-
67
5,414
195,267
956
Commercial mortgage loans
(1) (3)
2,617,658
1,265
208
540
7,442
2,627,113
4,558
C&I loans
(5)
3,665,543
636
316
1,248
27,100
3,694,843
12,447
Consumer loans:
Auto loans
1,962,478
42,189
6,778
-
12,483
2,023,928
942
Finance leases
861,882
13,141
2,544
-
4,235
881,802
143
Personal loans
323,143
4,125
2,119
-
1,517
330,904
-
Credit cards
267,401
4,205
2,725
6,033
-
280,364
-
Other consumer loans
137,204
1,875
1,397
-
1,482
141,958
-
Total loans held for investment
$
12,863,864
$
67,436
$
43,084
$
28,949
$
87,744
$
13,091,077
$
19,046
(1)
According to the Corporation’sdelinquency policy and consistent withthe instructions for the preparationof the Consolidated Financial Statementsfor Bank Holding Companies (FRY-9C) requiredby the Federal Reserve
Board, residential mortgage, commercial mortgage, and construction loans are consideredpast due when the borrower is in arrears on two or moremonthly payments. Federal Housing Authority (“FHA”)/U.S. Department of
Veterans Affairs (“VA”)government-guaranteed loans, conventional residential mortgage loans, and commercial mortgage loans past due 30-59 days, butless than two payments in arrears, as of March 31, 2026 amounted to
$
7.4
million, $
54.4
million, and $
1.2
million, respectively.
(2)
It is the Corporation’s policyto report delinquent FHA/VAgovernment-guaranteed residential mortgage loans as past-due loans 90 daysand still accruing as opposed to nonaccrual loans. TheCorporation continues accruing
interest on these loans until they havepassed the 15-month delinquency mark, takinginto consideration the FHA interest curtailment process.These balances include $
3.9
million of residential mortgage loans guaranteed by
the FHA that were over 15 months delinquent as of March 31, 2026.
(3)
Includes purchasedcredit deteriorated(“PCD”) loanspreviously accountedfor underASC Subtopic310-30 forwhich theCorporation electedto treatpools ofthese loansas singleassets bothat thetime ofadoption of
current expectedcredit loss(“CECL”) methodologyon January1, 2020and onan ongoingbasis forcredit lossmeasurement. Theseloans willcontinue tobe excludedfrom nonaccrualloan statisticsas longas the
Corporation can reasonably estimate the timing andamount of cash flows expected to becollected on the loan pools. Theportion of such loans contractually past due 90days or more, amounting to $
4.2
million as of March
31, 2026 ($
3.7
million conventional residential mortgage loans and $
0.5
million commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above.
(4)
Included rebooked loans, which were previouslypooled into Government National Mortgage Association(“GNMA”) securities, amounting to $
6.7
million as of March 31, 2026.Under the GNMA program, the Corporation
has the optionbut not the obligationto repurchase loans thatmeet GNMA’sspecified delinquency criteria. Foraccounting purposes, these loanssubject to the repurchaseoption are required tobe reflected on thefinancial
statements with an offsetting liability.
(5)
Nonaccrual loans in the Florida region amounted to $
11.8
million as of March 31, 2026, of which $
11.3
million were residential mortgage loans and $
0.5
million were C&I loans.
(6)
There were
no
nonaccrual loans with no ACL in the Florida region as of March 31, 2026.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
20
As of December 31, 2025
Days Past Due and Accruing
Current
(1)
30-59
60-89
90+
(2) (3) (4)
Nonaccrual
(5)
Total loans held
for investment
Nonaccrual
Loans with no
ACL
(6)
(In thousands)
Residential mortgage loans, mainly secured by first mortgages:
FHA/VA government-guaranteedloans
(1)
(2) (4)
$
70,781
$
-
$
2,163
$
15,776
$
-
$
88,720
$
-
Conventional residential mortgage loans
(1) (3) (5)
2,758,359
-
25,985
6,069
29,169
2,819,582
-
Commercial loans:
Construction loans
260,032
-
-
-
5,536
265,568
956
Commercial mortgage loans
(1) (3)
2,544,283
141
513
933
8,382
2,554,252
952
C&I loans
(5)
3,653,509
1,514
2,563
2,730
28,042
3,688,358
13,752
Consumer loans:
Auto loans
1,952,600
63,085
12,661
-
14,665
2,043,011
631
Finance leases
871,810
14,049
2,670
-
3,510
892,039
100
Personal loans
325,474
5,185
2,705
-
1,792
335,156
-
Credit cards
278,938
4,479
3,266
6,405
-
293,088
-
Other consumer loans
140,117
2,157
1,841
-
1,467
145,582
-
Total loans held for investment
$
12,855,903
$
90,610
$
54,367
$
31,913
$
92,563
$
13,125,356
$
16,391
(1)
According tothe Corporation’sdelinquency policyand consistentwith theinstructions forthe preparationof theConsolidated FinancialStatements forBank HoldingCompanies (FRY-9C)required bythe Federal
Reserve Board, residentialmortgage, commercial mortgage,and construction loansare considered pastdue when theborrower is inarrears on twoor more monthlypayments. FHA/VAgovernment-guaranteed loans,
conventional residential mortgage loans,and commercial mortgage loanspast due 30-59 days,but less than two paymentsin arrears, as ofDecember 31, 2025 amounted to$
8.7
million, $
59.1
million, and $
0.8
million,
respectively.
(2)
It isthe Corporation’spolicy toreport delinquentFHA/VAgovernment-guaranteed residentialmortgage loansas past-dueloans 90days andstill accruingas opposedto nonaccrualloans. TheCorporation continues
accruing interest on theseloans until they havepassed the 15-month delinquency mark,taking into consideration theFHA interest curtailment process.These balances include $
4.1
million of residential mortgageloans
guaranteed by the FHA that were over 15 months delinquent as of December 31, 2025.
(3)
Includes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation elected to treat pools of these loans as single assets both at the time of adoption of CECL on January 1, 2020 and on an
ongoing basis for credit loss measurement. These loans willcontinue to be excluded from nonaccrual loan statistics as longas the Corporation can reasonably estimate the timing andamount of cash flows expected to be
collected on the loanpools. The portion of suchloans contractually past due 90days or more, amounting to$
4.8
million as of December31, 2025 ($
3.9
million conventional residential mortgage loansand $
0.9
million
commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above.
(4)
Include rebooked loans,which were previouslypooled into GNMAsecurities, amounting to$
6.7
million as ofDecember 31, 2025.Under the GNMAprogram, the Corporationhas the optionbut not theobligation to
repurchase loans that meet GNMA’sspecified delinquency criteria. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability.
(5)
Nonaccrual loans in the Florida region amounted to $
11.3
million as of December 31, 2025, of which $
11.1
million were residential mortgage loans and $
0.2
million was a C&I loan.
(6)
There were
no
nonaccrual loans with no ACL in the Florida region as of December 31, 2025.
Whenaloanis placedinnonaccrualstatus,anyaccruedbut uncollectedinterestincomeis reversedandchargedagainst interest
incomeand theamortization ofany netdeferred feesis suspended.The amountof accruedinterest reversedagainst interestincome
totaled $
0.7
million and $
0.9
million for thequarters ended March31, 2026 and2025, respectively.For the quartersended March 31,
2026 and 2025, interest income recognized on nonaccrual loans amountedto $
0.7
million, compared to $
0.4
million, respectively.
As ofMarch 31,2026, therecorded investmenton residentialmortgage loanscollateralized byresidential realestate propertythat
were inthe processof foreclosureamountedto $
23.2
million,including$
6.2
million ofFHA/VAgovernment-guaranteedmortgage
loans, and$
3.0
million ofPCD loansacquired priorto theadoption, onJanuary 1,2020, ofCECL. TheCorporation commencesthe
foreclosureprocess onresidential realestate loansafter
120
days ofdelinquencyhave passed.Foreclosureprocedures andtimelines
vary depending on whether the property is locatedin a judicial or non-judicial state. Occasionally,foreclosures may be delayed due to,
among other reasons, mandatory mediations, bankruptcy,court delays, and title issues.
Credit Quality Indicators:
The Corporationcategorizes loansinto riskcategories basedon relevantinformationabout theability ofthe borrowersto service
their debtsuch ascurrent financialinformation, historicalpayment experience,credit documentation,public information,and current
economictrends,amongotherfactors.TheCorporationanalyzesnon-homogeneousloans,suchas commercialmortgage,C&I,and
construction loans individuallyto classify the loans’ creditrisk. The Corporationperiodically reviews its commercialand construction
loanstoevaluateiftheyareproperlyclassified.Thefrequencyofthesereviewswilldependontheamountoftheaggregate
outstandingdebt,andtheriskratingclassificationoftheobligor.Inaddition,duringtherenewalandannualreviewprocessof
applicable credit facilities,the Corporation evaluatesthe corresponding loangrades. The Corporationuses the same definitionfor risk
ratingsasthosedescribedforgovernmentbondsaccountedforasheld-to-maturitydebtsecurities,asdiscussedinNote2-“Debt
Securities,”
to the audited consolidated financial statements included in the 2025Annual Report on Form 10-K.
For residential mortgage and consumer loans, the Corporation evaluatescredit quality based on its interest accrual status.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
21
Based onthe mostrecent analysisperformed, theamortized costof commercialand constructionloans by portfolioclasses andby
origination year basedon the internal credit-riskcategory as of March31, 2026, the gross charge-offs for the quarterended March 31,
2026by portfolioclasses andby originationyear,and theamortizedcost ofcommercial andconstruction loansby portfolioclasses
based on the internal credit-risk category as of December 31, 2025, wereas follows:
As of March 31, 2026
As of
December 31,
2025
Puerto Rico and Virgin Islands Region
Term Loans
Amortized Cost Basis by Origination Year
(1)
2026
2025
2024
2023
2022
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
CONSTRUCTION
Risk Ratings:
Pass
$
-
$
18,221
$
101,993
$
60,062
$
3,409
$
3,878
$
-
$
187,563
$
258,104
Criticized:
Substandard
-
-
-
4,201
-
1,213
-
5,414
5,536
Total construction loans
$
-
$
18,221
$
101,993
$
64,263
$
3,409
$
5,091
$
-
$
192,977
$
263,640
Charge-offs on construction loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
COMMERCIAL MORTGAGE
Risk Ratings:
Pass
$
52,412
$
210,368
$
303,036
$
215,899
$
326,291
$
688,276
$
8,466
$
1,804,748
$
1,741,159
Criticized:
Special Mention
-
269
-
3,271
-
-
-
3,540
3,588
Substandard
-
63
-
448
3,001
14,749
-
18,261
19,180
Total commercial mortgage loans
$
52,412
$
210,700
$
303,036
$
219,618
$
329,292
$
703,025
$
8,466
$
1,826,549
$
1,763,927
Charge-offs on commercial mortgage loans
$
-
$
-
$
-
$
-
$
-
$
562
$
-
$
562
C&I
Risk Ratings:
Pass
$
24,068
$
468,181
$
249,028
$
279,784
$
238,446
$
330,870
$
835,993
$
2,426,370
$
2,440,152
Criticized:
Special Mention
-
-
-
1,647
-
-
33,030
34,677
40,643
Substandard
-
1,740
7
762
105
28,975
2,065
33,654
38,207
Total C&I loans
$
24,068
$
469,921
$
249,035
$
282,193
$
238,551
$
359,845
$
871,088
$
2,494,701
$
2,519,002
Charge-offs on C&I loans
$
-
$
-
$
38
$
35
$
-
$
11
$
306
$
390
(1) Excludes accrued interest receivable.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
22
As of March 31, 2026
As of
December 31,
2025
Term Loans
Florida Region
Amortized Cost Basis by Origination Year
(1)
2026
2025
2024
2023
2022
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
CONSTRUCTION
Risk Ratings:
Pass
$
-
$
1,614
$
676
$
-
$
-
$
-
$
-
$
2,290
$
1,928
Total construction loans
$
-
$
1,614
$
676
$
-
$
-
$
-
$
-
$
2,290
$
1,928
Charge-offs on construction loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
COMMERCIAL MORTGAGE
Risk Ratings:
Pass
$
19,443
$
172,849
$
75,268
$
25,876
$
195,926
$
261,144
$
31,834
$
782,340
$
771,997
Criticized:
Substandard
-
-
-
-
17,407
817
-
18,224
18,328
Total commercial mortgage loans
$
19,443
$
172,849
$
75,268
$
25,876
$
213,333
$
261,961
$
31,834
$
800,564
$
790,325
Charge-offs on commercial mortgage loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
C&I
Risk Ratings:
Pass
$
14,929
$
227,076
$
272,917
$
174,151
$
131,876
$
148,113
$
215,749
$
1,184,811
$
1,154,271
Criticized:
Special Mention
-
-
10,884
-
-
-
3,968
14,852
14,898
Substandard
-
-
-
-
-
181
298
479
187
Total C&I loans
$
14,929
$
227,076
$
283,801
$
174,151
$
131,876
$
148,294
$
220,015
$
1,200,142
$
1,169,356
Charge-offs on C&I loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
(1) Excludes accrued interest receivable.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
23
As of March 31, 2026
As of
December 31,
2025
Term Loans
Total
Amortized Cost Basis by Origination Year (1)
2026
2025
2024
2023
2022
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
CONSTRUCTION
Risk Ratings:
Pass
$
-
$
19,835
$
102,669
$
60,062
$
3,409
$
3,878
$
-
$
189,853
$
260,032
Criticized:
Substandard
-
-
-
4,201
-
1,213
-
5,414
5,536
Total construction loans
$
-
$
19,835
$
102,669
$
64,263
$
3,409
$
5,091
$
-
$
195,267
$
265,568
Charge-offs on construction loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
COMMERCIAL MORTGAGE
Risk Ratings:
Pass
$
71,855
$
383,217
$
378,304
$
241,775
$
522,217
$
949,420
$
40,300
$
2,587,088
$
2,513,156
Criticized:
Special Mention
-
269
-
3,271
-
-
-
3,540
3,588
Substandard
-
63
-
448
20,408
15,566
-
36,485
37,508
Total commercial mortgage loans
$
71,855
$
383,549
$
378,304
$
245,494
$
542,625
$
964,986
$
40,300
$
2,627,113
$
2,554,252
Charge-offs on commercial mortgage loans
$
-
$
-
$
-
$
-
$
-
$
562
$
-
$
562
C&I
Risk Ratings:
Pass
$
38,997
$
695,257
$
521,945
$
453,935
$
370,322
$
478,983
$
1,051,742
$
3,611,181
$
3,594,423
Criticized:
Special Mention
-
-
10,884
1,647
-
-
36,998
49,529
55,541
Substandard
-
1,740
7
762
105
29,156
2,363
34,133
38,394
Total C&I loans
$
38,997
$
696,997
$
532,836
$
456,344
$
370,427
$
508,139
$
1,091,103
$
3,694,843
$
3,688,358
Charge-offs on C&I loans
$
-
$
-
$
38
$
35
$
-
$
11
$
306
$
390
(1) Excludes accrued interest receivable.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
24
The followingtables present theamortized cost ofresidential mortgageloans by portfolioclasses and byorigination yearbased on
accrual status as of March 31, 2026,the gross charge-offs forthe quarter ended March 31, 2026 byorigination year, and theamortized
cost of residential mortgage loans by portfolio classes based on accrualstatus as of December 31, 2025:
As of March 31, 2026
As of
December 31,
2025
Term Loans
Amortized Cost Basis by Origination Year
(1)
2026
2025
2024
2023
2022
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Puerto Rico and Virgin Islands Region:
FHA/VA government-guaranteed loans
Accrual Status:
Performing
$
-
$
87
$
242
$
1,115
$
1,107
$
84,456
$
-
$
87,007
$
87,635
Total FHA/VAgovernment-guaranteed loans
$
-
$
87
$
242
$
1,115
$
1,107
$
84,456
$
-
$
87,007
$
87,635
Conventional residential mortgage loans
Accrual Status:
Performing
$
52,607
$
238,810
$
177,607
$
153,731
$
141,017
$
1,510,811
$
-
$
2,274,583
$
2,271,925
Non-Performing
-
39
-
-
328
16,431
-
16,798
18,044
Total conventional residential mortgage loans
$
52,607
$
238,849
$
177,607
$
153,731
$
141,345
$
1,527,242
$
-
$
2,291,381
$
2,289,969
Total
Accrual Status:
Performing
$
52,607
$
238,897
$
177,849
$
154,846
$
142,124
$
1,595,267
$
-
$
2,361,590
$
2,359,560
Non-Performing
-
39
-
-
328
16,431
-
16,798
18,044
Total residential mortgage loans
$
52,607
$
238,936
$
177,849
$
154,846
$
142,452
$
1,611,698
$
-
$
2,378,388
$
2,377,604
Charge-offs on residential mortgage loans
$
-
$
-
$
-
$
1
$
-
$
125
$
-
$
126
(1)
Excludes accrued interest receivable.
As of March 31, 2026
As of
December 31,
2025
Term Loans
Amortized Cost Basis by Origination Year
(1)
2026
2025
2024
2023
2022
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Florida Region:
FHA/VA government-guaranteed loans
Accrual Status:
Performing
$
-
$
-
$
-
$
-
$
-
$
1,332
$
-
$
1,332
$
1,085
Total FHA/VAgovernment-guaranteed loans
$
-
$
-
$
-
$
-
$
-
$
1,332
$
-
$
1,332
$
1,085
Conventional residential mortgage loans
Accrual Status:
Performing
$
19,073
$
72,055
$
82,184
$
72,788
$
61,636
$
216,169
$
-
$
523,905
$
518,488
Non-Performing
-
-
-
1,814
2,442
7,017
-
11,273
11,125
Total conventional residential mortgage loans
$
19,073
$
72,055
$
82,184
$
74,602
$
64,078
$
223,186
$
-
$
535,178
$
529,613
Total
Accrual Status:
Performing
$
19,073
$
72,055
$
82,184
$
72,788
$
61,636
$
217,501
$
-
$
525,237
$
519,573
Non-Performing
-
-
-
1,814
2,442
7,017
-
11,273
11,125
Total residential mortgage loans
$
19,073
$
72,055
$
82,184
$
74,602
$
64,078
$
224,518
$
-
$
536,510
$
530,698
Charge-offs on residential mortgage loans
$
-
$
-
$
-
$
-
$
-
$
4
$
-
$
4
(1)
Excludes accrued interest receivable.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
25
As of March 31, 2026
As of
December 31,
2025
Term Loans
Amortized Cost Basis by Origination Year
(1)
2026
2025
2024
2023
2022
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Total:
FHA/VA government-guaranteed loans
Accrual Status:
Performing
$
-
$
87
$
242
$
1,115
$
1,107
$
85,788
$
-
$
88,339
$
88,720
Total FHA/VAgovernment-guaranteed loans
$
-
$
87
$
242
$
1,115
$
1,107
$
85,788
$
-
$
88,339
$
88,720
Conventional residential mortgage loans
Accrual Status:
Performing
$
71,680
$
310,865
$
259,791
$
226,519
$
202,653
$
1,726,980
$
-
$
2,798,488
$
2,790,413
Non-Performing
-
39
-
1,814
2,770
23,448
-
28,071
29,169
Total conventional residential mortgage loans
$
71,680
$
310,904
$
259,791
$
228,333
$
205,423
$
1,750,428
$
-
$
2,826,559
$
2,819,582
Total
Accrual Status:
Performing
$
71,680
$
310,952
$
260,033
$
227,634
$
203,760
$
1,812,768
$
-
$
2,886,827
$
2,879,133
Non-Performing
-
39
-
1,814
2,770
23,448
-
28,071
29,169
Total residential mortgage loans
$
71,680
$
310,991
$
260,033
$
229,448
$
206,530
$
1,836,216
$
-
$
2,914,898
$
2,908,302
Charge-offs on residential mortgage loans
$
-
$
-
$
-
$
1
$
-
$
129
$
-
$
130
(1)
Excludes accrued interest receivable.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
26
Thefollowingtables presenttheamortizedcostofconsumerloansbyportfolioclassesandby originationyearbased onaccrual
status as ofMarch 31,2026, thegross charge-offsfor the quarterended March31, 2026 byportfolio classesand byorigination year,
and the amortized cost of consumer loans by portfolio classes based on accrual status as ofDecember 31, 2025:
As of March 31, 2026
As of
December 31,
2025
Term Loans
Total
Amortized Cost Basis by Origination Year
(1)
2026
2025
2024
2023
2022
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Auto loans
Accrual Status:
Performing
$
144,722
$
558,732
$
478,783
$
352,065
$
257,925
$
219,218
$
-
$
2,011,445
$
2,028,346
Non-Performing
-
1,144
2,116
2,385
2,606
4,232
-
12,483
14,665
Total auto loans
$
144,722
$
559,876
$
480,899
$
354,450
$
260,531
$
223,450
$
-
$
2,023,928
$
2,043,011
Charge-offs on auto loans
$
16
$
1,615
$
2,328
$
3,049
$
1,614
$
1,383
$
-
$
10,005
Finance leases
Accrual Status:
Performing
$
54,180
$
217,931
$
200,464
$
196,600
$
128,607
$
79,785
$
-
$
877,567
$
888,529
Non-Performing
-
71
772
950
799
1,643
-
4,235
3,510
Total finance leases
$
54,180
$
218,002
$
201,236
$
197,550
$
129,406
$
81,428
$
-
$
881,802
$
892,039
Charge-offs on finance leases
$
-
$
191
$
519
$
842
$
539
$
624
$
-
$
2,715
Personal loans
Accrual Status:
Performing
$
31,838
$
105,208
$
77,904
$
63,537
$
38,136
$
12,764
$
-
$
329,387
$
333,364
Non-Performing
-
290
360
467
300
100
-
1,517
1,792
Total personal loans
$
31,838
$
105,498
$
78,264
$
64,004
$
38,436
$
12,864
$
-
$
330,904
$
335,156
Charge-offs on personal loans
$
-
$
533
$
1,153
$
1,414
$
964
$
284
$
-
$
4,348
Credit cards
Accrual Status:
Performing
$
-
$
-
$
-
$
-
$
-
$
-
$
280,364
$
280,364
$
293,088
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
280,364
$
280,364
$
293,088
Charge-offs on credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
4,772
$
4,772
Other consumer loans
Accrual Status:
Performing
$
19,609
$
56,256
$
26,028
$
16,523
$
7,180
$
5,339
$
9,541
$
140,476
$
144,115
Non-Performing
-
440
450
298
103
47
144
1,482
1,467
Total other consumer loans
$
19,609
$
56,696
$
26,478
$
16,821
$
7,283
$
5,386
$
9,685
$
141,958
$
145,582
Charge-offs on other consumer loans
$
-
$
1,701
$
1,356
$
705
$
273
$
111
$
133
$
4,279
Total
Accrual Status:
Performing
$
250,349
$
938,127
$
783,179
$
628,725
$
431,848
$
317,106
$
289,905
$
3,639,239
$
3,687,442
Non-Performing
-
1,945
3,698
4,100
3,808
6,022
144
19,717
21,434
Total consumer loans
$
250,349
$
940,072
$
786,877
$
632,825
$
435,656
$
323,128
$
290,049
$
3,658,956
$
3,708,876
Charge-offs on total consumer loans
$
16
$
4,040
$
5,356
$
6,010
$
3,390
$
2,402
$
4,905
$
26,119
(1)
Excludes accrued interest receivable.
As of March 31, 2026 and December 31, 2025, the balance of revolving loans convertedto term loans was
no
t material.
Accruedinterestreceivableonloanstotaled$
54.5
millionasofMarch31,2026($
58.7
millionasofDecember31,2025),was
reported as partof accrued interest receivableon loans andinvestment securities inthe consolidated statementsof financial condition,
and is excluded from the estimate of credit losses.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
27
Thefollowingtablespresentinformationaboutcollateraldependentloansthatwereindividuallyevaluatedforpurposesof
determining the ACL as of March 31, 2026 and December 31, 2025:
As of March 31, 2026
Collateral Dependent Loans -
With Allowance
Collateral Dependent
Loans - With No
Related Allowance
Collateral Dependent Loans - Total
Amortized Cost
Related
Allowance
Amortized Cost
Amortized Cost
Related
Allowance
(In thousands)
Residential mortgage loans:
Conventional residential mortgage loans
$
22,044
$
1,200
$
-
$
22,044
$
1,200
Commercial loans:
Construction loans
4,201
597
956
5,157
597
Commercial mortgage loans
-
-
17,130
17,130
-
C&I loans
-
-
12,447
12,447
-
$
26,245
$
1,797
$
30,533
$
56,778
$
1,797
As of December 31, 2025
Collateral Dependent Loans -
With Allowance
Collateral Dependent
Loans - With No
Related Allowance
Collateral Dependent Loans - Total
Amortized Cost
Related
Allowance
Amortized Cost
Amortized Cost
Related
Allowance
(In thousands)
Residential mortgage loans:
Conventional residential mortgage loans
$
22,919
$
1,233
$
-
$
22,919
$
1,233
Commercial loans:
Construction loans
4,321
627
956
5,277
627
Commercial mortgage loans
4,454
130
19,009
23,463
130
C&I loans
-
-
13,753
13,753
-
$
31,694
$
1,990
$
33,718
$
65,412
$
1,990
Theunderlyingcollateralforresidentialmortgageandconsumercollateraldependentloans consistedofsingle-familyresidential
properties,and forcommercial andconstruction loansconsisted primarilyof officebuildings, multifamilyresidential properties,and
retailestablishments.Theweighted-averageloan-to-valuecoverageforcollateraldependentloansasofMarch31,2026was
65
%,
compared to
67
% asof December31, 2025,driven bya $
1.2
million repaymentof aC&I loanin thePuerto Ricoregion inthe food
retail industry with a loan-to-value ratio of
77
% and a $
4.7
million outflow from the collateral-dependent loanportfolio, attributable to
a commercial mortgage loan in the Puerto Rico region with a loan-to-valueratio of
80
%.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
28
Purchases and Sales of Loans
Intheordinarycourseofbusiness,theCorporationentersintosecuritizationtransactionsandwholeloansaleswithGNMAand
GSEs,suchasFederalNationalMortgageAssociation(“FNMA”)andFederalHomeLoanMortgageCorporation(“FHLMC”).
During thequarters endedMarch 31,2026 and2025, loanspooledinto GNMAMBS amountedto approximately$
41.6
million and
$
42.2
million,respectively,forwhichtheCorporationrecognizedanetgainonsale of$
2.4
millionand$
1.1
million,respectively.
Also, duringthe quarterended March31, 2025,the Corporationsold approximately$
4.1
million ofperforming residentialmortgage
loans to GSEs,for which theCorporation recognizeda net gain onsale of $
0.2
million. There were
no
sales of performingresidential
mortgage loansto GSEsfor thequarter endedMarch 31,2026. TheCorporation’scontinuing involvementwith theloans thatit sells
consistsprimarilyofservicingtheloans.Inaddition,theCorporationagreestorepurchaseloansifitbreachesanyofthe
representationsandwarrantiesincludedinthesaleagreement.TheserepresentationsandwarrantiesareconsistentwiththeGSEs’
selling and servicing guidelines (
i.e.
, ensuring that the mortgage was properly underwritten according to establishedguidelines).
For loanspooled intoGNMA MBS,the Corporation,as servicer,holds anoption torepurchase individualdelinquent loansissued
on or afterJanuary 1, 2003,when certain delinquencycriteria are met. Thisoption gives theCorporation the unilateralability,but not
the obligation, torepurchase the delinquentloans at par withoutprior authorization fromGNMA. Since theCorporation is considered
tohaveregainedeffectivecontrolovertheloans,itisrequiredtorecognizetheloansandacorrespondingrepurchaseliability
regardless ofits intentto repurchasethe loans.As ofeach ofMarch 31,2026 andDecember 31,2025, rebookedGNMA delinquent
loans that were included in the residential mortgage loan portfolioamounted to $
6.7
million.
DuringthequartersendedMarch31,2026and2025,theCorporationrepurchased,pursuanttotheaforementionedrepurchase
option, $
0.4
million and $
0.2
million, respectively,of loans previously pooledinto GNMA MBS. Theprincipal balance of theseloans
is fullyguaranteed,and therisk ofloss relatedto therepurchased loansis generallylimited tothe differencebetween thedelinquent
interest paymentadvancedto GNMA,whichis computedat theloan’sinterest rate,andthe interestpaymentsreimbursedby FHA,
which arecomputed ata pre-determineddebenture rate.Repurchases ofGNMA loansallow theCorporation, amongother things,to
maintain acceptable delinquencyrates on outstanding GNMApools and remain asa seller and servicerin good standing withGNMA.
Historically, losseson these repurchases ofGNMA delinquent loans havebeen immaterial and no provision hasbeen made at the time
of sale.
Loan sales to FNMA andFHLMC are without recoursein relation to the futureperformance of the loans.The Corporation’srisk of
losswithrespecttotheseloansisalsominimalastheserepurchasedloansaregenerallyperformingloanswithdocumentation
deficiencies.
During thequarter endedMarch 31,2026, theCorporation purchasedC&I loanparticipations inthe Floridaregion totaling$
35.7
million, compared to $
15.0
million during the quarter ended March 31, 2025.
DuringthequarterendedMarch31,2025,theCorporationrecognizedrecoveriesof$
2.4
millionfromthebulksaleoffully
charged-offconsumerloansandfinanceleases.TherewerenosignificantsalesofloansduringthequarterendedMarch31,2026,
other than sales of conforming residential mortgage loans mentioned above.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
29
Loan Portfolio Concentration
The Corporation’sprimarylending areais PuertoRico. TheCorporation’sbanking subsidiary,FirstBank, alsolends inthe USVI
and the BVI markets andin the United States (principallyin the state of Florida).Of the total gross loans heldfor investment portfolio
of $
13.1
billion asof March31, 2026,credit riskconcentration wasapproximately
77
% inPuerto Rico,
19
% inthe U.S.,and
4
% in
the USVI and the BVI.
AsofMarch31,2026,theCorporationhad$
215.0
millionoutstandinginloansextendedtothePuertoRicogovernment,its
municipalities andpublic corporations,compared to$
215.5
million asof December31, 2025.As ofMarch 31,2026, approximately
$
155.4
millionconsistedofloansextendedtomunicipalitiesinPuertoRicothataregeneralobligationssupportedbyassigned
propertytaxrevenues,and $
18.6
millionofloans whichare supportedby oneormorespecific sourcesof municipalrevenues. The
vastmajorityofrevenuesof themunicipalitiesincludedintheCorporation’sloanportfolioareindependentofbudgetarysubsidies
providedbythePuertoRicocentralgovernment.Thesemunicipalitiesarerequiredbylawtolevyspecialpropertytaxesinsuch
amountsasarerequiredtosatisfythepaymentofalloftheirrespectivegeneralobligationbondsandnotes.Inadditiontoloans
extended to municipalities, theCorporation’s exposureto the Puerto Rico governmentas of March 31, 2026 included$
8.6
million in a
loan granted toan affiliate ofthe Puerto RicoElectric Power Authority(“PREPA”)and $
32.4
million in loansto a public corporation
of the Puerto Rico government.
