fbp-20250331

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, 2025

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

COMMISSION FILE NUMBER

001-14793

FIRST BANCORP

(EXACT NAME OF REGISTRANT AS SPECIFIED

IN ITS CHARTER)

Puerto Rico

66-0561882

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification 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 filed

all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the

preceding 12 months (or for such shorter period that the registrant

was required to file such reports), and (2) has been subject

to such filing requirements for the past 90

days.

Yes

☑

Indicate by check mark whether the registrant has submitted electronically

every Interactive Data File required to be submitted pursuant

to Rule 405 of Regulation S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for

such shorter period that the registrant was required

to submit such files).

Yes

☑

Indicate by check mark whether the registrant is a large accelerated

filer, 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” in

Rule 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 to

use the extended transition period for complying with any

new or revised

financial accounting standards provided pursuant to Section 13(a)

of the Exchange Act.

Indicate by check mark whether the registrant is a shell company

(as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☑

Indicate the number of shares outstanding of each of the

issuer’s classes of common stock, as of the latest practicable date.

Common stock:

161,542,570

shares outstanding as of May 5, 2025.

FIRST BANCORP.

INDEX PAGE

PART

I. FINANCIAL INFORMATION

PAGE

Item 1.

Financial Statements:

Consolidated

Statements

Financial

Condition

(Unaudited)

March

31,

2025

and

December 31, 2024

Consolidated Statements of Income (Unaudited) – Quarter

ended March 31, 2025 and 2024

Consolidated

Statements

Comprehensive

Income

(Unaudited)

–

Quarters

ended

March

31,

2025 and 2024

Consolidated

Statements

Cash

Flows

(Unaudited)

–

Quarters

ended

March

31,

2025

and

2024

Consolidated

Statements

Changes

Stockholders’

Equity

(Unaudited)

–

Quarters

ended

March 31, 2025 and 2024

Notes to Consolidated Financial Statements (Unaudited)

Item 2.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

109

Item 4.

Controls and Procedures

109

PART

II. OTHER INFORMATION

Item 1.

Legal Proceedings

110

Item 1A.

Risk Factors

110

Item 2.

Item 5.

Unregistered Sales of Equity Securities and Use of Proceeds

Other Information

111

Item 6.

Exhibits

112

SIGNATURES

Forward-Looking Statements

This Quarterly

Report on

Form 10-Q

(this “Form

10-Q”) contains

forward-looking statements

within the

meaning of

Section 27A

of the Securities Act of 1933, as

amended (the “Securities Act”), and

Section 21E of the Securities Exchange

Act of 1934, as amended

(the “Exchange Act”),

which are subject to

the safe harbor created

by such sections. When

used in this Form

10-Q or future filings

First

BanCorp.

(the

“Corporation,”

“we,”

“us,”

“our”)

with

the

U.S.

Securities

and

Exchange

Commission

(the

“SEC”),

the

Corporation’s press

releases or in other public or

stockholder communications made by

the Corporation, or in oral statements

made on

behalf

the

Corporation

by,

with

the

approval

of,

authorized

executive

officer

the

Corporation,

the

words

phrases

“would,”

“intends,”

“will,”

“expect,”

“should,”

“plans,”

“forecast,”

“anticipate,”

“look

forward,”

“believes,”

and

other

terms

similar meaning or import, or the

negatives of these terms or variations

of them, in connection with

any discussion of future operating,

financial or other performance are meant to identify “forward-looking

statements.”

The Corporation cautions readers

not to place undue reliance on

any such “forward-looking statements,” which

speak only as of the

date made

or,

with respect

to such

forward-looking statements

contained in

this Form

10-Q, the

date hereof,

and advises

readers that

any such

forward-looking statements

are not

guarantees of

future performance

and involve

certain risks,

uncertainties, estimates,

and

assumptions

by us

that are

difficult

to predict

Various

factors, some

of which

are beyond

our

control,

could cause

actual results

differ materially from those expressed in, or implied

by, such forward-looking

statements.

Factors

that

could

cause

results

differ

materially

from

those

expressed

in,

implied

by,

the

Corporation’s

forward-looking

statements include, but are not

limited to, risks described or

referenced in Part I, Item 1A,

“Risk Factors,” in the Corporation’s

Annual

Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Annual

Report on Form 10-K”), and the following:

●

the effect

of changes

in the

interest rate

environment

and inflation

levels on

the level,

composition

and performance

of the

Corporation’s

assets and

liabilities, and

corresponding

effects on

the Corporation’s

net interest

income, net

interest margin,

loan originations, deposit attrition, overall results of operations, and liquidity

position;

●

volatility

the

financial

services

industry,

which

could

result

in,

among

other

things,

bank

deposit

runoffs,

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, the

Puerto Rico

government and

other governments,

including those

determined by

the Board

of Governors

the Federal Reserve

System (the “Federal

Reserve Board”), the Federal

Reserve Bank of New

York

(the “FED”), the

Federal

Deposit

Insurance

Corporation

(the

“FDIC”),

government-sponsored

housing

agencies

and

regulators

Puerto

Rico,

the

U.S., and

the U.S.

Virgin

Islands (the

“USVI”) and

British Virgin

Islands (the

“BVI”), that

may affect

the future

results of

the Corporation;

●

uncertainty as

to the

ability of

the Corporation’s

banking subsidiary,

FirstBank Puerto

Rico (“FirstBank”

or the

“Bank”), to

retain its core

deposits and

generate sufficient

cash flow through

its wholesale funding

sources, such as

securities sold under

agreements

repurchase,

Federal

Home

Loan

Bank

(“FHLB”)

advances,

and

brokered

certificates

deposit

(“brokered

CDs”), which may require us to sell investment securities at a loss;

●

adverse changes

in general political

and economic

conditions in Puerto

Rico, the U.S.,

and the USVI

and the BVI,

including

in the interest

rate environment, unemployment

rates, market liquidity

and volatility,

trade policies, housing

absorption rates,

real

estate

markets,

and

U.S.

capital

markets,

which

may

affect

funding

sources,

loan

portfolio

performance

and

credit

quality,

market

prices

investment

securities,

and

demand

for

the

Corporation’s

products

and

services,

and which

may

reduce the Corporation’s revenues

and earnings and the value of the Corporation’s

assets;

●

the impact

of government

financial assistance

for hurricane

recovery and

other disaster

relief on

economic activity

in Puerto

Rico, and the timing and pace of disbursements of funds earmarked for

disaster relief;

●

the ability

of the

Corporation,

FirstBank,

and

third-party

service providers

to identify

and prevent

cyber-security

incidents,

such

data

security

breaches,

ransomware,

malware,

“denial

service”

attacks,

“hacking,”

identity

theft,

and

state-

sponsored

cyberthreats,

and

the

occurrence

and

response

any

incidents

that

occur,

which

may

result

misuse

misappropriation

confidential

proprietary

information,

disruption,

damage

our

systems

those

third-party

service providers on which we rely,

increased costs and losses and/or adverse effects

to our reputation;

●

general

competitive

factors

and

other

market

risks

well

the

implementation

existing

planned

strategic

growth

opportunities,

including

risks,

uncertainties,

and

other

factors

events

any

business

acquisitions,

dispositions,

strategic

partnerships,

strategic

operational

investments,

including

systems

conversions,

and

any

anticipated

efficiencies

other expected results related thereto;

●

uncertainty as

to the

implementation of

the debt

restructuring plan

of Puerto

Rico (“Plan

of Adjustment”

or “PoA”)

and the

fiscal

plan

for

Puerto

Rico

as certified

June 5,

2024

(the “2024

Fiscal Plan”)

the oversight

board

established

by the

Puerto Rico

Oversight,

Management, and

Economic Stability

Act (“PROMESA”),

or any

revisions to

it, on

our clients

and

loan portfolios, and any potential impact from future economic or political

developments and tax regulations in Puerto Rico;

●

the

impact

changes

accounting

standards,

determinations

and

assumptions

applying

those

standards,

and

forecasts of economic variables considered for the determination of

the 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 dividends

to the Corporation;

●

environmental, social, and governance (“ESG”) matters, including

our climate-related initiatives and commitments,

as well as

the impact and potential cost to us of any policies, legislation, or initiatives in opposition

to our ESG policies;

●

the impacts of natural

or man-made disasters, widespread

health emergencies, geopolitical

conflicts (including sanctions, war

armed

conflict,

such

as the

ongoing

conflict

Ukraine, the

conflict

the

Middle

East, the

possible

expansion

of such

conflicts in

surrounding areas

and potential

geopolitical consequences

and the

threat of

conflict from

neighboring countries

in our

region), terrorist

attacks, or

other catastrophic

external events,

including impacts

of such

events on

general economic

conditions and on the Corporation’s

assumptions regarding forecasts of economic variables;

●

the

risk

that

additional

portions

the

unrealized

losses in

the

Corporation’s

debt

securities portfolio

are

determined

credit-related, resulting

in additional

charges to

the provision

for credit

losses on

the Corporation’s

debt securities

portfolio,

and

the potential

for additional

credit losses

that could

emerge

from further

downgrades of

the U.S.’s

Long-Term

Foreign-

Currency Issuer Default Rating and negative ratings outlooks;

●

the

impacts

applicable

legislative,

tax,

regulatory

changes

legislative,

tax,

regulatory

priorities,

the

reduction

staffing

U.S.

governmental

agencies,

potential

government

shutdowns,

and

political

impasses,

including

uncertainties

regarding

the U.S.

debt

ceiling

and

federal budget,

as well

as the

current

U.S. presidential

administration

and

Puerto Rico government administration, on the Corporation’s

financial condition or performance;

●

the

risk

possible

failure

circumvention

the

Corporation’s

internal

controls

and

procedures

and

the

risk

that

the

Corporation’s risk management

policies may not be adequate;

●

the risk that the FDIC may

further increase the deposit insurance

premium and/or require further special

assessments, causing

an additional increase in the Corporation’s

non-interest expenses;

●

any need to recognize impairments on the Corporation’s

financial instruments, goodwill, and other intangible assets;

●

the risk

that the

impact

of the

occurrence

of any

of these

uncertainties on

the Corporation’s

capital would

preclude

further

growth of FirstBank and preclude the Corporation’s

Board of Directors (the “Board”) from declaring dividends; and

●

uncertainty as

to whether

FirstBank will

be able

to continue

to satisfy

its regulators

regarding,

among other

things, its

asset

quality,

liquidity

plans,

maintenance

capital

levels,

and

compliance

with

applicable

laws,

regulations

and

requirements.

The

Corporation

does

not

undertake

and

specifically

disclaims

any

obligation

update

any

“forward-looking

statements”

reflect

occurrences

unanticipated

events

circumstances

after

the

date

such

statements,

except

required

the

federal

securities laws.

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

March 31, 2025

December 31, 2024

(In thousands, except for share information)

ASSETS

Cash and due from banks

1,327,075

1,158,215

Money market investments:

Time deposit with another financial institution

500

Other short-term investments

700

Total money market investments

1,200

Available-for-sale debt securities, at fair value (amortized cost of

4,788,924

as of March 31, 2025 and $

5,125,408

as of December 31, 2024; ACL of $

516

as of March 31, 2025 and $

521

as of December 31, 2024)

4,312,884

4,565,302

Held-to-maturity debt securities, at amortized

cost, net of ACL of $

843

as of March 31, 2025 and $

802

as of December 31, 2024 (fair value of

305,501

as of March 31, 2025 and $

308,040

as of December 31, 2024)

311,964

316,984

Equity securities

44,813

52,018

Total investment securities

4,669,661

4,934,304

Loans, net of ACL of $

247,269

as of March 31, 2025 and $

243,942

as of December 31, 2024

12,428,129

12,502,614

Mortgage loans held for sale, at lower of

cost or market

14,713

15,276

Total loans, net

12,442,842

12,517,890

Accrued interest receivable on loans and

investments

63,777

71,881

Premises and equipment, net

130,469

133,437

Other real estate owned (“OREO”)

15,880

17,306

Deferred tax asset, net

134,346

136,356

Goodwill

38,611

Other intangible assets

5,715

6,967

Other assets

277,407

276,754

Total assets

19,106,983

19,292,921

LIABILITIES

Non-interest-bearing deposits

5,629,383

5,547,538

Interest-bearing deposits

11,193,146

11,323,760

Total deposits

16,822,529

16,871,298

Long-term borrowings

331,143

561,700

Accounts payable and other liabilities

173,969

190,687

Total liabilities

17,327,641

17,623,685

Commitments and contingencies (See

Note 19)

(nil)

STOCKHOLDERS’ EQUITY

Common stock, $

0.10

par value,

2,000,000,000

shares authorized;

223,663,116

shares issued;

163,104,181

shares outstanding as of March 31, 2025

and

163,868,877

shares outstanding as of December

31, 2024

22,366

Additional paid-in capital

957,380

964,964

Retained earnings, includes legal surplus reserve

of $

230,178

as of each of March 31, 2025 and

December 31, 2024

2,086,276

2,038,812

Treasury stock (at cost),

60,558,935

shares as of March 31, 2025 and

59,794,239

shares as of December 31, 2024

(804,185)

(790,350)

Accumulated other comprehensive loss, net

of tax of $

8,221

as of each of March 31, 2025 and

December 31, 2024

(482,495)

(566,556)

Total stockholders’ equity

1,779,342

1,669,236

Total liabilities and stockholders’ equity

19,106,983

19,292,921

The accompanying notes are an integral part

of these statements.

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Quarter Ended March 31,

2025

2024

(In thousands, except per share information)

Interest and dividend income:

Loans

241,332

237,129

Investment securities

23,528

24,122

Money market investments and interest-bearing cash accounts

12,205

7,254

Total interest and dividend income

277,065

268,505

Interest expense:

Deposits

58,497

63,025

Short-term borrowings

Long-term borrowings

6,095

8,960

Total interest expense

64,668

71,985

Net interest income

212,397

196,520

Provision for credit losses - expense (benefit):

Loans and finance leases

24,837

12,917

Unfunded loan commitments

(63)

281

Debt securities

(1,031)

Provision for credit losses - expense

24,810

12,167

Net interest income after provision for credit losses

187,587

184,353

Non-interest income:

Service charges and fees on deposit accounts

9,640

9,662

Mortgage banking activities

3,177

2,882

Insurance commission income

5,805

5,507

Card and processing income

11,475

11,312

Other non-interest income

5,637

4,620

Total non-interest income

35,734

33,983

Non-interest expenses:

Employees’ compensation and benefits

62,137

59,506

Occupancy and equipment

22,630

21,381

Business promotion

3,278

3,842

Professional service fees

11,486

12,676

Taxes, other than income taxes

5,878

5,129

FDIC deposit insurance

2,236

3,102

Net gain on OREO operations

(1,129)

(1,452)

Credit and debit card processing expenses

5,110

5,751

Communications

2,245

2,097

Other non-interest expenses

9,151

8,891

Total non-interest expenses

123,022

120,923

Income before income taxes

100,299

97,413

Income tax expense

23,240

23,955

Net income

77,059

73,458

Net income attributable to common stockholders

77,059

73,458

Net income per common share:

Basic

0.47

0.44

Diluted

0.47

0.44

The accompanying notes are an integral part

of these statements.