Moreover,asofMarch31,2026,theoutstandingbalanceofconstructionloansfundedthroughconduitfinancingstructuresto
supportthefederalprogramsofLow-IncomeHousingTaxCredit(“LIHTC”)combinedwithotherfederalprogramsamountedto
$
81.6
million, comparedto $
92.4
million asof December31, 2025.The mainobjective ofthese programsis tospur developmentin
new or rehabilitatedand affordable rentalhousing. PRHFA,as program subrecipientand conduit issuer,issues tax-exempt obligations
whichareacquiredbyprivatefinancialinstitutionsandarerequiredtoco-underwritewithPRHFAamirrorconstructionloan
agreement for the specific projectloan to which the Corporation willserve as ultimate lender,but where the PRHFAwill be the lender
of record.
In addition,as of March31, 2026, theCorporation had$
66.0
million in exposureto residential mortgageloans that areguaranteed
bythePRHFA,agovernmentinstrumentalitythathasbeendesignatedasacoveredentityunderPROMESA,comparedto$
67.1
million as ofDecember 31, 2025.Residential mortgageloans guaranteed bythe PRHFAare secured bythe underlying propertiesand
the guarantees serve to cover shortfalls in collateral in the event of a borrower default.
The Corporationalso has creditexposure toUSVI governmententities. As ofMarch 31, 2026,the Corporationhad
$
168.3
million
in loansto USVIgovernment publiccorporations, comparedto $
138.7
million asof December31, 2025.As ofMarch 31,2026, all
loans were currently performing and up to date on principal and interest payments.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
30
Loss Mitigation Program for Borrowers ExperiencingFinancial Difficulty
The Corporation provides assistance toits customers through a loss mitigationprogram. Depending upon thenature of a borrower’s
financialcondition,restructuringsorloanmodificationsthroughthisprogramareprovided,aswellasotherrestructuringsof
individualC&I,commercialmortgage,construction,andresidentialmortgageloans.TheCorporationmayalsomodifycontractual
terms to comply with regulations regarding the treatment of certain bankruptcyfilings and discharge situations.
Theloanmodificationsgrantedtoborrowersexperiencingfinancialdifficultythatareassociatedwithpaymentdelaystypically
include the following:
-
Forbearance plans –Payments of either interestand/or principal aredeferred for a pre-establishedperiod of time, generallynot
exceedingsixmonthsinanygivenyear.Thedeferredinterestand/orprincipalisrepaidaseitheralumpsumpaymentat
maturity date or by extending the loan’smaturity date by the number of forbearance months granted.
-
Paymentplans–Borrowersareallowedtopaytheregularmonthlypaymentplusthepre-establisheddelinquentamounts
during a period generally not exceedingsix months.At the end of the payment plan, theborrower is required to resume making
its regularly scheduled loan payments.
-
Trialmodifications–Thesetypesofloanmodificationsare grantedforresidentialmortgageloansandhomeequitylines of
credit. Borrowerscontinue making reduced monthlypayments during thetrial period, which isgenerally up to sixmonths. The
reducedpaymentsthataremadebytheborrowerduringthetrialperiodwillresultinapaymentdelaywithrespecttothe
original contractual terms ofthe loan since the loan hasnot yet been contractuallymodified. After successful completionof the
trial period, the mortgage loan is contractually modified.
Modificationsin theformof areductionin interestrate,term extension,change inamortizationterm,an other-than-insignificant
paymentdelay,oranycombinationofthesetypesofloanmodificationsthathaveoccurredinthecurrentreportingperiodfora
borrowerexperiencingfinancialdifficultyaredisclosedinthetablesbelow.Manyfactorsareconsideredwhenevaluatingwhether
there isan other-than-insignificantpayment delay,such asthe significanceof therestructured paymentamount relativeto theunpaid
principal balance or collateral value of the loan or the relative significance ofthe delay to the original loan terms.
Thebelowdisclosuresrelatetoloanmodificationsgrantedtoborrowersexperiencingfinancialdifficultyinwhichtherewasa
changeinthetimingand/oramountofcontractualcashflowsintheformofanyoftheaforementionedtypesofmodifications,
includingrestructuringsthatresultedinamore-than-insignificantpaymentdelay.Thesedisclosuresexclude$
0.8
millionin
restructuredresidentialmortgageloansthataregovernment-guaranteed(e.g.FHA/VAloans)andweremodifiedduringthequarter
ended March 31, 2026, compared to $
1.4
million for the comparable period in 2025.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
31
The followingtables presentthe amortizedcost basisas of March31, 2026and 2025of loansmodified toborrowers experiencing
financial difficultyduring the quartersended March 31, 2026and 2025, by portfolioclasses and typeof modification granted,and the
percentage of these modified loans relative to the total period-endamortized cost basis of receivables in the portfolio class:
Quarter Ended March 31, 2026
Payment Delay Only
Forbearance
Payment
Plan
Trial
Modification
Change in
Amortization
term
Interest Rate
Reduction
Term
Extension
Combination
of Interest
Rate
Reduction
and Term
Extension
Other
Total
Percentage
of Total by
Portfolio
Classes
(In thousands)
Conventional residential mortgage loans
$
-
$
-
$
144
$
-
$
-
$
-
$
-
$
-
$
144
0.01%
Construction loans
-
-
-
-
-
-
-
-
-
-
Commercial mortgage loans
-
365
-
-
-
-
-
-
365
0.01%
C&I loans
-
298
-
-
12
(1)
19
1,559
8
(2)
1,896
0.05%
Consumer loans:
Auto loans
-
-
-
-
-
81
141
640
(2)
862
0.04%
Personal loans
-
-
-
-
-
-
197
-
197
0.06%
Credit cards
-
-
-
-
570
(1)
-
-
-
570
0.20%
Other consumer loans
-
-
-
-
-
59
3
-
62
0.04%
Total modifications
$
-
$
663
$
144
$
-
$
582
$
159
$
1,900
$
648
$
4,096
Quarter Ended March 31, 2025
Payment Delay Only
Forbearance
Payment
Plan
Trial
Modification
Change in
Amortization
Term
Interest Rate
Reduction
Term
Extension
Combination
of Interest
Rate
Reduction
and Term
Extension
Other
Total
Percentage
of Total by
Portfolio
Classes
(In thousands)
Conventional residential mortgage loans
$
-
$
-
95
$
-
$
-
$
117
$
-
$
-
$
212
0.01%
Construction loans
-
-
-
-
-
-
-
-
-
-
Commercial mortgage loans
-
-
-
-
-
-
-
-
-
-
C&I loans
201
(3)
-
-
-
21
(1)
331
-
-
553
0.02%
Consumer loans:
Auto loans
-
-
-
-
-
205
55
796
(2)
1,056
0.05%
Personal loans
-
-
-
-
-
7
91
-
98
0.03%
Credit cards
-
-
-
-
965
(1)
-
-
-
965
0.32%
Other consumer loans
-
-
-
-
-
76
57
-
133
0.09%
Total modifications
$
201
$
-
95
$
-
$
986
$
736
$
203
$
796
$
3,017
(1)
Modification consists of reduction in interest rate and revocation of revolving line privileges.
(2)
Modification consists of court mandated reduction to 0% interest rate for remaining loan term to borrowers in bankruptcy proceedings unless dismissal occurs.
(3)
Modification consists of a six-month deferral of principal and interest to be repaid on or before the end of the forbearanceplan.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
32
Thefollowingtablespresentbyportfolioclassesthefinancialeffectsofthemodificationsgrantedtoborrowersexperiencing
financial difficulty,other than thoseassociated to paymentdelay,during the quartersended March31, 2026 and2025. The financial
effects of the modifications associated to payment delay were discussedabove and, as such, were excluded from the tables below:
Quarter Ended March 31, 2026
Combination of Interest Rate Reduction
and Term Extension
Weighted-Average
Interest Rate
Reduction (%)
Weighted-Average
Term Extension (in
months)
Weighted-Average
Interest Rate
Reduction (%)
Weighted-Average
Term Extension (in
months)
Change in
Amortization Term
(in months)
Conventional residential mortgage loans
-
%
-
-
%
-
-
Construction loans
-
%
-
-
%
-
-
Commercial mortgage loans
-
%
-
-
%
-
-
C&I loans
15.27
%
8
2.25
%
12
-
Consumer loans:
Auto loans
-
%
27
4.04
%
26
-
Personal loans
-
%
-
4.79
%
26
-
Credit cards
14.60
%
-
-
%
-
-
Other consumer loans
-
%
24
2.00
%
20
-
Quarter Ended March 31, 2025
Combination of Interest Rate Reduction
and Term Extension
Weighted-Average
Interest Rate
Reduction (%)
Weighted-Average
Term Extension (in
months)
Weighted-Average
Interest Rate
Reduction (%)
Weighted-Average
Term Extension (in
months)
Change in
Amortization Term
(in months)
Conventional residential mortgage loans
-
%
66
-
%
-
-
Construction loans
-
%
-
-
%
-
-
Commercial mortgage loans
-
%
-
-
%
-
-
C&I loans
14.23
%
120
-
%
-
-
Consumer loans:
Auto loans
-
%
25
1.88
%
16
-
Personal loans
-
%
36
3.65
%
23
-
Credit cards
16.01
%
-
-
%
-
-
Other consumer loans
-
%
27
3.14
%
21
-
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
33
The followingtables presentby portfolioclasses theperformance ofloans modifiedduring thelast twelvemonths endedMarch
31, 2026 and 2025 that were granted to borrowers experiencing financial difficulty:
Last Twelve Months Ended March 31, 2026
30-59
60-89
90+
Total
Delinquency
Current
Total
(In thousands)
Conventional residential mortgage loans
$
165
$
-
$
-
$
165
$
1,374
$
1,539
Construction loans
-
-
-
-
-
-
Commercial mortgage loans
-
-
-
-
30,530
30,530
C&I loans
8
-
14
22
3,007
3,029
Consumer loans:
Auto loans
54
107
121
282
3,630
3,912
Personal loans
79
-
15
94
604
698
Credit cards
365
207
267
839
2,194
3,033
Other consumer loans
15
9
9
33
387
420
Total modifications
$
686
$
323
$
426
$
1,435
$
41,726
$
43,161
Last Twelve Months Ended March 31, 2025
30-59
60-89
90+
Total
Delinquency
Current
Total
(In thousands)
Conventional residential mortgage loans
$
-
$
-
$
-
$
-
$
981
$
981
Construction loans
-
-
-
-
119
119
Commercial mortgage loans
-
-
-
-
126,974
126,974
C&I loans
6
4
-
10
10,519
10,529
Consumer loans:
Auto loans
78
99
152
329
3,313
3,642
Personal loans
-
-
-
-
267
267
Credit cards
218
117
99
434
2,651
3,085
Other consumer loans
18
23
10
51
488
539
Total modifications
$
320
$
243
$
261
$
824
$
145,312
$
146,136
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
34
NOTE 4 – ALLOWANCEFOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES
The following tables present the activity in the ACL on loans and finance leases byportfolio segment for the indicated periods:
Residential
Mortgage
Loans
Commercial
Mortgage
Loans
Consumer Loans
and Finance
Leases
Construction
Loans
C&I
Loans
Total
Quarter Ended March 31, 2026
(In thousands)
ACL:
Beginning balance
$
41,071
$
5,672
$
23,832
$
41,416
$
137,046
$
249,037
Provision for credit losses - expense (benefit)
239
(2,361)
360
1,017
17,915
17,170
Charge-offs
(130)
-
(562)
(390)
(26,119)
(27,201)
Recoveries
354
13
40
81
5,566
6,054
Ending balance
$
41,534
$
3,324
$
23,670
$
42,124
$
134,408
$
245,060
Residential
Mortgage
Loans
Construction
Loans
Commercial
Mortgage
Loans
C&I
Loans
Consumer Loans
and Finance
Leases
Total
Quarter Ended March 31, 2025
(In thousands)
ACL:
Beginning balance
$
40,654
$
3,824
$
22,447
$
33,034
$
143,983
$
243,942
Provision for credit losses - expense (benefit)
1,004
(421)
1,656
3,353
19,245
24,837
Charge-offs
(235)
-
-
(77)
(27,898)
(28,210)
Recoveries
217
14
40
154
6,275
(1)
6,700
Ending balance
$
41,640
$
3,417
$
24,143
$
36,464
$
141,605
$
247,269
(1) Includes recoveries totaling $
2.4
million associated with the bulk sale of fully charged-offconsumer loans and finance leases.
TheCorporationestimatestheACLfollowingthemethodologiesdescribedinNote1–“NatureofBusinessandSummaryof
Significant AccountingPolicies” tothe auditedconsolidated financialstatements includedin the2025 AnnualReport onForm 10-K,
as updated by the information contained in this report, for each portfolio segment.
The Corporationgenerally appliesprobability weightsto thebaseline andalternative downsideeconomic scenariosto estimatethe
ACL withthebaselinescenariocarryingthe highestweight.Thescenariosthat arechoseneach quarterandtheweightinggivento
eachscenarioforthedifferentloanportfoliocategoriesdependonavarietyoffactorsincludingrecenteconomicevents,leading
nationalandregionaleconomicindicators,andindustrytrends.AsofMarch31,2026andDecember31,2025,theCorporation
applied100%probabilitytothebaselinescenarioforthecommercialmortgageandconstructionloanportfoliossincecertain
macroeconomic variablesassociated withcommercial realestate propertyperformance andthe commercialreal estate(“CRE”) price
index,particularlyinthePuertoRicoregion,areexpectedtocontinuetoperforminamorefavorablemannerthanthealternative
downside economic scenario.
As of March 31,2026, the ACL for loansand finance leases was $
245.1
million, a decrease of$
3.9
million, from $
249.0
million as
of December31, 2025.The decreasewas mainlyrelated tothe ACLfor consumerloans, whichdecreased by$
2.6
million, drivenby
improvements in macroeconomic variables,mainly in the projection of the unemploymentrate, and lower delinquency levels, partially
offset by higher qualitative reserves associated with geopoliticaluncertainty driven by,among other things, higher oil prices as a result
of the conflictin the MiddleEast. In addition,the ACL forcommercial andconstruction loans decreasedby $
1.8
million, mainly due
toimprovementsintheprojectionsoftheunemploymentrateandtheCREpriceindex,netofaforementionedqualitativereserves,
partially offset by renewals and refinancings.
Meanwhile,theACLforresidentialmortgageloansincreasedby$
0.5
million,drivenbyloangrowthandtheaforementioned
geopolitical uncertainty,partially offset by an improvement in the projection of the unemploymentrate.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
35
Net charge-offswere $
21.1
million forthe quarterended March31, 2026,compared to$
21.4
million forthe sameperiod in2025.
The $
0.3
million decreasewas driven bya $
1.1
million reductionin consumer loansand finance leasesnet charge-offs,mainly inthe
unsecured loan portfolios, after considering theimpact of $
2.4
million in recoveries related to the aforementioned bulksale recognized
during the first quarter of 2025. This improvement was partially offsetby a $
0.9
million increase in commercial and construction loans
net charge-offs,driven by a $
0.6
million charge-offon a nonaccrual commercialmortgage loan in the VirginIslands region during the
first quarter of 2026.
The tables below present theACL related to loans andfinance leases and the carryingvalues of loans by portfoliosegment as of
March 31, 2026 and December 31, 2025:
As of March 31, 2026
Residential
Mortgage
Loans
Construction
Loans
Commercial
Mortgage
Loans
C&I
Loans
Consumer Loans
and Finance
Leases
Total
(Dollars in thousands)
Total loans held for investment:
Amortized cost of loans
$
2,914,898
$
195,267
$
2,627,113
$
3,694,843
$
3,658,956
$
13,091,077
Allowance for credit losses
41,534
3,324
23,670
42,124
134,408
245,060
Allowance for credit losses to
amortized cost
1.42
%
1.70
%
0.90
%
1.14
%
3.67
%
1.87
%
As of December 31, 2025
Residential
Mortgage
Loans
Construction
Loans
Commercial
Mortgage
Loans
C&I
Loans
Consumer Loans
and Finance
Leases
Total
(Dollars in thousands)
Total loans held for investment:
Amortized cost of loans
$
2,908,302
$
265,568
$
2,554,252
$
3,688,358
$
3,708,876
$
13,125,356
Allowance for credit losses
41,071
5,672
23,832
41,416
137,046
249,037
Allowance for credit losses to
amortized cost
1.41
%
2.14
%
0.93
%
1.12
%
3.70
%
1.90
%
Inaddition,theCorporationestimatesexpectedcreditlossesoverthecontractualperiodinwhichtheCorporationisexposedto
creditriskviaacontractualobligationtoextendcredit,suchasunfundedloancommitmentsandstandbylettersofcreditfor
commercialandconstructionloans,unlesstheobligationisunconditionallycancellablebytheCorporation.SeeNote18–
“RegulatoryMatters,CommitmentsandContingencies”forinformationonoff-balancesheetexposuresasofMarch31,2026and
December 31,2025. TheCorporation estimatesthe ACLfor theseoff-balancesheet exposuresfollowing themethodology described
inNote1 –“Natureof BusinessandSummaryof SignificantAccountingPolicies”tothe auditedconsolidatedfinancial statements
included in the2025 Annual Reporton Form 10-K.As of March31, 2026, theACL for off-balancesheet credit exposuresamounted
to $
3.1
million, compared to $
3.0
million as of December 31, 2025.
The followingtable presentsthe activityin theACL forunfunded loancommitments andstandby lettersof creditfor thequarters
ended March 31, 2026 and 2025:
Quarter Ended March 31,
2026
2025
(In thousands)
Beginning balance
$
3,013
$
3,143
Provision for credit losses - expense (benefit)
107
(63)
Ending balance
$
3,120
$
3,080
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
36
NOTE 5
–
OTHER REAL ESTATEOWNED (“OREO”)
The following table presents the OREO inventory as of the indicated dates:
March 31, 2026
December 31, 2025
(In thousands)
OREO balances, carrying value:
Residential
(1)
$
5,107
$
6,524
Construction
442
386
Commercial
795
612
Total
$
6,344
$
7,522
(1)
Excludes $
3.1
million and $
4.1
million as ofMarch 31, 2026and December 31,2025, respectively,of foreclosures thatmet the conditionsof ASC Subtopic310-40 “Reclassificationof
Residential RealEstate Collateralized ConsumerMortgage Loans uponForeclosure,” andare presented asa receivable aspart of otherassets inthe consolidated statementsof financial
condition.
See Note 14 – “FairValue”for information on subsequentmeasurement adjustments recordedon OREO properties reportedas part
of “Net gain on OREO operations” in the consolidated statements ofincome during the quarters ended March 31, 2026 and 2025.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
37
NOTE 6 – DEPOSITS
The following table summarizes deposit balances as of the indicated dates:
March 31, 2026
December 31, 2025
(In thousands)
Type of account:
Non-interest-bearing deposit accounts
$
5,554,751
$
5,549,416
Interest-bearing checking accounts
3,545,690
3,512,649
Interest-bearing saving accounts
3,505,401
3,452,192
Time deposits
3,482,968
3,562,331
Brokered CDs
507,011
593,555
Total
$
16,595,821
$
16,670,143
The following table presents the remaining contractual maturities of time deposits,including brokered CDs, as of March 31, 2026:
Total
(In thousands)
Three months or less
$
937,286
Over three months to six months
789,420
Over six months to one year
1,372,283
Over one year to two years
665,539
Over two years to three years
126,660
Over three years to four years
41,270
Over four years to five years
41,715
Over five years
15,806
Total
$
3,989,979
TotalPuertoRicoandU.S.timedepositswithbalancesofmorethan$250,000amountedto$
1.7
billionand$
1.8
billionasof
March 31, 2026and December 31,2025, respectively.This amount doesnot include brokeredCDs that aregenerally participatedout
bybrokersinsharesoflessthantheFDICinsurancelimit.AsofMarch31,2026andDecember31,2025,unamortizedbroker
placementfeesamountedto$
0.8
millionand$
0.9
million,respectively,whichareamortizedoverthecontractualmaturityofthe
brokered CDs under the interest method.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
38
NOTE 7 – BORROWINGS
As of March 31, 2026 and December 31, 2025, total borrowings consisted of FHLB advancesas set forth below:
March 31, 2026
December 31, 2025
(In thousands)
Short-term
Fixed
-rate advances from the FHLB
(1)
$
90,000
$
-
Long-term
Fixed
-rate advances from the FHLB
(2)
200,000
290,000
$
290,000
$
290,000
(1)
Interest rate of
3.86
% as of March 31, 2026.
(2)
Weighted-average interest rate of
4.25
% and
4.32
% as of March 31, 2026 and December 31, 2025, respectively. Contractual maturitydate of November 2027 as of
March 31, 2026.
Advances from the FHLB mature as follows as of the indicated date:
March 31, 2026
(In thousands)
Three months or less
$
90,000
Over one year to two years
200,000
Total
(1)
$
290,000
(1) Average remaining term to maturity of
1.13
years.
During the firstquarter of 2026, theCorporation added a $
90.0
million short-term fixed-rateFHLB advance withan interest rate of
3.86
% and repaid at maturity $
90.0
million of long-term FHLB advances at an average rate of
4.49
%.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
39
NOTE 8 – EARNINGS PER COMMON
.
SHARE
The calculations of earnings per common share for the quarters ended March 31, 2026and 2025 are as follows:
Quarter Ended March 31,
2026
2025
(In thousands, except per share information)
Net income attributable to common stockholders
$
88,778
$
77,059
Weighted-AverageShares:
Average commonshares outstanding
155,262
162,934
Average potentialdilutive common shares
839
815
Average commonshares outstanding - assuming dilution
156,101
163,749
Earnings per common share:
Basic
$
0.57
$
0.47
Diluted
$
0.57
$
0.47
Earningspercommonshareiscomputedbydividingnetincomeattributabletocommonstockholdersbytheweighted-average
numberofcommonsharesissuedandoutstanding.Basicweighted-averagecommonsharesoutstandingexcludeunvested sharesof
restricted stock that do not contain non-forfeitable dividend rights.
Potential dilutivecommonshares consistof unvestedshares ofrestrictedstockandperformanceunits (ifanyof theperformance
conditionsaremetasoftheendofthereportingperiod)thatdonotcontainnon-forfeitabledividendordividendequivalentrights
using thetreasury stockmethod. Thismethod assumesthat proceedsequal tothe amountof compensationcost attributableto future
servicesisusedtorepurchasesharesontheopenmarketattheaveragemarketpricefortheperiod.Thedifferencebetweenthe
numberofpotentialdilutivesharesissuedandthesharespurchasedisaddedasincrementalsharestotheactualnumberofshares
outstandingtocomputedilutedearningspershare.Unvestedsharesofrestrictedstockoutstandingduringtheperiodthatresultin
lower potentiallydilutive shares issuedthan shares purchasedunder thetreasury stock methodare not includedin the computationof
dilutiveearningspersharesincetheirinclusionwouldhave anantidilutiveeffectonearningspershare.Therewere
no
antidilutive
shares of common stock during the quarters ended March 31, 2026and 2025.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
40
NOTE 9 – STOCK-BASED
.
COMPENSATION
The First BanCorp.2016 Omnibus Plan (the “2016Omnibus Plan”), provided forequity-based and non-equity-basedcompensation
incentives (the“awards”), andauthorized theissuance ofup to
14,169,807
shares ofcommon stock,subject toadjustments forstock
splits,reorganizationsandothersimilarevents.AsofMarch31,2026,therewere
1,336,410
authorizedsharesofcommonstock
available for issuance under the 2016 Omnibus Plan.
OnMay 6,2026,the Corporation’sstockholdersapproved theadoptionof theFirst BanCorp.2026 OmnibusIncentivePlan(the
“2026OmnibusPlan”).The 2026OmnibusPlanisthesuccessortothe2016OmnibusPlan(referredtogetherhereinas“Omnibus
Plan”) andeffective asof May6, 2026,no awardswill be grantedunder the2016 OmnibusIncentive Plan.The 2026 OmnibusPlan,
which iseffective untilMay 6, 2036,authorizes upto
5,000,000
shares ofcommon stock,subject tocertain adjustments.In addition,
any shares ofcommon stock subjectto outstandingawards granted underthe 2016 OmnibusIncentive Planthat are payablein shares
and that areforfeited orotherwise terminate onor afterMay 6, 2026,without the deliveryof shares ofcommon stock, maybe issued
with respect toawards underthe 2026 OmnibusPlan. The Corporation’sCompensation andBenefits Committee ofthe Board hasthe
power andauthority todetermine thoseeligible toreceive awardsand toestablish theterms andconditions ofany awards,subject to
various limits and vesting restrictions that apply to individual and aggregateawards.
Restricted Stock
Under theOmnibus Plan,the Corporationmay grantrestricted stockto planparticipants, subjectto forfeitureupon theoccurrence
of certainevents untilthe datesspecified inthe participant’saward agreement.While therestricted stockis subjectto forfeitureand
doesnotcontainnon-forfeitabledividendrights,participantsmayexercisefullvotingrightswithrespecttothesharesofrestricted
stockgrantedtothem.ThefairvalueofthesharesofrestrictedstockgrantedwasbasedonthemarketpriceoftheCorporation’s
commonstock onthe dateof therespective grant.The sharesof restrictedstocks grantedto employeesare subjectto thefollowing
vesting period:fifty percent(
50
%) ofthose sharesvest onthe two-yearanniversary ofthe grantdate andthe remaining
50
% veston
the three-yearanniversary ofthe grantdate. Theshares ofrestricted stockgranted todirectors aregenerally subjectto vestingon the
one-year anniversary of the grant date.
The following table summarizes the restricted stock activity under the 2016 OmnibusPlan during the quarters ended March 31,
2026 and 2025:
Quarter ended
Quarter ended
March 31, 2026
March 31, 2025
Number of
Weighted-
Number of
Weighted-
shares of
Average
shares of
Average
restricted
Grant Date
restricted
Grant Date
stock
Fair Value
stock
Fair Value
Unvested shares outstanding at beginning of year
1,033,690
$
16.71
1,007,621
$
14.39
Granted
(1)
436,540
20.59
447,631
18.35
Forfeited
-
-
(2,180)
15.22
Vested
(404,613)
14.48
(364,677)
12.44
Unvested shares outstanding at end of period
1,065,617
$
19.14
1,088,395
$
16.67
(1)
For the quarter ended March 31, 2026, includes
1,872
shares of restricted stock awarded to independent directors and
434,668
shares of restricted stock awarded to employees, of which
87,895
shares were granted to retirement-eligible employees and thuscharged to earnings as of the grant date. For thequarter ended March 31, 2025, includes
2,086
shares of restricted
stock awarded to independent directors and
445,545
shares of restricted stock awarded to employees, of which
103,560
shares were granted to retirement-eligible employees and thus
charged to earnings as of the grant date.
For the quartersended March 31,2026 and 2025,the Corporation recognized$
3.2
million and $
3.1
million, respectively,of stock-
based compensationexpense relatedto restrictedstock awards.As ofMarch 31,2026, therewas $
10.8
million oftotal unrecognized
compensationcostrelatedtounvestedsharesofrestrictedstockthattheCorporationexpectstorecognizeoveraweighted-average
period of
2.0
years.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
41
Performance Units
Under the Omnibus Plan, the Corporation may awardperformance units to participants, with each unit representingthe value of one
shareoftheCorporation’scommonstock.
These awards, which are granted to executives, have the right to receive dividend
equivalents. Such dividend equivalents accrue during the performance cycle and are paid in cash on the vesting date based upon
achievement of the performance goals.
Performance units granted vest on the third anniversary of the effective date of the award based on actual achievement of two
performance metrics weighted equally: relative total shareholder return (“Relative TSR”), compared to companies that comprise the
KBW Nasdaq Regional Banking Index, and the achievement of a tangible book value per share (“TBVPS”) goal, which is measured
based upon the growth in the tangible book value during the performance cycle, adjusted for certain allowable non-recurring
transactions. The participant may earn 50% of their target opportunity for threshold level performance and up to 150% of their target
opportunity for maximum level performance, based on the individual achievement of each performance goal during a three-year
performance cycle. Amounts between threshold, target and maximum performance will vest in a proportional amount. During the
quarter ended March 31, 2026, 55,805 additional shares related to the 2023 performance share award, which vested in March 2026,
were awarded as a result of performance achieved in excess of target opportunity.
The followingtable summarizesthe performanceunits activity underthe 2016Omnibus Planduring thequarters endedMarch 31,
2026 and 2025:
Quarter ended
Quarter ended
March 31, 2026
March 31, 2025
Number
Weighted -
Number
Weighted -
of
Average
of
Average
Performance
Grant Date
Performance
Grant Date
Units
Fair Value
Units
Fair Value
Performance units at beginning of year
544,107
$
16.02
549,032
$
14.37
Additions
(1)
(3)
144,458
20.22
160,744
18.66
Vested
(2)
(3)
(216,876)
12.24
(166,669)
13.15
Performance units at end of period
471,689
$
19.04
543,107
$
16.01
(1)
Units granted during the quarters ended March 31, 2026 and 2025are based on the achievement of the Relative TSR and TBVPSperformance goals during a three-year performance cycle
beginning January 1, 2026 and January 1, 2025, respectively,and ending on December 31, 2028 and December 31, 2027,respectively.
(2)
Units vested during the quarters ended March 31, 2026 and2025 are related to performance units granted in2023 and 2022, respectively,that met the pre-established target and were
settled with shares of common stock reissued from treasury shares.
(3)
Excludes the aforementioned
55,805
additional shares awardedin connection with the2023 performance share awardwhich were alsosettled with shares ofcommon stock reissuedfrom
treasury shares.
Thefairvalueoftheperformanceunitsawarded,thatwasbasedontheTBVPSgoalcomponent,wascalculatedbasedonthe
marketpriceoftheCorporation’scommonstockontherespectivedateofthegrantandassumingattainmentof100%oftarget
opportunity. As of March31, 2026, there have been no changes in management’sassessment of the probability that the pre-established
TBVPS goal will beachieved;as such, nocumulative adjustment tocompensation expense hasbeen recognized.The fair value ofthe
performance units awarded, thatwas based on the RelativeTSR component, was calculatedusing a Monte Carlo simulation.Since the
RelativeTSR componentis considereda marketcondition,thefair valueof theportionofthe awardbasedon RelativeTSR isnot
revised subsequent to grant date based on actual performance.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
42
The following tablesummarizes the valuationassumptions used tocalculate the fairvalue as ofthe grant dateof the RelativeTSR
component of the performance units granted under the 2016 Omnibus Plan duringthe quarters March 31, 2026 and 2025:
Quarter ended March 31,
2026
2025
Risk-free interest rate
(1)
3.75
%
3.92
%
Correlation coefficient
77.54
74.96
Expected dividend yield
(2)
-
-
Expected volatility
(3)
29.07
31.94
Expected life (in years)
2.79
2.79
(1)
Based on the yield on zero-coupon U.S. TreasurySeparate Trading of Registered Interest andPrincipal of Securities as of the grant date for a period equal to thesimulation term.
(2)
Assumes that dividends are reinvested at each ex-dividend date.
(3)
Calculated based on the historical volatility of the Corporation'sstock price with a look-back period equal to the simulationterm using daily stock prices.
For the quartersended March 31,2026 and 2025,the Corporation recognized$
0.7
million and $
0.6
million, respectively,of stock-
basedcompensationexpenserelatedtoperformanceunits.AsofMarch31,2026,therewas$
5.9
millionoftotalunrecognized
compensation costrelated to unvestedperformance units thatthe Corporationexpects to recognizeover a weighted-average period of
2.3
years.
Shares withheld
Duringthefirstquarterof2026,theCorporationwithheld
225,099
shares(2025–
182,249
shares)oftherestrictedstockand
performance units thatvested during such periodto cover the participants’payroll and incometax withholding liabilities; theseshares
are heldas treasuryshares. TheCorporation paidin cashany fractionalshare ofsalary stockto whichan officerwas entitled.In the
consolidated financial statements, the Corporation presents shareswithheld for tax purposes as common stock repurchases.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
43
NOTE 10 –STOCKHOLDERS’EQUITY
Stock Repurchase Program
On October22, 2025, theCorporation announcedthat its Boardof Directors hadapproved a stockrepurchase program authorizing
therepurchaseof upto $
200
millionof itsoutstandingcommonstock.Underthis program,the Corporationrepurchased
2,409,192
sharesofcommonstockthroughopenmarkettransactionsatanaveragepriceof$
20.75
,foratotalcostofapproximately$
50.0
million duringthe firstquarter of2026. Asof March31, 2026,the Corporationhas remainingauthorization ofapproximately $
138.3
million, which it expects to execute during the remainder of 2026.
Repurchasesundertheprogrammaybeexecutedthroughopenmarketpurchases,acceleratedsharerepurchasesandprivately
negotiatedtransactionsorplans,includingplanscomplyingwithRule10b5-1undertheExchangeAct,andwillbeconductedin
accordancewithapplicablelegalandregulatoryrequirements.TheCorporation’sstockrepurchaseprogramissubjecttovarious
factors,includingtheCorporation’scapitalposition,liquidity,financialperformanceandalternativeusesofcapital,stocktrading
price, andgeneral marketconditions. The stockrepurchase programdoes not obligateit to acquireany specificnumber of sharesand
doesnothaveanexpirationdate.Thestockrepurchaseprogrammaybemodified,suspended,orterminatedatanytimeatthe
Corporation’sdiscretion.Anyrepurchasedsharesofcommonstockareexpectedtobeheldastreasuryshares.TheCorporation’s
holding company hasno operations and dependson dividends, distributionsand other payments fromits subsidiaries to funddividend
payments, stock repurchases, and to fund all payments on its obligations, includingdebt obligations.
Common Stock
The following table shows the changes in shares of common stock outstanding forthe quarters ended March 31, 2026 and 2025:
TotalNumber of Shares
Quarter Ended March 31,
2026
2025
Common stock outstanding, beginning of year
156,618,996
163,868,877
Common stock repurchased
(1)
(2,634,291)
(1,376,816)
Common stock reissued under stock-based compensation plan
(2)
709,221
614,300
Restricted stock forfeited
-
(2,180)
Common stock outstanding, end of period
154,693,926
163,104,181
(1)
For the quarters ended March 31, 2026 and 2025 includes
225,099
and
182,249
shares, respectively, of common stocksurrendered to cover officers’ payroll and incometaxes.
(2)
Include
55,805
additional shares awarded in connection with the 2023 performanceshare award. See Note 9 – “Stock-Based Compensation”for additional information.
ForthequartersendedMarch31,2026and2025,totalcashdividendsdeclaredonsharesofcommonstockamountedto$
31.5
million ($
0.20
per share)and $
29.6
million ($
0.18
per share),respectively.On
April 22, 2026
, theCorporation’sBoard ofDirectors
declared a quarterlycash dividend of$
0.20
per common share.The dividend ispayable on
June 12, 2026
to shareholders ofrecord at
the closeof businesson
May 28, 2026
. TheCorporation intendsto continueto payquarterly dividendson commonstock. However,
theCorporation’scommonstockdividends,includingthedeclaration,timing,andamount,remainsubjecttoconsiderationand
approval by the Corporation’s Boardof Directors at the relevant times.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
44
Preferred Stock
The Corporationhas
50,000,000
authorized shares ofpreferred stock witha par valueof $
1.00
, subject tocertain terms. Thisstock
maybeissuedinseriesandthesharesofeachserieshavesuchrightsandpreferencesasarefixedbytheCorporation’sBoardof
DirectorswhenauthorizingtheissuanceofthatparticularseriesandareredeemableattheCorporation’soption.
No
sharesof
preferred stock were outstanding as of March 31, 2026 and December31, 2025.
Treasury Stock
The following table shows the changes in shares of treasury stock for the quartersended March 31, 2026 and 2025:
TotalNumber of Shares
Quarter Ended March 31,
2026
2025
Treasury stock, beginning of year
67,044,120
59,794,239
Common stock repurchased
2,634,291
1,376,816
Common stock reissued under stock-based compensation plan
(709,221)
(614,300)
Restricted stock forfeited
-
2,180
Treasury stock, end of period
68,969,190
60,558,935
FirstBank Statutory Reserve (Legal Surplus)
ThePuertoRicoBankingLawof1933,asamended(the“PuertoRicoBankingLaw”),requiresthataminimumof
10
%of
FirstBank’snet incomeforthe yearbe transferredto alegal surplusreserveuntil suchsurplusequals thetotal ofpaid-in-capitalon
common and preferredstock. Amounts transferredto the legal surplusreserve from retainedearnings are not availablefor distribution
to the Corporation without theprior consent of the PuertoRico Commissioner of Financial Institutions.
The Puerto Rico Banking Law
provides that, when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over
receipts must be charged against the undistributed profits of the bank, and the balance, if any, must be charged against the legal
surplus reserve, as a reduction thereof. If the legal surplus reserve is not sufficient to cover such balance in whole or in part, the
outstanding amount must be charged against the capital account and the Bank cannot pay dividends until it can replenish the legal
surplus reserve to an amount of at least 20% of the original capital contributed.
FirstBank’slegal surplusreserve, includedas partof
retained earnings inthe Corporation’sconsolidated statements offinancial condition, amountedto $
262.5
million as of eachof March
31, 2026 and December 31, 2025. There were
no
transfers to the legal surplus reserve during the first quarter of 2026.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
45
NOTE 11 – ACCUMULATEDOTHER COMPREHENSIVE LOSS
ThefollowingtablepresentsthechangesinaccumulatedothercomprehensivelossforthequartersendedMarch31,2026and
2025:
Changes in Accumulated Other ComprehensiveLoss by Component
(1)
Quarter ended March 31,
2026
2025
(In thousands)
Unrealized net holding losses on available-for-sale debt securities:
Beginning balance
$
(354,940)
$
(567,338)
Other comprehensive (loss) income
(2)
(6,168)
84,061
Ending balance
$
(361,108)
$
(483,277)
Adjustment of pension and postretirement benefit plans:
Beginning balance
$
390
$
782
Other comprehensive (loss) income
-
-
Ending balance
$
390
$
782
(1)
All amounts presented are net of tax.
(2)
Unrealized net holding losses on available-for-sale debt securitieshave no tax effect because securities are either tax-exempt, held by an IBE,or have a full deferred tax asset
valuation allowance.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
46
NOTE 12 – EMPLOYEE BENEFIT PLANS
The Corporationmaintains two frozenqualified noncontributorydefined benefit pensionplans (the “PensionPlans”), anda related
complementarypost-retirementbenefitplan(the“PostretirementBenefitPlan”)coveringmedicalbenefitsandlifeinsuranceafter
retirementthatitobtainedintheBancoSantanderPuertoRico(“BSPR”)acquisitiononSeptember1,2020.Onedefinedbenefit
pensionplan coverssubstantially allof BSPR’sformeremployees whowere activebefore January1, 2007,whilethe otherdefined
benefit pension plan covers personnel of an institution previously acquiredby BSPR. Benefits are based on salary and years of service.
The accrual of benefits under the Pension Plans is frozen to all participants.
The following table presents the components of net periodic benefit forthe indicated periods:
Affected Line Item
in the Consolidated
Quarter Ended March 31,
Statements of Income
2026
2025
(In thousands)
Net periodic benefit, pension plans:
Interest cost
Other expenses
$
880
$
928
Expected return on plan assets
Other expenses
(992)
(998)
Net periodic benefit, pension plans
(112)
(70)
Net periodic cost, postretirement plan
Other expenses
11
7
Net periodic benefit
$
(101)
$
(63)
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
47
NOTE 13 –INCOME TAXES
The Corporation is subjectto Puerto Rico incometax on its income fromall sources. Under thePuerto Rico Internal RevenueCode
of2011,asamended(the“PR TaxCode”),theCorporationanditssubsidiariesaretreatedasseparatetaxableentitiesandarenot
entitledtofileconsolidatedtaxreturns.However,certainsubsidiariesthatareorganizedaslimitedliabilitycompanieswitha
partnership electionare treated aspass-through entitiesfor Puerto Ricotax purposes.Furthermore, theCorporation conductsbusiness
throughcertainentitiesthathavespecialtaxtreatments,includingdoingbusinessthroughanIBEunitoftheBankandthrough
FirstBankOverseasCorporation,eachofwhicharegenerallyexemptfromPuertoRicoincometaxationundertheInternational
Banking EntityAct of PuertoRico (“IBE Act”),and through awholly-owned subsidiarythat engages incertain Puerto Ricoqualified
investing and lending activities that have certain tax advantages underAct 60 of 2019.
For the first quarterof 2026, the Corporationrecorded an income taxexpense of $
25.5
million, compared to anincome tax expense
of $
23.2
million forthe sameperiod in2025. Theincrease inincome taxexpense wasmainly dueto higherpre-tax income.For the
year,theCorporation’sannualeffectivetaxrate,excludingdiscreteitems,wasestimatedat
21.9
%forthefirstquarterof2026,
compared to
23.9
% for thecomparable period in2025. The decrease inthe annual effectivetax rate was dueto a higher proportionof
exempt to taxable income.
IncometaxexpenseattributabletoPuertoRicoisconsidereddomesticforPuertoRicotaxpurposes.Incometaxexpensealso
includesU.S.federaltaxes,aswellasUSVIandstateincometaxesinFlorida,whichareconsideredforeignforPuertoRicotax
purposes. Asa PuertoRico corporation,FirstBank istreated asa foreigncorporation forU.S. andUSVI incometax purposesand is
generallysubjecttoU.S.andUSVIincometaxonlyonitsincomefromsourceswithintheU.S.andUSVIorincomeeffectively
connected withthe conductof a tradeor business inthose jurisdictions.Such tax paidin the U.S.and USVI isalso creditableagainst
theCorporation’sPuertoRicotaxliability,subjecttocertainconditionsandlimitations.IncomegenerallyfromBVIoperationsis
consideredforeign-sourceincome andis notsubject totaxation inthat jurisdiction.For thefirst quarterof 2026,FirstBank incurred
current incometax expense ofapproximately $
2.8
million related toits U.S. operations,compared to$
2.6
million for thecomparable
period in 2025.
As of March 31, 2026,the Corporation had a net deferredtax asset of $
143.6
million, net of a valuation allowanceof $
75.9
million,
compared toa netdeferred taxasset of$
149.0
million, netof avaluation allowanceof $
75.0
million, asof December31, 2025.The
net deferredtax assetof theCorporation’sbanking subsidiary,FirstBank, amountedto $
130.8
million asof March31, 2026,net ofa
valuationallowance of$
73.2
million,comparedto anet deferredtax assetof $
134.8
million, netof avaluationallowance of$
72.2
million, as of December 31, 2025.The decrease in the net deferred taxasset was mainly related to stock-basedcompensation, usage of
alternativeminimumtax credits,andchanges inthe ACL.The Corporationmaintainsa fullvaluationallowance forits deferredtax
assetsassociatedwithcapitallosscarryforwards,netoperatingloss(“NOL”)carryforwardscorrespondingtoUSVIandunrealized
losses of available-for-sale debt securities.
See Note 17– “Income Taxes,”to the auditedconsolidated financial statementsincluded in the2025 Annual Reporton Form 10-K
for information on the taxtreatment of NOL carryforwards and dividendreceived deduction under the PR TaxCode and the limitation
under Section 382 of the U.S. Internal Revenue Code.
The amountof unrecognizedtax benefitsmay increaseor decreasein thefuture forvarious reasons,including addingamounts for
current taxyear positions,expiration ofopen incometax returnsdue to thestatute oflimitations, changesin management’sjudgment
about the level of uncertainty,the status of examinations, litigation and legislative activity,and the addition or elimination of uncertain
tax positions.The statuteof limitationsunder thePR TaxCode isfour yearsafter atax returnis dueor filed,whichever islater; the
statute oflimitations forU.S. andUSVI incometax purposesis threeyears aftera taxreturn isdue orfiled, whicheveris later.The
completion of an audit bythe taxing authorities or theexpiration of the statuteof limitations for a givenaudit period could result inan
adjustment tothe Corporation’sliability forincome taxes.For U.S.and USVIincome taxpurposes, alltax yearssubsequent to2021
remain open to examination. For Puerto Rico tax purposes, all tax yearssubsequent to 2020 remain open to examination.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
48
NOTE 14 –FAIR VALUE
Fair ValueMeasurement
ASC Topic820, “FairValueMeasurement,” definesfair value asthe exchangeprice that wouldbe received foran asset orpaid to
transferaliability(anexitprice)intheprincipalormostadvantageousmarketfortheassetorliabilityinanorderlytransaction
between marketparticipants onthe measurementdate. This guidancealso establishesa three-levelhierarchy formeasuring fairvalue
based on theobservability of inputs:(i) Level 1inputs are quotedprices in active marketsfor identical assets andliabilities; (ii) Level
2 inputs are observableinputs other than Level1 prices, such as quotedprices for similar assets orliabilities in active markets,as well
as inputsthat areobservable forthe assetor liability(other thanquoted prices);and (iii)Level 3inputs aresignificant unobservable
inputs, requiring significant judgment due to limited or no market activity.
See Note 19 –“Fair Value,”to the audited consolidatedfinancial statements includedin the 2025 AnnualReport on Form 10-Kfor
a description of the valuation methodologies used to measure financial instrumentsat fair value on a recurring basis.
TherewerenotransfersofassetsandliabilitiesmeasuredatfairvaluebetweenLevel1andLevel2measurementsduringthe
quarters ended March 31, 2026 and 2025.
Assets and liabilities measured at fair value on a recurring basis are summarized below as ofthe indicated dates:
As of March 31, 2026
As of December 31, 2025
Fair Value Measurements Using
Fair Value Measurements Using
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
(In thousands)
Assets:
Available-for-sale debt securities:
U.S. Treasury securities
$
497,254
$
-
$
-
$
497,254
$
497,342
$
-
$
-
$
497,342
Noncallable U.S. agencies debt securities
-
277,130
-
277,130
-
336,849
-
336,849
Callable U.S. agencies debt securities
-
562,787
-
562,787
-
566,263
-
566,263
MBS
-
3,326,804
3,113
(1)
3,329,917
-
3,148,692
3,266
(1)
3,151,958
Puerto Rico government obligation
-
-
1,609
1,609
-
-
1,620
1,620
Equity securities
5,005
-
-
5,005
5,024
-
-
5,024
Derivative assets
-
350
-
350
-
345
-
345
Liabilities:
Derivative liabilities
-
162
-
162
-
200
-
200
(1) Related to private label MBS.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
49
Thetablebelowpresentsareconciliationofthebeginningandendingbalancesofallassetsmeasuredatfairvalueona
recurring basis using significant unobservable inputs (Level 3) for thequarters ended March 31, 2026 and 2025:
Quarter Ended March 31,
2026
2025
Level 3 Instruments Only
Securities Available
for Sale
(1)
Securities Available
for Sale
(1)
(In thousands)
Beginning balance
$
4,886
$
6,815
Total gain (losses):
Included in other comprehensive income (unrealized)
182
46
Included in earnings (unrealized)
(2)
(88)
5
Principal repayments and amortization
(258)
(233)
Ending balance
$
4,722
$
6,633
(1)
Amounts mostly related to private label MBS.
(2)
Changes in unrealized (losses) gains included in earnings wererecognized within provision for credit losses - expenseand relate to assets still held as of the reporting date.
Thetablesbelowpresentquantitativeinformationforsignificantassetsmeasuredatfairvalueonarecurringbasisusing
significant unobservable inputs (Level 3) as of the indicated dates:
March 31, 2026
Fair Value
Valuation Technique
Unobservable Input
Range
Weighted
Average
Minimum
Maximum
(Dollars in thousands)
Available-for-saledebt securities:
Private label MBS
$
3,113
Discounted cash flows
Discount rate
16.2%
16.2%
16.2%
Prepayment rate
1.6%
8.0%
2.5%
Projected cumulative loss rate
0.1%
12.5%
6.8%
Puerto Rico government obligation
$
1,609
Discounted cash flows
Discount rate
10.8%
10.8%
10.8%
Projected cumulative loss rate
23.6%
23.6%
23.6%
December 31, 2025
Fair Value
Valuation Technique
Unobservable Input
Range
Weighted
Average
Minimum
Maximum
(Dollars in thousands)
Available-for-saledebt securities:
Private label MBS
$
3,266
Discounted cash flows
Discount rate
15.9%
15.9%
15.9%
Prepayment rate
1.6%
8.0%
3.1%
Projected cumulative loss rate
0.1%
11.4%
5.5%
Puerto Rico government obligation
$
1,620
Discounted cash flows
Discount rate
10.8%
10.8%
10.8%
Projected cumulative loss rate
24.0%
24.0%
24.0%
Information about Sensitivity to Changes in Significant Unobservable Inputs
Private labelMBS: Thesignificant unobservableinputs inthe valuationinclude probabilityof default,the lossseverityassumption,
and prepaymentrates. Shiftsin thoseinputs wouldresult in differentfair valuemeasurements. Increasesin the probabilityof default,
lossseverityassumptions,andprepaymentratesinisolationwouldgenerallyresultinanadverseeffectonthefairvalueofthe
instruments. The Corporation modeled meaningful and possibleshifts of each input to assess the effect on the fair value estimation.
Puerto Rico Government Obligation:The significant unobservable input used in thefair value measurement is the assumed loss rate of
theunderlyingresidentialmortgageloansthatcollateralizeapass-throughMBSguaranteedbythePRHFA.Asignificantincrease
(decrease) in the assumed rate would lead to a (lower) higher fair value estimate.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
50
Additionally, fair valueis used on a non-recurring basis to evaluate certain assets in accordance with GAAP.
For the quarters ended March 31, 2026 and 2025, the Corporation recordedlosses or valuation adjustments for assets recognized at
fair value on a non-recurring basis and still held at the respective reporting dates,as shown in the following table:
Carrying value as of March 31,
Related to losses recorded for the Quarter Ended
March 31,
2026
2025
2026
2025
(In thousands)
Level 3:
Loans receivable
(1)
$
3,970
$
4,647
$
(436)
$
(164)
OREO
(2)
119
335
(6)
(24)
(1)
Consists mainly ofcollateral dependentcommercial and constructionloans. TheCorporation generallymeasured lossesbased on thefair value ofthe collateral.The Corporation derived
the fair values fromexternal appraisals thattook into considerationprices in observedtransactions involving similarassets in similarlocations but adjustedfor specific characteristicsand
assumptions of thecollateral (e.g., absorption rates),which are not market observable.The adjustment applied toappraisals was
3
% for the quarterended March 31, 2026and
22
% for the
quarter ended March 31, 2025.
(2)
The Corporationderived thefair valuesfrom appraisalsthat tookinto considerationprices inobserved transactionsinvolving similarassets insimilar locationsbut adjustedfor specific
characteristics and assumptions ofthe properties (e.g., absorptionrates and net operatingincome of income producingproperties), which arenot market observable. Losseswere related to
market valuation adjustmentsafter the transferof the loansto the OREOportfolio. Theadjustment applied toappraisals was
16
% for thequarter ended March31, 2026, andfrom
2
% to
24
% for the quarter ended March 31, 2025.
See Note 19 –“Fair Value,”to the auditedconsolidated financial statementsincluded in the2025 Annual Reporton Form 10-Kfor
qualitativeinformationregardingthefairvaluemeasurementsforLevel3financialinstrumentsmeasuredatfairvalueona
nonrecurring basis.
Thefollowingtablespresentthecarryingvalue,estimatedfairvalueandestimatedfairvaluelevelofthehierarchyoffinancial
instruments as of the indicated dates:
Total Carrying Amount
in Statement of
Financial Condition as
of March 31, 2026
Fair Value Estimate asof
March 31, 2026
Level 1
Level 2
Level 3
(In thousands)
Assets:
Cash and due from banks and money market investments (amortizedcost)
$
550,899
$
550,899
$
550,899
$
-
$
-
Available-for-sale debtsecurities (fair value)
4,668,697
4,668,697
497,254
4,166,721
4,722
Held-to-maturity debt securities:
Held-to-maturity debt securities (amortized cost)
257,522
Less: ACL on held-to-maturity debt securities
(641)
Held-to-maturity debt securities, net of ACL
$
256,881
253,485
-
171,353
82,132
Equity securities (amortized cost)
41,427
41,427
-
41,427
(1)
-
Other equity securities (fair value)
5,005
5,005
5,005
-
-
Loans held for sale (lower of cost or market)
12,805
13,006
-
13,006
-
Loans held for investment:
Loans held for investment (amortized cost)
13,091,077
Less: ACL for loans and finance leases
(245,060)
Loans held for investment, net of ACL
$
12,846,017
12,773,439
-
-
12,773,439
MSRs (amortized cost)
22,880
40,485
-
-
40,485
Derivative assets (fair value) (2)
350
350
-
350
-
Liabilities:
Deposits (amortized cost)
$
16,595,821
$
16,600,047
$
-
$
16,600,047
$
-
Short-term advances from the FHLB (amortized cost)
90,000
90,001
-
90,001
-
Long-term advances from the FHLB (amortized cost)
200,000
201,168
-
201,168
-
Derivative liabilities (fair value) (2)
162
162
-
162
-
(1) Includes FHLB stock with a carrying value of $
24.7
million, which is considered restricted.
(2) Includes interest rate swap agreements, forward contracts, and interest rate lock commitments.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
51
Total Carrying Amount
in Statement of
Financial Condition as
of December 31, 2025
Fair Value Estimate asof
December 31, 2025
Level 1
Level 2
Level 3
(In thousands)
Assets:
Cash and due from banks and money market investments (amortizedcost)
$
658,599
$
658,599
$
658,599
$
-
$
-
Available-for-sale debtsecurities (fair value)
4,554,032
4,554,032
497,342
4,051,804
4,886
Held-to-maturity debt securities:
Held-to-maturity debt securities (amortized cost)
265,296
Less: ACL on held-to-maturity debt securities
(733)
Held-to-maturity debt securities, net of ACL
$
264,563
262,055
-
178,815
83,240
Equity securities (amortized cost)
39,729
39,729
-
39,729
(1)
-
Other equity securities (fair value)
5,024
5,024
5,024
-
-
Loans held for sale (lower of cost or market)
16,697
16,996
-
16,996
-
Loans held for investment:
Loans held for investment (amortized cost)
13,125,356
Less: ACL for loans and finance leases
(249,037)
Loans held for investment, net of ACL
$
12,876,319
12,806,115
-
-
12,806,115
MSRs (amortized cost)
23,288
40,874
-
-
40,874
Derivative assets (fair value) (2)
345
345
-
345
-
Liabilities:
Deposits (amortized cost)
$
16,670,143
$
16,675,488
$
-
$
16,675,488
$
-
Long-term advances from the FHLB (amortized cost)
290,000
292,581
-
292,581
-
Derivative liabilities (fair value) (2)
200
200
-
200
-
(1) Includes FHLB stock with a carrying value of $
24.7
million, which is considered restricted.
(2) Includes interest rate swap agreements, forward contracts, and interest rate lock commitments.
The short-term natureof certain assets andliabilities result in theircarrying value approximatingfair value. These includecash and
cashduefrombanksandothershort-termassets,suchasFHLBstock.Certainassets,themostsignificantbeingpremisesand
equipment,goodwillandotherintangibleassets, arenotconsideredfinancialinstrumentsandarenotincludedabove. Accordingly,
thisfairvalueinformationis notintendedto, anddoes not,representthe Corporation’sunderlyingvalue.Many ofthese assetsand
liabilities thatare subjectto thedisclosure requirementsare notactively traded,requiring managementto estimatefair values.These
estimatesnecessarilyinvolvetheuseofassumptionsandjudgmentsaboutawidevarietyoffactors,includingbutnotlimitedto,
relevancy of market prices of comparable instruments, expected futurecash flows, and appropriate discount rates.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
52
NOTE 15 – REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue Recognition
In accordance withASC Topic606, “Revenue fromContracts with Customers” (“ASCTopic606”), revenues arerecognized when
controlofpromisedgoodsorservicesistransferredtocustomersandinanamountthatreflectstheconsiderationtowhichthe
Corporation expects to beentitled in exchange for thosegoods or services. At contractinception, once the contract isdetermined to be
within thescope ofASC Topic606, theCorporation assessesthe goodsor servicesthat arepromised withineach contract,identifies
therespectiveperformanceobligations,andassesseswhethereachpromisedgoodorserviceisdistinct.TheCorporationthen
recognizesas revenuethe amountof thetransaction pricethat isallocated tothe respectiveperformance obligationwhen (oras) the
performance obligation is satisfied.
Disaggregation of Revenue
ThefollowingtablessummarizetheCorporation’srevenue,whichincludesnetinterestincomeonfinancialinstrumentsthatis
outsideofASCTopic606andnon-interestincome,disaggregatedbytypeofserviceandbusinesssegmentforthequartersended
March 31, 2026 and 2025:
Quarter ended March 31, 2026
Mortgage
Banking
Consumer
(Retail)
Banking
Commercial
and Corporate
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Net interest income (loss)
(1)
$
17,802
$
144,963
$
44,655
$
(25,101)
$
21,897
$
16,740
$
220,956
Service charges and fees on deposit accounts
-
7,436
1,580
-
156
760
9,932
Insurance commission income
-
5,742
-
-
14
188
5,944
Card and processing income
-
10,109
231
-
14
1,404
11,758
Other service charges and fees
33
1,793
221
-
726
149
2,922
Not in scope of ASC Topic606
(1)
4,375
2,460
271
35
(3)
(9)
7,129
Total non-interest income
4,408
27,540
2,303
35
907
2,492
37,685
Total Revenue (Loss)
$
22,210
$
172,503
$
46,958
$
(25,066)
$
22,804
$
19,232
$
258,641
Quarter ended March 31, 2025
Mortgage
Banking
Consumer
(Retail)
Banking
Commercial
and Corporate
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Net interest income (loss)
(1)
$
17,586
$
143,015
$
42,809
$
(27,659)
$
20,789
$
15,857
$
212,397
Service charges and fees on deposit accounts
-
7,315
1,441
-
142
742
9,640
Insurance commission income
-
5,585
-
-
39
181
5,805
Card and processing income
-
9,450
404
-
22
1,599
11,475
Other service charges and fees
20
1,580
19
-
282
140
2,041
Not in scope of ASC Topic606
(1)
3,562
2,263
393
151
369
35
6,773
Total non-interest income
3,582
26,193
2,257
151
854
2,697
35,734
Total Revenue (Loss)
$
21,168
$
169,208
$
45,066
$
(27,508)
$
21,643
$
18,554
$
248,131
(1)
Most of the Corporation’srevenue is not within the scope of ASCTopic 606. The guidanceexplicitly excludes net interest income from financialassets and liabilities, as well as other non-interestincome from loans,
leases, investment securities and derivative financial instruments.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
53
ForthequartersendedMarch31,2026and2025,mostoftheCorporation’srevenuewithinthescopeofASCTopic606was
related to performance obligations satisfied at a point in time.
SeeNote20–“RevenuefromContractswithCustomers,”totheauditedconsolidatedfinancialstatementsincludedinthe2025
Annual Report on Form 10-K for a discussion of major revenue streams underthe scope of ASC Topic 606.
Contract Balances
AsofMarch31,2026andDecember31,2025,theCorporationhad
no
contractassetsrecordedinitsconsolidatedfinancial
statements. In addition, the balances of contract liabilities as of thosedates were not significant.
Other
The Corporationalso didnot haveany material contractacquisition costsand didnot makeany significantjudgments orestimates
in recognizing revenue for financial reporting purposes.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
54
NOTE 16 – SEGMENT INFORMATION
The Corporation’soperating segmentsare basedprimarily onthe Corporation’slines ofbusiness forits operationsin PuertoRico,
theCorporation’sprincipalmarket,andbygeographicareasforitsoperationsoutsideofPuertoRico.AsofMarch31,2026,the
Corporationhad
six
reportablesegments:MortgageBanking;Consumer(Retail)Banking;CommercialandCorporateBanking;
Treasury andInvestments; United States Operations;and VirginIslands Operations. The ChiefExecutive Officer (“CEO”),who is the
designatedchiefoperatingdecisionmaker(“CODM”),asultimatedecisionmaker,evaluatesperformanceandallocatesresources
basedon financialinformationprovidedby management.In determiningthe reportablesegments,theCorporationconsidersfactors
such asthe organizationalstructure, natureof theproducts,distributionchannels, customerrelationshipmanagement,and economic
characteristicsofthebusinesslines.TheCorporationevaluatestheperformanceofthesegmentsbasedonsegmentincomeorloss,
which consists ofnet interest income,the provision forcredit losses, non-interestincome andnon-interest expenses.Segment income
orlossismeasuredonapre-taxbasis,consistentwiththeCorporation’sconsolidatedfinancialstatementsunderGAAP.Thetotal
segment income or loss equalsconsolidated pre-tax income orloss, and no adjustments orreconciliations are necessary.The segments
are alsoevaluated basedon theaverage volumeof theirinterest-earning assets(net offair valueadjustments ofinvestment securities
and the ACL).