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Quarter Ended March 31,

2025

2024

(In thousands)

Net income

77,059

73,458

Other comprehensive income (loss), net of tax:

Available-for-sale debt securities:

Net unrealized holding gains (losses) on debt securities

(1)

84,061

(15,065)

Other comprehensive income (loss) for the period, net of tax

84,061

(15,065)

Total comprehensive income

161,120

58,393

(1)

Net unrealized holding gains (losses) on available-for-sale

debt securities have no tax effect because securities

are either tax-exempt, held by an International

Banking Entity

(“IBE”), or have a full deferred tax asset

valuation allowance.

The accompanying notes are an integral part

of these statements.

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Quarter ended March 31,

2025

2024

(In thousands)

Cash flows from operating activities:

Net income

77,059

73,458

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization

4,453

4,680

Amortization of intangible assets

1,252

1,841

Provision for credit losses

24,810

12,167

Deferred income tax expense

2,010

2,384

Stock-based compensation

3,739

2,925

Unrealized gain on derivative instruments

(130)

(108)

Net gain on disposals or sales, and impairments of premises and

equipment and other assets

(33)

Net gain on sales of loans and loans held-for-sale valuation adjustments

(708)

(759)

Net (accretion) amortization of discounts, premiums, and

deferred loan fees and costs

(394)

Originations and purchases of loans held for sale

(44,824)

(35,577)

Sales and repayments of loans held for sale

46,192

31,588

Amortization of broker placement fees

160

130

Net amortization of premiums and discounts on investment securities

1,073

874

Increase in accrued interest receivable

8,081

4,503

(Decrease) increase in accrued interest payable

(3,864)

4,567

Increase in other assets

(240)

(909)

(Decrease) increase in other liabilities

(10,450)

16,482

Net cash provided by operating activities

108,219

118,246

Cash flows from investing activities:

Net repayments (disbursements) on loans held for investment

32,663

(156,118)

Proceeds from sales of loans held for investment

2,475

10,162

Proceeds from sales of repossessed assets

12,238

17,784

Purchases of available-for-sale debt securities

(12,264)

Proceeds from principal repayments and maturities of available-for-sale

debt securities

347,267

166,440

Proceeds from principal repayments of held-to-maturity debt securities

5,384

5,339

Additions to premises and equipment

(1,485)

(4,140)

Proceeds from sales of premises and equipment and other assets

1,280

Net redemptions (purchases) of equity securities

7,276

(1,737)

Proceeds from the settlement of insurance claims - investing activities

667

Net cash provided by investing activities

393,554

39,677

Cash flows from financing activities:

Net decrease in deposits

(49,685)

(57,585)

Repayments of long-term borrowings

(229,040)

Repurchase of outstanding common stock

(24,872)

(52,354)

Dividends paid on common stock

(29,316)

(26,629)

Net cash used in financing activities

(332,913)

(136,568)

Net increase in cash and cash equivalents

168,860

21,355

Cash and cash equivalents at beginning of year

1,159,415

663,164

Cash and cash equivalents at end of year

1,328,275

684,519

Cash and cash equivalents include:

Cash and due from banks

1,327,075

680,734

Money market investments

1,200

3,785

1,328,275

684,519

The accompanying notes are an integral part of these statements.

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITY

(Unaudited)

Quarter Ended March 31,

2025

2024

(In thousands, except per share information)

Common Stock

22,366

Additional Paid-In Capital:

Balance at beginning of period

964,964

965,707

Stock-based compensation expense

3,739

2,925

Common stock reissued under stock-based compensation plan

(11,356)

(9,336)

Restricted stock forfeited

Balance at end of period

957,380

959,319

Retained Earnings:

Balance at beginning of period

2,038,812

1,846,112

Net income

77,059

73,458

Dividends on common stock ($

0.18

per share and $

0.16

per share for the quarters ended

March 31, 2025 and 2024, respectively)

(29,595)

(26,856)

Balance at end of period

2,086,276

1,892,714

Treasury Stock (at cost):

Balance at beginning of period

(790,350)

(697,406)

Common stock repurchases (See Note 11)

(25,158)

(52,354)

Common stock reissued under stock-based compensation plan

11,356

9,336

Restricted stock forfeited

(33)

(23)

Balance at end of period

(804,185)

(740,447)

Accumulated Other Comprehensive Loss, net of tax:

Balance at beginning of period

(566,556)

(639,170)

Other comprehensive income (loss), net of tax

84,061

(15,065)

Balance at end of period

(482,495)

(654,235)

Total stockholders’ equity

1,779,342

1,479,717

The accompanying notes are an integral part of these statements.

FIRST BANCORP.

INDEX TO NOTES TO CONSOLIDATED

FINANCIAL 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 –

Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets

Note 7 –

Deposits

Note 8 –

Borrowings

Note 9 –

Earnings per Common Share

Note 10 –

Stock-Based Compensation

Note 11 –

Stockholders’ Equity

Note 12 –

Accumulated Other Comprehensive Loss

Note 13 –

Employee Benefit Plans

Note 14–

Income Taxes

Note 15

–

Fair Value

Note 16

–

Revenue from Contracts with Customers

Note 17 –

Segment Information

Note 18 –

Supplemental Statements

of Cash Flows Information

Note 19 –

Regulatory Matters, Commitments, and Contingencies

Note 20 –

First BanCorp. (Holding Company Only) Financial Information

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS

(Unaudited)

NOTE 1 – BASIS

OF PRESENTATION AND

SIGNIFICANT

ACCOUNTING

POLICIES

The

Consolidated

Financial

Statements

(unaudited)

for

the

quarter

ended

March

31,

2025

(the

“unaudited

consolidated

financial

statements”)

First

BanCorp.

(the

“Corporation”)

have

been

prepared

conformity

with

the

accounting

policies

stated

the

Corporation’s Audited Consolidated Financial Statements for the fiscal year ended December

31, 2024 (the “audited consolidated financial

statements”) included in the 2024 Annual Report on Form 10-K, as updated by the information contained in this report. Certain information

and note disclosures normally included in

the financial statements prepared in

accordance with generally accepted accounting

principles in

the United States of America (“GAAP”) have been

condensed or omitted from these statements pursuant to the

rules and regulations of the

SEC and,

accordingly, these

financial statements

should be

read in

conjunction with

the audited

consolidated financial

statements, which

are included

in the 2024

Annual Report on

Form 10-K. All

adjustments (consisting

only of normal

recurring adjustments) that

are, in the

opinion of management, necessary for

a fair presentation of the

statement of financial position, results of

operations and cash flows for

the

interim periods

have

been reflected.

All

significant

intercompany

accounts

and

transactions

have

been

eliminated

in consolidation.

The

Corporation evaluates subsequent events through the date of

filing with the SEC.

The results of operations for the

quarter ended March 31,

2025 are not necessarily

indicative of the results to

be expected for the entire

year.

Adoption of New Accounting Requirements

The Corporation was not impacted

by the adoption of the

following Accounting Standards Updates (“ASUs”) during

the first quarter of

2025:

●

ASU 2024-02, “Codification Improvements –

Amendments to Remove References to the Concepts Statements”

●

ASU 2024-01, “Compensation – Stock Compensation (Topic

718): Stock Application of Profits Interest and Similar Awards”

Recently

Issued Accounting

Standards

Not Yet Effective

or Not Yet Adopted

For issued accounting

standards not yet effective

or not yet adopted,

see Note 1 –

“Nature of Business and

Summary of Significant

Accounting Policies,” to the audited consolidated financial statements included

in the 2024 Annual Report on Form 10-K.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 2 – DEBT SECURITIES

Available-for-Sale

Debt Securities

The amortized

cost, gross

unrealized gains

and losses,

ACL, estimated

fair value,

and weighted-average

yield of

available-for-sale

debt securities by contractual maturities as of March 31, 2025 and

December 31, 2024 were as follows:

March 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

19,960

348

19,612

0.65

U.S. government-sponsored entities' (“GSEs”) obligations:

Due within one year

1,015,466

17,837

997,629

0.72

After 1 to 5 years

692,123

38,962

653,193

0.98

After 10 years

7,584

7,549

4.69

Puerto Rico government obligation:

After 10 years

(3)

2,899

960

340

1,599

United States and Puerto Rico government obligations

1,738,032

58,142

340

1,679,582

0.84

Mortgage-backed securities (“MBS”):

Residential MBS:

Freddie Mac (“FHLMC”) certificates:

After 1 to 5 years

12,881

346

12,535

2.14

After 5 to 10 years

116,041

8,184

107,857

1.52

After 10 years

912,039

341

147,069

765,311

1.52

1,040,961

341

155,599

885,703

1.53

Ginnie Mae (“GNMA”) certificates:

Due within one year

392

390

2.46

After 1 to 5 years

6,889

267

6,622

0.72

After 5 to 10 years

64,042

5,001

59,044

1.84

After 10 years

139,482

19,576

119,955

2.78

210,805

24,846

186,011

2.43

Fannie Mae (“FNMA”) certificates:

After 1 to 5 years

19,453

521

18,932

2.13

After 5 to 10 years

232,359

15,249

217,118

1.75

After 10 years

950,195

432

135,749

814,878

1.50

1,202,007

440

151,519

1,050,928

1.56

Collateralized mortgage obligations (“CMOs”) issued

or guaranteed by the FHLMC, FNMA, and GNMA:

After 10 years

361,783

624

47,198

315,209

2.82

Private label:

After 5 to 10 years

5,905

1,695

176

4,034

6.60

Total Residential MBS

2,821,461

1,457

380,857

176

2,441,885

1.79

Commercial MBS:

After 1 to 5 years

33,658

1,893

31,778

2.56

After 5 to 10 years

10,549

1,413

9,136

1.67

After 10 years

184,224

34,809

149,503

2.21

Total Commercial MBS

228,431

101

38,115

190,417

2.23

Total MBS

3,049,892

1,558

418,972

176

2,632,302

1.82

Other:

Due within one year

1,000

2.31

Total available-for-sale debt securities

4,788,924

1,590

477,114

516

4,312,884

1.46

(1)

Excludes accrued

interest receivable

on available-for-sale

debt

securities that

totaled

9.0

million as

of March

31, 2025

reported as

part of

accrued interest

receivable on

loans

and investment

securities in

the

consolidated statements of financial condition, and excluded from the estimate of credit losses.

(2)

Includes $

467.4

million (amortized cost - $

528.2

million) that was pledged at the FHLB as collateral for borrowings and letters of credit as well as $

2.8

billion (amortized cost - $

3.1

billion) 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 a residential

pass-through MBS issued by the

Puerto Rico Housing Finance Authority

(the “PRHFA”) that

is collateralized by certain

second mortgages originated under

a program launched by the

Puerto

Rico government in 2010 and is in nonaccrual status based on the delinquency status of the underlying second mortgage loans collateral.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

December 31, 2024

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

59,992

803

59,189

0.75

U.S. GSEs’ obligations:

Due within one year

1,090,678

22,826

1,067,852

0.79

After 1 to 5 years

817,835

53,195

764,679

0.96

After 10 years

7,835

7,800

4.73

Puerto Rico government obligation:

After 10 years

(3)

2,951

986

345

1,620

United States and Puerto Rico government obligations

1,979,291

77,845

345

1,901,140

0.87

MBS:

Residential MBS:

FHLMC certificates:

After 1 to 5 years

14,477

460

14,017

2.14

After 5 to 10 years

122,548

9,977

112,571

1.52

After 10 years

936,531

168,691

767,865

1.51

1,073,556

179,128

894,453

1.52

GNMA certificates:

Due within one year

881

875

2.68

After 1 to 5 years

8,025

350

7,675

0.71

After 5 to 10 years

67,181

6,125

61,056

1.86

After 10 years

142,330

22,041

120,305

2.78

218,417

28,522

189,911

2.42

FNMA certificates:

After 1 to 5 years

21,921

689

21,232

2.13

After 5 to 10 years

244,966

18,874

226,092

1.74

After 10 years

979,366

159,560

819,822

1.51

1,246,253

179,123

1,067,146

1.56

CMOs issued or guaranteed by the FHLMC, FNMA,

and GNMA:

After 10 years

377,812

52,338

325,548

2.88

Private label:

After

5 to 10 years

4,886

1,430

3,399

6.69

After 10 years

1,200

285

119

796

6.32

6,086

1,715

176

4,195

6.62

Total Residential MBS

2,922,124

131

440,826

176

2,481,253

1.79

Commercial MBS:

After 1 to 5 years

33,835

2,286

31,562

2.59

After 5 to 10 years

10,621

1,653

8,968

1.67

After 10 years

178,537

37,158

141,379

2.06

Total Commercial MBS

222,993

41,097

181,909

2.12

Total MBS

3,145,117

144

481,923

176

2,663,162

1.82

Other

Due within one year

1,000

2.32

Total available-for-sale debt securities

5,125,408

183

559,768

521

4,565,302

1.45

(1)

Excludes accrued

interest receivable

on available-for-sale

debt

securities that

totaled $

9.6

million as

of December

31, 2024

reported as

part of

accrued interest

receivable on

loans and

investment

securities in

the

consolidated statements of financial condition, and excluded from the estimate of credit losses.

(2)

Includes $

466.1

million (amortized cost - $

533.7

million) that was pledged

at the FHLB as

collateral for borrowings and

letters of credit as well

as $

3.0

billion (amortized cost -

3.3

billion) 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 a residential pass-through MBS issued by the PRHFA

that is collateralized by certain second mortgages originated under a program

launched by the Puerto Rico government in 2010 and is in

nonaccrual status

based on the delinquency status of the underlying second mortgage loans collateral.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

During

the

first

quarter

2025,

the

Corporation

purchased

approximately

12.3

million

available-for-sale

GNMA

MBS,

which $

7.3

million were commercial MBS.

Maturities

available-for-sale

debt

securities

are

based

the

period

final

contractual

maturity.

Expected

maturities

might

differ

from

contractual

maturities

because

they

may

subject

prepayments

and/or

call

options.

The

weighted-average

yield

available-for-sale

debt

securities

based

amortized

cost

and,

therefore,

does

not

give

effect

changes

fair

value.

The

net

unrealized loss

on available-for-sale

debt securities

is presented

as part

of accumulated

other comprehensive

loss in

the consolidated

statements of financial condition.

The

following

tables

present

the

fair

value

and

gross

unrealized

losses

the

Corporation’s

available-for-sale

debt

securities,

aggregated by

investment category

and length of

time that individual

securities have

been in a

continuous unrealized

loss position, as

of March 31, 2025 and December 31, 2024. The tables also include debt securities for

which an ACL was recorded.