TheMortgageBankingsegmentconsistsoftheorigination,sale,andservicingofavarietyofresidentialmortgageloans.The
MortgageBankingsegmentalsoacquiresandsellsmortgagesinthesecondarymarket.TheConsumer(Retail)Bankingsegment
includes theCorporation’sconsumer lending,commercial lendingto smallbusinesses, commercialtransaction banking,and deposit-
taking activitiesprimarily conductedthrough itsbranch networkand loancenters. TheCommercial andCorporate Bankingsegment
consists of theCorporation’slending and otherservices for largecustomers representedby specialized andmiddle-market clients and
the government sector.The Commercial and Corporate Banking segmentconsists of the Corporation’scommercial lending (other than
smallbusinesscommercialloans)andcommercialdeposit-takingactivities(otherthanthegovernmentsector).TheTreasuryand
Investments segmentis responsible forthe Corporation’sinvestment portfolioand treasury functionsthat are executedto manage and
enhanceliquidity.UndertheCorporation’sfundtransferpricing(“FTP”)methodology,theTreasuryandInvestmentssegment
centrallymanagesfundingbyprovidingfundstotheMortgageBanking,Consumer(Retail)Banking,CommercialandCorporate
Banking, United StatesOperations, and VirginIslands Operations segmentsto support their lendingactivities and compensatingthese
unitsfordepositsgathered.ThemismatchbetweenfundsprovidedandfundsusedismanagedbytheTreasuryandInvestments
segment.The fundstransferpricingchargedor creditedare calculatedusingthe SecuredOvernightFinancing Rate(“SOFR”)/swap
curvewithtermrates,adjustedforafundingspreadthatreflectstheCorporation’scostoffunds.Themethodology,whichis
performedbasedonmatchedmaturityfunding,ensuresamarket-basedallocationoffundingcostsandcredits,impactingsegment
profitability by aligning internal pricing with external market conditions.The United States Operations segment consists of all banking
activitiesconductedbyFirstBankintheUnitedStates mainland,includingcommercialandconsumerbankingservices. TheVirgin
IslandsOperationssegmentconsistsofallbankingactivitiesconductedbytheCorporationintheUSVIandtheBVI,including
commercial and consumer banking services.
TheaccountingpoliciesofthesegmentsareconsistentwiththosereferredtoinNote1–“NatureofBusinessandSummaryof
Significant Accounting Policies” to the audited consolidated financialstatements included in the 2025 Annual Report on Form 10-K.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
55
The following tables present information about the reportable segments forthe indicated periods:
Mortgage
Banking
Consumer
(Retail) Banking
Commercial and
Corporate
Banking
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Quarter ended March 31, 2026:
Interest income
$
33,286
$
102,130
$
61,546
$
35,948
$
38,580
$
8,359
$
279,849
Net (charge) credit for transfer of funds
(15,484)
79,089
(13,039)
(58,678)
(1,638)
9,750
-
Interest expense
-
(36,256)
(3,852)
(2,371)
(15,045)
(1,369)
(58,893)
Net interest income (loss)
17,802
144,963
44,655
(25,101)
21,897
16,740
220,956
Provision for credit losses - (benefit) expense
(329)
18,582
(3,306)
88
1,392
846
17,273
Non-interest income
4,408
27,540
2,303
35
907
2,492
37,685
Non-interest expenses:
Employees’ compensation and benefits
7,022
39,827
5,172
1,258
7,418
4,602
65,299
Occupancy and equipment
1,378
15,198
1,351
179
1,857
2,100
22,063
Business promotion
241
2,527
209
173
298
107
3,555
Professional fees
1,629
7,736
992
376
1,026
1,153
12,912
Taxes, other than income taxes
492
4,648
660
121
91
172
6,184
FDIC deposit insurance
376
675
629
-
244
134
2,058
Net (gain) loss on OREO operations
(1,016)
-
(11)
-
-
90
(937)
Credit and debit card processing expenses
-
6,451
191
-
2
683
7,327
Other non-interest expenses
(1)
817
5,565
390
229
714
929
8,644
Total non-interest expenses
10,939
82,627
9,583
2,336
11,650
9,970
127,105
Segment income (loss)
$
11,600
$
71,294
$
40,681
$
(27,490)
$
9,762
$
8,416
$
114,263
Average interest-earning assets
$
2,202,958
$
3,975,633
$
3,755,974
$
5,274,088
$
2,578,130
$
478,759
$
18,265,542
Mortgage
Banking
Consumer
(Retail) Banking
Commercial and
Corporate
Banking
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Quarter ended March 31, 2025:
Interest income
$
32,064
$
105,753
$
61,872
$
32,638
$
37,400
$
7,338
$
277,065
Net (charge) credit for transfer of funds
(14,478)
75,097
(15,280)
(54,717)
(1,039)
10,417
-
Interest expense
-
(37,835)
(3,783)
(5,580)
(15,572)
(1,898)
(64,668)
Net interest income (loss)
17,586
143,015
42,809
(27,659)
20,789
15,857
212,397
Provision for credit losses - expense (benefit)
676
20,020
2,654
(5)
849
616
24,810
Non-interest income
3,582
26,193
2,257
151
854
2,697
35,734
Non-interest expenses:
Employees’ compensation and benefits
6,972
36,619
5,764
1,140
6,999
4,643
62,137
Occupancy and equipment
1,517
15,129
1,604
173
1,878
2,329
22,630
Business promotion
203
2,320
218
170
273
94
3,278
Professional fees
1,540
6,244
1,042
348
948
1,364
11,486
Taxes, other than income taxes
471
4,394
605
120
117
171
5,878
FDIC deposit insurance
415
778
668
-
237
138
2,236
Net (gain) loss on OREO operations
(1,096)
-
36
-
-
(69)
(1,129)
Credit and debit card processing expenses
-
4,002
260
-
2
846
5,110
Other non-interest expenses
(1)
972
6,733
1,412
648
711
920
11,396
Total non-interest expenses
10,994
76,219
11,609
2,599
11,165
10,436
123,022
Segment income (loss)
$
9,498
$
72,969
$
30,803
$
(30,102)
$
9,629
$
7,502
$
100,299
Average interest-earning assets
$
2,156,558
$
4,056,039
$
3,550,790
$
5,730,140
$
2,391,708
$
426,092
$
18,311,327
(1) Consists of communication expenses and the expense categories described in Note 16 - “Other Non-Interest Expenses,” to the audited consolidated financial statements included in the 2025 Annual Report on Form 10-K.
The following table presents a reconciliation of the reportable segment financial information to the consolidated totals for the indicated periods:
Quarter Ended March 31,
2026
2025
(In thousands)
Average assets:
Total average interest-earning assets for segments
$
18,265,542
$
18,311,327
Average non-interest-earning assets
(1)
803,696
795,775
Total consolidated average assets
$
19,069,238
$
19,107,102
(1)
Includes,amongotherthings,non-interest-earningcash,premisesandequipment,netdeferredtaxasset,right-of-use("ROU")assets,andaccruedinterestreceivableonloansand
investments.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
56
NOTE 17 – SUPPLEMENTALSTATEMENTSOF CASH FLOWS INFORMATION
Supplemental statements of cash flows information is as follows forthe indicated periods:
Quarter ended March 31,
2026
2025
(In thousands)
Cash paid for:
Interest
$
60,282
$
68,412
Income tax
10,839
15,401
Operating cash flow from operating leases
4,514
4,408
Non-cash investing and financing activities:
Additions to OREO
1,062
1,455
Additions to auto and other repossessed assets
17,177
15,407
Capitalization of servicing assets
645
641
Loan securitizations
41,134
41,518
Loans held for investment transferred to held for sale
605
-
Payable related to unsettled purchases of investment securities
39,875
-
ROU assets obtained in exchange for operating lease liabilities, net of lease
terminations
4,166
99
Payable related to unsettled common stock repurchases
-
286
Redemption of investments in FBP Statutory Trusts
-
1,517
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
57
NOTE 18 – REGULATORYMATTERS, COMMITMENTSAND CONTINGENCIES
Regulatory Matters
TheCorporationandFirstBankareeachsubjecttovariousregulatorycapitalrequirementsimposedbytheU.S.federalbanking
agencies. Failureto meetminimum capitalrequirements canresult incertain mandatoryand possiblyadditional discretionaryactions
by regulatorsthat, ifundertaken, couldhave adirect materialadverse effecton theCorporation’sfinancial statementsandactivities.
Undercapitaladequacyguidelinesandtheregulatoryframeworkforpromptcorrectiveaction,theCorporationmustmeetspecific
capitalguidelinesthatinvolvequantitativemeasuresofthe Corporation’sandFirstBank’sassets,liabilities,andcertainoff-balance
sheet itemsas calculatedunder regulatoryaccounting practices.The Corporation’scapital amountsand classificationare alsosubject
to qualitative judgments andadjustment by the regulators with respectto minimum capital requirements, components,risk weightings,
andother factors.As ofMarch 31,2026 andDecember 31,2025,the Corporationand FirstBankexceededthe minimumregulatory
capitalratiosforcapitaladequacypurposes andFirstBank exceededthe minimumregulatorycapital ratiostobe consideredawell-
capitalizedinstitutionundertheregulatoryframeworkforpromptcorrectiveaction.AsofMarch31,2026,managementdoesnot
believe that any condition has changed or event has occurred that would havechanged the institution’s status.
The Corporation and FirstBankcompute risk-weighted assetsusing the standardizedapproach required by theU.S. Basel III capital
rules (“Basel III rules”).
TheBaselIIIrulesrequiretheCorporationtomaintainanadditionalcapitalconservationbufferof
2.5
%oncertainregulatory
capitalratiostoavoidlimitationsonboth(i)capitaldistributions(
e.g.
,repurchasesofcapitalinstruments,dividendsandinterest
payments on capital instruments) and (ii) discretionary bonus paymentsto executive officers and heads of major business lines.
The regulatory capital position of the Corporation and FirstBank as ofMarch 31, 2026 and December 31, 2025 were as follows:
Regulatory Requirements
Actual
For Capital Adequacy Purposes
To be Well-Capitalized
Thresholds
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars in thousands)
As of March 31, 2026
Total Capital (to Risk-WeightedAssets)
First BanCorp.
$
2,420,129
18.19
%
$
1,064,412
8.0
%
N/A
N/A
FirstBank
$
2,362,757
17.77
%
$
1,063,962
8.0
%
$
1,329,953
10.0
%
CET1 Capital (to Risk-Weighted Assets)
First BanCorp.
$
2,253,076
16.93
%
$
598,732
4.5
%
N/A
N/A
FirstBank
$
2,095,773
15.76
%
$
598,479
4.5
%
$
864,469
6.5
%
Tier I Capital (to Risk-WeightedAssets)
First BanCorp.
$
2,253,076
16.93
%
$
798,309
6.0
%
N/A
N/A
FirstBank
$
2,195,773
16.51
%
$
797,972
6.0
%
$
1,063,962
8.0
%
Leverage ratio
First BanCorp.
$
2,253,076
11.66
%
$
773,001
4.0
%
N/A
N/A
FirstBank
$
2,195,773
11.37
%
$
772,626
4.0
%
$
965,783
5.0
%
As of December 31, 2025
Total Capital (to Risk-WeightedAssets)
First BanCorp.
$
2,412,137
18.01
%
$
1,071,257
8.0
%
N/A
N/A
FirstBank
$
2,355,882
17.61
%
$
1,070,432
8.0
%
$
1,338,040
10.0
%
CET1 Capital (to Risk-Weighted Assets)
First BanCorp.
$
2,243,981
16.76
%
$
602,582
4.5
%
N/A
N/A
%
FirstBank
$
2,087,853
15.60
%
$
602,118
4.5
%
$
869,726
6.5
%
Tier I Capital (to Risk-WeightedAssets)
First BanCorp.
$
2,243,981
16.76
%
$
803,443
6.0
%
N/A
N/A
FirstBank
$
2,187,853
16.35
%
$
802,824
6.0
%
$
1,070,432
8.0
%
Leverage ratio
First BanCorp.
$
2,243,981
11.58
%
$
774,882
4.0
%
N/A
N/A
FirstBank
$
2,187,853
11.30
%
$
774,609
4.0
%
$
968,261
5.0
%
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
58
Commitments
The Corporation entersinto financial instrumentswith off-balance sheetrisk in the normalcourse of business tomeet the financing
needsofitscustomers.Thesefinancialinstrumentsmayincludecommitmentstoextendcreditandstandbylettersofcredit.
Commitments to extend credit are agreementsto lend to a customer as longas there is no violation of any conditionsestablished in the
contract. Commitmentsgenerally have fixedexpiration dates orother termination clauses.Since certain commitmentsare expectedto
expire withoutbeing drawnupon, thetotal commitmentamount doesnot necessarilyrepresent futurecash requirements.For mostof
thecommerciallinesofcredit,theCorporationhastheoptiontoreevaluatetheagreementpriortoadditionaldisbursements.Inthe
case of credit cards and personal lines of credit, the Corporation cancancel the unused credit facility at any time and without cause.As
of March 31, 2026,commitments to extendcredit amounted to approximately$
2.1
billion, of which $
0.8
billion relates to retailcredit
cardloans.Inaddition,commercialandfinancialstandbylettersofcreditasofMarch31,2026amountedtoapproximately$
63.1
million.
Contingencies
AsofMarch31,2026,FirstBanCorp.anditssubsidiariesweredefendantsinorpartiestocertainpendingandthreatenedlegal
proceedings,claimsandotherlosscontingenciesarisingintheordinarycourseofbusiness.Onatleastaquarterlybasis,the
Corporationassesses itsliabilitiesandcontingenciesin connectionwith suchlegal proceedings,claims andother losscontingencies
utilizing thelatest informationavailable,advice fromlegal counsel,and availableinsurance coverage.For legalproceedings, claims
andotherlosscontingencieswhereitisbothprobablethattheCorporationwillincuralossandtheamountcanbereasonably
estimated,the Corporationestablishes anaccrualforthe loss.Once established,the accrualis adjustedas appropriateto reflectany
relevant developments.For legalproceedings, claimsand otherloss contingencieswhere theCorporation hasdetermined thatloss is
not probable or the amount of the loss cannot be estimated, no accrual is established.
Any estimateof possible lossis basedon currentlyavailable informationand subjectto significantjudgment, giventhe complexity
of the facts,the novelty ofthe legal theories,the varying stagesof the proceedings(including the factthat some ofthem are currently
in preliminarystages), theexistence insome ofthe currentproceedings ofmultiple defendantswhose shareof liabilityhas yetto be
determined, the numerous unresolvedissues in the proceedings,and the inherent uncertaintyof the various potentialoutcomes of such
proceedings. Accordingly,it may takemonths or yearsafter the initialclaim, filing ofa case orcommencement ofa proceeding oran
investigation beforean estimateof the reasonablypossible loss canbe madeand theCorporation’sestimate willchange fromtime to
time, and actual losses may be more or less than the current estimate.
Whilethefinaloutcomeoflegalproceedings,claims,andotherlosscontingenciesisinherentlyuncertain,basedoninformation
currentlyavailable,managementbelievesthatthefinaldispositionoftheCorporation’slegalproceedings,claimsandotherloss
contingencies,totheextentnotpreviouslyprovidedfor,willnothaveamaterialadverseeffectontheCorporation’sconsolidated
financial position as a whole.
If management believes that, based on available information,it is at least reasonably possible that a material loss (or materialloss in
excessofanyaccrual)willbeincurredinconnectionwithanylegalcontingencies,includingtaxcontingencies,theCorporation
discloses anestimate ofthe possibleloss orrange ofloss, eitherindividually orin theaggregate, asappropriate, ifsuch anestimate
can be made, or discloses that an estimate cannot be made.
For information regardingongoing litigation, seeNote 23 –“Regulatory Matters, Commitmentsand Contingencies,” tothe audited
consolidated financial statements included in the 2025 Annual Report onForm 10-K.
FIRST BANCORP.
NOTES TO CONSOLIDATEDFINANCIALSTATEMENTS – (Continued)
59
NOTE 19 – FIRST BANCORP.(HOLDING COMPANYONLY) FINANCIALINFORMATION
The following condensedfinancial information presentsthe financial positionof First BanCorp.at the holdingcompany level only
as of March 31, 2026 and December 31, 2025, and the results of its operations for the quartersended March 31, 2026 and 2025:
Statements of Financial Condition
As of March 31,
As of December 31,
2026
2025
(In thousands)
Assets
Cash and due from banks (includes $
39,108
due from FirstBank as of March 31, 2026
and $
37,654
as of December 31, 2025)
$
39,855
$
38,401
Equity securities
1,950
1,950
Investment in FirstBank, at equity
1,898,589
1,898,022
Investment in FirstBank Insurance Agency, at equity
22,998
18,630
Dividends receivable
558
560
Deferred tax asset
(1)
11,820
13,246
Other assets
770
917
Total assets
$
1,976,540
$
1,971,726
Liabilities and Stockholders’ Equity
Accounts payable and other liabilities
9,301
4,861
Stockholders’ equity
1,967,239
1,966,865
Total liabilities and stockholders’ equity
$
1,976,540
$
1,971,726
(1)
Consists of deferred tax assets associated with NOL carryforwards,which the Corporation expects to realize under the electionestablished by Act 65-2025.
Statements of Income
Quarter Ended March 31,
2026
2025
(In thousands)
Income
Interest income on interest-bearing cash balances due from FirstBank
$
460
$
94
Dividend income from banking subsidiaries
83,000
117,457
Other income
-
29
Total income
83,460
117,580
Expense
Interest expense on long-term borrowings
-
981
Other non-interest expenses
475
478
Total expense
475
1,459
Income before income taxes and equity in undistributedearnings of subsidiaries
82,985
116,121
Income tax expense
1,426
1
Equity in undistributed earnings of subsidiaries (distribution in excess of
earnings)
7,219
(39,061)
Net income
$
88,778
$
77,059
Other comprehensive (loss) income, net of tax
(6,168)
84,061
Comprehensive income
$
82,610
$
161,120
60
ITEM2.MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOF
OPERATIONS (“MD&A”)
ThefollowingMD&ArelatestotheaccompanyingunauditedconsolidatedfinancialstatementsofFirstBanCorp.(the
“Corporation,” “we,” “us,”“our,” or “FirstBanCorp.”) and should beread in conjunction withsuch financial statements andthe notes
thereto,and ourAnnual Reporton Form10-K forthe fiscalyear endedDecember 31,2025 (the“2025 AnnualReport onForm 10-
K”). This sectionalso presents certainfinancial measures thatare not basedon generally acceptedaccounting principles inthe United
StatesofAmerica(“GAAP”).See“Non-GAAPFinancialMeasuresandReconciliations”belowforinformationaboutwhynon-
GAAPfinancialmeasuresarepresented,reconciliationsofnon-GAAPfinancialmeasurestothemostcomparableGAAPfinancial
measures, and references to non-GAAP financial measures reconciliationspresented in other sections.
EXECUTIVE SUMMARY
First BanCorp. isa diversified financialholding company headquarteredin San Juan, PuertoRico, offering afull range of financial
products toconsumers andcommercial customersthrough varioussubsidiaries. FirstBanCorp.is theholding companyof FirstBank
PuertoRico(“FirstBank”or the“Bank”)andFirstBankInsuranceAgency.Throughits wholly-ownedsubsidiaries,the Corporation
operatesinPuertoRico,theUnitedStatesVirginIslands(“USVI”),theBritishVirginIslands(“BVI”),andthestateofFlorida,
concentrating oncommercial banking,residential mortgage loans,credit cards, personalloans, small loans,auto loans andleases, and
insurance agency activities.
Recent Developments
Economy and Market Update
EconomicconditionsinPuertoRicocontinuedtoremaingenerallystablethroughtheendofthefirstquarterof2026.The
unemployment rate was largelyunchanged on a quarter-over-quarterbasis, from 5.7% in the fourth quarter of2025 to 5.6% by the end
of the first quarter of 2026, remaining near historic lows and reflecting a resilientand stable labor market.
In the broaderU.S. economy,economic momentumcontinued to moderateduring the firstquarter of 2026following softergrowth
trendsobservedinthesecondhalfof2025.Labormarketconditionseasedfurtherbutremainedorderly,characterizedbyslower
hiring activity and agradual moderation in labordemand. The U.S. unemploymentrate remained elevated relativeto mid-2025 levels,
standingat4.3%inJanuary2026,unchangedfromlate2025,consistentwithanongoingtransitiontowardamorebalancedlabor
market ratherthan a deteriorationin overalleconomic conditions.In responseto thesetrends, andfollowing thethree 25basis points
(“bps”) ratecuts implementedin September,October,and December2025, theFederal Reserve(the “FED”)maintainedthe federal
funds targetrange at3.50%-3.75% duringthe firstquarter of2026, allowingtime toassess thelagged effectsof priorpolicy actions
and to help ensure that inflation continues to move sustainably towardits long-term 2% target.
Business activityandeconomicconditionsinPuertoRicoremainedstableandprogressedbroadlyin linewiththeCorporation’s
expectations.Supportedbyaresilientlabormarketandstableeconomicbackdrop,theCorporationremainsfocusedonservingits
customersacrossarangeofeconomicenvironments,whilecloselymonitoringkeyrisks,includingenergycostsandtheirpotential
impactoncustomers.Fortheremainderof2026,theCorporationcontinuestoexpectgrowthinthecommercialandresidential
mortgageloanportfolios,despitetheexpectedmoderationinconsumercredit demand.Inaddition,theCorporationexpectsthenet
interest margin to continue expanding as cash flows are reinvestedin higher-yielding assets.
Capital Deployment Actions
In thefirst quarterof 2026,the Corporationdelivered approximately$81.5 millionin theform ofcapital deploymentactions that
included $50.0 million in repurchases of common stock and $31.5million in common stock dividends declared.
OnApril22,2026,theCorporation’sBoardofDirectorsdeclaredaquarterlycashdividendof$0.20percommonshare.The
dividend is payable on June 12, 2026 to shareholders of record at the close ofbusiness on May 28, 2026.
61
CRITICAL ACCOUNTING POLICIES AND PRACTICES
TheaccountingprinciplesoftheCorporationandthemethodsofapplyingtheseprinciplesconformtoGAAP.Inpreparingthe
consolidatedfinancialstatements,managementisrequiredtomakeestimates,assumptions,andjudgmentsthataffecttheamounts
recorded for assets,liabilities and contingentliabilities as ofthe date ofthe financial statementsand the reportedamounts of revenues
andexpensesduringthereportingperiods.Note1ofthe NotestoConsolidatedFinancialStatementsincludedinour2025Annual
ReportonForm10-K,assupplementedbythisQuarterlyReportonForm10-Q,includingthisMD&A,describesthesignificant
accounting policies we used in our consolidated financial statements.
Not all significantaccounting policies requiremanagement to makedifficult, subjectiveor complex judgments.Critical accounting
estimatesarethoseestimatesmadeinaccordancewithGAAPthatinvolveasignificantlevelofuncertaintyandhavehadorare
reasonablylikelytohaveamaterialimpactontheCorporation’sfinancialconditionandresultsofoperations.TheCorporation’s
critical accountingestimates thatare particularlysusceptible tosignificant changesinclude, butare notlimited to,the allowancefor
creditlosses (“ACL”).In addition,the useof estimatesandassumptionsis alsoimportantin performingtheaccountingforincome
taxes, valuation offinancial instruments, determiningthe accounting for goodwill,pension and postretirementbenefit obligations, and
provisions for lossesthat may arise fromlitigation and regulatory proceedings(including governmental investigations).For additional
information, see “Critical AccountingEstimates” and “Other Estimates” in Part II,Item 7, “Management’sDiscussion and Analysis of
FinancialConditionandResultsofOperations(“MD&A”),”inthe2025AnnualReportonForm10-K.Inaddition,the“Risk
Management –Credit Risk Management”section of thisMD&A details thepolicies, assumptions,and judgments relatedto the ACL.
Actual results could differ from estimates and assumptions if differentoutcomes or conditions prevail.
62
Overview of Results of Operations
TheCorporation’sresultsofoperationsdependprimarilyonitsnetinterestincome,whichisthedifferencebetweentheinterest
incomeearnedonitsinterest-earningassets,includinginvestmentsecuritiesandloans,andtheinterestexpenseincurredonits
interest-bearingliabilities,includingdepositsandborrowings.Netinterestincomeisaffectedbyvariousfactors,includingthe
following:(i)theinterestrateenvironment;(ii)thevolumes,mix,andcompositionofinterest-earningassets,andinterest-bearing
liabilities; and (iii) the repricing characteristics of these assets and liabilities.
TheCorporationhadnetincomeof$88.8million($0.57perdilutedcommonshare),forthequarterendedMarch31,2026,
compared to $77.1million ($0.47 perdiluted commonshare), for thequarter ended March31, 2025. Otherrelevant selected financial
indicators for the periods presented are included below:
Quarter Ended March 31,
2026
2025
Key Performance Indicators:
(1)
Return on Average Assets
(2)
1.89
%
1.64
%
Return on Average Common Equity
(3)
17.92
17.90
Efficiency Ratio
(4)
49.14
49.58
(1)
These financial ratios are used by management to monitor the Corporation’sfinancial performance and whether it is using its assetsefficiently.
(2)
Indicates how profitable the Corporation is in relation to its total assetsand is calculated by dividing net income on an annualizedbasis by its average total assets.
(3)
Measures the Corporation’sperformance based on itsaverage common stockholders’ equity andis calculated by dividing netincome on an annualizedbasis by its average totalcommon
stockholders’ equity.
(4)
Measures how much the Corporation incurred to generate adollar of revenue and is calculated by dividing non-interest expensesby total revenue.
The key driversof the Corporation’sGAAP financial resultsfor the quarterended March 31,2026, compared tothe first quarter of
2025, include the following:
●
Net interest incomeincreased by$8.6 millionto $221.0million for thefirst quarter of2026, comparedto $212.4million for
thefirstquarterof2025.Netinterestmarginforthefirstquarterof2026increasedby23bpsto4.75%,drivenbythe
deploymentof cashflows fromlower-yieldinginvestment securitiesto higher-yieldingassets, anda decreasein thecost of
interest-bearingliabilitiesduetotheeffectoflowerinterestratesondeposits,primarilyonnon-maturitygovernment
deposits,andtherepaymentsofFederalHomeLoanBank(“FHLB”)advancesandredemptionofjuniorsubordinated
debentures. Thesefactors werepartially offsetby thedownward repricingof variable-ratecommercial loansand theoverall
declineinthehigher-yieldingconsumerloanportfolio.See“ResultsofOperations–NetInterestIncome”belowfor
additional information.
●
The provision for creditlosses on loans, financeleases, unfunded loan commitmentsand debt securities for thequarter ended
March31,2026was $17.3million,comparedto $24.8millionforthe firstquarterof 2025.The decreasewas drivenbya
favorableyear-over-yearvarianceintheprovisionforthecommercialandconstructionloanportfolios,primarilydueto
improvements in the projections of the unemployment rate and the commercialreal estate (“CRE”) price index.
Netcharge-offstotaled$21.1millionforthefirstquarterof2026,oranannualized0.65%ofaverageloans,comparedto
$21.4 million,or anannualized 0.68%of averageloans, forthe sameperiod in2025. The$0.3 milliondecrease wasdriven
by a $1.1 million reductionin consumer loans andfinance leases net charge-offs,after considering the impactof $2.4 million
inrecoveriesrelatedtothebulksaleoffullycharged-offconsumerloansandfinanceleasesrecognizedduringthefirst
quarter of2025.This improvementwas partiallyoffsetby a$0.6 millioncharge-offon anonaccrualcommercialmortgage
loan inthe VirginIslands regionduring thefirst quarterof 2026.See “Resultsof Operations– Provisionfor CreditLosses”
and “Risk Management” below for analyses of the ACL and non-performingassets and related ratios.
●
Non-interestincome increasedby $2.0million to$37.7 millionfor thefirst quarterof 2026,compared to$35.7 millionfor
the same periodin 2025, drivenin part by$0.9 millionin higher revenuesfrom mortgage bankingactivities. See “Resultsof
Operations – Non-Interest Income” below for additional information.
●
Non-interest expensesincreased by$4.1 millionto $127.1million forthe firstquarter of2026, comparedto $123.0million
for the same period in2025, mainly due to a $3.2million increase in employees’compensation and benefits expenses,in part
due to annual salary merit increases. See “Results of Operations – Non-InterestExpenses” below for additional information.
63
●
Income tax expense increased by$2.3 million to $25.5 million forthe first quarter of 2026, comparedto $23.2 million for the
same periodin 2025,driven byhigher pre-taxincome,partially offsetby adecrease inthe annualeffective taxrate due toa
higher proportionof exemptto taxableincome. Forthe year,the Corporation’sannual effectivetax rate,excluding discrete
items,wasestimatedat21.9%forthefirstquarterof2026,comparedto23.9%forthecomparableperiodin2025.See
“IncomeTaxes”belowandNote13–“IncomeTaxes”totheunauditedconsolidatedfinancialstatementshereinfor
additional information.
●
As ofMarch 31,2026,total assetswere approximately$19.1 billion,a decreaseof $46.8million fromDecember 31,2025,
primarilyrelatedtoadecreaseincashandcashequivalentsresultingfromcapitaldeploymentactionsandthedecreasein
governmentdepositsandbrokeredcertificatesofdeposit(“CDs”),partiallyoffsetbythenetincomegeneratedinthefirst
quarter of 2026.
●
As of March 31, 2026,total liabilities were $17.1billion, a decrease of$47.2 million from December31, 2025, driven bythe
aforementioneddecreasein deposits.See“Risk Management–LiquidityRisk”belowforadditionalinformationabout the
Corporation’s fundingsources and strategy.
●
TheCorporation’sprimarysourcesoffundingareconsumerandcommercialcoredeposits,whichexcludegovernment
depositsandbrokeredCDs.Excludingfullycollateralizedgovernmentdeposits,estimateduninsureddepositsamountedto
$4.8billionasofMarch31,2026.TheCorporationhadapproximately$2.9billionincashandcashequivalentsandfree
high-quality liquidsecurities as ofMarch 31, 2026.When addingapproximately $2.6billion availablefor fundingunder the
FED’s
Discount Windowand $1.0billion availablefor additionalborrowing capacityon theFHLB linesof creditbased on
collateral pledged at these entities, the Corporation had $6.5 billion,or 134%of estimated uninsured deposits (excluding fully
collateralizedgovernmentdeposits), availableto meetliquidityneeds.See “RiskManagement– LiquidityRisk” belowfor
additional information about the Corporation’sfunding sources and strategy.
●
AsofMarch31,2026,theCorporation’stotalstockholders’equitywas$2.0billion,anincreaseof$0.4millionfrom
December31,2025,drivenbythenetincomegeneratedinthefirstquarterof2026,partiallyoffsetby$50.0millionin
commonstockrepurchases,$31.5million,or$0.20percommonshare,incommonstockdividendsdeclaredinthefirst
quarter of2026, anda $6.2million decreasein thefair valueof available-for-saledebt securities.The Corporation’sCET1
capital, tier 1capital, total capital, andleverage ratios were 16.93%,16.93%, 18.19%, and11.66%, respectively,as of March
31, 2026, compared to CET1 capital, tier 1 capital, total capital, andleverage ratios of 16.76%, 16.76%, 18.01%, and 11.58%,
respectively, as ofDecember 31, 2025.See “Risk Management – Capital” below for additional information.