As of March 31, 2025

Less than 12 months

12 months or more

Total

Unrealized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

(In thousands)

U.S. Treasury and U.S. GSEs’

obligations

8,099

1,664,851

57,147

1,672,950

57,182

Puerto Rico government obligation

1,599

960

(1)

1,599

960

MBS:

Residential MBS:

FHLMC

1,188

851,798

155,598

852,986

155,599

GNMA

15,671

196

162,660

24,650

178,331

24,846

FNMA

999,306

151,519

999,306

151,519

CMOs issued or guaranteed by the FHLMC,

FNMA, and GNMA

3,094

184,045

47,197

187,139

47,198

Private label

4,034

1,695

(1)

4,034

1,695

Commercial MBS

20,856

444

132,121

37,671

152,977

38,115

48,908

677

4,000,414

476,437

4,049,322

477,114

(1)

Unrealized losses do not include the credit loss component recorded

as part of the ACL. As of March 31, 2025, the

PRHFA bond and private label MBS

had an ACL of $

0.3

million and

0.2

million, respectively.

As of December 31, 2024

Less than 12 months

12 months or more

Total

Unrealized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

(In thousands)

U.S. Treasury and U.S. GSEs’

obligations

8,005

1,886,046

76,824

1,894,051

76,859

Puerto Rico government obligation

1,620

986

(1)

1,620

986

MBS:

Residential MBS:

FHLMC

36,224

857,492

179,043

893,716

179,128

GNMA

22,281

508

166,470

28,014

188,751

28,522

FNMA

53,325

132

1,012,331

178,991

1,065,656

179,123

CMOs issued or guaranteed by the FHLMC,

FNMA, and GNMA

52,778

248

187,772

52,090

240,550

52,338

Private label

4,195

1,715

(1)

4,195

1,715

Commercial MBS

44,831

823

131,152

40,274

175,983

41,097

217,444

1,831

4,247,078

557,937

4,464,522

559,768

(1)

Unrealized losses do not include

the credit loss component recorded

as part of the ACL.

As of December 31, 2024,

the PRHFA bond

and private label MBS had

an ACL of $

0.3

million

and $

0.2

million, respectively.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Assessment for Credit Losses

Debt securities

issued by

U.S. government

agencies,

U.S. GSEs,

and

the U.S.

Treasury,

including

notes and

MBS, accounted

for

substantially

all of

the total

available-for-sale

portfolio

as of

March 31,

2025, and

the Corporation

expects no

credit losses

on these

securities,

given

the

explicit

and

implicit

guarantees

provided

the

U.S.

federal

government.

Because

the

decline

fair

value

attributable to

changes in

interest rates,

and not

credit quality,

and because

as of

March 31,

2025, the

Corporation did

not have

the

intent to

sell these

U.S. government

and agencies

debt securities

and determined

that it

was likely

that it

will not

be required

to sell

these

securities

before

their

anticipated

recovery,

the

Corporation

does

not

consider

impairments

these

securities

credit

related. The

Corporation’s

credit loss

assessment was

concentrated mainly

on private

label MBS and

on the

Puerto Rico

government

debt security, for

which credit losses are evaluated on a quarterly basis.

Private label MBS

held as part

of the Corporation’s

available for sale

portfolio consist of

trust certificates issued

by an unaffiliated

party

backed

fixed-rate,

single-family

residential

mortgage

loans

the

U.S.

mainland

with

original

FICO

scores

over

700

and

moderate

loan-to-value

ratios (under

%), as

well

as moderate

delinquency

levels.

The interest

rate

these

private label

MBS is

variable, tied

3-month CME Term Secured Overnight Financing Rate (“SOFR”)

plus a

tenor spread

adjustment of

0.26161

% and

the

original

spread

limited

the

weighted-average

coupon

the

underlying

collateral.

The

Corporation

determined

the

ACL

for

private

label

MBS

based

risk-adjusted

discounted

cash

flow

methodology

that

considers

the

structure

and

terms

the

instruments.

The

Corporation

utilized

probability

of default

(“PDs”)

and

loss-given

default

(“LGDs”)

that

considered,

among

other

things, historical

payment performance,

loan-to-value attributes,

and relevant

current and

forward-looking

macroeconomic variables,

such as

regional unemployment

rates and

the housing

price index.

Under this

approach, expected

cash flows

(interest and

principal)

were discounted

at the U.S.

Treasury yield

curve as of

the reporting

date. See

Note 15

– “Fair Value

”

for the significant

assumptions

used in the valuation of the private label MBS as of March 31, 2025 and December

31, 2024.

For the residential

pass-through MBS issued

by the PRHFA

held as part of

the Corporation’s

available-for-sale portfolio

backed by

second

mortgage

residential

loans

Puerto

Rico,

the

ACL

was

determined

based

discounted

cash

flow

methodology

that

considered the structure and

terms of the debt security.

The expected cash flows were

discounted at the U.S. Treasury

yield curve plus

a spread as

of the reporting date

and compared to

the amortized cost. The

Corporation utilized PDs and

LGDs that considered,

among

other

things,

historical

payment

performance,

loan-to-value

attributes,

and

relevant

current

and

forward-looking

macroeconomic

variables, such as

regional unemployment

rates, the housing

price index,

and expected recovery

from the PRHFA

guarantee. PRHFA,

not the

Puerto Rico

government, provides

a guarantee

in the event

of default

and subsequent

foreclosure of

the properties

underlying

the

second

mortgage

loans.

the

event

that

the

second

mortgage

loans

default

and

the

collateral

insufficient

satisfy

the

outstanding

balance

this

residential

pass-through

MBS,

PRHFA’s

ability

honor

such

guarantee

will

depend

on,

among

other

factors,

its

financial

condition

the

time

such

obligation

becomes

due

and

payable.

Deterioration

the

Puerto

Rico

economy

fiscal health of the PRHFA

could impact the value of this security,

resulting in additional losses to the Corporation.

The following table presents

a roll-forward of the ACL on available-for-sale debt securities by major

security type for the quarters

ended March 31, 2025 and 2024:

Quarter Ended March 31,

2025

2024

Private label

MBS

Puerto Rico

Government

Obligation

Total

Private label

MBS

Puerto Rico

Government

Obligation

Total

(In thousands)

Beginning balance

176

345

521

116

395

511

Provision for credit losses – (benefit)

(5)

(69)

ACL on available-for-sale debt securities

176

340

516

116

326

442

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Held-to-Maturity Debt Securities

The

amortized

cost,

gross

unrecognized

gains

and

losses,

estimated

fair

value,

ACL,

weighted-average

yield

and

contractual

maturities of held-to-maturity debt securities as of March 31, 2025 and

December 31, 2024 were as follows:

March 31, 2025

Amortized cost

(1) (2)

Gross Unrecognized

Fair value

Weighted-

Gains

Losses

ACL

average yield%

(Dollars in thousands)

Puerto Rico municipal bonds:

Due within one year

2,297

2,357

4.87

After 1 to 5 years

62,792

2,797

253

65,336

464

7.19

After 5 to 10 years

11,678

771

164

12,285

121

5.07

After 10 years

15,755

275

16,030

252

7.78

Total Puerto Rico municipal bonds

92,522

3,908

422

96,008

843

6.97

MBS:

Residential MBS:

FHLMC certificates:

After 1 to 5 years

11,120

239

10,881

3.03

After 10 years

16,654

880

15,774

4.33

27,774

1,119

26,655

3.81

GNMA certificates:

After 10 years

12,987

605

12,382

3.30

FNMA certificates:

After 10 years

59,962

2,759

57,203

4.19

CMOs issued or guaranteed by

FHLMC, FNMA, and GNMA:

After 10 years

24,833

1,060

23,773

3.49

Total Residential MBS

125,556

5,543

120,013

3.88

Commercial MBS:

After 1 to 5 years

9,209

109

9,100

3.48

After 10 years

85,520

5,140

80,380

1.90

Total Commercial MBS

94,729

5,249

89,480

2.05

Total MBS

220,285

10,792

209,493

3.09

Total held-to-maturity debt securities

312,807

3,908

11,214

305,501

843

4.24

(1)

Excludes accrued interest receivable on held-to-maturity debt

securities that totaled $

2.3

million as of March 31, 2025 reported as part

of accrued interest receivable on loans and investment

securities in the consolidated

statements of financial condition, and excluded from the estimate of credit losses.

(2)

Includes $

150.3

million (fair value - $

148.8

million) that serves as collateral for the uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

December 31, 2024

Amortized cost

(1) (2)

Gross Unrecognized

Fair value

Weighted-

Gains

Losses

ACL

average yield%

(Dollars in thousands)

Puerto Rico municipal bonds:

Due within one year

2,214

134

2,342

5.07

After 1 to 5 years

61,289

2,724

438

63,575

433

7.33

After 5 to 10 years

13,184

811

205

13,790

127

5.79

After 10 years

15,755

146

15,901

236

8.07

Total Puerto Rico municipal bonds

92,442

3,815

649

95,608

802

7.18

MBS:

Residential MBS:

FHLMC certificates:

After 5 to 10 years

12,112

353

11,759

3.03

After 10 years

16,936

1,142

15,794

4.30

29,048

1,495

27,553

3.77

GNMA certificates:

After 10 years

13,472

842

12,630

3.29

FNMA certificates:

After 10 years

61,233

3,786

57,447

4.19

CMOs issued or guaranteed by

FHLMC, FNMA, and GNMA:

After 10 years

25,566

1,321

24,245

3.49

Total Residential MBS

129,319

7,444

121,875

3.86

Commercial MBS:

After 1 to 5 years

9,258

151

9,107

3.48

After 10 years

86,767

5,317

81,450

3.92

Total Commercial MBS

96,025

5,468

90,557

3.88

Total MBS

225,344

12,912

212,432

3.87

Total held-to-maturity debt securities

317,786

3,815

13,561

308,040

802

4.83

(1)

Excludes accrued

interest receivable

on held-to-maturity

debt securities

that totaled

4.1

million as

of December

31, 2024

reported as

part of

accrued interest

receivable on

loans and

investment securities

in the

consolidated statements of financial condition, and excluded from the estimate of credit losses.

(2)

Includes $

198.6

million (fair value - $

192.4

million) that serves as collateral for the uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The

following

tables

present

the

Corporation’s

held-to-maturity

debt

securities’

fair

value

and

gross

unrecognized

losses,

aggregated by

category and length

of time that

individual securities had

been in a

continuous unrecognized

loss position, as

of March

31, 2025 and December 31, 2024, including debt securities for which

an ACL was recorded:

As of March 31, 2025

Less than 12 months

12 months or more

Total

Unrecognized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

(In thousands)

Puerto Rico municipal bonds

20,287

422

20,287

422

MBS:

Residential MBS:

FHLMC certificates

26,655

1,119

26,655

1,119

GNMA certificates

12,382

605

12,382

605

FNMA certificates

57,203

2,759

57,203

2,759

CMOs issued or guaranteed by FHLMC,

FNMA, and GNMA

23,773

1,060

23,773

1,060

Commercial MBS

89,480

5,249

89,480

5,249

Total held-to-maturity debt securities

229,780

11,214

229,780

11,214

As of December 31, 2024

Less than 12 months

12 months or more

Total

Unrecognized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

(In thousands)

Puerto Rico municipal bonds

20,071

649

20,071

649

MBS:

Residential MBS:

FHLMC certificates

27,553

1,495

27,553

1,495

GNMA certificates

12,630

842

12,630

842

FNMA certificates

57,447

3,786

57,447

3,786

CMOs issued or guaranteed by FHLMC,

FNMA, and GNMA

24,245

1,321

24,245

1,321

Commercial MBS

90,557

5,468

90,557

5,468

Total held-to-maturity debt securities

232,503

13,561

232,503

13,561

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The

Corporation

classifies

the

held-to-maturity

debt

securities

portfolio

into

the

following

major

security

types:

MBS

issued

guaranteed by

GSEs and

underlying collateral

and Puerto

Rico municipal

bonds. The

Corporation does

not recognize

an ACL

for MBS

issued or guaranteed by GSEs since they are highly rated by major rating agencies and have a long history of no credit losses. In the case of

Puerto Rico municipal

bonds, the Corporation

determines the ACL

based on the product

of a cumulative

PD and LGD, and

the amortized

cost

basis

the

bonds

over

their

remaining

expected

life

described

Note

–

“Nature

Business

and

Summary

Significant

Accounting Policies,” to the audited financial statements included in the

2024 Annual Report on Form 10-K.

The Corporation

performs periodic

credit quality

reviews on

these issuers.

All of

the Puerto

Rico municipal

bonds were

current as

scheduled contractual payments

as of March

31, 2025. The ACL

of Puerto Rico

municipal bonds was

0.9

million as of

March 31, 2025,

compared to $

0.8

million as of December 31, 2024.

The

following

table

presents

the

activity

the

ACL

for

held-to-maturity

debt

securities

major

security

type

for

the

quarters

ended March 31, 2025 and 2024:

Puerto Rico Municipal Bonds

Quarter Ended March 31,

2025

2024

(In thousands)

Beginning balance

802

2,197

Provision for credit losses – expense (benefit)

(962)

ACL on held-to-maturity debt securities

843

1,235

Credit Quality Indicators:

The

held-to-maturity

debt

securities

portfolio

consisted

GSEs’

MBS,

for

which

the

Corporation

expects

credit

losses,

and

financing arrangements

with Puerto

Rico municipalities

issued in

bond form.

The Puerto

Rico municipal

bonds are

accounted for

securities

but

are

underwritten

loans

with

features

that

are

typically

found

commercial

loans.

Accordingly,

the

Corporation

monitors the

credit quality

of these

municipal bonds

through the

use of

internal credit-risk

ratings, which

are generally

updated on

quarterly

basis.

The

Corporation

considers

municipal

bond

criticized

asset

its

risk

rating

Special

Mention,

Substandard,

Doubtful, or Loss.

Puerto Rico municipal

bonds that do

not meet the

criteria for classification

as criticized assets

are considered

to be

Pass-rated

securities.

For

the

definitions

the

internal-credit

ratings,

see

Note

–

“Debt

Securities,”

the

audited

consolidated

financial statements included in the 2024 Annual Report on Form 10-K.

The

Corporation

periodically

reviews

its Puerto

Rico

municipal

bonds

evaluate

they are

properly

classified,

and to

measure

credit losses on

these securities. The

frequency of these

reviews will depend

on the amount

of the aggregate

outstanding debt, and

the

risk rating classification of the obligor.

The

Corporation

has

Loan

Review

Group

that

reports

directly

the

Corporation’s

Risk

Management

Committee

and

administratively

the

Chief

Risk

Officer.

The

Loan

Review

Group

performs

annual

comprehensive

credit

process

reviews

the

Bank’s

commercial

loan

portfolios,

including

the

above-mentioned

Puerto

Rico

municipal

bonds

accounted

for

held-to-maturity

debt

securities.

The objective

these

loan

reviews is

assess accuracy

of the

Bank’s

determination

and

maintenance

loan

risk

rating

and

its

adherence

lending

policies,

practices

and

procedures.

The

monitoring

performed

this

group

contributes

the

assessment

compliance

with

credit

policies

and

underwriting

standards,

the

determination

the

current

level

credit

risk,

the

evaluation of

the effectiveness

of the credit

management process,

and the identification

of any deficiency

that may arise

in the credit-

granting process. Based

on its findings, the

Loan Review Group recommends

corrective actions, if

necessary,

that help in maintaining

a sound credit process. The Loan Review Group reports the results of the credit

process reviews to the Risk Management Committee.