●
Totalloanproduction,includingpurchases,refinancings,renewals,anddrawsfromexistingrevolvingandnon-revolving
commitments,increasedby$71.6millionto$1.2billionforthequarterendedMarch31,2026,ascomparedtothefirst
quarter of 2025. See “Results of Operations – Loan Production”below for additional information.
●
Totalnon-performing assets were$108.8 million asof March 31,2026, a decreaseof $5.3 millionfrom December 31,2025,
primarilyreflecting a$4.8 millionreduction innonaccrual loansand a$1.2 milliondecrease inthe otherreal estateowned
(“OREO”) portfoliobalance. See“Risk Management– NonaccrualLoans andNon-Performing Assets”below foradditional
information.
●
Adversely classifiedcommercial and constructionloans were $76.0million as ofMarch 31, 2026,a decrease of$5.4 million
from December31, 2025, drivenby $3.8 millionin repayments onthree commercial andindustrial (“C&I”)loans, including
a $1.2 million repayment of a nonaccrual C&I loan in the Puerto Rico region.
64
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
The Corporation has included in this Quarterly Report on Form 10-Qthe following financial measures that are not recognized under
GAAP,which are referred to as non-GAAP financial measures:
Net Interest Income,Interest Rate Spread,and Net Interest Margin ona Tax-Equivalent Basis
Netinterestincome,interestratespread,andnetinterestmarginarereportedonatax-equivalentbasisinordertoprovideto
investorsadditionalinformationabouttheCorporation’snetinterestincomethatmanagementusesandbelievesshould
facilitate comparability andanalysisoftheperiodspresented.Thetax-equivalentadjustmenttonetinterestincomerecognizesthe
income tax savingswhen comparingtaxable and tax-exemptassets and assumesa marginalincome tax rate.Income from tax-exempt
earning assets is increasedby an amount equivalentto the taxes that wouldhave been paid if thisincome had been taxableat statutory
rates. Management believes that itis a standard practice in the bankingindustry to present net interest income,interest rate spread, and
net interest marginon a fully tax-equivalent basis.This adjustment puts all earningassets, most notably tax-exemptsecurities and tax-
exempt loans, on a common basis that facilitates comparison ofresults to the results of peers.
See“ResultsofOperations–NetInterestIncome–PartI”belowforareconciliationoftheCorporation’snon-GAAPfinancial
measure of net interest income on a tax-equivalent basis to net interest incomein accordance with GAAP.
TangibleCommon Equity Ratio and TangibleBook ValuePer Common Share
The tangiblecommon equityratio andtangible bookvalue percommon shareare non-GAAPfinancial measuresthat management
believes are generallyused by the financialcommunity to evaluatecapital adequacy.Tangiblecommon equity is totalcommon equity
less goodwilland otherintangible assets.Similarly,tangible assetsare totalassets lessgoodwill andother intangibleassets. Tangible
commonequityratioistangiblecommonequitydividedbytangibleassets.Tangiblebookvaluepercommonshareistangible
commonequity dividedby thenumber ofcommon sharesoutstanding.Management usesand believesthat manystock analystsuse
the tangiblecommon equityratio andtangible bookvalue percommon sharein conjunctionwith othermore traditionalbank capital
ratiostocomparethecapitaladequacyofbankingorganizationswithsignificantamountsofgoodwillorotherintangibleassets,
typicallystemmingfromthe useofthepurchasemethodofaccountingformergersandacquisitions.Accordingly,the Corporation
believes thatdisclosures ofthese financialmeasures maybe usefulto investors.Neither tangiblecommon equitynor tangibleassets,
or the relatedmeasures, should beconsidered in isolationor as a substitutefor stockholders’equity,total assets, or anyother measure
calculated in accordancewith GAAP.Moreover,the manner in whichthe Corporation calculates itstangible commonequity, tangible
assets, and any other related measures may differ fromthat of other companies reporting measures with similar names.
See “RiskManagement –Capital” belowfor thetable thatreconciles theCorporation’stotal equityand totalassets inaccordance
with GAAP tothe tangible commonequity and tangibleassets figures usedto calculate thenon-GAAP financial measuresof tangible
common equity ratio and tangible book value per common share.
65
Adjusted Net Income and Adjusted Non-Interest Expenses
Tosupplement theCorporation’sfinancial statementspresented inaccordance withGAAP,the Corporationuses, and believesthat
investors benefit from disclosure of, non-GAAP financial measures that reflectadjustments to net income and non-interestexpenses to
excludeitems thatmanagement believesare notreflective ofcore operatingperformance (“SpecialItems”). Thefinancial resultsfor
the firstquarter of2025did notinclude anysignificant SpecialItems. Thefinancial resultsfor thefirst quarterof 2026included the
following Special Item:
Federal Deposit Insurance Corporation (“FDIC”) Special Assessment Reversal
-
A benefitof $0.1million ($57thousandafter-tax,calculated basedon thestatutory taxrate of37.5%) wasrecordedduring
thefirstquarterof2026followingreceiptoftheFDICassessmentinvoice,paidonMarch30,2026,whichreducedthe
quarterlyspecial assessmentrate forthe eighthand finalcollection periodfrom 3.36bps to2.97 bps.Any futureoffsets or
one-time final shortfall special assessmentcollection, if any,will be communicated by theFDIC through future invoices. The
FDIC depositspecial assessmentis reflectedin theconsolidatedstatements ofincomeas partof “FDICdepositinsurance”
expenses.
Adjusted NetIncome –The followingtable reconciles,for the firstquarter of2026, netincome toadjusted netincome, whichis a
non-GAAP financial measure that excludes the Special Item identifiedabove, and shows net income, for the first quarter of 2025:
Quarter Ended March 31,
2026
2025
(In thousands)
Net income, as reported (GAAP)
$
88,778
$
77,059
Adjustment:
FDIC special assessment reversal
(92)
-
Income tax impact of adjustment
(1)
35
-
Adjusted net income (Non-GAAP)
$
88,721
$
77,059
(1)
See “Adjusted Net Income and Adjusted Non-Interest Expenses”above for the individual tax impact related to the above adjustment,which was based on the Puerto Rico statutory tax
rate of 37.5%.
66
RESULTSOF OPERATIONS
Net Interest Income
Net interestincome isthe excess ofinterest earnedby FirstBanCorp. onits interest-earningassets overthe interestincurred on its
interest-bearingliabilities.FirstBanCorp.’snetinterestincomeissubjecttointerestrateriskduetotherepricingandmaturity
mismatchoftheCorporation’sassetsandliabilities.Inaddition,variablesourcesofinterestincome,suchasloanfees,periodic
dividends, and collection of interest on nonaccrual loans, can fluctuatefrom period to period. Net interest income for the quarterended
March31, 2026was $221.0million,comparedto $212.4millionforthe comparableperiodin 2025.Ona tax-equivalentbasis,net
interest incomefor thequarter endedMarch 31,2026 was$232.4 million,compared to$218.6 millionfor thecomparable periodin
2025.
Thefollowingtablesinclude adetailedanalysisof netinterest incomeforthe indicatedperiods.Part Ipresentsaverage volumes
(basedontheaveragedailybalance)andratesonanadjustedtax-equivalentbasisandPartIIpresents,alsoonanadjustedtax-
equivalent basis,the extentto whichchanges ininterest ratesand changesin thevolume ofinterest-related assetsand liabilitieshave
affectedthe Corporation’snet interestincome. Foreach categoryof interest-earningassets andinterest-bearingliabilities, thetables
provideinformationonchangesin(i)volume(changesinvolumemultipliedbypriorperiodrates),and(ii)rate(changesinrate
multiplied byprior periodvolumes). TheCorporation hasallocated rate-volumevariances (changesin ratemultiplied bychanges in
volume) to either the changes in volume or the changes in rate based upon theeffect of each factor on the combined totals.
Netinterestincomeonanadjustedtax-equivalentbasisisanon-GAAPfinancialmeasure.Forthedefinitionofthisnon-GAAP
financial measure, refer to the discussion in “Non-GAAP Financial Measuresand Reconciliations” above.
67
Part I
Average volume
Interest income
(1)
/ expense
Average rate
(1)
Quarter ended March 31,
2026
2025
2026
2025
2026
2025
(Dollars in thousands)
Interest-earning assets:
Money market and other short-term investments
$
618,371
$
1,111,087
$
5,630
$
12,205
3.69
%
4.45
%
Government obligations
(2)
1,467,672
1,971,327
11,426
6,970
3.16
%
1.43
%
Mortgage-backed securities (“MBS”)
3,645,699
3,308,964
26,814
17,497
2.98
%
2.14
%
FHLB stock
24,150
32,661
474
790
7.96
%
9.81
%
Other investments
20,952
19,977
139
247
2.69
%
5.01
%
Total investments
(3)
5,776,844
6,444,016
44,483
37,709
3.12
%
2.37
%
Residential mortgage loans
2,911,731
2,841,918
43,249
41,484
6.02
%
5.92
%
Construction loans
247,415
232,295
5,791
5,596
9.49
%
9.77
%
C&I and commercial mortgage loans
6,225,066
5,806,929
101,920
99,756
6.64
%
6.97
%
Consumer loans and finance leases
3,684,662
3,751,359
95,871
98,752
10.55
%
10.68
%
Total loans
(4)(5)
13,068,874
12,632,501
246,831
245,588
7.66
%
7.88
%
Total interest-earning assets
$
18,845,718
$
19,076,517
$
291,314
$
283,297
6.27
%
6.02
%
Tax-equivalent adjustment
(11,465)
(6,232)
Interest income - GAAP
279,849
277,065
6.02
%
5.89
%
Interest-bearing liabilities:
Time deposits
$
3,542,960
$
3,048,778
$
29,237
$
25,468
3.35
%
3.39
%
Brokered CDs
555,938
483,774
5,759
5,461
4.20
%
4.58
%
Other interest-bearing deposits
7,033,139
7,693,900
20,935
27,568
1.21
%
1.45
%
Advances from the FHLB
277,000
468,667
2,962
5,190
4.34
%
4.49
%
Other borrowings
-
53,892
-
981
-
%
7.38
%
Total interest-bearing liabilities
$
11,409,037
$
11,749,011
$
58,893
$
64,668
2.09
%
2.23
%
Net interest income/margin - non-GAAP
(1)
$
232,421
$
218,629
5.00
%
4.65
%
Net interest income/margin - GAAP
$
220,956
$
212,397
4.75
%
4.52
%
Net interest spread - non-GAAP
(1)
4.18
%
3.79
%
Net interest spread - GAAP
3.93
%
3.66
%
(1)
Non-GAAP measure reported on an adjustedtax-equivalent basis. The Corporation estimated theadjusted tax-equivalent yield by dividing the netinterest spread on exempt assets by 1less
the Puerto Rico statutory tax rateof 37.5% and adding to it thecost of interest-bearing liabilities. Thetax-equivalent adjustment recognizes the incometax savings when comparing taxable
and tax-exempt assets.Management believesthat it isa standard practicein the bankingindustry to presentnet interest income,interest rate spreadand net interestmargin on afully tax-
equivalentbasis.Therefore,managementbelievesthesemeasuresprovideusefulinformationtoinvestorsbyallowingthemtomakepeercomparisons.See“Non-GAAPFinancial
Measures and Reconciliations” above.
(2)
Government obligations include debt issued by government-sponsoredagencies.
(3)
Unrealized gains and losses on available-for-sale debt securitiesare excluded from the average volumes.
(4)
Average loan balances includethe average of nonaccrual loans.
(5)
Interest income on loans includes$4.0 million and $5.4 millionfor the quarters ended March31, 2026 and 2025, respectively,of income from prepayment penaltiesand late fees related to
the Corporation’s loan portfolio.
68
Part II
Quarter Ended March 31,
2026 Compared to 2025
Variance due to:
Volume
Rate
Total
(In thousands)
Interest income on interest-earning assets:
Money market and other short-term investments
$
(4,753)
$
(1,822)
$
(6,575)
Government obligations
(2,921)
7,377
4,456
MBS
1,924
7,393
9,317
FHLB stock
(183)
(133)
(316)
Other investments
10
(118)
(108)
Total investments
(5,923)
12,697
6,774
Residential mortgage loans
1,030
735
1,765
Construction loans
363
(168)
195
C&I and commercial mortgage loans
7,097
(4,933)
2,164
Consumer loans and finance leases
(2,563)
(318)
(2,881)
Total loans
5,927
(4,684)
1,243
Total interest income
$
4
$
8,013
$
8,017
Interest expense on interest-bearing liabilities:
Time deposits
$
4,134
$
(365)
$
3,769
Brokered CDs
790
(492)
298
Other interest-bearing deposits
(3,029)
(3,604)
(6,633)
Advances from the FHLB
(2,055)
(173)
(2,228)
Other borrowings
(981)
-
(981)
Total interest expense
(1,141)
(4,634)
(5,775)
Change in net interest income
$
1,145
$
12,647
$
13,792
Net interest incomeamounted to $221.0million for the quarterended March 31, 2026,an increase of $8.6million, when compared
to $212.4 million for the same period in 2025. The increase in net interest incomeconsisted of:
●
A $5.8 million decrease in interest expense on interest-bearing liabilities, consistingof:
o
A $3.2milliondecrease ininterest expenseon borrowings,dueto a$191.7 milliondecrease inthe averagebalanceof
FHLB advances and the redemption of the remaining junior subordinateddebentures during the first half of 2025.
o
A $2.6 million decrease in interest expense on interest-bearing deposits, drivenby:
-
A $6.6million decreasein interestexpense oninterest-bearing checkingand savingaccounts, dueto a $3.6million
decreaseassociatedwithlowerinterestratespaidanda$3.0milliondecreaseassociatedwitha$660.8million
decreaseintheaveragebalance.Theaveragecostofinterest-bearingcheckingandsavingaccountsinthefirst
quarter of2026 decreased24 bps to1.21% whencompared tothe sameperiod in2025, drivenby adecrease inthe
costofgovernmentdeposits.Excludinggovernmentdeposits,theaveragecostofinterest-bearingcheckingand
savings accounts for the quarter ended March 31, 2026 was 0.66%,compared to 0.77% for the same period in 2025.
Partially offset by:
-
A$3.8millionincreaseininterestexpenseontimedeposits,excludingbrokeredCDs,drivenbya$4.1million
increase associated with a $494.2 million increase in the average balance.
●
A $2.6 million net increase in interest income on investment securities and interest-bearingcash balances, driven by:
o
A $9.6millionincreaseininterestincomeondebtsecurities,mainlyduetoan 81bpsimprovementinyield resulting
from purchases of higher-yielding available-for-sale debt securities replacing maturities of lower-yieldingdebt securities.
69
Partially offset by:
o
A $6.6 million decreasein interest income frominterest-bearing cash balances,due to a $4.8million decrease associated
with a$492.7 millionnet reductionin theaverage balances,whichconsisted primarilyofcash maintainedat theFED,
and a $1.8 million decrease associated with the reduction of the federal fundsrate.
●
A $0.2 million increase in interest income on loans, a net effect of:
o
A $1.8millionincreaseininterest incomeon residentialmortgageloans,of which$1.1 millionwas associatedwitha
$69.8 million increase in the average balance.
o
A$1.3millionincreaseininterestincomeoncommercialandconstructionloans,drivenbya$7.4millionincrease
mainlyassociatedwitha$433.3millionincreaseintheaveragebalance,partiallyoffsetbya$4.9milliondecrease
mainly relatedto theeffect oflower interestrates onthe downwardrepricing ofvariable-rate loansand $1.2million in
interestincomerecognizedduringthefirstquarterof2025asaresultofthepayoffofa$73.8millioncommercial
mortgage loan.
As ofMarch 31,2026, theinterest rateon approximately51% ofthe Corporation’scommercial andconstruction loans
was tiedto variablerates, with32% basedupon SecuredOvernight FinancingRate (“SOFR”)of 3months orless, 12%
based upon the Prime rate index, and 7% based on other indexes.For the quarter ended March 31, 2026, the average one-
month SOFRdecreased 64bps, theaverage three-monthSOFR decreased63 bps,and the averagePrime ratedecreased
75 bps, when compared to the same period in 2025.
Partially offset by:
o
A $2.9million decreasein interestincome onconsumer loansand financeleases, ofwhich $2.6million wasassociated
with a $66.7 million net decrease in the average balance.
Net interest marginfor the first quarterof 2026 was4.75%, an increaseof 23 bps,compared to 4.52%for the sameperiod in 2025.
Theincreaseinthenetinterestmarginmostlyreflectsthedeploymentofcashflowsfromlower-yieldinginvestmentsecuritiesto
higher-yielding assets,and a decreasein the costof interest-bearingliabilities due tothe effectof lowerinterest rates ondeposits and
theaforementionedrepaymentsofFHLBadvancesandredemptionofjuniorsubordinateddebentures.Thesefactorswerepartially
offsetbythedownwardrepricingofvariable-ratecommercialloansandtheoveralldeclineinthehigher-yieldingconsumerloan
portfolio.
70
Provision for Credit Losses
The provisionfor creditlosses consists ofprovisions forcredit losses onloans andfinance leases,unfunded loancommitments, as
well as the debt securities portfolio. The principal changes in the provisionfor credit losses by main categories follow:
Provision for credit losses forloans and finance leases
Theprovisionforcreditlossesforloansandfinanceleaseswas$17.2millionforthefirstquarterof2026,comparedto$24.8
million for the first quarter of 2025.The variances by major portfolio category were as follows:
●
Provision forcredit lossesfor thecommercial andconstruction loanportfolios wasa netbenefit of$1.0 millionfor thefirst
quarter of2026, comparedto an expenseof $4.6million for thefirst quarterof 2025.The favorableyear-over-yearvariance
was driven by improvementsin the projections of the unemployment rate and the CRE price index.
●
Provisionforcredit lossesforthe consumerloanandfinance leaseportfolioswas anexpenseof $18.0millionforthe first
quarter of 2026, compared to anexpense of $19.2 million for the first quarterof 2025. The decrease in provisionexpense was
drivenbylowerdelinquencylevels,partiallyoffsetby$2.4millioninrecoveriesfromthebulksaleoffullycharged-off
consumerloansandfinanceleasesthattookplaceinthefirstquarterof2025andalowerfavorableimpactfromupdated
macroeconomic variables, mainly in the projection of the unemploymentrate.
●
Provision forcredit lossesfor theresidential mortgageloan portfoliowas anexpense of$0.2 millionfor thefirst quarterof
2026, compared to an expense of $1.0 million for the first quarter of 2025.
Provision for credit losses forunfunded loan commitments and debt securities
Theprovisionforcredit lossesforunfundedcommercialandconstructionloancommitments andstandbyletters ofcredit forthe
first quarter 2026 was an expense of $0.1 million, compared to a netbenefit of $63 thousand for the same period in 2025.
The provision for creditlosses for held-to-maturity andavailable-for-sale debt securities for thefirst quarter 2026 was anet benefit
$4 thousand, compared to an expense of $36 thousand for the same periodin 2025.
71
Non-Interest Income
Non-interest income amounted to $37.7 million for thefirst quarter of 2026, compared to $35.7 million forthe same period in 2025.
The $2.0 million increase in non-interest income was primarily dueto:
●
A $0.9 millionincrease in revenuesfrom mortgagebanking activities, drivenby an increasein the netrealized gainon sales
ofresidentialmortgageloansinthesecondarymarket.Duringthefirstquarterof2026,netrealizedgainsof$2.4million
wererecognizedasaresultofGovernmentNationalMortgageAssociation(“GNMA”)securitizationstransactions
amountingto$41.6million,comparedto$1.3millioninnetrealizedgainsforthefirstquarterof2025relatedtoGNMA
securitizations and whole loan sales to U.S. government-sponsored entities(“GSEs”) amounting to $46.3 million.
●
A$0.4millionincreaseinothernon-interestincome,ofwhich$0.2millionwasrelatedtohigherrealizedgainsfrom
purchased income tax credits.
●
A $0.3millionincreasein servicechargesand feeson depositaccounts,drivenbyan increaseinservicefeesearned from
cash management services.
●
A $0.3 million increase in card and processing income mainly dueto higher transactional volumes.
Non-Interest Expenses
Non-interestexpensesforthe firstquarterof2026amountedto$127.1million,anincreaseof$4.1million,comparedto$123.0
million forthe sameperiod in2025. Theefficiency ratiofor thefirst quarterof 2026was 49.14%,compared to49.58% forthe first
quarter of 2025. The increase in non-interest expenses was primarilydue to:
●
A $3.2millionincreasein employees’compensationand benefitsexpenses,driven byannualsalary meritincreases and
the filling of previously vacant positions.
●
A$2.2millionincreaseincreditanddebitcardprocessingexpenses,mainlydueto $1.0millionincreditcardexpense
reimbursements receivedduring the firstquarter of 2025,which for 2026 areexpected to be receivedlater in the year,and
higher transactional volumes during the first quarter of 2026.
●
A $1.4 millionincrease in professional servicesfees, mainly dueto a $0.7 millionincrease in legal feesand a $0.7 million
increase in outsourcing technology fees.
Partially offset by:
●
A $2.8million decreasein othernon-interestexpenses, mainlydueto a$1.0 milliondecrease inchargesfor operational
andfraudlosses,a$1.0milliondecreaseintheamortizationofcoredepositintangibleassetsrelatedtonon-interest-
bearing checkingaccounts fromthe BancoSantander PuertoRico acquisition,which werefully amortizedin 2025,and a
$0.3 million decrease in costs associated with the purchase of plastic cards.
Income Taxes
For the first quarterof 2026, the Corporationrecorded an income taxexpense of $25.5 million,compared to an incometax expense
of $23.2million forthe sameperiod in2025. Theincrease inincome taxexpense wasmainly dueto higherpre-tax income,partially
offsetbyadecreaseintheannualeffectivetaxrateduetoahigherproportionofexempttotaxableincome.Fortheyear,the
Corporation’sannualeffectivetaxrate, excludingdiscreteitems,was estimatedat21.9%forthe firstquarter of2026,comparedto
23.9% for the comparable periodin 2025. See Note 13 –“Income Taxes”to the unaudited consolidatedfinancial statements herein for
additional information.
As of March 31, 2026,the Corporation had a net deferredtax asset of $143.6 million, netof a valuation allowance of$75.9 million,
compared toa netdeferred taxasset of$149.0 million,net ofa valuationallowance of$75.0 million,as ofDecember 31,2025. The
decrease inthe netdeferred taxasset wasmainly relatedto stock-basedcompensation, theusage ofalternative minimumtax credits,
and changes in the ACL.
72
Assets
TheCorporation’stotalassetswere$19.1billionasofMarch31,2026,adecreaseof$46.8millionfromDecember31,2025,
primarily related toa decrease in cashand cash equivalentsresulting from capitaldeployment actions andthe decrease in government
deposits and brokered CDs, partially offset by the netincome generated in the first quarter of 2026.
Loans Receivable, including Loans Held for Sale
As of March 31,2026,the Corporation’stotal loan portfolio beforethe ACL amounted to$13.1 billion, a decreaseof $38.2 million
compared to December31, 2025, drivenby a $49.9 milliondecrease in consumerloans, of which$28.6 million was inauto loans and
finance leases inthe PuertoRico region. Interms of geography,the decline consistedof a $112.9million decrease inthe Puerto Rico
region,driven bythe aforementioneddecreasein consumerloans andlower utilizationof C&Ilines ofcredit, mainlyin automotive
lending, partially offset by increases of $47.2 millionin the Florida region and $27.5 million in the VirginIslands region.
As ofMarch 31,2026, theCorporation’sloans held-for-investmentportfolio wascomprised ofcommercial andconstruction loans
(49%),consumerloansandfinanceleases(29%),andresidentialrealestateloans(22%).Ofthetotalgrossloanportfolioheldfor
investment of$13.1 billionas ofMarch 31,2026, theCorporation hadcredit riskconcentration ofapproximately 77%in thePuerto
Rico region,19% inthe UnitedStates region(mainlyin thestate ofFlorida),and4% inthe VirginIslands region,as shownin the
following table:
As of March 31, 2026
Puerto Rico
Virgin Islands
United States
Total
(In thousands)
Residential mortgage loans
$
2,231,306
$
147,082
$
536,510
$
2,914,898
Construction loans
178,810
14,167
2,290
195,267
Commercial mortgage loans
1,753,712
72,837
800,564
2,627,113
C&I loans
2,290,891
203,810
1,200,142
3,694,843
Total commercial loans
4,223,413
290,814
2,002,996
6,517,223
Consumer loans and finance leases
3,587,266
65,834
5,856
3,658,956
Total loans held for investment,gross
$
10,041,985
$
503,730
$
2,545,362
$
13,091,077
Loans held for sale
12,805
-
-
12,805
Total loans, gross
$
10,054,790
$
503,730
$
2,545,362
$
13,103,882
As of December 31, 2025
Puerto Rico
Virgin Islands
United States
Total
(In thousands)
Residential mortgage loans
$
2,227,053
$
150,551
$
530,698
$
2,908,302
Construction loans
249,466
14,174
1,928
265,568
Commercial mortgage loans
1,690,176
73,751
790,325
2,554,252
C&I loans
2,348,274
170,728
1,169,356
3,688,358
Total commercial loans
4,287,916
258,653
1,961,609
6,508,178
Consumer loans and finance leases
3,636,072
66,947
5,857
3,708,876
Total loans held for investment,gross
$
10,151,041
$
476,151
$
2,498,164
$
13,125,356
Loans held for sale
16,697
-
-
16,697
Total loans, gross
$
10,167,738
$
476,151
$
2,498,164
$
13,142,053
See “Risk Management –Exposure to Puerto Rico Government”and “Risk Management –Exposure to USVI Government”below
for information on the Corporation’scredit exposure to PR and USVI government entities.
As ofMarch 31,2026, theCorporation’stotal commercialmortgage loanexposure amountedto $2.6billion, or20% ofthe total
loan portfolio.The $1.7 billionexposure in thePuerto Rico regionwas comprised mainlyof 39% inthe retail industry,25% in office
real estate,and 19%in thehotel industry.The $0.8billion exposurein theFlorida regionwas comprisedmainly of36% inthe retail
industry,19% inthehotel industry,and6%inofficereal estate.OftheCorporation’stotalcommercialmortgageloan exposureof
$2.6billion,$626.5millionmatureswithinthenext12monthsandhasaweighted-averageinterestrateofapproximately5.48%.
Commercial mortgageloan exposurein the officereal estate industry,which matureswithin the next12 months,amounted to $119.3
million and has a weighted-average interest rate of approximately 5.60%.
As ofeach ofMarch 31,2026 andDecember 31,2025, theCorporation’stotal exposureto sharednational credit(“SNC”) loans
(including unused commitments)amounted to $1.1billion. As of March31, 2026, approximately $332.3million of the SNCexposure
is related to the portfolio in the Puerto Rico region and $778.6 million is relatedto the portfolio in the Florida region.
73
Loan Production
First BanCorp.relies primarilyon itsretail networkof branchesto originateresidential andconsumer loans.The Corporationmay
supplementits residentialmortgage originationswith wholesaleservicing releasedmortgage loanpurchases frommortgage bankers.
TheCorporationmanagesitsconstructionandcommercialloanoriginationsthroughcentralizedunitsandmostofitsoriginations
comefromexistingcustomers,aswellasthroughreferralsanddirectsolicitations.Autoloansandfinanceleasesoriginationsrely
primarily on relationships with auto dealers and dedicated sales professionals whoserve selected locations to facilitate originations.
ThefollowingtableprovidesabreakdownofFirstBanCorp.’sloanproduction,includingpurchases,refinancings,renewalsand
draws from existing revolving and non-revolving commitments by geographicsegment,for the indicated periods:
Quarter Ended March 31,
2026
2025
(In thousands)
Puerto Rico:
Residential mortgage
$
96,714
$
101,420
Construction
13,330
26,714
Commercial mortgage
54,309
4,284
C&I
343,863
364,188
Consumer
340,686
369,436
Total loan production
$
848,902
$
866,042
Virgin Islands:
Residential mortgage
$
-
$
723
Construction
-
7,801
Commercial mortgage
1,035
8,450
C&I
162,987
24,465
Consumer
6,882
7,758
Total loan production
$
170,904
$
49,197
Florida:
Residential mortgage
$
19,032
$
11,687
Construction
384
14,791
Commercial mortgage
28,479
47,621
C&I
180,336
186,913
Consumer
183
333
Total loan production
$
228,414
$
261,345
Total:
Residential mortgage
$
115,746
$
113,830
Construction
13,714
49,306
Commercial mortgage
83,823
60,355
C&I
687,186
575,566
Consumer
347,751
377,527
Total loan production
$
1,248,220
$
1,176,584
Commercialandconstructionloanoriginations(excludinggovernmentloans)for thequarter endedMarch 31,2026amountedto
$622.2million,comparedto $656.3millionforthefirstquarterof 2025.Thedecrease of$34.1millioninthe firstquarterof 2026
consistedofdecreasesof$40.1millionintheFloridaregionand$10.5millionin VirginIslandsregion,partiallyoffsetbya$16.5
million increase in the Puerto Rico region.
GovernmentloanoriginationsforthequarterendedMarch31,2026amountedto$162.5million,anincreaseof$133.6million,
compared to$28.9 million forthe first quarterof 2025. The$133.6 millionincrease was mainlyrelated to theorigination of a$138.1
milliongovernmentlineofcreditintheVirginIslandsregionduringthefirstquarterof2026,ofwhich$108.1millionwasa
refinancing.
OriginationsofautoloansandfinanceleasesforthequarterendedMarch31,2026amountedto$199.5million,comparedto
$227.7millionforthefirstquarterof 2025.Thedecrease wasmainlyinthePuertoRicoregion.Other consumerloanoriginations,
otherthancreditcards,forthequarterendedMarch31,2026amountedto$53.3million,comparedto$47.6millionforthefirst
quarterof2025.The utilizationactivity onthe outstandingcreditcardportfolioforthe quarterendedMarch 31,2026amountedto
$94.9 million, compared to $102.2 million for the same period in 2025.
74
Investment Activities
Aspartofitsliquidity,revenuediversification,andinterestrateriskmanagementstrategies,FirstBanCorp.maintainsadebt
securities portfolio classified as available for sale or held to maturity.
SubstantiallyalloftheCorporation’savailable-for-saledebtsecuritiesportfoliowasinvestedinU.S.Treasurysecurities,U.S.
GSEs’obligations,andfixed-rateGSEs’MBS.TheCorporation’stotalavailable-for-saledebtsecuritiesportfolioasofMarch31,
2026amountedto$4.7billion,a$114.7millionincreasefromDecember31,2025.Theincreasewasdrivenby$807.6millionin
purchases, ofwhich $437.0million wereU.S. agencies’residential MBSand debentureswith anaverage yieldof 4.57%; and$370.6
millionwereU.S.Treasurysecuritieswithanaverageyieldof3.65%.Thesefactorswerepartiallyoffsetby$500.7millionin
maturities, $189.9million inprincipal repaymentsand a$6.2 milliondecrease infair valueattributable tochanges inmarket interest
rates. As of March31, 2026, the Corporationhad a net unrealizedloss on available-for-saledebt securities of $353.4million. This net
unrealizedlossisprimarilyattributabletoinstrumentsonbookscarryingalowerinterestratethanmarketrates.TheCorporation
expectsthatthisunrealizedlosswillreverseovertimeanditislikelythatitwillnotberequiredtosellthesecuritiesbeforetheir
anticipatedrecovery.The Corporationexpects theportfolio willcontinueto decreaseand theaccumulated othercomprehensive loss
will decrease accordingly,excluding the impact of market interest rates.