As of

March 31,

2025 and

December 31,

2024,

all Puerto

Rico

municipal

bonds

classified

as held-to-maturity

were

classified as

Pass.

held-to-maturity debt securities were

on nonaccrual status, 90

days past due and

still accruing, or past due

as of March 31, 2025

and

December

31,

2024.

security

considered

past

due

once

days

contractually

past

due

under

the

terms

the

agreement.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 3 – LOANS HELD FOR INVESTMENT

The

following table

provides information

about

the

loan

portfolio held

for

investment by

portfolio segment

and

disaggregated by

geographic locations

as of the indicated

dates:

As of March 31,

As of December 31,

2025

2024

(In thousands)

Puerto Rico and Virgin Islands region:

Residential mortgage loans, mainly secured by first mortgages

2,334,653

2,323,205

Construction loans

193,791

184,427

Commercial mortgage loans

1,781,402

1,867,894

Commercial and Industrial (“C&I”) loans

2,289,278

2,325,875

Consumer loans

3,736,076

3,750,205

Loans held for investment

10,335,200

10,451,606

Florida region:

Residential mortgage loans, mainly secured by first mortgages

503,193

505,226

Construction loans

40,650

43,969

Commercial mortgage loans

720,287

698,090

C&I loans

1,070,590

1,040,163

Consumer loans

5,478

7,502

Loans held for investment

2,340,198

2,294,950

Total:

Residential mortgage loans, mainly secured by first mortgages

2,837,846

2,828,431

Construction loans

234,441

228,396

Commercial mortgage loans

2,501,689

2,565,984

C&I loans

(1)

3,359,868

3,366,038

Consumer loans

3,741,554

3,757,707

Loans held for investment

(2)

12,675,398

12,746,556

ACL on loans and finance leases

(247,269)

(243,942)

Loans held for investment, net

12,428,129

12,502,614

(1)

As of March 31, 2025 and

December 31, 2024, includes $

830.8

million and $

780.9

million, respectively, of commercial loans

that were secured by real estate and

for which the primary source of repayment at origination was

not dependent upon such real estate.

(2)

Includes accretable fair value net purchase discounts of $

22.8

million and $

23.6

million as of March 31, 2025 and December 31, 2024, respectively.

Various

loans

were

assigned

collateral

for

borrowings,

government

deposits,

time

deposits

accounts,

and

unused

commitments.

The carrying

value of

loans pledged

as collateral

amounted

to $

5.5

billion and

5.4

billion as

of March

31, 2025

and

December 31,

2024, respectively.

As of

March 31, 2025

and December

31, 2024,

loans pledged

as collateral

include $

1.8

billion and

1.7

billion

respectively,

that

were

pledged

the

FHLB

collateral

for

borrowings

and

letters

credit;

3.4

billion

pledged

collateral to

secure borrowing

capacity at

the FED

Discount Window

as of

each of

March 31,

2025 and

December 31,

2024; $

162.7

million pledged

to secure

as collateral

for the uninsured

portion of

government deposits,

compared to

163.5

million as of

December

31, 2024; and $

120.2

million pledged to secure time deposits accounts, compared to $

123.0

million as of December 31, 2024

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The Corporation’s

aging of

the loan

portfolio held

for investment,

as well

as information

about nonaccrual

loans with

no ACL,

portfolio classes as of March 31, 2025 and December 31, 2024 are as follows:

As of March 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-guaranteed

loans

(1)

(2) (4)

71,785

2,529

17,569

91,883

Conventional residential mortgage loans

(1) (3) (5)

2,681,724

26,393

7,053

30,793

2,745,963

Commercial loans:

Construction loans

233,027

1,356

234,441

956

Commercial mortgage loans

(1) (3) (5) (6)

2,476,055

292

1,142

1,045

23,155

2,501,689

14,602

C&I loans

3,333,347

2,169

115

3,893

20,344

3,359,868

845

Consumer loans:

Auto loans

1,961,832

49,747

9,490

15,088

2,036,157

1,875

Finance leases

881,101

15,854

3,571

4,509

905,035

898

Personal loans

339,289

5,464

2,744

1,952

349,449

Credit cards

290,313

4,587

3,438

7,488

305,826

Other consumer loans

140,200

2,221

1,402

1,264

145,087

Total loans held for investment

12,408,673

80,334

50,882

37,048

98,461

12,675,398

19,176

(1)

According to

the Corporation’s

delinquency policy and

consistent with the

instructions for the

preparation of the

Consolidated Financial

Statements for Bank

Holding Companies (FR

Y-9C)

required by

the Federal

Reserve Board, residential mortgage,

commercial mortgage, and construction

loans are considered past

due when the borrower

is in arrears on

two or more monthly

payments. FHA/VA

government-guaranteed loans,

conventional residential mortgage

loans, and commercial

mortgage loans past

due 30-59 days,

but less than

two payments in

arrears, as of

March 31, 2025

amounted to $

7.1

million, $

57.3

million, and $

1.3

million,

respectively.

(2)

It is the Corporation’s policy to report

delinquent Federal Housing Authority (“FHA”)/U.S. Department of Veterans

Affairs (“VA”)

government-guaranteed residential mortgage loans as past-due loans 90 days and still

accruing as

opposed to

nonaccrual loans.

The Corporation

continues accruing

interest on

these loans

until they

have passed

the 15-month

delinquency mark,

taking into

consideration the

FHA interest

curtailment

process. These balances include $

6.8

million of residential mortgage loans guaranteed by the FHA that were over 15 months delinquent as of March 31, 2025.

(3)

Includes purchased credit deteriorated (“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

current expected

credit loss

(“CECL”) methodology on

January 1, 2020

and on an

ongoing basis for

credit loss measurement.

These loans

will continue to

be excluded

from nonaccrual loan

statistics as long

as the

Corporation can reasonably estimate

the timing and amount

of cash flows expected

to be collected on

the loan pools. The

portion of such loans

contractually past due 90 days

or more, amounting to

5.7

million as of

March 31, 2025 ($

4.8

million conventional residential mortgage loans and $

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)

Included rebooked loans,

which were previously

pooled into GNMA

securities, amounting to

6.4

million as

of March 31,

2025. Under the

GNMA program, the

Corporation has the

option but not

the obligation to

repurchase loans

that meet

GNMA’s

specified 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 $

21.4

million as of March 31, 2025, of which $

12.5

million was a commercial mortgage loan and $

8.9

million were residential mortgage loans.

(6)

Includes $

12.5

million related to a nonaccrual commercial mortgage loan with no ACL in the Florida region as of March 31, 2025.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

As of December 31, 2024

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-guaranteed

loans

(1)

(2) (4)

70,529

2,907

18,816

92,252

Conventional residential mortgage loans

(1) (3) (5)

2,666,959

29,867

7,404

31,949

2,736,179

Commercial loans:

Construction loans

227,031

1,365

228,396

968

Commercial mortgage loans

(1) (3)

2,554,226

907

10,851

2,565,984

6,732

C&I loans

3,336,465

1,589

575

6,895

20,514

3,366,038

1,189

Consumer loans:

Auto loans

1,935,995

61,524

13,354

15,305

2,026,178

1,032

Finance leases

875,663

15,879

4,092

3,812

899,446

275

Personal loans

349,588

6,591

3,593

2,136

361,908

Credit cards

303,311

5,366

3,969

8,368

321,014

Other consumer loans

143,957

2,222

1,447

1,535

149,161

Total loans held for investment

12,463,724

93,171

59,804

42,390

87,467

12,746,556

10,199

(1)

According to

the Corporation’s

delinquency policy

and consistent

with the

instructions for

the preparation

of the

Consolidated Financial

Statements for

Bank Holding

Companies (FR

Y-9C)

required by

the Federal

Reserve Board, residential

mortgage, commercial mortgage,

and construction loans

are considered past

due when the

borrower is in

arrears on two

or more monthly

payments. FHA/VA

government-guaranteed loans,

conventional residential mortgage loans,

and commercial mortgage loans

past due 30-59 days,

but less than two payments

in arrears, as of

December 31, 2024 amounted to

8.8

million, $

65.6

million, and $

1.0

million,

respectively.

(2)

It is

the Corporation’s

policy to

report delinquent

FHA/VA

government-guaranteed residential

mortgage loans

as past-due

loans 90

days and

still accruing

as opposed

to nonaccrual

loans. The

Corporation continues

accruing interest on these

loans until they have

passed the 15-month delinquency mark,

taking into consideration the

FHA interest curtailment process.

These balances include $

8.0

million of residential mortgage

loans

guaranteed by the FHA that were over 15 months delinquent as of December 31, 2024.

(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 will

continue to be excluded from nonaccrual loan statistics as long

as the Corporation can reasonably estimate the timing and

amount of cash flows expected to be

collected on the loan pools. The

portion of such loans contractually past

due 90 days or more,

amounting to $

6.2

million as of December 31,

2024 ($

5.3

million conventional residential mortgage loans,

and $

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 previously

pooled into GNMA

securities, amounting to

5.7

million as of

December 31, 2024.

Under the GNMA

program, the Corporation

has the option

but not the

obligation to

repurchase loans that meet GNMA’s

specified 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 $

8.6

million as of December 31, 2024, of which $

8.5

million were residential mortgage loans.

(6)

There were

nonaccrual loans with no ACL in the Florida region as of December 31, 2024.

When

loan

is placed

nonaccrual

status,

any

accrued

but uncollected

interest

income

is reversed

and

charged

against interest

income

and the

amortization of

any net

deferred fees

is suspended.

The amount

of accrued

interest reversed

against interest

income

totaled $

0.9

million and $

0.8

million for the

quarters ended March

31, 2025 and

2024, respectively.

For the quarters

ended March 31,

2025 and 2024, interest income recognized on nonaccrual loans amounted

to $

0.4

million and $

0.6

million, respectively.

As of

March 31,

2025, the

recorded investment

on residential

mortgage loans

collateralized by

residential real

estate property

that

were in

the process

of foreclosure

amounted

to $

27.6

million,

including

8.8

million of

FHA/VA

government-guaranteed

mortgage

loans, and

3.9

million of

PCD loans

acquired prior

to the

adoption, on

January 1,

2020, of

CECL. The

Corporation commences

the

foreclosure

process

residential

real

estate

loans

when

borrower

becomes

120

days

delinquent.

Foreclosure

procedures

and

timelines

vary

depending

whether

the

property

located

judicial

non-judicial

state.

Occasionally,

foreclosures

may

delayed due to, among other reasons, mandatory mediations, bankruptcy,

court delays, and title issues.

Credit Quality Indicators:

The Corporation

categorizes loans

into risk

categories based

on relevant

information

about the

ability of

the borrowers

to service

their debt

such as

current financial

information, historical

payment experience,

credit documentation,

public information,

and current

economic

trends,

among

other

factors.

The

Corporation

analyzes

non-homogeneous

loans,

such

as commercial

mortgage,

C&I,

and

construction loans individually

to classify the loans’ credit

risk. The Corporation

periodically reviews its commercial

and construction

loans

evaluate

they

are

properly

classified.

The

frequency

these

reviews

will

depend

the

amount

the

aggregate

outstanding

debt,

and

the

risk

rating

classification

the

obligor.

addition,

during

the

renewal

and

annual

review

process

applicable credit facilities,

the Corporation evaluates

the corresponding loan

grades. The Corporation

uses the same definition

for risk

ratings as those

described for Puerto

Rico municipal bonds

accounted for

as held-to-maturity debt

securities, as discussed

in Note 3

–

“Debt Securities,” to the audited consolidated financial statements included

in the 2024 Annual Report on Form 10-K.

For residential mortgage and consumer loans, the Corporation evaluates

credit quality based on its interest accrual status.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Based on

the most

recent analysis

performed, the

amortized cost

of commercial

and construction

loans by portfolio

classes and

origination year based

on the internal credit-risk

category as of March

31, 2025, the gross charge

-offs for the quarter

ended March 31,

2025 by

portfolio

classes and

by origination

year,

and the

amortized

cost of

commercial and

construction loans

by portfolio

classes

based on the internal credit-risk category as of December 31, 2024, were

as follows:

As of March 31, 2025

As of

December 31,

2024

Puerto Rico and Virgin Islands Region

Term Loans

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

CONSTRUCTION

Risk Ratings:

Pass

7,459

65,179

99,812

9,823

2,564

3,465

188,302

179,755

Criticized:

Special Mention

Substandard

4,133

1,356

5,489

4,672

Doubtful

Loss

Total construction loans

7,459

65,179

103,945

9,823

2,564

4,821

193,791

184,427

Charge-offs on construction loans

COMMERCIAL MORTGAGE

Risk Ratings:

Pass

12,201

320,262

168,300

348,207

137,398

731,644

5,645

1,723,657

1,804,876

Criticized:

Special Mention

3,694

3,127

30,167

36,988

37,035

Substandard

20,757

25,983

Doubtful

Loss

Total commercial mortgage loans

12,201

320,262

171,994

351,334

137,398

782,568

5,645

1,781,402

1,867,894

Charge-offs on commercial mortgage loans

C&I

Risk Ratings:

Pass

69,210

240,936

371,992

273,170

122,396

415,175

712,273

2,205,152

2,249,680

Criticized:

Special Mention

3,072

10,004

39,512

52,588

44,900

Substandard

191

3,225

13,824

6,305

7,909

31,538

31,295

Doubtful

Loss

Total C&I loans

69,210

241,020

375,255

276,395

146,224

421,480

759,694

2,289,278

2,325,875

Charge-offs on C&I loans

(1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

As of March 31, 2025

As of

December 31,

2024

Term Loans

Florida Region

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

CONSTRUCTION

Risk Ratings:

Pass

17,919

17,098

5,633

40,650

43,969

Criticized:

Special Mention

Substandard

Doubtful

Loss

Total construction loans

17,919

17,098

5,633

40,650

43,969

Charge-offs on construction loans

COMMERCIAL MORTGAGE

Risk Ratings:

Pass

41,522

80,763

28,567

219,070

100,836

177,266

29,137

677,161

672,736

Criticized:

Special Mention

Substandard

17,798

25,328

43,126

25,354

Doubtful

Loss

Total commercial mortgage loans

41,522

80,763

28,567

236,868

100,836

202,594

29,137

720,287

698,090

Charge-offs on commercial mortgage loans

C&I

Risk Ratings:

Pass

15,080

294,989

177,258

174,614

125,880

109,327

162,432

1,059,580

1,029,100

Criticized:

Special Mention

11,010

11,063

Substandard

Doubtful

Loss

Total C&I loans

15,080

294,989

177,258

174,614

125,880

120,337

162,432

1,070,590

1,040,163

Charge-offs on C&I loans

(1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

As of March 31, 2025

As of

December 31,

2024

Term Loans

Total

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

CONSTRUCTION

Risk Ratings:

Pass

7,459

83,098

116,910

9,823

2,564

3,465

5,633

228,952

223,724

Criticized:

Special Mention

Substandard

4,133

1,356

5,489

4,672

Doubtful

Loss

Total construction loans

7,459

83,098

121,043

9,823

2,564

4,821

5,633

234,441

228,396

Charge-offs on construction loans

COMMERCIAL MORTGAGE

Risk Ratings:

Pass

53,723

401,025

196,867

567,277

238,234

908,910

34,782

2,400,818

2,477,612

Criticized:

Special Mention

3,694

3,127

30,167

36,988

37,035

Substandard

17,798

46,085

63,883

51,337

Doubtful

Loss

Total commercial mortgage loans

53,723

401,025

200,561

588,202

238,234

985,162

34,782

2,501,689

2,565,984

Charge-offs on commercial mortgage loans

C&I

Risk Ratings:

Pass

84,290

535,925

549,250

447,784

248,276

524,502

874,705

3,264,732

3,278,780

Criticized:

Special Mention

3,072

10,004

11,010

39,512

63,598

55,963

Substandard

191

3,225

13,824

6,305

7,909

31,538

31,295

Doubtful

Loss

Total C&I loans

84,290

536,009

552,513

451,009

272,104

541,817

922,126

3,359,868

3,366,038

Charge-offs on C&I loans

(1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The following

tables present the

amortized cost of

residential mortgage

loans by portfolio

classes and by

origination year

based on

accrual status as of March 31, 2025

the gross charge-offs for

the quarter ended March 31, 2025

by origination year, and

the amortized

cost of residential mortgage loans by portfolio classes based on accrual

status as of December 31, 2024:

As of March 31, 2025

As of

December 31,

2024

Term Loans

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

Puerto Rico and Virgin Islands Region:

FHA/VA government-guaranteed loans

Accrual Status:

Performing

1,140

1,041

1,575

87,007

90,763

91,124

Non-Performing

Total FHA/VA

government-guaranteed loans

1,140

1,041

1,575

87,007

90,763

91,124

Conventional residential mortgage loans

Accrual Status:

Performing

52,444

187,942

163,584

149,257

61,696

1,607,066

2,221,989

2,208,672

Non-Performing

21,834

21,901

23,409

Total conventional residential mortgage loans

52,444

187,942

163,584

149,324

61,696

1,628,900

2,243,890

2,232,081

Total

Accrual Status:

Performing

52,444

187,942

164,724

150,298

63,271

1,694,073

2,312,752

2,299,796

Non-Performing

21,834

21,901

23,409

Total residential mortgage loans

52,444

187,942

164,724

150,365

63,271

1,715,907

2,334,653

2,323,205

Charge-offs on residential mortgage loans

234

235

(1)

Excludes accrued interest receivable.

As of March 31, 2025

As of

December 31,

2024

Term Loans

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

Florida Region:

FHA/VA government-guaranteed loans

Accrual Status:

Performing

1,120

1,128

Non-Performing

Total FHA/VA

government-guaranteed loans

1,120

1,128

Conventional residential mortgage loans

Accrual Status:

Performing

11,054

88,123

83,245

67,541

40,570

202,648

493,181

495,558

Non-Performing

1,158

1,224

6,510

8,892

8,540

Total conventional residential mortgage loans

11,054

88,123

84,403

68,765

40,570

209,158

502,073

504,098

Total

Accrual Status:

Performing

11,054

88,123

83,245

67,541

40,570

203,768

494,301

496,686

Non-Performing

1,158

1,224

6,510

8,892

8,540

Total residential mortgage loans

11,054

88,123

84,403

68,765

40,570

210,278

503,193

505,226

Charge-offs on residential mortgage loans

(1)

Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

As of March 31, 2025

As of

December 31,

2024

Term Loans

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

Total:

FHA/VA government-guaranteed loans

Accrual Status:

Performing

1,140

1,041

1,575

88,127

91,883

92,252

Non-Performing

Total FHA/VA

government-guaranteed loans

1,140

1,041

1,575

88,127

91,883

92,252

Conventional residential mortgage loans

Accrual Status:

Performing

63,498

276,065

246,829

216,798

102,266

1,809,714

2,715,170

2,704,230

Non-Performing

1,158

1,291

28,344

30,793

31,949

Total conventional residential mortgage loans

63,498

276,065

247,987

218,089

102,266

1,838,058

2,745,963

2,736,179

Total

Accrual Status:

Performing

63,498

276,065

247,969

217,839

103,841

1,897,841

2,807,053

2,796,482

Non-Performing

1,158

1,291

28,344

30,793

31,949

Total residential mortgage loans

63,498

276,065

249,127

219,130

103,841

1,926,185

2,837,846

2,828,431

Charge-offs on residential mortgage loans

234

235

(1)

Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The

following

tables present

the

amortized

cost

consumer

loans

portfolio

classes

and

origination

year

based on

accrual

status as of

March 31,

2025, the

gross charge-offs

for the quarter

ended March

31, 2025 by

portfolio classes

and by

origination year,

and the amortized cost of consumer loans by portfolio classes based on accrual status as of

December 31, 2024:

As of March 31, 2025

As of

December 31,

2024

Term Loans

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

Puerto Rico and Virgin Islands Region:

Auto loans

Accrual Status:

Performing

162,352

601,698

473,335

368,843

245,610

169,131

2,020,969

2,010,690

Non-Performing

1,712

3,941

3,254

2,493

3,687

15,087

15,295

Total auto loans

162,352

603,410

477,276

372,097

248,103

172,818

2,036,056

2,025,985

Charge-offs on auto loans

1,442

3,257

1,997

1,027

981

8,714

Finance leases

Accrual Status:

Performing

65,078

243,748

252,129

180,652

103,616

55,303

900,526

895,634

Non-Performing

194

1,790

1,348

329

848

4,509

3,812

Total finance leases

65,078

243,942

253,919

182,000

103,945

56,151

905,035

899,446

Charge-offs on finance leases

260

1,205

872

370

333

3,040

Personal loans

Accrual Status:

Performing

28,490

117,519

102,811

64,734

14,920

18,842

347,316

358,033

Non-Performing

432

725

530

196

1,952

2,136

Total personal loans

28,490

117,951

103,536

65,264

14,989

19,038

349,268

360,169

Charge-offs on personal loans

924

2,634

1,675

357

408

5,998

Credit cards

Accrual Status:

Performing

305,826

321,014

Non-Performing

Total credit cards

305,826

321,014

Charge-offs on credit cards

6,074

Other consumer loans

Accrual Status:

Performing

17,156

57,023

31,352

14,606

4,138

5,791

8,578

138,644

142,091

Non-Performing

478

328

125

153

126

1,247

1,500

Total other consumer loans

17,156

57,501

31,680

14,731

4,175

5,944

8,704

139,891

143,591

Charge-offs on other consumer loans

1,628

1,456

579

149

165

4,056

Total

Accrual Status:

Performing

273,076

1,019,988

859,627

628,835

368,284

249,067

314,404

3,713,281

3,727,462

Non-Performing

2,816

6,784

5,257

2,928

4,884

126

22,795

22,743

Total consumer loans

273,076

1,022,804

866,411

634,092

371,212

253,951

314,530

3,736,076

3,750,205

Charge-offs on total consumer loans

4,254

8,552

5,123

1,903

1,793

6,239

27,882

(1)

Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

As of March 31, 2025

As of

December 31,

2024

Term Loans

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

Florida Region:

Auto loans

Accrual Status:

Performing

100

183

Non-Performing

Total auto loans

101

193

Charge-offs on auto loans

Finance leases

Accrual Status:

Performing

Non-Performing

Total finance leases

Charge-offs on finance leases

Personal loans

Accrual Status:

Performing

138

181

1,739

Non-Performing

Total personal loans

138

181

1,739

Charge-offs on personal loans

Credit cards

Accrual Status:

Performing

Non-Performing

Total credit cards

Charge-offs on credit cards

Other consumer loans

Accrual Status:

Performing

128

1,184

213

2,125

1,529

5,179

5,535

Non-Performing

Total other consumer loans

128

1,184

213

2,140

1,531

5,196

5,570

Charge-offs on other consumer loans

Total

Accrual Status:

Performing

128

1,322

213

2,225

1,529

5,460

7,457

Non-Performing

Total consumer loans

128

1,322

213

2,241

1,531

5,478

7,502

Charge-offs on total consumer loans

(1)

Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

As of March 31, 2025

As of

December 31,

2024

Term Loans

Amortized Cost Basis by Origination Year

(1)

2025

2024

2023

2022

2021

Prior

Revolving

Loans

Amortized

Cost Basis

Total

(In thousands)

Total:

Auto loans

Accrual Status:

Performing

162,352

601,698

473,335

368,843

245,610

169,231

2,021,069

2,010,873

Non-Performing

1,712

3,941

3,254

2,493

3,688

15,088

15,305

Total auto loans

162,352

603,410

477,276

372,097

248,103

172,919

2,036,157

2,026,178

Charge-offs on auto loans

1,442

3,257

1,997

1,027

997

8,730

Finance leases

Accrual Status:

Performing

65,078

243,748

252,129

180,652

103,616

55,303

900,526

895,634

Non-Performing

194

1,790

1,348

329

848

4,509

3,812

Total finance leases

65,078

243,942

253,919

182,000

103,945

56,151

905,035

899,446

Charge-offs on finance leases

260

1,205

872

370

333

3,040

Personal loans

Accrual Status:

Performing

28,490

117,657

102,854

64,734

14,920

18,842

347,497

359,772

Non-Performing

432

725

530

196

1,952

2,136

Total personal loans

28,490

118,089

103,579

65,264

14,989

19,038

349,449

361,908

Charge-offs on personal loans

924

2,634

1,675

357

408

5,998

Credit cards

Accrual Status:

Performing

305,826

321,014

Non-Performing

Total credit cards

305,826

321,014

Charge-offs on credit cards

6,074

Other consumer loans

Accrual Status:

Performing

17,284

58,207

31,352

14,606

4,351

7,916

10,107

143,823

147,626

Non-Performing

478

328

125

168

128

1,264

1,535

Total other consumer loans

17,284

58,685

31,680

14,731

4,388

8,084

10,235

145,087

149,161

Charge-offs on other consumer loans

1,628

1,456

579

149

165

4,056

Total

Accrual Status:

Performing

273,204

1,021,310

859,670

628,835

368,497

251,292

315,933

3,718,741

3,734,919

Non-Performing

2,816

6,784

5,257

2,928

4,900

128

22,813

22,788

Total consumer loans

273,204

1,024,126

866,454

634,092

371,425

256,192

316,061

3,741,554

3,757,707

Charge-offs on total consumer loans

4,254

8,552

5,123

1,903

1,809

6,239

27,898

(1)

Excludes accrued interest receivable.

As of March 31, 2025 and December 31, 2024, the balance of revolving loans converted

to term loans was

t material.

Accrued

interest

receivable

loans

totaled

52.5

million

March

31,

2025

58.2

million

December

31,

2024),

was

reported as part

of accrued interest receivable

on loans and

investment securities in

the consolidated statements

of financial condition,

and is excluded from the estimate of credit losses.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The

following

tables

present

information

about

collateral

dependent

loans

that

were

individually

evaluated

for

purposes

determining the ACL as of March 31, 2025 and December 31, 2024

As of March 31, 2025

Collateral Dependent Loans -

With Allowance

Collateral Dependent

Loans - With No

Related Allowance

Collateral Dependent Loans - Total

Amortized Cost

Allowance

Amortized Cost

Allowance

(In thousands)

Residential mortgage loans:

Conventional residential mortgage loans

22,951

1,222

22,951

1,222

Commercial loans:

Construction loans

956

Commercial mortgage loans

9,395

134

49,466

58,861

134

C&I loans

15,359

266

5,761

21,120

266

Consumer loans:

Personal loans

Other consumer loans

123

47,856

1,632

56,183

104,039

1,632

As of December 31, 2024

Collateral Dependent Loans -

With Allowance

Collateral Dependent

Loans - With No

Related Allowance

Collateral Dependent Loans - Total

Amortized Cost

Allowance

Amortized Cost

Allowance

(In thousands)

Residential mortgage loans:

Conventional residential mortgage loans

24,163

1,285

24,243

1,285

Commercial loans:

Construction loans

956

Commercial mortgage loans

4,981

41,784

46,765

C&I loans

15,684

552

6,120

21,804

552

Consumer loans:

Personal loans

Other consumer loans

123

44,979

1,892

48,940

93,919

1,892

The

underlying

collateral

for

residential

mortgage

and

consumer

collateral

dependent

loans consisted

single-family

residential

properties,

and for

commercial and

construction loans

consisted primarily

of office

buildings, multifamily

residential properties,

and

retail

establishments.

The

weighted-average

loan-to-value

coverage

for

collateral

dependent

loans

March

31,

2025

was

compared to

% as of

December 31, 2024,

driven by the

aforementioned $

12.5

million nonaccrual

commercial mortgage loan

in the

Florida region with a loan-to-value ratio of

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Purchases and Sales of Loans

the

ordinary

course

business,

the

Corporation

enters

into

securitization

transactions

and

whole

loan

sales

with

GNMA

and

GSEs, such as FNMA and FHLMC. During the quarters ended March

31, 2025 and 2024, loans pooled into GNMA MBS amounted

approximately $

42.2

million and

24.7

million, respectively,

for which

the Corporation

recognized a

net gain

on sale

of $

1.1

million

and

0.9

million,

respectively.

Also,

during

the quarters

ended

March

31,

2025

and 2024,

the

Corporation

sold

approximately

4.1

million and

6.8

million, respectively,

of performing

residential mortgage

loans to

GSEs, for which

the Corporation

recognized a

net

gain on

sale of

0.2

million for

each of

those quarters.

The Corporation’s

continuing involvement

with the

loans that

it sells

consists

primarily of

servicing the

loans. In

addition, the

Corporation agrees

to repurchase

loans if

it breaches

any of

the representations

and

warranties

included

in the

sale agreement.

These representations

and

warranties

are consistent

with

the GSEs’

selling

and

servicing

guidelines (

i.e.

, ensuring that the mortgage was properly underwritten according to established

guidelines).

For loans

pooled into

GNMA MBS,

the Corporation,

as servicer,

holds an

option to

repurchase individual

delinquent loans

issued

on or after

January 1, 2003,

when certain delinquency

criteria are met. This

option gives the

Corporation the unilateral

ability,

but not

the obligation, to

repurchase the delinquent

loans at par without

prior authorization from

GNMA. Since the

Corporation is considered

have

regained

effective

control

over

the

loans,

required

recognize

the

loans

and

corresponding

repurchase

liability

regardless of its

intent to repurchase

the loans. As

of March 31, 2025

and December 31,

2024, rebooked GNMA

delinquent loans that

were included in the residential mortgage loan portfolio amounted

to $

6.4

million and $

5.7

million, respectively.

During

each

the

quarters

ended

March

31,

2025

and

2024,

the

Corporation

repurchased,

pursuant

the

aforementioned

repurchase option, $

0.2

million of loans previously

pooled into GNMA MBS. The

principal balance of these

loans is fully guaranteed,

and

the

risk

loss

the

repurchased

loans

generally

limited

the

difference

between

the

delinquent

interest

payment

advanced to GNMA, which is

computed at the loan’s

interest rate, and the interest

payments reimbursed by FHA, which

are computed

at a

pre-determined

debenture rate.

Repurchases of

GNMA loans

allow the

Corporation, among

other things,

to maintain

acceptable

delinquency rates

on outstanding GNMA

pools and

remain as a

seller and servicer

in good standing

with GNMA.

Historically,

losses

on these repurchases of GNMA delinquent loans have been immaterial

and no provision has been made at the time of sale.

Loan sales to FNMA and FHLMC are without recourse in relation

to the future performance of the loans.

The Corporation’s risk of

loss

with

respect

these

loans

also

minimal

these

repurchased

loans

are

generally

performing

loans

with

documentation

deficiencies.

During the

quarter ended

March 31,

2025, the

Corporation purchased

C&I loan

participations in

the Florida

region totaling

15.0

million.

Meanwhile,

during

the

quarter

ended

March

31,

2024,

the

Corporation

purchased

commercial

loan

participations

the

Florida region

totaling $

23.2

million, which

consisted of

approximately $

13.7

million in

the commercial

mortgage portfolio

and $

9.5

million in the C&I portfolio.

During

the

quarters

ended

March

31,

2025

and

2024,

the

Corporation

recognized

recoveries

2.4

million

and

9.5

million,

respectively,

from

the

bulk

sales

fully

charged-off

consumer

loans

and

finance

leases.

These

recoveries

are

net

repurchase

liability of $

0.1

million and $

0.5

million, respectively, during

such periods.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Loan Portfolio Concentration

The Corporation’s

primary

lending area

is Puerto

Rico. The

Corporation’s

banking subsidiary,

FirstBank, also

lends in

the USVI

and the BVI markets and

in the United States (principally

in the state of Florida).

Of the total gross loans held

for investment portfolio

of $

12.7

billion as

of March

31, 2025,

credit risk

concentration was

approximately

% in

Puerto Rico,

% in

the U.S.,

and

% in

the USVI and the BVI.

March

31,

2025,

the

Corporation

had

192.7

million

outstanding

loans

extended

the

Puerto

Rico

government,

its

municipalities and

public corporations,

compared to

193.3

million as

of December

31, 2024.

As of

March 31,

2025, approximately

132.2

million

consisted

loans

extended

municipalities

Puerto

Rico

that

are

general

obligations

supported

assigned

property

tax

revenues,

and $

22.2

million

loans which

are supported

by one

specific sources

of municipal

revenues. The

vast

majority

revenues

of the

municipalities

included

the

Corporation’s

loan

portfolio

are

independent

budgetary

subsidies

provided

the

Puerto

Rico

central

government.

These

municipalities

are

required

law

levy

special

property

taxes

such

amounts

are

required

satisfy

the

payment

all

their

respective

general

obligation

bonds

and

notes.

addition

loans

extended to municipalities, the

Corporation’s exposure

to the Puerto Rico government

as of March 31, 2025 included

8.8

million in a

loan granted to

an affiliate of

the Puerto Rico

Electric Power Authority

(“PREPA”)

and $

29.5

million in loans

to a public corporation

of the Puerto Rico government.

Moreover,

March

31,

2025,

the

outstanding

balance

construction

loans

funded

through

conduit

financing

structures

support the

federal programs

of Low-Income

Housing Tax

Credit (“LIHTC”)

combined with

Community Development

Block Grant-

Disaster Recovery (“CDBG-DR”)

funding amounted to

62.6

million, compared to

59.2

million as of

December 31, 2024.

The main

objective

these

programs

spur

development

new

rehabilitated

and

affordable

rental

housing.

PRHFA,

program

subrecipient and

conduit issuer,

issues tax-exempt

obligations which

are acquired

by private

financial institutions

and are

required to

co-underwrite with

PRHFA

a mirror

construction loan

agreement for

the specific

project loan

to which

the Corporation

will serve

ultimate lender but where the PRHFA

will be the lender of record.

In addition,

as of March

31, 2025, the

Corporation had

71.5

million in exposure

to residential mortgage

loans that are

guaranteed

the

PRHFA,

government

instrumentality

that

has

been

designated

covered

entity

under

PROMESA,

compared

72.5

million as of

December 31, 2024.

Residential mortgage

loans guaranteed by

the PRHFA

are secured by

the underlying properties

and

the guarantees serve to cover shortfalls in collateral in the event of a borrower default.

The Corporation

also has credit

exposure to

USVI government

entities. As of

March 31, 2025,

the Corporation

had

116.0

million

in loans

to USVI

government public

corporations, compared

to $

100.4

million as

of December

31, 2024.

As of

March 31,

2025, all

loans were currently performing and up to date on principal and interest payments.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Loss Mitigation Program for Borrowers Experiencing

Financial Difficulty

The Corporation provides assistance to

its customers through a loss mitigation

program. Depending upon the

nature of a borrower’s

financial

condition,

restructurings

loan

modifications

through

this

program

are

provided,

well

other

restructurings

individual

C&I,

commercial

mortgage,

construction,

and

residential

mortgage

loans.

The

Corporation

may

also

modify

contractual

terms to comply with regulations regarding the treatment of certain bankruptcy

filings and discharge situations.

The

loan

modifications

granted

borrowers

experiencing

financial

difficulty

that

are

associated

with

payment

delays

typically

include the following:

Forbearance plans –

Payments of either interest

and/or principal are

deferred for a pre-established

period of time, generally

not

exceeding

six

months

any

given

year.

The

deferred

interest

and/or

principal

repaid

either

lump

sum

payment

maturity date or by extending the loan’s

maturity date by the number of forbearance months granted.

Payment

plans

–

Borrowers

are

allowed

pay

the

regular

monthly

payment

plus

the

pre-established

delinquent

amounts

during a period generally not exceeding

six months.

At the end of the payment plan, the

borrower is required to resume making

its regularly scheduled loan payments.

Trial modifications

– These types of loan

modifications are granted for

residential mortgage loans. Borrower

continue making

reduced monthly payments during the

trial period, which is generally up to

six months. The reduced payments that

are made by

the

borrower

during

the

trial

period

will

result

payment

delay

with

respect

the

original

contractual

terms

the

loan

since

the

loan

has

not

yet

been

contractually

modified.

After

successful

completion

the

trial

period,

the

mortgage

loan

contractually modified.

Modifications

the

form

reduction

interest

rate,

term

extension,

other-than-insignificant

payment

delay,

any

combination

these

types

loan

modifications

that

have

occurred

the

current

reporting

period

for

borrower

experiencing

financial

difficulty

are

disclosed

the

tables

below.

Many

factors

are

considered

when

evaluating

whether

there

other-than-

insignificant

payment

delay,

such as

the significance

of the

restructured

payment

amount relative

to the

unpaid

principal balance

collateral value of the loan or the relative significance of the delay to

the original loan terms.

The

below

disclosures

relate

loan

modifications

granted

borrowers

experiencing

financial

difficulty

which

there

was

change

the

timing

and/or

amount

contractual

cash

flows

the

form

any

the

aforementioned

types

modifications,

including

restructurings

that

resulted

more-than-insignificant

payment

delay.

These

disclosures

exclude

1.4

million

restructured

residential

mortgage

loans that

are government

-guaranteed

(e.g., FHA/VA

loans)

and

were modified

during

the quarter

ended March 31, 2025, compared to $

1.1

million for the comparable period in 2024.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The following

tables present

the amortized

cost basis

as of March

31, 2025

and 2024

of loans

modified to

borrowers experiencing

financial difficulty

during the quarters

ended March 31,

2025 and 2024,

by portfolio classes and

type of modification

granted, and the

percentage of these modified loans relative to the total period-end

amortized cost basis of receivables in the portfolio class:

Quarter Ended March 31, 2025

Payment Delay Only

Forbearance

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

117

212

0.01%

Construction loans

Commercial mortgage loans

C&I loans

201

(1)

(3)

331

553

0.02%

Consumer loans:

Auto loans

205

796

(2)

1,056

0.05%

Personal loans

0.03%

Credit cards

965

(3)

965

0.32%

Other consumer loans

133

0.09%

Total modifications

201

986

736

203

796

3,017

Quarter Ended March 31, 2024

Payment Delay Only

Forbearance

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

464

0.02%

Construction loans

Commercial mortgage loans

C&I loans

(3)

0.00%

Consumer loans:

Auto loans

174

125

1,036

(2)

1,335

0.07%

Personal loans

0.01%

Credit cards

548

(3)

548

0.17%

Other consumer loans

140

(2)

171

0.11%

Total modifications

464

570

328

137

1,060

2,559

(1)

Modification consists of a six-month deferral of principal and interest to be repaid on or before the end of the forbearance

plan.

(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 reduction in interest rate and revocation of revolving line privileges.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The

following

tables

present

portfolio

classes

the

financial

effects

the

modifications

granted

borrowers

experiencing

financial difficulty,

other than those

associated to payment

delay,

during the quarters

ended March

31, 2025 and

2024. The financial

effects of the modifications associated to payment delay were discussed

above and, as such, were excluded from the tables below:

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)

Conventional residential mortgage loans

Construction loans

Commercial mortgage loans

C&I loans

14.23

120

Consumer loans:

Auto loans

1.88

Personal loans

3.65

Credit cards

16.01

Other consumer loans

3.14

Quarter Ended March 31, 2024

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)

Conventional residential mortgage loans

Construction loans

Commercial mortgage loans

C&I loans

13.00

Consumer loans:

Auto loans

2.68

Personal loans

8.49

1.79

Credit cards

16.55

Other consumer loans

2.81

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The following

tables present

by portfolio

classes the

performance of

loans modified

during the

last twelve

months ended

March

31, 2025 and 2024 that were granted to borrowers experiencing financial difficulty:

Last Twelve Months Ended March 31, 2025

30-59

60-89

90+

Total

Delinquency

Current

Total

(In thousands)

Conventional residential mortgage loans

981

Construction loans

119

Commercial mortgage loans

126,974

C&I loans

10,519

10,529

Consumer loans:

Auto loans

152

329

3,313

3,642

Personal loans

267

Credit cards

218

117

434

2,651

3,085

Other consumer loans

488

539

Total modifications

320

243

261

824

145,312

146,136

Last Twelve Months Ended March 31, 2024

30-59

60-89

90+

Total

Delinquency

Current

Total

(In thousands)

Conventional residential mortgage loans

1,642

1,679

Construction loans

Commercial mortgage loans

32,384

C&I loans

362

375

Consumer loans:

Auto loans

3,184

3,271

Personal loans

329

340

Credit cards

217

147

456

1,097

1,553

Other consumer loans

457

533

Total modifications

328

109

243

680

39,455

40,135

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 4 – ALLOWANCE

FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES

The following tables present the activity in the ACL on loans and finance leases by portfolio

segment for the indicated periods:

Residential Mortgage

Loans

Construction

Loans

Commercial

Mortgage

C&I

Loans

Consumer Loans

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

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-off

consumer loans and finance leases.

Residential Mortgage

Loans

Construction

Loans

Commercial

Mortgage

C&I

Loans

Consumer Loans

Total

Quarter Ended March 31, 2024

(In thousands)

ACL:

Beginning balance

57,397

5,605

32,631

33,996

132,214

261,843

Provision for credit losses - (benefit) expense

(464)

571

(10)

(3,160)

15,980

12,917

Charge-offs

(516)

(532)

(28,291)

(29,339)

Recoveries

272

5,119

12,730

(1)

18,171

Ending balance

56,689

6,186

32,661

35,423

132,633

263,592

(1)

Includes recoveries totaling $

9.5

million associated with the bulk sale of fully charged-off

consumer loans and finance leases.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The

Corporation

estimates

the

ACL

following

the

methodologies

described

Note

–

“Nature

Business

and

Summary

Significant Accounting

Policies” to

the audited

consolidated financial

statements included

in the

2024 Annual

Report on

Form 10-K,

as updated by the information contained in this report, for each portfolio segment

The Corporation

generally applies

probability weights

to the

baseline and

alternative downside

economic scenarios

to estimate

the

ACL with

the

baseline

scenario

carrying

the highest

weight.

The

scenarios

that are

chosen

each quarter

and

the

weighting

given

each

scenario

for

the

different

loan

portfolio

categories

depend

variety

factors

including

recent

economic

events,

leading

national

and

regional

economic

indicators,

and

industry

trends.

March

31,

2025

and

December

31,

2024,

the

Corporation

applied

100%

probability

the

baseline

scenario

for

the

commercial

mortgage

and

construction

loan

portfolios

since

certain

macroeconomic variables

associated with

commercial real

estate property

performance and

the commercial

real estate

(“CRE”) price

index,

particularly

the

Puerto

Rico

region,

are

expected

continue

perform

favorable

manner

than

the

alternative

downside economic scenario.

As of March 31, 2025, the ACL for loans and finance leases was $

247.3

million, an increase of $

3.4

million, from $

243.9

million as

of December 31, 2024.

The ACL for the first quarter of 2025 includes an increase of

2.7

million in qualitative adjustments due to the

uncertainty in

the economic

environment. The

increase was

mainly related

to the

ACL for

commercial and

construction loans,

which

increased by $

4.7

million, mainly due to the

impact of renewals of lines

of credit, updated financial

information of certain commercial

borrowers,

and

deterioration

the

economic

outlook

the

forecasted

CRE

price

index.

Also,

the

ACL for

residential

mortgage

loans increased by

0.9

million mainly

due to newly

originated loans that

carry a higher

loss rate, partially

offset by improvements

macroeconomic variables, such as the unemployment rate

and the Housing Price Index.

Meanwhile, the

ACL for

consumer loans

decreased by

2.2

million, driven

by improvements

in macroeconomic

variables, mainly

in the projection of the unemployment rate.

Net charge-offs

were $

21.4

million for

the quarter

ended March

31, 2025,

compared to

11.2

million for

the same

period in

2024.

The

net

charge-offs

for

the

quarters

ended

March

31,

2025

and

2024

included

2.4

million

and

9.5

million,

respectively,

recoveries associated

with the

bulk sales

of fully

charged-off consumer

loans and

finance leases.