Held-to-maturitydebtsecuritiesincludefixed-rateGSEs’MBSwithacarryingvalueof$177.7million(fairvalueof$171.4
million)as ofMarch31,2026,comparedto$184.4millionas ofDecember 31,2025.Held-to-maturitydebtsecurities alsoinclude
$79.8millionasofMarch31,2026,comparedto$80.9millionasofDecember31,2025,offinancingarrangementswiththe
government issued in bondform, which the Corporationaccounts for as securities,but which were underwrittenas loans with features
thataretypicallyfoundincommercialloans.AsofMarch31,2026,approximately59%oftheCorporation’sgovernmentbonds
consisted of obligations issued by three of the largest municipalitiesin Puerto Rico.
AsofMarch31,2026,cashinflowsexpectedtobereceivedduringtheremainderof2026frommaturitiesandexpected
prepaymentsofthedebtsecuritiesportfolio(excludingU.S.Treasurysecurities)amountedtoapproximately$0.8billion,ofwhich
$0.7 billion have a weighted-average yieldof 1.81%. These inflows are expectedto be redeployed to fund loan growth, reinvestedinto
higher-yielding securities,or usedto repaymaturing brokeredCDs. See Note2 –“Debt Securities”for informationand detailsabout
the Corporation’s available-for-sale debt securities portfolio.
See“Risk Management–Exposureto PuertoRicoGovernment”belowforinformationanddetailsaboutthe Corporation’stotal
direct exposureto thePuerto Ricogovernment, includingmunicipalities,and “RiskManagement– CreditRisk Management”below
and Note 2 – “Debt Securities” for the ACL of the exposure to governmentbonds.
75
The carryingvalues ofdebt securitiesas ofMarch 31,2026 andDecember 31,2025 bycontractual maturity(excluding MBS)and
weighted-average yield, are shown below:
March 31, 2026
December 31, 2025
Weighted-Average
Yield %
Carrying
Amount
Weighted-Average
Yield %
Carrying
Amount
(Dollars in thousands)
U.S government and agencies obligations:
Due within one year
2.37
$
946,428
2.54
$
895,052
After 1 to 5 years
2.08
369,615
1.45
483,916
After 5 to 10 years
4.75
14,865
4.75
14,985
After 10 years
3.95
6,263
3.97
6,501
2.32
1,337,171
(1)
2.19
1,400,454
Puerto Rico government obligation:
After 10 years (2)
-
1,609
-
1,620
MBS:
Residential MBS:
Federal Home Loan Mortgage Corporation (“FHLMC”)
1.72
870,323
1.72
901,779
GNMA
2.92
253,816
2.50
196,569
Federal National Mortgage Association (“FNMA”)
1.94
1,113,083
1.90
1,138,925
U.S. Agencies collateralized mortgage obligations (“CMOs”)
4.08
999,192
3.94
819,807
Private Label MBS
5.95
3,113
5.92
3,266
Commercial MBS
2.36
268,124
2.35
276,007
Total MBS
2.57
3,507,651
2.41
3,336,353
Government bonds:
Due within one year
4.75
1,071
4.94
1,044
After 1 to 5 years
6.85
53,409
7.05
54,611
After 5 to 10 years
4.49
10,438
4.78
10,376
After 10 years
7.13
14,870
7.46
14,870
6.57
79,788
6.81
80,901
ACL on held-to-maturity debt securities
-
(641)
-
(733)
Total debt securities
2.57
$
4,925,578
2.41
$
4,818,595
(1)
Includes approximately $562.8 million incallable debt securities with anaverage yield of 1.85%, of which approximately59% were purchased at adiscount. See “Risk Management” below
for further analysis ofthe effects ofchanging interest rateson the Corporation’snet interest income andthe Corporation’sinterest risk managementstrategies. Also, referto Note 2 -“Debt
Securities” for additional information regarding the Corporation’sdebt securities portfolio.
(2)
Consists of aresidential pass-through MBSissued by thePuerto Rico Housing FinanceAuthority ("PRHFA")that is collateralizedby certain secondmortgages originated undera program
launched by the Puerto Rico government in 2010 and is innonaccrual status based on the delinquency status of the underlyingsecond mortgage loans collateral.
76
RISK MANAGEMENT
General
RisksareinherentinvirtuallyallaspectsoftheCorporation’sbusinessactivitiesandoperations.Consequently,effectiverisk
managementisfundamentaltothesuccessoftheCorporation.Theprimarygoalsofriskmanagementaretoensurethatthe
Corporation’srisk-taking activities areconsistent with theCorporation’sobjectives and risktolerance, and thatthere is an appropriate
balance between risks and rewards to maximize stockholder value.
TheCorporationhasinplaceariskmanagementframeworktomonitor,evaluateandmanagetheprincipalrisksassumedin
conducting its activities.First BanCorp’sbusiness is subject toeleven broad categoriesof risks: (i) liquidityrisk; (ii) interest raterisk;
(iii) market risk; (iv)credit risk; (v) operationalrisk; (vi) legal andregulatory risk; (vii)reputational risk; (viii) modelrisk; (ix) capital
risk; (x)strategic risk;and (xi)information technologyrisk. FirstBanCorp. hasadopted policiesand proceduresdesigned toidentify
and manage the risks to which the Corporation is exposed.
Liquidity Risk and Capital Adequacy
Liquidityriskinvolvestheongoingabilitytoaccommodateliabilitymaturitiesanddepositwithdrawals,fundasset growthand
business operations,and meetcontractual obligationsthrough unconstrainedaccess to fundingat reasonablemarket rates. Liquidity
managementinvolvesforecastingfundingrequirementsandmaintainingsufficientcapacitytomeetliquidityneedsand
accommodatefluctuationsinassetandliabilitylevelsduetochangesintheCorporation’sbusinessoperationsorunanticipated
events.
The Corporationmanages liquidity attwo levels. Thefirst is theliquidity ofthe parentcompany,or First BanCorp.,which is the
holdingcompanythatownsthebankingandnon-bankingsubsidiaries.Thesecondistheliquidityofthebankingsubsidiary,
FirstBank.
TheAssetandLiabilityCommitteeoftheCorporation’sBoardofDirectorsisresponsibleforoverseeingmanagement’s
establishmentoftheCorporation’sliquiditypolicy,aswellasapprovingoperatingandcontingencyproceduresandmonitoring
liquidityonanongoingbasis.TheManagement’sInvestmentandAssetLiabilityCommittee(“MIALCO”),whichreportstothe
Board’sAssetandLiabilityCommittee,usesmeasuresofliquiditydevelopedbymanagementthatinvolvetheuseofseveral
assumptionstoreviewtheCorporation’sliquiditypositiononamonthlybasis.TheMIALCOoverseesliquiditymanagement,
interest rate risk, market risk, and other related matters.
TheMIALCOiscomposedofseniormanagementofficers,includingtheCorporation’sChiefExecutiveOfficer(“CEO”),the
Chief FinancialOfficer (“CFO”),the ChiefRisk Officer(“CRO”), theTreasurer,the ChiefConsumer Officerand CorporateChief
ofStaff,theCorporateStrategicandBusinessDevelopmentDirector,theTreasuryandInvestmentsRiskManager,theFinancial
PlanningandAssetandLiabilityManagement(“ALM”)Director,andtheChiefOperatingOfficer(“COO”).TheTreasuryand
InvestmentsDivisionisresponsibleforplanningandexecutingtheCorporation’sfundingactivitiesandstrategy,monitoring
liquidity availability daily,and reviewing liquiditymeasures on a weeklybasis. The Investments Accountingand Operations area of
theCorporateController’sDepartmentisresponsibleforcalculatingtheliquiditymeasurementsusedbytheTreasuryand
Investment Divisionto review theCorporation’sliquidity positionon aweekly basis.The FinancialPlanning andALM Divisionis
responsible for operating the liquidity and interest rate risk models.
Toensureadequate liquiditythrough thefull rangeof potentialoperatingenvironments andmarket conditions,the Corporation
conductsitsliquiditymanagementandbusinessactivitiesinamannerthatisintendedtopreserveandenhancefundingstability,
flexibility,anddiversity.Keycomponentsofthisoperatingstrategyincludeastrongfocusonthecontinueddevelopmentof
customer-basedfunding, themaintenanceof directrelationships withwholesalemarket fundingproviders, andthe maintenanceof
the ability to liquidate certain assets when, and if, requirements warrant.
77
TheCorporationdevelopsandmaintainscontingencyfundingplans.TheseplansevaluatetheCorporation’sliquidityposition
under variousoperating circumstancesand aredesigned tohelp ensurethat theCorporation willbe ableto operatethrough periods
of stress whenaccess to normalsources of fundsis constrained. Theplans project fundingrequirements duringa potential periodof
stress, specify and quantify sources of liquidity,outline actions and procedures for effectively managingliquidity through a period of
stress, anddefine rolesand responsibilitiesfor theCorporation’semployees. Underthe contingencyfunding plans,the Corporation
stresses thebalance sheetand theliquidity positionto critical levelsthat mimicdifficulties ingenerating fundsor even maintaining
the currentfunding positionof theCorporation andthe Bankand aredesigned tohelp ensurethe abilityof theCorporation andthe
Bank to honortheir respective commitments.The Corporation hasestablished liquiditytriggers that theMIALCO monitors inorder
to maintain theordinary funding ofthe banking business.The MIALCO hasdeveloped contingency fundingplans for thefollowing
threescenarios:acredit ratingdowngrade,aneconomiccycledownturnevent,andaconcentrationevent.TheBoard’sAsset and
Liability Committee reviews and approves these plans on an annual basis.
Liquidity Risk Management
The Corporation managesits liquidity ina proactive manner andin an effortto maintain a soundliquidity position. It usesmultiple
measuresto monitorits liquidityposition,includingcoreliquidity,basicliquidity,and time-basedreservemeasures. Cashandcash
equivalentsamounted to$550.9 millionas ofMarch 31,2026, comparedto $658.6millionas ofDecember 31,2025. Whenadding
$2.3 billion of free high-quality liquid securities that could be liquidatedor pledged within one day (which includes assets such as U.S.
government andGSEs’ obligations),the total coreliquidity amountedto $2.9 billionas of March31, 2026, or14.66% of totalassets,
compared to $2.6 billion, or 13.54%of total assets as of December 31, 2025.
In additionto the aforementioned$2.9 billion incash and freehigh qualityliquid assets, theCorporation had $1.0billion available
for credit with the FHLB based on the value of loans andsecurities collateral pledged with the FHLB. As such, the basic liquidityratio
(whichaddssuchavailablesecuredlinesofcredittothecoreliquidity)wasapproximately20.14%oftotalassetsasofMarch31,
2026,compared to 19.39% of total assets as of December 31, 2025.
Further,theCorporationalsomaintainsborrowingcapacityattheFEDDiscountWindowandhadapproximately$2.6billion
available forfunding underthe FED’sBorrower-in-Custody (“BIC”)Program asof eachof March31, 2026and December31, 2025
as anadditionalsource ofliquidity.Totalloans pledgedto theFED BICProgramamounted to$3.4 billionas ofeach ofMarch 31,
2026 and December 31, 2025. TheCorporation does not rely on uncommittedinter-bank lines of credit (federalfunds lines) to fund its
operations.Intheaggregate,asofMarch31,2026,theCorporationhad$6.5billionavailabletomeetliquidityneeds,or134%of
estimated uninsureddeposits, excludingfully collateralizedgovernment deposits,compared to$6.3 billionor 132%,respectively,as
of December 31, 2025.
Liquidityatthe Banklevelis highlydependentonbank deposits,whichfund87.3%of theBank’sassets (or84.7%excluding
brokered CDs).In addition,as furtherdiscussed below,the Corporationmaintains adiversified baseof readilyavailable wholesale
fundingsources,includingadvancesfromtheFHLBthroughpledgedborrowingcapacity,securitiessoldunderagreementsto
repurchase, and access to brokered CDs. Fundingthrough wholesale funding may continue to increasethe overall cost of funding for
the Corporation and adversely affect the net interest margin.
78
Commitments to extend credit and standbyletters of credit
Asaprovideroffinancialservices,theCorporationroutinelyentersintocommitmentswithoff-balancesheetrisktomeetthe
financialneedsofitscustomers.Thesefinancialinstrumentsmayincludeloancommitmentsandstandbylettersofcredit.These
commitmentsaresubjecttothesamecreditpoliciesandapprovalprocessesusedforon-balancesheetinstruments.These
instruments involve, to varying degrees,elements of credit and interest rate riskin excess of the amount recognized in thestatements
of financialcondition.Commitments toextendcredit areagreementsto lendto acustomer aslongas thereis noviolationof any
conditionestablishedinthecontract.Sincecertaincommitmentsareexpectedtoexpirewithoutbeingdrawnupon,thetotal
commitmentamountdoesnotnecessarilyrepresentfuturecashrequirements.Formostofthecommerciallinesofcredit,the
Corporationhastheoptiontoreevaluatetheagreementpriortoadditionaldisbursements.Therehavebeennosignificantor
unexpected drawson existingcommitments. Inthe caseof creditcards andpersonal linesof credit,the Corporationcan cancelthe
unused credit facility at any time and without cause.
The following table summarizes commitments to extend credit and standby letters ofcredit as of the indicated dates:
March 31, 2026
December 31, 2025
(In thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit:
Construction undisbursed funds
$
159,031
$
191,879
Unused credit card lines
767,653
760,531
Unused personal lines of credit
34,512
34,932
Commercial lines of credit
1,145,553
1,146,541
Letters of credit:
Commercial letters of credit
41,011
32,252
Standby letters of credit
22,042
21,430
TheCorporationengagesinthe ordinarycourseof businessinotherfinancialtransactionsthatare notrecordedon thebalance
sheetormayberecordedonthebalancesheetinamountsthataredifferentfromthefullcontractornotionalamountofthe
transactionand, thus,affectthe Corporation’sliquidity position.These transactionsare designedto (i)meet thefinancial needsof
customers, (ii) manage theCorporation’s credit,market and liquidity risks, (iii)diversify the Corporation’sfunding sources, and (iv)
optimize capital.
In addition to theaforementioned off-balancesheet debt obligationsand unfunded commitmentsto extend credit,the Corporation
has obligations and commitments to make futurepayments under contracts, amounting to approximately$4.4billion as of March 31,
2026.Ourmaterialcashrequirementscompriseprimarilyofcontractualobligationstomakefuturepaymentsrelatedtotime
deposits,long-termborrowings,and operatinglease obligations.
We
also haveother contractualcash obligationsrelatedto certain
binding agreementswe haveentered intofor servicesincluding outsourcingof technologyservices, security,advertising andother
serviceswhicharenotmaterialtoourliquidityneeds.
We
currentlyanticipatethatouravailablefunds,creditfacilities,andcash
flows fromoperations willbe sufficientto meetour operationalcash needsand supportloan growthand capitalplan executionfor
the foreseeable future.
Off-balance sheettransactions are continuouslymonitored to considertheir potential impactto our liquidityposition and changes
are applied to the balance between sources and uses of funds, as deemed appropriate,to maintain a sound liquidity position.
79
Sources of Funding
The Corporationutilizes differentsources offunding tohelp ensurethat adequatelevels ofliquidity areavailable whenneeded.
DiversificationoffundingsourcesisofgreatimportancetoprotecttheCorporation’sliquidityfrommarketdisruptions.The
principalsourcesofshort-termfundingaredeposits,includingbrokeredCDs.Additionalfundingisprovidedbysecuritiessold
under agreementsto repurchase andlines of creditwith the FHLB.In addition,the Corporation alsomaintains as additionalsources
borrowing capacity at the FED’s BIC Program,as discussed above.
The Asset and Liability Committee reviews credit availabilityon a regular basis. The Corporation mayalso sell mortgage loans as
a supplementary source of funding and obtain long-term fundingthrough the issuance of notes and long-term brokered CDs.
Whileliquidityisanongoingchallengeforallfinancialinstitutions,managementbelievesthattheCorporation’savailable
borrowing capacity andefforts to growcore deposits will beadequate to providethe necessary fundingfor the Corporation’sbusiness
plans in the next 12 months and beyond.
Retailandcommercialcoredeposits–
TheCorporation’sdepositproductsincluderegularsavingaccounts,demanddeposit
accounts,moneymarketaccounts,andretailCDs. AsofMarch31,2026andDecember31,2025,theCorporation’scoredeposits,
whichexcludegovernmentdepositsandbrokeredCDs,totaled$13.2billionand$13.1billion,respectively.The$158.5million
increaseinsuchdepositswasdrivenbyincreasesof$97.0millioninthePuertoRicoregion,$37.8millionintheVirginIslands
region, and $23.7million in the Floridaregion.By deposit type, theincrease consisted of a$115.4 millionincrease in interest-bearing
deposits, of which $73.1 million was in the Puerto Rico region, and a $43.1 millionincrease in non-interest-bearing deposits.
Government deposits(fully collateralized)
– Asof March31, 2026,the Corporationhad $2.4billion ofPuerto Ricopublic sector
deposits($2.3billionintransactionalaccountsand$151.9millionintimedeposits),comparedto$2.5billionasofDecember31,
2025.GovernmentdepositsareinsuredbytheFDICuptotheapplicablelimitsandtheuninsuredportionsarefullycollateralized.
Approximately20% ofthe publicsectordeposits asofMarch31,2026 werefrom municipalitiesandmunicipalagenciesinPuerto
Rico and 80% were from public corporations, the centralgovernment and its agencies, and U.S. federal government agenciesin Puerto
Rico.
Theuninsuredportions ofgovernmentdeposits werecollateralizedby securitiesandloans withan amortizedcost of$2.8billion
and $3.0billion asof March31, 2026and December31, 2025,respectively,and anestimated marketvalue of$2.6 billionand $2.8
billion asof March31, 2026and December31, 2025,respectively.In additionto securitiesand loans,as ofeach ofMarch 31,2026
and December 31, 2025,the Corporation used $225.0million in letters of creditissued by the FHLB aspledges for a portionof public
deposits in the VirginIslands.
EstimateofUninsuredDeposits–
AsofMarch31,2026andDecember31,2025,theestimatedamountsofuninsureddeposits
totaled$7.4billion and$7.5 billion,respectively,including governmentdeposits, generallyrepresentingthe portionof depositsthat
exceedtheFDICinsurancelimitof$250,000andamountsinanyotheruninsureddepositaccount.AsofMarch31,2026and
December31,2025,theuninsuredportionoffullycollateralizedgovernmentdepositsamountedto$2.6billionand$2.7billion,
respectively.Excludingfullycollateralizedgovernmentdeposits,theestimatedamountsofuninsureddepositsamountedto$4.8
billionasofeachofMarch31,2026andDecember31,2025,whichrepresents30.12%and29.79%oftotaldeposits(excluding
brokered CDs), respectively.
Theestimatedamountofuninsureddepositsiscalculatedbasedonthesamemethodologiesandassumptionsusedforourbank
regulatory reporting requirements adjusted for cash held by wholly-ownedsubsidiaries at the Bank.
The following table presents by contractual maturities the amount of U.S. time deposits inexcess of FDIC insurance limits (over
$250,000) and other time deposits that are otherwise uninsured as of March31, 2026:
(In thousands)
3 months or
less
3 months to
6 months
6 months to
1 year
Over 1 year
Total
U.S. time deposits in excess of FDIC insurance limits
$
267,792
$
270,912
$
434,412
$
169,315
$
1,142,431
Other uninsured time deposits
$
30,597
$
9,782
$
8,650
$
4,096
$
53,125
Brokered CDs
– Total brokeredCDs decreased by $86.5 million to $507.0 million as of March 31, 2026,driven by a decrease in the
Florida region.The decrease reflectsmaturing brokeredCDs amounting to$119.6 millionwith an all-incost of 4.42%that were paid
offduringthefirstquarterof2026,partiallyoffsetby$33.1millionofnewissuanceswithoriginalaveragematuritiesof
approximately 1.2 years and an all-in cost of 3.77%.
The average remaining term to maturity of the brokered CDs outstandingas of March 31, 2026 was approximately 1.0 year.
80
The future useof brokeredCDs will dependon multiple factorsincluding excessliquidity at eachof the regions,future cash needs
andanytax implications.Also,dependingonlending orotherinvestmentopportunities available,cashinflows fromrepaymentsof
investment securitiesmay be usedas wellto repay brokeredCDs. BrokeredCDs are insuredby the FDICup to regulatorylimits and
can be obtained faster than regular retail deposits.
Thefollowingtablepresentstheremainingcontractualmaturitiesandweighted-averageinterestratesofbrokeredCDsasof
March 31, 2026:
Total
Weighted-average
interest rate %
(In thousands)
Three months or less
$
92,188
4.17
Over three months to six months
81,539
4.06
Over six months to one year
185,268
3.89
Over one year to two years
105,138
3.80
Over two years to three years
27,401
4.44
Over four years to five years
5,952
4.63
Over five years
9,525
4.60
Total
$
507,011
4.00
Refer to“Net InterestIncome” abovefor informationabout averagebalances ofinterest-bearing depositsand theaverage interest
rate paid on such deposits for the quarters ended March 31, 2026and 2025.
Borrowings
As of each of March 31, 2026 and December 31, 2025, total borrowingsamounted to $290.0 million.
AdvancesfromtheFHLB–
TheBankisamemberoftheFHLBsystemandobtainsadvancestofunditsoperationsundera
collateralagreementwiththeFHLBthatrequirestheBanktomaintainqualifyingmortgagesand/orinvestmentsascollateralfor
advancestaken.As ofeach ofMarch31, 2026andDecember31, 2025,the totaloutstandingbalance offixed-rateFHLB advances
was $290.0 million.During the first quarterof 2026, theCorporation added a$90.0 million short-termfixed-rate FHLB advancewith
an interest rate of 3.86%and repaid at maturity $90.0million of long-term FHLB advancesat an average rate of4.49%. Of the $290.0
millioninFHLB advancesasofMarch31,2026,$100.0millionwerepledgedwithinvestmentsecuritiesand$190.0millionwere
pledged with mortgageloans. As of March31, 2026, the Corporationhad $1.0 billion availablefor additional credit onFHLB lines of
credit based on collateral pledged at the FHLB of New York.
The followingtable presents theremaining contractualmaturities andweighted-average interestrates ofadvances fromthe FHLB
as of March 31, 2026:
Total
Weighted-average
interest rate %
(In thousands)
Three months or less
$
90,000
3.86
Over one year to two years
200,000
4.25
Total
(1)
$
290,000
4.13
(1) Average remaining term to maturityof 1.13 years.
Securitiessoldunderagreementstorepurchase–
Fromtimetotime,theCorporationentersintorepurchaseagreementsasan
additionalsourceoffunding.AsofeachofMarch31,2026andDecember31,2025,therewerenooutstandingrepurchase
agreements.
WhentheCorporationentersintorepurchaseagreements,as isthecasewithderivativecontracts,theCorporationisrequiredto
pledgecashorqualifyingsecuritiestomeetmarginrequirements.Totheextentthatthevalueofsecuritiespreviouslypledgedas
collateraldeclinesduetochangesininterestrates,aliquiditycrisisoranyotherfactor,theCorporationisrequiredtodeposit
additionalcashorsecuritiestomeetitsmarginrequirements,therebyadverselyaffectingitsliquidity.Giventhequalityofthe
collateralpledged,theCorporationhasnotexperiencedmargincallsfromcounterpartiesarisingfromcredit-quality-relatedwrite-
downs in valuations.
81
FED Discount Window
– The Corporation participates inthe BIC Program of the FED.Through the BIC Program, abroad range of
loansmaybepledgedascollateralforborrowingsthroughtheFEDDiscountWindow.Aspreviouslymentioned,asofMarch31,
2026,theCorporationhadapproximately$2.6billionfullyavailableforfundingundertheFED’sDiscountWindowbasedon
collateral pledged at the FED.
Effect of Credit Ratings on Access to Liquidity
TheCorporation’sliquidityiscontingentuponitsabilitytoobtaindepositsandotherexternalsourcesoffundingtofinanceits
operations.The Corporation’scurrentcredit ratingsand anydowngradein creditratings canhinder theCorporation’saccess tonew
formsofexternalfundingand/orcauseexternalfundingtobemoreexpensive,whichcould,inturn,adverselyaffectitsresultsof
operations.
The Corporationdoes nothave anyoutstanding debtor derivativeagreements thatwould beaffected bycredit ratingdowngrades.
Furthermore, given the Corporation’snon-reliance on corporate debt or otherinstruments directly linked in termsof pricing or volume
to creditratings, theliquidity ofthe Corporationhas not beenaffected inany materialway by downgrades.The Corporation’sability
to access new non-deposit sources of funding, however,could be adversely affected by credit downgrades.
Asofthedatehereof,theCorporation’slong-termissuercreditratingsareBB+fromFitchandBBBfromKrollBondRating
Agency (“KBRA”).As ofthe datehereof, FirstBank’slong-term issuercredit ratingsare BB+from Fitch,which isone notchbelow
the minimumBBB- level requiredto be consideredinvestment grade,and BBB+ fromKBRA, which isconsidered investmentgrade.
The Corporation’scredit ratingsare dependenton anumber offactors, bothquantitative andqualitative, andare subjectto changeat
any time. The disclosureof credit ratings isnot a recommendationto buy,sell or hold the Corporation’ssecurities. Each rating should
be evaluated independently of any other rating.
82
Cash Flows
Cash andcash equivalentswere $550.9million asof March31, 2026,a decreaseof $107.7million whencompared toDecember
31, 2025.The followingdiscussion highlightsthe majoractivities andtransactions thataffectedthe Corporation’scash flowsduring
the first quarters of 2026 and 2025:
Cash Flows from Operating Activities
First BanCorp.’soperating assets andliabilities vary significantlyin the normal courseof business due tothe amount and timingof
cash flows.Management believesthat cashflows fromoperations, availablecash balances,and theCorporation’sability togenerate
cash throughshort and long-termborrowings will besufficient tofund the Corporation’soperating liquidityneeds for theforeseeable
future.
For the quartersended March 31,2026 and 2025,net cash providedby operating activitieswas $121.1 millionand $108.2 million,
respectively.Net cashgenerated fromoperating activitieswas higherthan reportednet incomelargely asa resultof adjustmentsfor
non-cash items suchas depreciation andamortization,deferred income taxexpense and the provisionfor credit losses, aswell as cash
generated from sales and repayments of loans held for sale.
Cash Flows from Investing Activities
The Corporation’sinvesting activities primarilyrelate to originatingloans to beheld for investment,as well aspurchasing, selling,
and repayingavailable-for-sale andheld-to-maturity debtsecurities. For thequarter ended March31, 2026, netcash used ininvesting
activitieswas$62.2million,primarilyduetopurchasesofU.S.agenciesMBSanddebentures,partiallyoffsetbymaturitiesand
principal repayments of U.S. agencies MBS and debentures,as well as proceeds from sales of repossessed assets.
For thequarter endedMarch 31,2025, netcash providedby investingactivities was$393.6 million,primarily dueto maturities of
U.S. agencies debentures and U.S. Treasurysecurities and principal repayments of U.S. agencies MBS and debentures,net repayments
on loans held for investment, proceeds from sales of repossessed assets, andproceeds from the bulk sale of fully charged-offconsumer
loans and finance leases, partially offset by purchases of MBS duringthe first quarter of 2025.
Cash Flows from Financing Activities
TheCorporation’sfinancingactivitiesprimarilyincludethereceiptofdepositsandtheissuanceofbrokeredCDs,theissuance
and/or repayment oflong-term borrowings,the issuance of equityinstruments, return ofcapital, and activitiesrelated to its short-term
funding.ForthequarterendedMarch31,2026,netcashusedinfinancingactivitieswas$166.6million,mainlyreflectingcapital
returned tostockholders anda decreasein totaldeposits. Inaddition, duringthe firstquarter of2026, theCorporation addeda $90.0
million short-term fixed-rate FHLB advance and repaid at maturity $90.0million of long-term FHLB advances.
For the quarter ended March31, 2025, net cash usedin financing activities was $332.9million, mainly reflecting the repaymentsof
long-term borrowings,consisting of$180.0 millionin FHLB advancesand theredemption ofjunior subordinateddebentures;capital
returned to stockholders; and a decrease in total deposits.
83
Capital
AsofMarch31,2026,theCorporation’sstockholders’equitywas$2.0billion,anincreaseof$0.4millionfromDecember31,
2025. The increasewas driven bynet income generatedin the first quarterof 2026, partiallyoffset by $50.0million in commonstock
repurchases,$31.5 million,or $0.20per commonshare, incommon stockdividends declaredin thefirst quarterof 2026,and a$6.2
milliondecreaseinthefairvalueofavailable-for-saledebtsecuritiesduetochangesinmarketinterestratesrecognizedaspartof
accumulated other comprehensive loss in the consolidated statements offinancial condition.
OnApril22,2026,theCorporation’sBoardofDirectorsdeclaredaquarterlycashdividendof$0.20percommonshare.The
dividend ispayable onJune 12,2026 toshareholders ofrecord atthe closeof businesson May28, 2026.The Corporationintends to
continuetopayquarterlydividendsoncommonstock.However,theCorporation’scommonstockdividends,includingthe
declaration, timing,and amount, remainsubject to considerationand approval bythe Corporation’sBoard of Directorsat the relevant
times.
On October 22, 2025, the Corporation announcedthat its Board of Directors approved a stock repurchaseprogram authorizing up to
$200millionofitsoutstandingcommonstock,whichitexpectstoexecutethroughtheendofthefourthquarterof2026.The
Corporation repurchased approximately2.4 million shares ofcommon stock for atotal cost of $50.0million during the firstquarter of
2026.Formoreinformation,seePartII,Item2,“UnregisteredSalesofEquitySecuritiesandUseofProceeds,”andNote10–
“Stockholders’ Equity,”of this Quarterly Report on Form 10-Q.
The tangible commonequity ratio andtangible book valueper common shareare non-GAAP financialmeasures generally usedby
thefinancialcommunitytoevaluatecapitaladequacy.Tangiblecommonequityistotalcommonequitylessgoodwillandother
intangible assets. Tangibleassets are total assets lessthe previously mentionedintangible assets. See “Non-GAAPFinancial Measures
and Reconciliations” above for additional information.
ThefollowingtablepresentsareconciliationoftheCorporation’stangiblecommonequityandtangibleassets,non-GAAP
financial measures, to total common equity and total assets, respectively,as of the indicated dates:
March 31, 2026
December 31, 2025
(In thousands, except ratios and per share information)
Total common equity- GAAP
$
1,967,239
$
1,966,865
Goodwill
(38,611)
(38,611)
Other intangible assets
(3,240)
(3,458)
Tangible commonequity - non-GAAP
$
1,925,388
$
1,924,796
Total assets - GAAP
$
19,086,105
$
19,132,892
Goodwill
(38,611)
(38,611)
Other intangible assets
(3,240)
(3,458)
Tangible assets - non-GAAP
$
19,044,254
$
19,090,823
Common shares outstanding
154,694
156,619
Tangible commonequity ratio - non-GAAP
10.11%
10.08%
Tangible book valueper common share - non-GAAP
$
12.45
$
12.29
See Note 18 – “RegulatoryMatters, Commitments and Contingencies”to the unaudited consolidated financialstatements herein for
the regulatory capital positions of the Corporation and FirstBank as ofMarch 31, 2026 and December 31, 2025, respectively.
84
ThePuertoRicoBankingLawof1933,asamended(the“PuertoRicoBankingLaw”),requiresthataminimumof10%of
FirstBank’snet incomeforthe yearbe transferredto alegal surplusreserveuntil suchsurplusequals thetotal ofpaid-in-capitalon
common and preferredstock. Amounts transferredto the legal surplusreserve from retainedearnings are not availablefor distribution
to the Corporation without theprior consent of the PuertoRico Commissioner of Financial Institutions.The Puerto Rico BankingLaw
provides that,when theexpenditures ofa PuertoRico commercialbank aregreater thanreceipts, theexcess ofthe expendituresover
receiptsmustbechargedagainsttheundistributedprofitsofthebank,andthebalance,ifany,mustbechargedagainstthelegal
surplusreserve,asareductionthereof.Ifthelegalsurplusreserveisnotsufficienttocoversuchbalanceinwholeorinpart,the
outstandingamountmustbe chargedagainstthecapitalaccountandtheBankcannotpaydividendsuntilitcanreplenishthelegal
surplus reserveto anamount ofat least20% ofthe originalcapital contributed.FirstBank’slegal surplusreserve, includedas partof
retained earnings inthe Corporation’sconsolidated statements offinancial condition, amountedto $262.5 million asof each of March
31, 2026 and December 31, 2025. There were no transfers to the legalsurplus reserve during the first quarter of 2026.
Interest Rate Risk Management
FirstBanCorp.managesitsasset/liabilitypositiontolimittheeffectsofchangesininterestratesonnetinterestincomeandto
maintain stabilityof profitabilityunder varyinginterest ratescenarios. TheMIALCO overseesinterest raterisk andmonitors, among
other things,current and expectedconditions in globalfinancial markets, competitionand prevailing ratesin the localdeposit market,
liquidity,loanoriginationspipeline,securitiesmarketvalues,recentorproposedchangestotheinvestmentportfolio,alternative
funding sourcesand related costs,hedging and thepossible purchase ofderivatives such asswaps and caps,and any taxor regulatory
issues which may bepertinent to these areas.The MIALCO approves fundingdecisions in light ofthe Corporation’soverall strategies
and objectives.
On at least a quarterly basis, the Corporation performsa consolidated net interest income simulation analysis to estimatethe potential
changeinfutureearningsfromprojectedchangesininterestrates.Thesesimulationsarecarriedoutoveraone-to-five-yeartime
horizon. Therate scenariosconsidered inthese simulationsreflect gradualupward ordownward interestrate movementsin theyield
curve, for gradual(ramp) parallel shiftsin the yieldcurve of 200and 300 bpsduring a twelve-monthperiod, or immediateupward or
downwardchangesininterestratemovementsof200bps,forinterestrateshockscenarios.TheCorporationcarriesoutthe
simulations in two ways:
(1)
Using a static balance sheet, as the Corporation had on the simulation date,and
(2)
Using a dynamic balance sheet based on recent patterns and currentstrategies.
The balancesheet isdivided intogroups ofassets andliabilities bymaturity orrepricing structureand theircorresponding interest
yields andcosts. As interestrates rise orfall, thesesimulations incorporateexpected futurelending rates,current andexpected future
funding sourcesand costs,the possibleexercise ofoptions, changesin prepaymentrates, depositdecay andother factors,which may
be important in projecting net interest income.
TheCorporationuses asimulationmodeltoprojectfuture movementsintheCorporation’sbalancesheetandincomestatement.
The startingpoint ofthe projectionscorresponds tothe actualvalues onthe balancesheet onthe simulationdate. Thesesimulations
arehighlycomplexandarebasedonmanyassumptionsthatareintendedtoreflectthegeneralbehaviorofthebalancesheet
components overthe modeledperiods. Itis unlikelythat actualevents willmatch theseassumptions inall cases.For thisreason, the
results ofthese forward-lookingcomputations areonly approximationsof thesensitivity ofnet interestincome tochanges inmarket
interest rates. Severalbenchmark and marketrate curves were usedin the modeling process,primarily,SOFR curve, Prime Rate,U.S.
Treasury yield curve, FHLB rates, and brokeredCDs rates.
85
As ofMarch 31,2026, theCorporation forecastedthe 12-monthnet interestincome assumingMarch 31,2026 interestrate curves
remainconstant.Then,netinterestincomewasestimatedunderrisingandfallingratesscenarios.Fortherisingratescenario,a
gradual (ramp)and immediate(shock) parallelupward shiftof theyield curveis assumedduring thefirst twelvemonths (the“+300
ramp”, “+200ramp” and“+200 shock”scenarios). Conversely,for thefalling ratescenario, agradual (ramp)and immediate(shock)
parallel downward shiftof the yieldcurve is assumed duringthe first twelve months(the “-300 ramp”,“-200 ramp” and “-200shock”
scenarios).
The SOFR curvefor March 31,2026, as comparedwith December 31,2025, reflects anincrease of 12bps on averagein the short-
term sector of the curve, orbetween one to twelve months;an increase of 22 bpsin the medium-term sector ofthe curve, or between 2
to 5years; andan increaseof 6bps inthe long-termsector ofthe curve,or over5-year maturities.A similarchange inmarket rates
was observed in the ConstantMaturity Treasury yieldcurve with an increase of 9bps in the short-term sectorof the curve, an increase
of 26 bps in the medium-term sector of the curve, and an increase of 8 bps inthe long-term sector of the curve.
The following table presents the results of the static simulations as of March 31, 2026and December 31, 2025. Consistent with prior
years, these exclude non-cash changes in the fair value of derivatives:
Net Interest Income Risk
(% Change Projected for the next 12 months)
March 31, 2026
December 31, 2025
Gradual Change in Interest Rates:
+ 300 bps ramp
3.56
%
3.57
%
+ 200 bps ramp
2.39
%
2.42
%
- 300 bps ramp
-4.96
%
-5.13
%
- 200 bps ramp
-3.27
%
-3.42
%
Immediate Change in Interest Rates:
+ 200 bps shock
4.53
%
4.31
%
- 200 bps shock
-7.85
%
-8.01
%
The Corporationcontinues tomanage itsbalance sheetstructure tocontrol andlimit theoverall interestrate riskby managingits
assetcompositionwhilemaintainingasoundliquidityposition.See“RiskManagement–LiquidityRiskManagement”abovefor
liquidity ratios.
As of March31, 2026 andDecember 31, 2025,the net interestincome simulationsshow that theCorporation continuesto have an
asset sensitive position for the next twelve months under a static balance sheetsimulation.
Under gradual rising andfalling rate scenarios, the netinterest income simulation reflectsreduced interest rate sensitivitycompared
toDecember31,2025,drivenbylowersensitivityontheassetssideduetoalowerinterest-bearingcashpositionand,toalesser
extent,amarginaldecreaseinsensitivityintheliabilitiessidedrivenbylowerbalancesingovernmentdeposits,whicharemarket
linked, and brokered CDs.
Underthestaticsimulation,theCorporationassumesthatmaturinginstrumentsarereplacedwithsimilarinstrumentsatthe
repricing rate upon maturity.The Corporation’s results may varysignificantly from the ones presented above under alternative balance
sheet compositions,such as adynamic balancesheet scenario which,for example, wouldassume that cashflows from theinvestment
securities portfolio and loan repayments could be redeployed into higheryielding alternatives.
86
Credit Risk Management
First BanCorp.is subjecttocreditriskmainlywithrespecttoits portfolioof loansreceivableandoff-balance-sheetinstruments,
principallyloancommitments.LoansreceivablerepresentsloansthatFirstBanCorp.holdsforinvestmentand,therefore,First
BanCorp. is at risk forthe term of the loan.Loan commitments represent commitmentsto extend credit, subjectto specific conditions,
for specific amountsand maturities. These commitmentsmay expose the Corporationto credit risk andare subject to thesame review
andapprovalprocessasforloansmadebytheBank.See“RiskManagement–LiquidityRisk”aboveforfurtherdetails.The
Corporationmanagesitscreditriskthroughitscreditpolicy,underwriting,monitoringofloanconcentrationsandrelatedcredit
quality,counterpartycreditrisk,economicandmarketconditions,andlegislativeorregulatorymandates.TheCorporationalso
performsindependentloanreviewandqualitycontrolprocedures,statisticalanalysis,comprehensivefinancialanalysis,established
management committees,and employsproactive collectionand lossmitigation efforts.Furthermore, personnelperforming structured
loanworkoutfunctionsareresponsibleformitigatingdefaultsandminimizinglossesupondefaultwithineachregionandforeach
business segment.In thecase ofthe C&I,commercialmortgage andconstruction loanportfolios,the SpecialAsset Group(“SAG”)
focuses onstrategies forthe acceleratedreduction ofnon-performing assetsthrough notesales, shortsales, lossmitigation programs,
and sales of OREO. In addition to the management ofthe resolution process for problem loans, the SAG oversees collectionefforts for
all loansto preventmigration tothe nonaccrualand/oradversely classifiedstatus.TheSAG utilizesrelationshipofficers,collection
specialists and attorneys.
TheCorporationmayalsohaveriskofdefaultinthesecuritiesportfolio.ThesecuritiesheldbytheCorporationareprincipally
fixed-rate U.S. agenciesMBS and U.S. Treasuryand agencies securities. Thus,a substantial portionof these instruments isbacked by
mortgages, a guarantee of a U.S. GSE or the full faith and credit of the U.S. government.
Management,consisting ofthe Corporation’sChief OperatingOfficer,Chief LendingOfficer,Credit RiskDirector,Loan Review
Manager, and other senior executives,has the primary responsibility for setting strategies to achieve theCorporation’s credit risk goals
and objectives. Management has documented these goals and objectivesin the Corporation’s Credit Policy.
Allowance for Credit Losses and Non-Performing Assets
Allowance for Credit Losses for Loans andFinance Leases
The ACLfor loansand financeleases representsthe estimateof thelevel ofreserves appropriateto absorbexpected creditlosses
over the estimated life ofthe loans. The amount of the allowanceis determined using relevant availableinformation, from internal and
external sources, relatingto past events, currentconditions, and reasonableand supportable forecasts.Historical credit loss experience
isasignificantinputfortheestimationofexpectedcreditlosses,aswellasadjustmentstohistoricallossinformationmadefor
differences in current loan-specificrisk characteristics, such as differencesin underwriting standards, portfolio mix,delinquency level,
orterm.Additionally,theCorporation’sassessmentinvolvesevaluatingkeyfactors,whichincludecreditandmacroeconomic
indicators,such aschanges inunemploymentrates, propertyvalues, andother relevantfactors toaccount forcurrent andforecasted
market conditionsthat arelikely tocause estimatedcredit lossesover thelife of theloans to differfrom historicalcredit losses.Such
factorsaresubjecttoregularreviewandmaychangetoreflectupdatedperformancetrendsandexpectations.Theprocess includes
judgmentsandquantitativeelementsthatmaybesubjecttosignificantchange.Further,theCorporationperiodicallyconsidersthe
need for qualitativereserves to theACL. Qualitative adjustmentsmay be relatedto and include,but are not limitedto, factors suchas
thefollowing:(i)management’sassessmentofeconomicforecastsusedinthemodelandhowthoseforecastsalignwith
management’soverallevaluationofcurrentandexpectedeconomicconditions;(ii)organizationspecificriskssuchascredit
concentrations, collateralspecific risks, natureand size ofthe portfolio andexternal factors thatmay ultimatelyimpact credit quality;
and(iii)otherlimitations associatedwith factorssuch aschangesin underwritingand loanresolutionstrategies,amongothers.The
ACL for loans andfinance leases is reviewedat least on a quarterlybasis as part ofthe Corporation’scontinued evaluation of itsasset
quality.
The Corporationgenerally applies probabilityweights to thebaseline and alternativedownside economicscenarios to estimatethe
ACL withthebaselinescenariocarryingthe highestweight.Thescenariosthat arechosen eachquarterandtheweightinggivento
eachscenarioforthedifferentloanportfoliocategoriesdependonavarietyoffactorsincludingrecenteconomicevents,leading
nationalandregionaleconomicindicators,andindustrytrends.AsofMarch31,2026andDecember31,2025,theCorporation
applied100%probabilitytothebaselinescenarioforthecommercialmortgageandconstructionloanportfoliossincecertain
macroeconomicvariablesassociatedwithcommercialreal estatepropertyperformanceandthe CREpriceindex,particularlyinthe
Puerto Rico region,are expected to continueto perform in amore favorable mannerthan the alternative downsideeconomic scenario.
TheeconomicscenariosusedintheACLdeterminationcontainedassumptionsrelatedtoeconomicuncertaintiesassociatedwith
geopolitical instability,the CREprice index,unemployment rate,inflation levels,and expectedfuture interestrate adjustmentsin the
Federal Reserve Board’s funds rate.
87
AsofMarch31,2026,theCorporation’sACLmodelconsideredthefollowingassumptionsforkeyeconomicvariablesinthe
probability-weighted economic scenarios:
●
CRE priceindex atthe national levelwith anaverage projectedappreciation of0.83% and1.00% forthe remainderof 2026
and for the year 2027, respectively,compared to an average projectedcontraction of 0.45% for the remainderof 2026, and an
average projected appreciation of 1.72% for the year 2027 as of December31, 2025.
●
RegionalHouse Price Indexforecast in PuertoRico (purchase onlyprices) is expectedto increase by2.84% for thenext two
years asof March31, 2026,compared toan increaseof 2.72%for thenext twoyears projectionas ofDecember 31,2025.
FortheFloridaregion,theHousePriceIndexforecastasofMarch31,2026andDecember31,2025wasprojectedto
decrease by 0.36%and 0.23%, respectively, for the first twoyears of the projection.
●
Averageregional unemployment ratein Puerto Rico isforecasted at 6.29%for the remainderof 2026 and 6.37%for the year
2027, comparedto 6.49%for theremainder of2026and 6.42%for theyear 2027as of December31, 2025.For theFlorida
region andthe U.S. mainland,average unemploymentrate is forecastedat 4.85%and 5.20%,respectively,for theremainder
of2026,and4.78%and5.24%,respectively,fortheyear2027,comparedto5.10%and5.54%,respectively,forthe
remainder of 2026, and 4.71% and 5.18%, respectively,for the year 2027, as of December 31, 2025.
●
Annualized change inGDP in the U.S.mainland of 2.07% forthe remainder of 2026and 1.31%for the year 2027,compared
to 1.06%for the remainder of 2026and 1.63%for the year 2027, as of December 31, 2025.
It is difficult to estimate how potential changesin one factor or input might affect the overall ACL becausemanagement considers a
wide variety offactors and inputs inestimating the ACL.Changes in thefactors and inputs consideredmay not occurat the same rate
and may not be consistentacross all geographies or producttypes, and changes in factorsand inputs may be directionallyinconsistent,
such that improvementin one factoror input mayoffset deteriorationin others. However,to demonstrate thesensitivity of creditloss
estimatestomacroeconomicforecastsasofMarch31,2026,managementcomparedthemodeledestimatesundertheprobability-
weightedeconomicscenariosagainstamoreadversescenario.Suchscenarioincorporatesanadditionaladversescenarioand
decreases theweight appliedto thebaseline scenario.Under thismore adversescenario, asan example,average unemploymentrate
for thePuerto Ricoregion increasesto 6.63%for theremainder of2026, comparedto 6.29%for thesame periodon theprobability-
weighted economic scenario projections.
TodemonstratethesensitivitytokeyeconomicparametersusedinthecalculationoftheACLatMarch31,2026,management
calculatedthedifferencebetweenthequantitativeACLandthismoreadversescenario.Excludingconsiderationofqualitative
adjustments,this sensitivityanalysiswouldresult ina hypotheticalincreasein theACL ofapproximately$44million atMarch31,
2026.This analysisrelates onlyto themodeled creditloss estimatesand isnot intendedto estimatechanges inthe overallACL asit
doesnotreflectanypotentialchangesinotheradjustmentstothequalitativecalculation,whichwouldalsobeinfluencedbythe
judgmentmanagementappliestothemodeledlifetimelossestimatestoreflecttheuncertaintyandimprecisionoftheseestimates
basedoncurrentcircumstancesandconditions.Recognizingthatforecastsofmacroeconomicconditionsareinherentlyuncertain,
particularly inlight ofrecent economicconditions andchallenges, whichcontinue toevolve, managementbelieves thatits processto
consider theavailable informationand associatedrisks anduncertainties isappropriately governedand thatits estimatesof expected
credit losses were reasonable and appropriate for the period endedMarch 31, 2026.
As of March 31, 2026,the ACL for loans andfinance leases was $245.1million, a decrease of $3.9million, from $249.0 millionas
of December31, 2025.The decreasewas mainlyrelated tothe ACLfor consumerloans, whichdecreased by$2.6 million,driven by
improvements in macroeconomic variables,mainly in the projection of the unemploymentrate, and lower delinquency levels, partially
offset by higher qualitative reserves associated with geopoliticaluncertainty driven by,among other things, higher oil prices as a result
of the conflictin the MiddleEast. In addition,the ACL forcommercial andconstruction loans decreasedby $1.8 million,mainly due
toimprovementsintheprojectionsoftheunemploymentrateandtheCREpriceindex,netofaforementionedqualitativereserves,
partially offset by renewals and refinancings.
Meanwhile,theACLforresidentialmortgageloansincreasedby$0.5million,drivenbyloangrowthandtheaforementioned
geopolitical uncertainty,partially offset by an improvement in the projection of the unemploymentrate.
TheratiooftheACLforloansandfinanceleasestototalloansheldforinvestmentdecreasedto1.87%asofMarch31,2026,
compared to 1.90% as of December 31, 2025. An explanation for the changefor each portfolio follows:
●
The ACL tototal loans ratiofor the residentialmortgage loan portfolioincreased from 1.41%as of December31, 2025 to
1.42% as of March 31, 2026, driven by the aforementioned factors.
88
●
The ACLto totalloans ratiofor the constructionloan portfoliodecreased from2.14% asof December31, 2025to 1.70%
asofMarch31,2026,mainlyduetotheconversionofaconstructionloanwithahigherlossratetoacommercial
mortgage loan.
●
The ACLto totalloans ratiofor thecommercial mortgageloan portfoliodecreased from0.93% asof December31, 2025
to 0.90%as ofMarch 31,2026, drivenby improvementsin theprojection ofthe CREprice index,partially offsetby the
aforementioned conversion.
●
TheACL tototal loansratio forthe C&Iloan portfolioincreasedfrom1.12%as ofDecember31,2025to 1.14%as of
March31,2026,drivenbyrenewalsandrefinancings,partiallyoffsetbyimprovementsinmacroeconomicvariables,
mainly in the projection of the unemployment rate.
●
The ACL tototal loans ratiofor the consumerloan portfolio decreasedfrom 3.70% asof December31, 2025to 3.67% as
of March 31, 2026, driven by the aforementioned factors.
The ratio ofthe total ACLfor loans andfinance leases tononaccrual loans heldfor investment was279.29%as of March31, 2026,
compared to 269.05% as of December 31, 2025.
See “Results of Operations- Provision forCredit Losses” aboveand Note 4 –“Allowance for CreditLosses for Loansand Finance
Leases” above for additional information.
Quarter Ended March 31,
2026
2025
(Dollars in thousands)
ACL for loans and finance leases, beginning of year
$
249,037
$
243,942
Provision for credit losses - expense (benefit):
Residential mortgage
239
1,004
Construction
(2,361)
(421)
Commercial mortgage
360
1,656
C&I
1,017
3,353
Consumer loans and finance leases
17,915
19,245
Total provision for credit losses- expense
17,170
24,837
Charge-offs:
Residential mortgage
(130)
(235)
Commercial mortgage
(562)
-
C&I
(390)
(77)
Consumer loans and finance leases
(26,119)
(27,898)
Total charge-offs
(27,201)
(28,210)
Recoveries:
Residential mortgage
354
217
Construction
13
14
Commercial mortgage
40
40
C&I
81
154
Consumer loans and finance leases
5,566
6,275
(1)
Total recoveries
6,054
6,700
Net charge-offs
(21,147)
(21,510)
ACL for loans and finance leases, end of period
$
245,060
$
247,269
ACL for loans and finance leases to period-end total loansheld for investment
1.87%
1.95%
Net charge-offs to average loans outstandingduring the period
0.65%
0.68%
(2)
Provision for credit losses - expense for loans and financeleases to net charge-offs during the period
0.81x
1.15x
(1)
Includes recoveries totaling $2.4 million associated with the bulk sale of fully charged-off consumer loans and finance leases.
(2)
The recoveries associated with the aforementioned bulk sale reduced the ratio of total net charge-off to related average loans by 8 bps.
89
The following tables set forth information concerning the composition of theCorporation's loan portfolio and related ACL by loan
category, and the percentageof loan balances in each category to the total of such loans as of the indicated dates:
As of March 31, 2026
Residential
Mortgage
Loans
Commercial
Mortgage
Loans
C&I
Loans
Consumer Loans
and Finance
Leases
Construction
Loans
(Dollars in thousands)
Total
Total loans held for investment:
Amortized cost of loans
$
2,914,898
$
195,267
$
2,627,113
$
3,694,843
$
3,658,956
$
13,091,077
Percent of loans in each category to total loans
22
%
1
%
20
%
28
%
29
%
100
%
Allowance for credit losses
$
41,534
$
3,324
$
23,670
$
42,124
$
134,408
$
245,060
Allowance for credit losses to amortized cost
1.42
%
1.70
%
0.90
%
1.14
%
3.67
%
1.87
%
As of December 31, 2025
Residential
Mortgage
Loans
Commercial
Mortgage
Loans
C&I
Loans
Consumer Loans
and Finance
Leases
Construction
Loans
(Dollars in thousands)
Total
Total loans held for investment:
Amortized cost of loans
$
2,908,302
$
265,568
$
2,554,252
$
3,688,358
$
3,708,876
$
13,125,356
Percent of loans in each category to total loans
22
%
2
%
19
%
28
%
29
%
100
%
Allowance for credit losses
$
41,071
$
5,672
$
23,832
$
41,416
$
137,046
$
249,037
Allowance for credit losses to amortized cost
1.41
%
2.14
%
0.93
%
1.12
%
3.70
%
1.90
%
Allowance for Credit Losses for UnfundedLoan Commitments
The Corporation estimatesexpected credit lossesover the contractualperiod in whichthe Corporation isexposed to creditrisk as a
resultofacontractualobligationtoextendcredit,such aspursuantto unfundedloancommitmentsandstandbyletters ofcreditfor
commercial andconstruction loans,unless theobligation isunconditionally cancellableby theCorporation. TheACL foroff-balance
sheet creditexposures isadjusted asa provisionfor creditloss expense.As ofMarch 31,2026, theACL foroff-balancesheet credit
exposures increased by $0.1 million to $3.1 million, when comparedto December 31, 2025.
Allowance for Credit Losses for Debt Securities
As ofMarch 31,2026,the ACLfor debtsecurities was$1.5 million,of which$0.6 millionwas relatedto PuertoRico municipal
bonds classified as held-to-maturity,compared to $1.5 million and $0.7 million, respectively,as of December 31, 2025.
Nonaccrual Loans and Non-Performing Assets
Totalnon-performingassets consistof nonaccrualloans (generallyloans heldforinvestment orloans heldforsale forwhichthe
recognition ofinterest incomewas discontinuedwhen theloan became90 dayspast dueor earlierif thefull andtimely collectionof
interest or principal is uncertain), foreclosed real estate andother repossessed properties (generally repossessed automobiles),and non-
performing investmentsecurities, ifany.See Note1 –“Nature ofBusiness andSummary ofSignificant AccountingPolicies” tothe
audited consolidatedfinancial statements includedin the 2025Annual Report onForm 10-K forinformation onthe policies followed
by the Corporation to classify loans in nonaccrual status or 90 days and still accruing.
90
The following table shows non-performing assets by geographic segment as ofthe indicated dates:
March 31, 2026
December 31, 2025
(In thousands)
Puerto Rico:
Nonaccrual loans held for investment:
Residential mortgage
$
11,875
$
12,637
Construction
4,458
4,581
Commercial mortgage
1,581
1,913
C&I
26,010
27,211
Consumer loans and finance leases
19,316
20,891
Total nonaccrual loans held for investment
63,240
67,233
OREO
5,685
6,661
Other repossessed property
13,055
12,216
Other assets
(1)
1,609
1,620
Total non-performing assets
$
83,589
$
87,730
Past due loans 90 days and still accruing
$
28,078
$
30,643
Virgin Islands:
Nonaccrual loans held for investment:
Residential mortgage
$
4,923
$
5,407
Construction
956
955
Commercial mortgage
5,861
6,469
C&I
611
644
Consumer loans
356
529
Total nonaccrual loans held for investment
12,707
14,004
OREO
659
861
Other repossessed property
69
173
Total non-performing assets
$
13,435
$
15,038
Past due loans 90 days and still accruing
$
871
$
1,270
United States:
Nonaccrual loans held for investment:
Residential mortgage
$
11,273
$
11,125
C&I
479
187
Consumer loans
45
14
Total nonaccrual loans held for investment
11,797
11,326
Total non-performing assets
$
11,797
$
11,326
Total:
Nonaccrual loans held for investment:
Residential mortgage
$
28,071
$
29,169
Construction
5,414
5,536
Commercial mortgage
7,442
8,382
C&I
27,100
28,042
Consumer loans and finance leases
19,717
21,434
Total nonaccrual loans held for investment
87,744
92,563
OREO
6,344
7,522
Other repossessed property
13,124
12,389
Other assets
(1)
1,609
1,620
Total non-performing assets
$
108,821
$
114,094
Past due loans 90 days and still accruing
(2) (3) (4) (5)
$
28,949
$
31,913
Non-performing assets to total assets
0.57%
0.60%
Nonaccrual loans held for investment to total loans held for investment
0.67%
0.71%
ACL for loans and finance leases
$
245,060
$
249,037
ACL for loans and finance leases to total nonaccrual loans heldfor investment
279.29%
269.05%
ACL for loans and finance leases to total nonaccrual loans heldfor investment, excluding residential real estate loans
410.67%
392.84%
(1)
Residential pass-through MBS issued by the PRHFA held aspart of the available-for-sale debt securities portfolio.
(2)
Includes purchasedcredit deteriorated("PCD") loanspreviously accountedfor underASC Subtopic310-30 forwhich theCorporation madethe accountingpolicy electionto treateach poolas a
single asset, both at the time of adoptionof current expected credit loss ("CECL") methodology onJanuary 1, 2020 and on an ongoing basis forcredit loss measurement. These loans will continue to
be excluded fromnonaccrual loan statisticsas long asthe Corporation canreasonably estimate thetiming and amountof cash flowsexpected to becollected on theloan pools. Theportion of such
loans contractually past due 90 days or more amounted to $4.2 million and $4.8 million as of March 31,2026 and December 31, 2025, respectively.
(3)
Includes Federal Housing Authority ("FHA")/U.S.Department of VeteransAffairs ("VA")government-guaranteed residential mortgage loansas loans past due 90 daysand still accruing as opposed
to nonaccrualloans. TheCorporation continuesaccruing intereston theseloans untilthey havepassed the15 monthsdelinquencymark, takinginto considerationthe FHAinterest curtailment
process. These balancesinclude $3.9 millionand $4.1 millionof FHA governmentguaranteed residential mortgageloans that wereover 15 monthsdelinquent as ofMarch 31, 2026and December
31, 2025, respectively.
(4)
These includes rebooked loans,which were previouslypooled into GNMA securities,amounting to $6.7 millionas of each ofMarch 31, 2026 andDecember 31, 2025.Under the GNMA program,
the Corporation hasthe option butnot the obligationto repurchase loansthat meet GNMA’sspecified delinquency criteria.For accountingpurposes, the loanssubject to therepurchase option are
required to be reflected on the financial statements with an offsetting liability.
(5)
Includes credit cards that continue accruing interest until charged-off at 180 daysdelinquent.
91
Totalnon-performing assetsdecreased by$5.3 millionto $108.8million asof March31, 2026,compared to$114.1million asof
December 31, 2025. The decreasein non-performing assets was drivenby a $4.8 million decrease in nonaccrualloans consisting of (i)
a $2.0million decrease innonaccrual commercialand constructionloans, primarilydue to a$1.2 millionrepayment of aC&I loan in
the PuertoRico regionin thefood retailindustry,and a$0.6 millioncharge-offof acommercial mortgageloan inthe VirginIslands
region;(ii) a $1.7 million decrease innonaccrual consumer loans, mainlyin the auto loan portfolio;and (iii) a $1.1 million decreasein
nonaccrual residentialmortgage loans.In addition,the OREOportfolio balancedecreased by$1.2 million,mainly attributableto the
sale of residential properties in the Puerto Rico region, partially offsetby an increase of $0.7 million in other repossessed properties.
Thefollowingtablespresenttheactivityofcommercialandconstructionnonaccrualloansheldforinvestmentfortheindicated
periods:
Construction
Commercial
Mortgage
C&I
Total
(In thousands)
Quarter Ended March 31, 2026
Beginning balance
$
5,536
$
8,382
$
28,042
$
41,960
Plus:
Additions to nonaccrual
-
64
1,123
1,187
Less:
Loans returned to accrual status
-
(65)
-
(65)
Nonaccrual loans transferred to OREO
-
-
(199)
(199)
Nonaccrual loans charge-offs
-
(562)
(253)
(815)
Loan collections
(122)
(377)
(1,613)
(2,112)
Ending balance
$
5,414
$
7,442
$
27,100
$
39,956
Construction
Commercial
Mortgage
C&I
Total
(In thousands)
Quarter Ended March 31, 2025
Beginning balance
$
1,365
$
10,851
$
20,514
$
32,730
Plus:
Additions to nonaccrual
-
12,982
856
13,838
Less:
Loans returned to accrual status
-
(349)
(165)
(514)
Nonaccrual loans transferred to OREO
-
(54)
(203)
(257)
Nonaccrual loans charge-offs
-
-
(47)
(47)
Loan collections
(9)
(275)
(611)
(895)
Ending balance
$
1,356
$
23,155
$
20,344
$
44,855
92
The following table presents the activity of residential nonaccrual loansheld for investment for the indicated periods:
Quarter Ended March 31,
2026
2025
(In thousands)
Beginning balance
$
29,169
$
31,949
Plus:
Additions to nonaccrual
3,413
4,585
Less:
Loans returned to accrual status
(2,069)
(3,699)
Nonaccrual loans transferred to OREO
(171)
(647)
Nonaccrual loans charge-offs
(8)
(36)
Loan collections
(2,263)
(1,359)
Ending balance
$
28,071
$
30,793
Theamount ofnonaccrualconsumerloans, includingfinanceleases, decreasedby$1.7 millionto $19.7millionas ofMarch31,
2026,mainlyrelatedtoadecreaseintheautoloanportfolio.Theinflowsofnonaccrualconsumerloansduringthequarterended
March 31, 2026 amounted to $29.7million, compared to inflows of $24.9 million for the same period in 2025.