The increase

in net

charge-offs

was

also driven by a $

5.0

million recovery associated with a C&I loan in the Puerto Rico region during the

first quarter of 2024.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The tables below

present the ACL

related to loans

and finance leases

and the carrying

values of loans

by portfolio segment

as of

March 31, 2025 and December 31, 2024:

As of March 31, 2025

Residential Mortgage

Loans

Construction

Loans

Commercial Mortgage

Loans

C&I

Loans

Consumer Loans

Total

(Dollars in thousands)

Total loans held for investment:

Amortized cost of loans

2,837,846

234,441

2,501,689

3,359,868

3,741,554

12,675,398

Allowance for credit losses

41,640

3,417

24,143

36,464

141,605

247,269

Allowance for credit losses to

amortized cost

1.47

1.46

0.97

1.09

3.78

1.95

As of December 31, 2024

Residential Mortgage

Loans

Construction

Loans

Commercial Mortgage

Loans

C&I

Loans

Consumer Loans

Total

(Dollars in thousands)

Total loans held for investment:

Amortized cost of loans

2,828,431

228,396

2,565,984

3,366,038

3,757,707

12,746,556

Allowance for credit losses

40,654

3,824

22,447

33,034

143,983

243,942

Allowance for credit losses to

amortized cost

1.44

1.67

0.87

0.98

3.83

1.91

addition,

the

Corporation

estimates

expected

credit

losses

over

the

contractual

period

which

the

Corporation

exposed

credit

risk

via

contractual

obligation

extend

credit,

such

unfunded

loan

commitments

and

standby

letters

credit

for

commercial

and

construction

loans,

unless

the

obligation

unconditionally

cancellable

the

Corporation.

See

Note

–

“Regulatory

Matters,

Commitments

and

Contingencies”

for

information

off-balance

sheet

exposures

March

31,

2025

and

December 31,

2024. The

Corporation estimates

the ACL

for these

off-balance

sheet exposures

following the

methodology described

Note

1 –

“Nature

of Business

and

Summary

of Significant

Accounting

Policies”

the audited

consolidated

financial statements

included

in the

2024 Annual

Report on

Form 10-K.

The ACL

for off-balance

sheet credit

exposures amounted

to $

3.1

million as

each of March 31, 2025 and December 31, 2024.

The following

table presents

the activity

in the

ACL for

unfunded loan

commitments and

standby letters

of credit

for the

quarters

ended March 31, 2025 and 2024:

Quarter Ended March 31,

2025

2024

(In thousands)

Beginning balance

3,143

4,638

Provision for credit losses - (benefit) expense

(63)

281

Ending balance

3,080

4,919

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 5

–

OTHER REAL ESTATE

OWNED (“OREO”)

The following table presents the OREO inventory as of the indicated dates:

March 31, 2025

December 31, 2024

(In thousands)

OREO balances, carrying value:

Residential

(1)

11,547

12,897

Construction

451

522

Commercial

3,882

3,887

Total

15,880

17,306

(1)

Excludes $

4.6

million and $

5.2

million as of

March 31, 2025

and December 31,

2024, respectively,

of foreclosures that

met the conditions

of ASC Subtopic

310-40 “Reclassification

Residential Real

Estate Collateralized Consumer

Mortgage Loans upon

Foreclosure,” and

are presented as

a receivable as

part of other

assets in

the consolidated statements

of financial

condition.

See Note 15 – “Fair

Value”

for information on subsequent

measurement adjustments recorded

on OREO properties reported

as part

of “Net gain on OREO operations” in the consolidated statements of

income during the quarters ended March 31, 2025 and 2024.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 6 – NON-CONSOLIDATED

VARIABLE

INTEREST ENTITIES (“VIEs”) AND SERVICING

ASSETS

The Corporation

transfers residential

mortgage loans

in sale

or securitization

transactions in

which it

has continuing

involvement,

including

servicing

responsibilities

and

guarantee

arrangements.

All

such

transfers

have

been

accounted

for

sales

required

applicable accounting guidance.

When

evaluating

the

need

consolidate

counterparties

which

the

Corporation

has

transferred

assets,

with

which

the

Corporation has

entered into

other transactions,

the Corporation

first determines

if the

counterparty is

an entity

for which

a variable

interest

exists.

scope

exception

applicable

and

variable

interest

exists,

the

Corporation

then

evaluates

whether

the

primary beneficiary of the VIE and whether the entity should be consolidated

or not.

Below is a summary of transactions with VIEs for which the Corporation has retained

some level of continuing involvement:

Trust-Preferred

Securities (“TruPS”)

2004,

FBP Statutory

Trusts

and

II,

financing

trusts

that

are

wholly

owned

the Corporation

sold to

institutional

investors

100

million

and

125

million

its

variable-rate

TruPS,

respectively.

Such

proceeds,

along

with

the

proceeds

associated

with

the

Corporation’s purchase

of common securities of $

3.1

million and $

3.9

million, respectively,

were used to purchase $

103.1

million and

128.9

million,

respectively,

Junior

Subordinated

Deferrable

Debentures.

These

debentures,

net

issuance

costs,

are

reflected

part

“Long-term

borrowings”

the

Corporation’s

consolidated

statements

financial

condition.

See

Note

–

“Borrowings” for additional information related to the terms of these debentures.

During the

first quarter of

2025, the Corporation

redeemed $

50.6

million of outstanding

TruPS at

a contractual

call price of

100

further

explained

Note

–

“Stockholders’

Equity.”

This

transaction

resulted

the

full

redemption

the

remaining

18.6

million

TruPS

issued

FBP

Statutory

Trust

and

reduced

32.0

million

the

outstanding

amount

TruPS

issued

FBP

Statutory

Trust

March

31,

2025

and

December

31,

2024,

Junior

Subordinated

Deferrable

Debentures

amounted

11.1

million

and

61.7

million,

respectively.

The

Corporation

expects

execute

the

redemption

the

remaining

junior

subordinated

debentures during the second quarter of 2025.

Private Label MBS

During

2004

and

2005,

an unaffiliated

party,

referred

to in

this subsection

as the

seller,

established

series of

statutory

trusts

securitize

mortgage

loans and

sell trust

certificates

(“private

label

MBS”).

The

seller

initially

provided

the

servicing

for

fee, then

sold and

issued the

private label

MBS in

favor of

FirstBank. Currently,

FirstBank is

the sole

owner of

these private

label MBS,

with

another third-party performing the servicing for a fee. The

FDIC became owner of an interest-only strip (“IO”) upon its intervention

the seller, a

failed financial institution, and,

as such, is entitled to receive

the excess of the interest income

less a servicing fee over

the

variable rate

income that

the Bank

earns on

the securities.

Since no

recourse agreement

exists, the

Bank, as

the sole

holder,

bears all

risks from

losses on

non-accruing loans

and repossessed

collateral. As

of March

31, 2025,

the amortized

cost and

fair value

of these

private label

MBS amounted

to $

5.9

million and

4.0

million, respectively,

which is

included as

part of

the Corporation’s

available-

for-sale

debt

securities

portfolio,

compared

to an

amortized

cost

and

fair value

of $

6.1

million

and

4.2

million,

respectively,

as of

December 31,

2024. As described

in Note 2

– “Debt Securities,”

the ACL on

these private label

MBS amounted

to $

0.2

million as of

each of March 31, 2025 and December 31, 2024.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Servicing Assets, or Mortgage Servicing Rights (“MSRs”)

The

Corporation

typically

transfers

first

lien

residential

mortgage

loans in

conjunction

with

GNMA

securitization

transactions

which the

loans are

exchanged for

cash or

securities that

are readily

redeemed for

cash proceeds

and servicing

rights. The

securities

issued

through

these

transactions

are

guaranteed

GNMA

and,

under

seller/servicer

agreements,

the

Corporation

required

service the

loans in

accordance with

the issuers’

servicing guidelines

and standards.

As of

March 31,

2025, the

Corporation serviced

loans

securitized

through

GNMA

with

principal

balance

2.1

billion.

Also,

certain

conventional

conforming

loans

are

sold

FNMA

FHLMC

with

servicing

retained.

The

Corporation

recognizes

separate

assets

the

rights

service

loans

for

others,

whether those servicing

assets are originated or

purchased. MSRs are included

as part of other

assets in the consolidated

statements of

financial condition.

The changes in MSRs are shown below for the indicated periods:

Quarter Ended March 31,

2025

2024

(In thousands)

Balance at beginning of year

(1)

25,019

26,941

Capitalization of servicing assets

641

460

Amortization

(1,027)

(1,037)

Other

(2)

(9)

Balance at end of period

24,624

26,355

(1)

Net of a valuation allowance of $

thousand as of each of January 1,

2025 and March 31, 2025. There was

valuation allowance recorded for the comparable

periods in

2024.

(2)

Mainly represents adjustments related

to the repurchase of loans serviced for others.

The components

of net servicing

income, included as

part of mortgage

banking activities in

the consolidated statements

of income,

are shown below for the indicated periods:

Quarter Ended March 31,

2025

2024

(In thousands)

Servicing fees

2,678

2,573

Late charges and prepayment penalties

208

189

Other

(1)

(9)

Servicing income, gross

2,877

2,753

Amortization of servicing assets

(1,027)

(1,037)

Servicing income, net

1,850

1,716

(1)

Mainly represents adjustments related to the repurchase of loans serviced

for others.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The Corporation’s

MSRs are subject

to prepayment

and interest rate

risks. Key economic

assumptions used

in determining

the fair

value at the time of sale of the related mortgages for the indicated periods

ranged as follows:

Weighted Average

Maximum

Minimum

Quarter Ended March 31, 2025

Constant prepayment rate:

Government-guaranteed mortgage loans

6.8

16.6

3.9

Conventional conforming mortgage loans

7.1

12.8

2.4

Conventional non-conforming mortgage loans

5.8

9.0

2.4

Discount rate:

Government-guaranteed mortgage loans

11.5

Conventional conforming mortgage loans

9.5

Conventional non-conforming mortgage loans

11.7

12.5

11.0

Quarter Ended March 31, 2024

Constant prepayment rate:

Government-guaranteed mortgage loans

6.9

12.6

3.2

Conventional conforming mortgage loans

6.8

15.1

2.9

Conventional non-conforming mortgage loans

6.0

7.6

4.4

Discount rate:

Government-guaranteed mortgage loans

11.5

Conventional conforming mortgage loans

9.5

Conventional non-conforming mortgage loans

11.5

12.5

11.0

The weighted

averages of the

key economic

assumptions that the

Corporation used

in its valuation

model and the

sensitivity of the

current

fair

value

immediate

and

adverse

changes

those

assumptions

for

mortgage

loans

were

follows

the

indicated dates:

March 31, 2025

December 31, 2024

(In thousands)

Carrying amount of servicing assets

24,624

25,019

Fair value

42,613

43,046

Weighted-average

expected life (in years)

7.60

7.63

Constant prepayment rate (weighted-average annual

rate)

6.36

6.34

Decrease in fair value due to 10% adverse change

858

Decrease in fair value due to 20% adverse change

1,674

1,675

Discount rate (weighted-average annual rate)

10.73

10.72

Decrease in fair value due to 10% adverse change

1,795

1,815

Decrease in fair value due to 20% adverse change

3,457

3,495

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10%

variation in assumptions generally cannot be extrapolated because the relationship between the change in assumption and the change

in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the MSR is

calculated without changing any other assumption. In reality, changes in one factor may result in changes in another (for example,

increases in market interest rates may result in lower prepayments), which may magnify or counteract the sensitivities

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 7 – DEPOSITS

The following table summarizes deposit balances as of the indicated dates:

March 31, 2025

December 31, 2024

(In thousands)

Type of account:

Non-interest-bearing deposit accounts

5,629,383

5,547,538

Interest-bearing checking accounts

4,138,245

4,308,116

Interest-bearing saving accounts

3,448,043

3,530,382

Time deposits

3,124,391

3,007,144

Brokered CDs

482,467

478,118

Total

16,822,529

16,871,298

The following table presents the remaining contractual maturities of time deposits,

including brokered CDs, as of March 31, 2025:

Total

(In thousands)

Three months or less

794,151

Over three months to six months

713,383

Over six months to one year

1,278,655

Over one year to two years

541,594

Over two years to three years

141,983

Over three years to four years

75,668

Over four years to five years

39,722

Over five years

21,702

Total

3,606,858

Total

Puerto

Rico

and

U.S.

time

deposits

with

balances

than

$250,000

amounted

1.6

billion

and

1.5

billion

March 31, 2025

and December 31,

2024, respectively.

This amount does

not include brokered

CDs that are

generally participated

out

brokers

less

than

the

FDIC

insurance

limit.

March

31,

2025

and

December

31,

2024,

unamortized

broker

placement

fees

amounted

1.0

million

and

1.1

million,

respectively,

which

are

amortized

over

the

contractual

maturity

the

brokered CDs under the interest method.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 8 –BORROWINGS

Advances from the Federal Home Loan Bank (“FHLB”)

The following is a summary of the advances from the FHLB as of the indicated dates:

March 31, 2025

December 31, 2024

(In thousands)

Long-term

Fixed

-rate advances from the FHLB

(1)

320,000

500,000

(1)

Weighted-average interest rate of

4.37

% and

4.45

% as of March 31, 2025 and December 31, 2024, respectively.

Advances from the FHLB mature as follows as of the indicated date:

March 31, 2025

(In thousands)

Over three months to six months

30,000

Over six months to one year

90,000

Over two years to three years

200,000

Total

(1)

320,000

(1) Average remaining term to maturity of

1.96

years.

Junior Subordinated Debentures

Junior subordinated debentures, as of the indicated dates, consisted of:

(In thousands)

March 31, 2025

December 31, 2024

Long-term floating rate junior subordinated debentures (FBP Statutory Trust I)

(1)

11,143

43,143

Long-term floating rate junior subordinated debentures (FBP Statutory Trust II)

(2)

18,557

11,143

61,700

(1)

Amount represents

junior subordinated

interest-bearing

debentures

due in

2034 with

a floating

interest rate

2.75

% over

3-month CME Term SOFR

plus a

0.26161

% tenor

spread

adjustment as of March 31, 2025 and December 31, 2024 (

7.31

% as of March 31, 2025 and

7.36

% as of December 31, 2024).

(2)

Amount represents

junior subordinated

interest-bearing

debentures

due in

2034 with

a floating

interest rate

2.50

% over

3-month CME Term SOFR

plus a

0.26161

% tenor

spread

adjustment as of December 31, 2024 (

7.12

% as of December 31, 2024).

See Note

6 –

“Non-Consolidated Variable

Interest Entities

(“VIEs”) and

Servicing Assets”

and Note

11 –

“Stockholders’ Equity”

for additional

information on

junior subordinated

debentures, including

the $

50.6

million redemption

of outstanding

TruPS issued

FBP Statutory Trusts I and II.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 9 – EARNINGS PER COMMON

The calculations of earnings per common share for the quarters ended March 31, 2025

and 2024 are as follows:

Quarter Ended March 31,

2025

2024

(In thousands, except per share information)

Net income attributable to common stockholders

77,059

73,458

Weighted-Average

Average common

shares outstanding

162,934

167,142

Average potential

dilutive common shares

815

656

Average common

shares outstanding - assuming dilution

163,749

167,798

Earnings per common share:

Basic

0.47

0.44

Diluted

0.47

0.44

Earnings

per

common

computed

dividing

net

income

attributable

common

stockholders

the

weighted-average

number

common

issued

and

outstanding.