AsofMarch31,2026,approximately$33.3million,or38%,oftheloansplacedinnonaccrualstatus,mainlycommercialand
residentialmortgageloans,werecurrent,orhaddelinquenciesoflessthan90daysintheirinterestpayments.Collectionson
nonaccrual loans are being recorded on a cash basis through earnings,or on a cost-recovery basis, as conditions warrant.
DuringthequarterendedMarch31,2026,interestincomeofapproximately$0.5millionrelatedtononaccrualcommercialand
constructionloanswithacarryingvalueof$27.0millionasofMarch31,2026wasappliedagainsttherelatedprincipalbalances
under the cost-recovery method.
Total loans in earlydelinquency (
i.e.
, 30-89 days past due loans, as defined in regulatory reportinginstructions) amounted to $110.5
million asof March31, 2026,a decreaseof $34.5million, comparedto $145.0million asof December31, 2025,driven bya $31.0
million decrease in consumer loans, primarily in the auto loan portfolio.
Inaddition,theCorporationprovideshomeownershippreservationassistancetoitscustomersthroughalossmitigation
program. Depending upon the nature of a borrower’sfinancial condition, restructurings or loanmodifications through this program are
provided,as wellas othermodifications ofindividual C&I,commercialmortgage, construction,and residentialmortgage loans.For
thequartersendedMarch31,2026and2025,loansmodifiedtoborrowersexperiencingfinancialdifficultyhadanamortizedcost
basis of $4.1 million and $3.0 million, respectively.See Note 3 – “Loans Held for Investment” for additional informationand statistics
about the Corporation’s modified loans.
93
The following tables show the composition of the OREO portfolio as ofMarch 31, 2026 and December 31, 2025, as well as the
activity of the OREO portfolio by geographic area during the quarterended March 31, 2026:
OREO Composition by Region
As of March 31, 2026
(In thousands)
Puerto Rico
Virgin Islands
Consolidated
Residential
$
4,448
$
659
$
5,107
Construction
442
-
442
Commercial
795
-
795
$
5,685
$
659
$
6,344
As of December 31, 2025
(In thousands)
Puerto Rico
Virgin Islands
Consolidated
Residential
$
5,663
$
861
$
6,524
Construction
386
-
386
Commercial
612
-
612
$
6,661
$
861
$
7,522
OREO Activity by Region
Quarter Ended March 31, 2026
(In thousands)
Puerto Rico
Virgin Islands
Consolidated
Beginning balance
$
6,661
$
861
$
7,522
Additions
1,062
-
1,062
Sales
(1,999)
(202)
(2,201)
Subsequent measurement adjustments
5
-
5
Other adjustments
(44)
-
(44)
Ending balance
$
5,685
$
659
$
6,344
94
The following table presents information about the OREO inventoryand related gains and losses for the indicated periods:
Quarter Ended March 31,
2026
2025
(Dollars in thousands)
OREO
OREO activity (number of properties):
Beginning property inventory
95
181
Properties acquired
7
13
Properties disposed
(23)
(33)
Ending property inventory
79
161
Average holding period (in days)
Residential
711
522
Construction
1,861
1,641
Commercial
4,102
3,820
Total average holding period (in days)
2,102
1,360
OREO operations (gain) loss:
Market adjustments and net gain on sale:
Residential
$
(1,057)
$
(1,199)
Construction
(38)
(48)
Commercial
(29)
(12)
Total net gain
(1,124)
(1,259)
Other OREO operations expenses
187
130
Net Gain on OREO operations
$
(937)
$
(1,129)
95
Net Charge-offs and TotalCredit Losses
Netcharge-offstotaled$21.1millionforthefirstquarterof2026,oranannualized0.65%ofaverageloans,comparedto$21.4
million, or an annualized0.68% of average loans, forthe same period in 2025. The$0.3 million decrease was drivenby a $1.1 million
reduction inconsumer loansand financeleases netcharge-offs,mainly inthe unsecuredloan portfolios,after consideringthe impact
of the aforementioned $2.4 millionin recoveries related to thebulk sale recognized during thefirst quarter of 2025. This improvement
was partially offsetby a $0.9million increasein commercialand constructionloans net charge-offs, drivenby a $0.6million charge-
off on a nonaccrual commercial mortgage loan inthe Virgin Islands regionduring the first quarter of 2026.
The following table presents net (recoveries) charge-offsto average loans held-in-portfolio for the indicated periods:
Quarter Ended March 31,
2026
2025
Residential mortgage
(0.03)
%
0.00
%
Construction
(0.02)
%
(0.02)
%
Commercial mortgage
0.08
%
(0.01)
%
C&I
0.03
%
(0.01)
%
Consumer loans and finance leases
2.23
%
2.31
%
(1)
Total loans
0.65
%
0.68
%
(1)
(1)
Includes $2.4 million in recoveries associated with the bulk sale of fully charged-off consumer loans and finance leases, which reduced the ratiosof consumer loans and finance leases and total net charge-offs to related
average loans by 25 bps and 8 bps, respectively.
The following table presents net (recoveries) charge-offsto average loans held in various portfolios by geographic segment for the
indicated periods:
Quarter Ended March 31,
2026
2025
PUERTO RICO:
Residential mortgage
(0.04)
%
0.00
%
Commercial mortgage
(0.00)
%
-
%
C&I
0.05
%
(0.02)
%
Consumer loans and finance leases
2.26
%
2.34
%
(1)
Total loans
0.82
%
0.87
%
(1)
VIRGIN ISLANDS:
Residential mortgage
0.01
%
-
%
Commercial mortgage
2.90
%
(0.20)
%
C&I
0.00
%
0.06
%
Consumer loans and finance leases
0.94
%
0.95
%
Total loans
0.57
%
0.14
%
FLORIDA:
Residential mortgage
0.00
%
(0.01)
%
Construction
(2.41)
%
(0.13)
%
C&I
(0.00)
%
(0.00)
%
Consumer loans and finance leases
(1.08)
%
(0.17)
%
Total loans
(0.00)
%
(0.01)
%
(1)
The recoveries associated with the aforementioned bulk sale reduced the ratios of consumer loans and finance leases and total net charge-offs to related average loans by 25 bps and 9 bps, respectively.
96
Operational Risk
The Corporationis exposed tooperational risk arisingfrom the processesinvolved in deliveringbanking and financialproducts, as
well asfrom externalfactors suchas marketconditions, cybersecuritythreats, andlegal orregulatory developments.These riskscan
resultinoperationalorreputationalloss.Tomanagethem,theCorporationmaintainsandcontinuallyenhancesinternalcontrols,
policies, andprocedures designedto identify,assess, andmanage operationalrisks acrossthe organizationand toprovide reasonable
assurance that operations function within established limits.
Operational riskis categorizedas business-specificor corporate-wide.Enterprise Risk Managementpartners with businessunits to
ensure consistentpolicies andassessments forbusiness-specificrisks. Corporate-wide risks,including informationsecurity,business
continuity,andlegalandcompliancerisk,aremanagedthroughspecializedgroups,suchas Legal,InformationSecurity,Corporate
Compliance,Operations,andEnterpriseRiskManagement.Thesegroupsassistthelinesofbusinessinthedevelopmentand
implementation of risk management practices specific to the needs ofthe business groups.
Legal and Compliance Risk
Legalandcomplianceriskarisesfrompotentialnoncompliancewithlawsandregulations,adverselegaljudgments,or
unenforceablecounterpartyobligations.TheCorporationoperatesinhighlyregulatedjurisdictionsandcontinuestostrengthenits
procedurestocomplywithapplicablelegalandregulatoryrequirements.TheGeneralCounsel,reportingtotheCEO,oversees
enterprise-widecomplianceandmanagestheCorporation’scomplianceriskassessmentprocess.Complianceofficersembeddedin
major business areas report directly to the Corporate Compliance Group.
Concentration Risk
The Corporation’soperations are geographicallyconcentrated in Puerto Rico,its main market.Of the total gross loanportfolio held
for investment of$13.1 billion as ofMarch 31, 2026, theCorporation had creditrisk of approximately 77%in the Puerto Ricoregion,
19% in the United States region, and 4% in the VirginIslands region.
Update on the Puerto Rico Fiscal and Economic Situation
A significant portion of the Corporation’sbusiness and credit exposure is concentrated in the Commonwealthof Puerto Rico, which
has facedprolongedeconomic andfiscal challenges.See “RiskManagement– Exposureto PuertoRico Government”below.Since
declaring bankruptcyand benefittingfrom theenactment ofthe federalPuerto RicoOversight, Management,and EconomicStability
Act (“PROMESA”)in 2016,the Governmentof PuertoRico hasmadeprogress onfiscal mattersprimarilyby restructuringa large
portion of its outstanding public debt and identifying funding sources for its underfundedpension system.
Economic Indicators
In October2025,the PuertoRico PlanningBoard(“PRPB”)reportedin itspreliminaryestimates thatreal grossnationalproduct
(“GNP”)grewby0.4%infiscalyear2025,markingthefifthconsecutiveyearofpositiveeconomicgrowth,drivenbypersonal
consumption and fixedinvestments in bothconstruction and machineryand equipment. The latestPRPB’s baselineprojections reflect
0.4% real GNP growth in fiscal year 2026 and 0.3% in fiscal year 2027.
Thereareotherindicatorsthatgaugeeconomicactivityandarepublishedwithgreaterfrequency,forexample,theEconomic
DevelopmentBankforPuertoRico’sEconomicActivityIndex(“EDB-EAI”).AlthoughnotadirectmeasureofPuertoRico’sreal
GNP,the EDB-EAIis correlatedto PuertoRico’sreal GNP.During the12-month periodended onJanuary 31,2026, theEDB-EAI
averaged127.9,decreasingby0.2%onayear-over-yearbasis,primarilyreflectingreductionsinelectricenergygenerationand
gasolineconsumption.ForJanuary2026,estimatesshowedthattheEDB-EAIstoodat127.2,up0.3%onayear-over-yearbasis,
marking the fourth consecutive month with a positive year-over-yearvariance.
Labor market trendsremain stable. Datapublished by theBureau of LaborStatistics showed thatnon-farm payrolls duringthe first
two months of 2026 in Puerto Rico decreased by 0.1%versus the comparable figure in 2025, primarily driven bypayrolls in the public
sector asthese decreasedby 2.2%year-over-year,partially offsetby jobsin theprivate sectorwhich continuedto movein theright
direction,increasingby0.4%onayear-over-yearbasis.Keyindustriesdrivingprivate-sectorpayrollgrowthincludeConstruction
with a year-over-yearincrease of 3.1%and Leisure &Hospitality with apositive variance of5.3%. The unemploymentrate remained
stable, averaging 5.6% during the first two months of 2026.
97
Fiscal Plan
On June6, 2025,the PROMESAoversight boardcertified arevised 2024Fiscal Planfor PuertoRico forthe purposeof including
the currently anticipatedfiscal performance and updatedFiscal Year2025 revenue forecast basedon the most recentavailable data on
revenue collections. TheFiscal Plan intends to serveas a roadmap topromote economic growth andachieve long-term fiscal stability.
The original2024 FiscalPlan outlinesthe Commonwealth’sfinancial condition,key fiscalrisks, andthe actionsrequired toachieve
long-termfiscalresponsibilityandaccesstocreditmarkets.Itidentifiespriorityareassuchasimprovedeconomicandrevenue
forecasting, adoption of budgetbest practices, enhanced governmentservice delivery,and strengthened financial reporting,along with
initiatives to support economicgrowth through human capitaldevelopment, tax reform,and infrastructure improvements. Theoriginal
2024Fiscal Planalso incorporatesupdatedmacroeconomic projections,including modestnear-termGNP growthfollowed byslight
declines,andanticipatesstablepopulationlevelssupportedbypositivenetmigration.Inaddition,itreflectsthesignificantroleof
federaldisasterrelief,COVID-19recoveryfunds,andBipartisanInfrastructureLawfundinginsupportingPuertoRico’s
reconstruction and economic outlook.
Debt Restructuring
Over 80% of Puerto Rico’soutstanding debt has been restructuredto date. Key actions include the 2022central government Plan of
Adjustment, whichexchanged morethan $33billion ofexisting bondsand otherclaims forabout $7billion innew bonds,reducing
debt serviceby morethan $50billion. Also,the restructuringsof thePuerto RicoSales TaxFinancing Corporation(“COFINA”), the
Highways andTransportationAuthority (“HTA”),and thePuerto RicoAqueducts andSewers Authority(“PRASA”) areexpected to
yield savings of approximately $17.5 billion, $3.0 billion, and $400 million, respectively,in future debt service payments.
TheremainingmajorrestructuringisthatofthePuertoRicoElectricPowerAuthority(“PREPA”).LitigationrelatedtoPREPA
bonds remainslargely stayed.On March28, 2025,the PROMESAoversight boardfiled itsfifth amendedplan ofadjustment, which
wouldreducePREPA’sdebtalmost80%,totheequivalentof$2.6billionincashorbonds,excludingpensionliabilities.Italso
incorporatesseveral amendmentsto thepreviousstructure, includinga RateReductionFundto supportPREPA’spensions,andthe
elimination ofthe LegacyCharge contemplatedin theprevious versionsof theplan ofadjustment torepay thesignificantly reduced
debt.
Other Developments
PuertoRicogainedmomentumasahubforreshoring,particularlyinthemanufacturingsector.During2025,theGovernment
announced 17 companies with expansionprojects representing over $2 billionin committed capital investments and over4,000 jobs to
be created over the short-to-mediumterm. This reflects part of the Government’spolicy efforts to prioritize growth-oriented initiatives
that are critical to sustaining long-term economic growth and competitiveness.
Infrastructure reconstructioncontinues toadvance, particularlyin theaftermath ofHurricane Mariain 2017.As ofApril 22,2026,
over5,000projectshadalreadybeencompletedunderFEMA’sPublicAssistancePermanentWorkprogramswhilenearly19,200
projectswereactiveacrossdifferentstagesofexecutionforatotalcostof$12.0billion,equivalenttoapproximately31%ofthe
agency’s $38.7 billion obligation,according to the Central Office for Recovery,Reconstruction and Resiliency (“COR3”).
OnJune27,2025,thePROMESAoversightboardcertifiedthe$32.7billionfiscalyear2026BudgetfortheCommonwealthof
PuertoRicoconsistingofthe $13.1billiongeneralfund budget,the $5.4billionspecial revenuefundbudget,andthe $14.2billion
federal fundbudget. Accordingto theoversight board,the fiscalyear 2026Budget wasdeveloped jointlywith thelocal government
andreflects theunprecedenteduncertaintyaround federalfunding,economicgrowth,andMedicaidcosts inthe comingfiscalyear.
Morethan60% oftotalgovernmentfundingis allocatedtohealth,education,publicsafety,housingandretirees.The generalfund
budget increasestotal spendingby 1.5%from theprevious fiscalyear,excluding certainreclassifications ofgeneral fundrevenues as
specialrevenue,whilefundingfromtheU.S.Governmentwasbudgetedtodeclinebyapproximately$1.2billion,mainlyduea
reductioninfederalfundingforeducation.AccordingtothePROMESAoversightboard,thefiscalyear2026Budgetpreparesthe
Government forpotential furtherdeclines infederal fundingover thefiscal yearthat beganon July1, 2025.Specifically,the budget
holds back 5% of most agencies spending for eightmonths to prevent deficits should the general fundrevenue decline, federal funding
decreasesorMedicaidcostsincrease.Certainexpensesareexemptfromtheholdback,includingpensions,publicsafety,certain
transportation costs, and sales tax.
Exposure to Puerto Rico Government
As of March 31,2026, the Corporationhad $297.5 million ofdirect exposure to thePuerto Rico government,its municipalities and
publiccorporations,adecreaseof$0.3millioncomparedto$297.8millionasofDecember31,2025.AsofMarch31,2026,
approximately $211.5million of the exposure consisted ofloans and obligations of municipalities inPuerto Rico that are supportedby
assignedpropertytaxrevenuesandforwhich,inmostcases,thegoodfaith,creditandunlimitedtaxingpoweroftheapplicable
98
municipality havebeen pledgedto theirrepayment, and$42.3 millionconsisted ofloans andobligations whichare supportedby one
ormorespecificsourcesofmunicipalrevenues.TheCorporation’sexposuretoPuertoRicomunicipalitiesconsistedprimarilyof
senior priority loans and obligations concentratedin six of the largest municipalities in Puerto Rico. Themunicipalities are required by
law tolevy specialproperty taxesin suchamounts asare requiredfor thepayment ofall oftheir respectivegeneral obligationbonds
andnotes.Inadditiontomunicipalities,thetotaldirectexposurealsoincluded$8.6millioninaloanextendedtoanaffiliateof
PREPA,$32.4millioninloanstoapubliccorporationofthePuertoRicogovernment,andanobligationofthePuertoRico
government,specificallyaresidentialpass-throughMBSissuedbythePRHFA,atanamortizedcostof$2.7millionaspartofits
available-for-sale debt securities portfolio (fair value of $1.6 million as ofMarch 31, 2026).
ThefollowingtabledetailstheCorporation’stotaldirectexposuretoPuertoRicogovernmentobligationsaccordingtotheir
maturities:
As of March 31, 2026
Investment
Portfolio
(Amortized cost)
Loans
Total
Exposure
(In thousands)
Puerto Rico Housing Finance Authority:
After 10 years
$
2,655
$
-
$
2,655
Total Puerto Rico Housing Finance Authority
2,655
-
2,655
Public corporation of the Puerto Rico government:
Due within one year
-
14,734
14,734
After 1 to 5 years
-
17,665
17,665
Total public corporation of the Puerto Rico government
-
32,399
32,399
Affiliate of the Puerto Rico Electric Power Authority:
After 1 to 5 years
-
8,619
8,619
Total Puerto Rico government affiliate
-
8,619
8,619
Total Puerto Rico public corporations and government affiliate
-
41,018
41,018
Municipalities:
Due within one year
1,071
-
1,071
After 1 to 5 years
53,409
112,631
166,040
After 5 to 10 years
10,438
61,402
71,840
After 10 years
14,870
-
14,870
Total Municipalities
79,788
174,033
253,821
Total DirectGovernment Exposure
$
82,443
$
215,051
$
297,494
Also, asof March31, 2026,the outstandingbalance ofconstruction loansfunded throughconduit financingstructures tosupport
the federal programs of Low-IncomeHousing TaxCredit combined with other federalprograms amounted to $81.6 million,compared
to $92.4million asof December31, 2025.The mainobjective ofthese programsis tospur developmentin newor rehabilitatedand
affordablerental housing.PRHFA,as programsubrecipient andconduct issuer,issues tax-exemptobligations whichare acquiredby
privatefinancialinstitutionsandarerequiredtoco-underwritewithPRHFAamirrorconstructionloanagreementforthespecific
projectloantowhichtheCorporationwillserveasultimatelender,butwherethePRHFAwillbethelenderofrecord.Thetotal
amount of unfunded loan commitments related to these loans as of March31, 2026 was $55.3 million.
In addition,as of March31, 2026, theCorporation had$66.0 millionin exposureto residential mortgageloans that areguaranteed
by the PRHFA,a governmental instrumentalitythat has beendesignated as acovered entity underPROMESA (December31, 2025 –
$67.1million).ResidentialmortgageloansguaranteedbythePRHFAaresecuredbytheunderlyingpropertiesandtheguarantees
serve tocover shortfallsin collateralin theevent ofa borrowerdefault. ThePuerto Rico governmentguarantees upto $75 millionof
theprincipalforallloansunderthemortgageloaninsuranceprogram.Accordingtothemostrecentlyreleasedauditedfinancial
statements of the PRHFA,as of June 30, 2025, the PRHFA’smortgage loans insurance program coveredloans in an aggregate amount
of approximately $346 million. The regulations adoptedby the PRHFA requirethe establishment of adequate reserves to guaranteethe
solvency ofthe mortgageloans insuranceprogram;as ofJune 30,2025, PRHFAwas incompliance withthe regulations.As ofJune
30,2025,the mostrecentdate asof whichinformationis available,the PRHFAhada liabilityof approximately$0.4 millionas an
estimate of the losses inherent in the portfolio.
AsofMarch31,2026andDecember31,2025,theCorporationhad$2.4billionand$2.5billion,respectively,ofpublicsector
depositsinPuertoRico.Approximately20%ofthepublicsectordepositsasofMarch31,2026werefrommunicipalitiesand
municipal agencies in Puerto Rico and 80% were frompublic corporations, the Puerto Rico central governmentand agencies, and U.S.
federal government agencies in Puerto Rico.
99
Exposure to USVI Government
The Corporation has operations in the USVI and has credit exposureto USVI government entities.
For many years, theUSVI has been experiencingseveral fiscal and economicchallenges that have deterioratedthe overall financial
andeconomicconditionsinthearea.OnJune17,2024,theUnitedStatesBureauofEconomicAnalysis(the“BEA”)releasedits
estimates of GDPfor 2022.According tothe BEA, theUSVI’sreal GDP decreased1.3% in 2022after increasing3.7% in 2021.The
decreaseinrealGDPreflecteddeclinesinexports,privatefixedinvestment,governmentspending,andpersonalconsumption
expenditures. Thesenegative variances werepartly offsetby an increasein inventory investment,while imports,a subtraction itemin
the calculation of GDP,decreased. The annualpublication of BEA’sGDP statistics for theUSVI is made possible throughfunding by
theOfficeofInsularAffairs(“OIA”)oftheU.S.DepartmentoftheInterior.OIAhaspausedfundingofthisworktoconductan
exploratoryassessmentofterritorialsourcedatawiththegoalofinforminghowtostrategicallyinvestinandsupporttheUSVI's
economic statistics into the future. Withoutfunding, BEA is pausing the production of GDP statisticsfor the USVI. When funding and
improved data sources become available, BEA plans to resume productionof these statistics.
Over thepast fouryears, the USVIhas beenrecovering fromthe adverseimpact caused byCOVID-19 andhas continuedto make
progressonitsrebuildingeffortsrelatedtoHurricanesIrmaandMaria,whichoccurredinSeptember2017.Accordingtodata
publishedbyFEMA,therewere over$26.2billionin obligateddisasterrecoveryfundsforthe USVIas ofDecember 31,2025,up
$5.7billion(or28%)fromthe comparablefigure ayearearlier.Duringthe 12-monthperiodended December31,2025,over $584
millionweredisbursedintheterritory,representingayear-over-yearreductionof13%primarilyduetoadecreaseinCommunity
Development Block Grant-related disbursements.
Finally, PROMESAdoes not apply tothe USVI and, as such,there is currently no federallegislation permitting the restructuringof
the debts of the USVI andits public corporations and instrumentalities.To theextent that the fiscal condition of theUSVI government
deterioratesagain,theU.S.CongressorthegovernmentoftheUSVImayenactlegislationallowingfortherestructuringofthe
financialobligationsoftheUSVIgovernmententitiesorimposingastayoncreditorremedies,includingbymakingPROMESA
applicable to the USVI.
As ofMarch31,2026 andDecember 31,2025,theCorporationhad $168.3millionand $138.7million,respectively,inloans to
USVI publiccorporations.As ofMarch 31,2026, approximately$49.7 millionwere fullycollateralized bycash balancesheld atthe
Bank,$30.4millionwere supportedbya utilitypubliccorporationgeneralfund,and$88.2millionwere supportedby oneor more
specificsourcesofrevenues.AsofMarch31,2026,allloanswerecurrentlyperforminganduptodateonprincipalandinterest
payments.
100
ITEM 3. QUANTITATIVEAND QUALITATIVE DISCLOSURESABOUT MARKETRISK
ForinformationregardingmarketrisktowhichtheCorporationisexposed,seetheinformationcontainedinPartI,Item2,
“Management’sDiscussionandAnalysisofFinancialConditionandResults ofOperations— RiskManagement”inthis Quarterly
Report on Form 10-Q.
ITEM 4.CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
FirstBanCorp.’smanagement,includingitsChiefExecutiveOfficerandChiefFinancialOfficer,evaluatedtheeffectivenessof
FirstBanCorp.’sdisclosurecontrolsandprocedures(asdefinedinRules13a-15(e)and15d-15(e)undertheExchangeAct)asof
March 31, 2026,the end ofthe period coveredby this QuarterlyReport on Form10-Q. Based onthis evaluation, theChief Executive
Officerand ChiefFinancial Officerconcluded thatthe Corporation’sdisclosurecontrols andprocedures wereeffectiveas ofMarch
31,2026andprovidereasonableassurancethattheinformationrequiredtobedisclosedbytheCorporationinreportsthatthe
CorporationfilesorsubmitsundertheExchangeActisrecorded,processed,summarizedandreportedwithinthetimeperiods
specifiedin SECrules andforms andis accumulatedand reportedto theCorporation’smanagement,includingthe ChiefExecutive
Officer and Chief Financial Officer,as appropriate, to allow timely decisions regarding required disclosures.
Internal Control over Financial Reporting
There wereno changesto theCorporation’sinternal controlover financialreporting (asdefinedin Rules13a-15(f) and15d-15(f)
under theExchange Act)during themost recentquarter endedMarch 31,2026 that havematerially affected,or are reasonablylikely
to materially affect, the Corporation’sinternal control over financial reporting.
101
PART II - OTHER INFORMATION
In accordance with the instructions to Part IIof Form 10-Q, the other specified items inthis part have been omitted because they are not
applicable, or the information has been previously reported.
ITEM 1.LEGAL PROCEEDINGS
Foradiscussionoflegalproceedings,seeNote18–“RegulatoryMatters,CommitmentsandContingencies,”totheunaudited
consolidated financial statements herein, which is incorporated by referencein this Part II, Item 1.
ITEM 1A.RISK FACTORS
The Corporation’s business, operating results and/or the market price of our common stock may be significantly affected by a number of
factors. A detaileddiscussion of certainrisk factors thatcould affectthe Corporation’s futureoperations, financialcondition or resultsfor
future periods is set forth in Part I, Item 1A, “Risk Factors,” in the 2025 Annual Report on Form 10-K. These risk factors, and others, could
cause actualresults todiffer materiallyfrom historicalresults orthe resultscontemplated bythe forward-looking statementscontained in
this report. Also,refer to thediscussion in“Forward-Looking Statements” andPart I, Item2, “Management’sDiscussion andAnalysis of
Financial Condition and Resultsof Operations,” in this QuarterlyReport on Form 10-Q foradditional information that may supplementor
update the discussion of risk factors in the2025 Annual Report on Form 10-K.
There have been no material changes from those risk factors previously disclosed in Part I, Item 1A., “Risk Factors,” in the 2025 Annual
Report on Form 10-K.
102
ITEM 2.UNREGISTEREDSALES OFEQUITY SECURITIESAND USE OFPROCEEDS
The Corporation did not have any unregistered salesof equity securities during the quarter ended March31, 2026.
Issuer Purchases of Equity Securities
The following table provides information in relationto the Corporation’s purchases of its common stock duringthe quarter ended March
31, 2026.
Period
Total Number of Shares
Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
(1)
Approximate Dollar Value
of Shares that May Yetbe
Purchased Under the Plans
or Programs (in
thousands)
(1)
January 1, 2026 - January 31, 2026
53,933
$
20.52
53,625
$
187,200
February 1, 2026 - February 28, 2026
138,097
21.21
138,097
184,271
March 1, 2026 - March 31, 2026
2,442,261
20.72
2,217,470
138,300
Total
2,634,291
(2)
2,409,192
(1)
As of March 31,2026, the Corporation wasauthorized to purchase upto $200 million of theCorporation's common stockunder the program thatwas publicly announced onOctober 22,
2025.Repurchasesundertheprogrammaybeexecutedthroughopenmarketpurchases,acceleratedsharerepurchases,privatelynegotiatedtransactionsorplans,includingplans
complying with Rule10b5-1 under theExchange Act.The stockrepurchase programdoes not obligateit to acquireany specificnumber of sharesand doesnot have anexpiration date.
The stockrepurchaseprogram maybe modified,suspended,or terminatedatany timeatthe Corporation’sdiscretion.Duringthefirst quarterof 2026,the Corporationrepurchased
approximately $50.0 million in common stock.
(2)
Includes 225,099 shares of common stock acquired bythe Corporation to cover minimum tax withholdingobligations upon the vesting of equity-based awards.The Corporation intends to
continue to satisfy statutory tax withholding obligations in connectionwith the vesting of outstanding restricted stock andperformance units through the withholding of shares.
ITEM 5.OTHER INFORMATION
DuringthequarterendedMarch31,2026,noneoftheCorporation’sdirectorsorofficers(asdefinedinRule16a-1(f)ofthe
Exchange Act)
adopted
or
terminated
a “Rule 10b5-1 tradingarrangement” or
“non-Rule
10b5-1
trading arrangement,” as thoseterms
are defined in Item 408 of Regulation S-K.
103
ITEM 6.EXHIBITS
See the Exhibit Index below, which is incorporated byreference herein:
EXHIBIT INDEX
Exhibit No.
Description
31.1
31.2
32.1
32.2
101.INS
Inline XBRL Instance Document, filed herewith. Theinstance document does not appear in the interactivedata file because
its XBRL tags are embedded within the inline XBRLdocument.
101.SCH
Inline XBRL Taxonomy Extension Schema Document, filed herewith
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document, filed herewith
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document, filed herewith
104
The cover page of First BanCorp. Quarterly Report on Form 10-Qfor the quarter ended March 31, 2026, formatted in
Inline XBRL (included within the Exhibit 101 attachments)
104
SIGNATURES
Pursuant tothe requirementsof theSecurities ExchangeAct of1934, theCorporation hasduly causedthis reportto besigned onits
behalf by the undersigned hereunto duly authorized:
First BanCorp.
Registrant
Date:May 8, 2026
By:/s/ Aurelio Alemán
Aurelio Alemán
President and Chief Executive Officer
Date: May 8, 2026
By:/s/ Orlando Berges
Orlando Berges
Executive Vice President and Chief Financial Officer