Basic

weighted-average

common

outstanding

exclude

unvested shares

restricted stock that do not contain non-forfeitable dividend rights

Potential dilutive

common

shares consist

of unvested

shares of

restricted

stock

and

performance

units (if

any

of the

performance

conditions

are

met

the

end

the

reporting

period)

that

not

contain

non-forfeitable

dividend

equivalent

rights

using the

treasury stock

method. This

method assumes

that proceeds

equal to

the amount

of compensation

cost attributable

to future

services

used

repurchase

the

open

market

the

average

market

price

for

the

period.

The

difference

between

the

number

potential

dilutive

issued

and

the

purchased

added

incremental

the

actual

number

outstanding

compute

diluted

earnings

per

share.

Unvested

restricted

stock

outstanding

during

the

period

that

result

lower potentially

dilutive shares issued

than shares purchased

under the

treasury stock method

are not included

in the computation

dilutive

earnings

per

since

their

inclusion

would

have an

antidilutive

effect

earnings

per

share.

There

were

antidilutive

shares of common stock during the quarters ended March 31, 2025

and 2024.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 10 – STOCK-BASED

COMPENSATION

The First Bancorp

Omnibus Incentive

Plan (the “Omnibus

Plan”), which is

effective until

May 24, 2026,

provides for equity-based

and non-equity-based

compensation incentives

(the “awards”).

The Omnibus

Plan authorizes

the issuance

of up

14,169,807

of common

stock, subject

to adjustments

for stock

splits, reorganizations

and other

similar events.

As of

March 31,

2025, there

were

1,981,258

authorized shares

of common

stock available

for issuance

under the

Omnibus Plan.

The Corporation’s

Board of

Directors,

based on

the recommendation

of the

Compensation

and Benefits

Committee of

the Board,

has the

power and

authority to

determine

those

eligible

receive

awards

and

establish

the

terms

and

conditions

any

awards,

subject

various

limits

and

vesting

restrictions that apply to individual and aggregate awards.

Restricted Stock

Under the

Omnibus Plan,

the Corporation

may grant

restricted stock

to plan

participants, subject

to forfeiture

upon the

occurrence

of certain

events until

the dates

specified in

the participant’s

award agreement.

While the

restricted stock

is subject

to forfeiture

and

does

not

contain

non-forfeitable

dividend

rights,

participants

may

exercise

full

voting

rights

with

respect

the

restricted

stock

granted

them.

The

fair

value

the

restricted

stock

granted

was

based

the

market

price

the

Corporation’s

common

stock on

the date

of the

respective grant.

The shares

of restricted

stocks granted

to employees

are subject

to the

following

vesting period:

fifty percent

(

%) of

those shares

vest on

the two-year

anniversary of

the grant

date and

the remaining

% vest

the three-year

anniversary of

the grant

date. The

shares of

restricted stock

granted to

directors are

generally subject

to vesting

on the

one-year anniversary of the grant date.

The following table summarizes the restricted stock activity under the Omnibus

Plan during the quarters ended March 31, 2025

and 2024:

Quarter ended

March 31, 2025

March 31, 2024

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

1,007,621

14.39

889,642

12.30

Granted

(1)

447,631

18.35

398,013

17.35

Forfeited

(2,180)

15.22

(1,905)

12.14

Vested

(364,677)

12.44

(252,504)

12.26

Unvested shares outstanding at end of period

1,088,395

16.67

1,033,246

14.26

(1)

For the quarter 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

quarter ended March 31, 2024, includes

2,280

shares of restricted

stock awarded to independent directors and

395,733

shares of restricted stock awarded to employees, of which

84,122

shares were granted to retirement-eligible employees and thus

charged to earnings as of the grant date.

For the quarters

ended March 31,

2025 and 2024,

the Corporation recognized

3.1

million and $

2.4

million, respectively,

of stock-

based compensation

expense related

to restricted

stock awards.

As of

March 31,

2025,

there was

9.4

million

of total

unrecognized

compensation

cost

unvested

restricted

stock

that

the

Corporation

expects

recognize

over

weighted-average

period of

2.0

years.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Performance Units

Under the Omnibus Plan, the Corporation may award

performance units to participants, with each unit representing

the value of one

the

Corporation’s

common

stock.

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.

The following

table summarizes

the performance

units activity under

the Omnibus

Plan during

the quarters

ended March

31, 2025

and 2024:

Quarter ended

March 31, 2025

March 31, 2024

Number

Weighted -

Number

Weighted -

Average

Performance

Grant Date

Performance

Grant Date

Units

Fair Value

Units

Fair Value

Performance units at beginning of year

549,032

14.37

534,261

12.25

Additions

(1)

160,744

18.66

165,487

18.39

Vested

(2)

(166,669)

13.15

(150,716)

11.26

Performance units at end of period

543,107

16.01

549,032

14.37

(1)

Units granted during the quarters ended March 31, 2025 and 2024

are based on the achievement of the Relative TSR and TBVPS

performance goals during a three-year performance cycle

beginning January 1, 2025 and January 1, 2024, respectively,

and ending on December 31, 2027 and December 31, 2026,

respectively.

(2)

Units vested during the quarters ended March 31, 2025 and

2024 are related to performance units granted in 2022 and 2021, respectively,

that met the pre-established target and were

settled with shares of common stock reissued from treasury shares.

The

fair

value

the

performance

units

awarded,

that

was

based

the

TBVPS

goal

component,

was

calculated

based

the

market

price

the

Corporation’s

common

stock

the

respective

date

the

grant

and

assuming

attainment

100%

target

opportunity. As of March

31, 2025, there have been no changes in management’s

assessment of the probability that the pre-established

TBVPS goal will be

achieved;

as such, no

cumulative adjustment to

compensation expense has

been recognized.

The fair value of

the

performance units awarded, that

was based on the Relative

TSR component, was calculated

using a Monte Carlo simulation.

Since the

Relative

TSR component

is considered

a market

condition,

the

fair value

of the

portion

the award

based

on Relative

TSR is

not

revised subsequent to grant date based on actual performance.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The following

table summarizes

the valuation

assumptions used

to calculate

the fair

value of

the Relative

TSR component

of the

performance units granted under the Omnibus Plan during the quarters

ended March 31, 2025 and 2024:

Quarter Ended March 31,

2025

2024

Risk-free interest rate

(1)

3.92

4.41

Correlation coefficient

74.96

73.80

Expected dividend yield

(2)

Expected volatility

(3)

31.94

34.65

Expected life (in years)

2.79

2.78

(1)

Based on the yield on zero-coupon U.S. Treasury

Separate Trading of Registered Interest and

Principal of Securities as of the grant date for a period equal to the simulation

term.

(2)

Assumes that dividends are reinvested at each ex-dividend date.

(3)

Calculated based on the historical volatility of the Corporation's

stock price with a look-back period equal to the simulation

term using daily stock prices.

For the quarters

ended March 31,

2025 and 2024,

the Corporation recognized

0.6

million and $

0.5

million, respectively,

of stock-

based

compensation

expense

performance

units.

March

31,

2025,

there

was

5.9

million

total

unrecognized

compensation cost

related to unvested

performance units that

the Corporation

expects to recognize

over a weighted

-average period of

2.3

years.

Shares withheld

During the

first quarter

of 2025,

the Corporation

withheld

182,249

shares (first

quarter of

2024 –

136,038

shares) of

the restricted

stock and

performance

units that

vested during

such period

to cover

the participants’

payroll and

income tax

withholding liabilities;

these

are

held

treasury

shares.

The

Corporation

paid

cash

any

fractional

salary

stock

which

officer

was

entitled.

the

consolidated

financial

statements,

the

Corporation

presents

withheld

for

tax

purposes

common

stock

repurchases.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 11 – STOCKHOLDERS’

EQUITY

Repurchase Program

July

22,

2024,

the

Corporation

announced

that

its

Board

Directors

approved

repurchase

program

under

which

the

Corporation

may

repurchase

250

million

that

could

include

repurchases

common

stock

and/or

junior

subordinated

debentures. Under

this program,

the Corporation

repurchased

1,194,567

shares of common

stock through

open market

transactions at

an average price of

18.21

for a total cost of approximately

21.8

million during the first

quarter of 2025. In

addition, the Corporation

redeemed

50.6

million

junior

subordinated

debentures.

March

31,

2025,

the

Corporation

has

remaining

authorization

approximately $

127.7

million, which it expects to execute during the remainder of 2025.

From

April

2025

May

2025,

the

Corporation

repurchased

1,556,440

common

stock

for

total

cost

approximately $

27.7

million. As of May 5, 2025, the Corporation has remaining authorization

of approximately $

100.0

million.

Repurchases

under

the

program

may

executed

through

open

market

purchases,

accelerated

repurchases,

privately

negotiated

transactions

or plans,

including

plans complying

with Rule

10b5-1

under

the Exchange

Act, and/or

redemption of

junior

subordinated

debentures, and

will be

conducted

in accordance

with applicable

legal and

regulatory requirements

The Corporation

’s

repurchase

program

subject

various

factors,

including

the

Corporation’s

capital

position,

liquidity,

financial

performance

and

alternative uses

of capital,

stock trading

price, and

general market

conditions. The

repurchase program

does not

obligate it to

acquire

any

specific

number

and

does

not

have

expiration

date.

The

repurchase

program

may

modified,

suspended,

terminated

at any

time at

the Corporation’s

discretion. Any

repurchased shares

of common

stock are

expected to

be held

as treasury

shares.

The

Corporation’s

holding

company

has no

operations

and

depends

on dividends,

distributions

and

other

payments from

its

subsidiaries to fund dividend payments, stock repurchases, and to

fund all payments on its obligations, including debt obligations.

Common Stock

The following table shows the changes in shares of common stock outstanding for

the quarters ended March 31, 2025 and 2024:

Total

Number of Shares

Quarter Ended March 31,

2025

2024

Common stock outstanding, beginning of year

163,868,877

169,302,812

Common stock repurchased

(1)

(1,376,816)

(3,142,589)

Common stock reissued under stock-based compensation plan

614,300

548,729

Restricted stock forfeited

(2,180)

(1,905)

Common stock outstanding, end of period

163,104,181

166,707,047

(1)

For the quarters ended March 31, 2025 and 2024 includes

182,249

and

136,038

shares, respectively, of common stock

surrendered to cover officers’ payroll and income

taxes.

For

the

quarters

ended

March

31,

2025

and

2024,

total

cash

dividends

declared

common

stock

amounted

29.6

million ($

0.18

per share)

and $

26.9

million ($

0.16

per share),

respectively.

April 24, 2025

, the

Corporation’s

Board of

Directors

declared a quarterly

cash dividend of

0.18

per common share.

The dividend is

payable on

June 13, 2025

to shareholders of

record at

the close

of business

May 29, 2025

. The

Corporation intends

to continue

to pay

quarterly dividends

on common

stock. However,

the

Corporation’s

common

stock

dividends,

including

the

declaration,

timing,

and

amount,

remain

subject

consideration

and

approval by the Corporation’s Board

of Directors at the relevant times.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Preferred Stock

The Corporation

has

50,000,000

authorized shares of

preferred stock with

a par value

of $

1.00

, subject to

certain terms. This

stock

may

issued

series

and

the

each

series

have

such

rights

and

preferences

are

fixed

the

Corporation’s

Board

Directors

when

authorizing

the

issuance

that

particular

series

and

are

redeemable

the

Corporation’s

option.

preferred stock were outstanding as of March 31, 2025 and December

31, 2024.

Treasury Stock

The following table shows the changes in shares of treasury stock for the quarters

ended March 31, 2025 and 2024:

Total

Number of Shares

Quarter Ended March 31,

2025

2024

Treasury stock, beginning of year

59,794,239

54,360,304

Common stock repurchased

1,376,816

3,142,589

Common stock reissued under stock-based compensation plan

(614,300)

(548,729)

Restricted stock forfeited

2,180

1,905

Treasury stock, end of period

60,558,935

56,956,069

FirstBank Statutory Reserve (Legal Surplus)

The

Puerto

Rico

Banking

Law

1933,

amended

(the

“Puerto

Rico

Banking

Law”),

requires

that

minimum

FirstBank’s

net income

for

the year

be transferred

to a

legal surplus

reserve

until such

surplus

equals the

total of

paid-in-capital

common and preferred

stock. Amounts transferred

to the legal surplus

reserve from retained

earnings are not available

for distribution

to the Corporation without the

prior consent of the Puerto

Rico Commissioner of Financial Institutions.

The Puerto Rico Banking Law

provides that, when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over

receipts must be charged against the undistributed profits of the bank, and the balance, if any, must be charged against the legal

surplus reserve, as a reduction thereof. If 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’s

legal surplus

reserve, included

as part

retained earnings in

the Corporation’s

consolidated statements of

financial condition, amounted

to $

230.2

million as of each

of March

31, 2025 and December 31, 2024. There were

transfers to the legal surplus reserve during the quarter ended March 31, 2025.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 12 – ACCUMULATED

OTHER COMPREHENSIVE LOSS

The

following

table

presents

the

changes

accumulated

other

comprehensive

loss

for

the

quarters

ended

March

31,

2025

and

2024:

Changes in Accumulated Other Comprehensive

Loss by Component

(1)

Quarter ended March 31,

2025

2024

(In thousands)

Unrealized net holding losses on available-for-sale debt securities:

Beginning balance

(567,338)

(640,552)

Other comprehensive income (loss)

(2)

84,061

(15,065)

Ending balance

(483,277)

(655,617)

Adjustment of pension and postretirement benefit plans:

Beginning balance

782

1,382

Other comprehensive income

Ending balance

782

1,382

(1)

All amounts presented are net of tax.

(2)

Net unrealized holding gains (losses) on available-for-sale

debt securities have no tax effect because securities

are either tax-exempt, held by an IBE,

or have a full deferred

tax asset valuation allowance.

NOTE 13 – EMPLOYEE BENEFIT PLANS

The Corporation

maintains two frozen

qualified noncontributory

defined benefit pension

plans (the “Pension

Plans”), and

a related

complementary

post-retirement

benefit

plan

(the

“Postretirement

Benefit

Plan”)

covering

medical

benefits

and

life

insurance

after

retirement

that

obtained

the

Banco

Santander

Puerto

Rico

(“BSPR”)

acquisition

September

2020.

One

defined

benefit

pension

plan covers

substantially all

of BSPR’s

former

employees who

were active

before January

1, 2007,

while

the other

defined

benefit pension plan covers personnel of an institution previously acquired

by 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 for the indicated

periods:

Affected Line Item

in the Consolidated

Quarter Ended

Statements of Income

March 31, 2025

March 31, 2024

(In thousands)

Net periodic benefit, pension plans:

Interest cost

Other expenses

928

901

Expected return on plan assets

Other expenses

(998)

(1,018)

Net periodic benefit, pension plans

(70)

(117)

Net periodic cost, postretirement plan

Other expenses

Net periodic benefit

(63)

(101)

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 14 –

INCOME TAXES

The Corporation is subject to Puerto Rico income tax on

its income from all sources. Under the Puerto Rico Internal

Revenue Code,

as amended (the “PR Tax

Code”), the Corporation and its subsidiaries are treated as

separate taxable entities and are not entitled to file

consolidated tax returns. However,

certain subsidiaries that are

organized as limited liability

companies with a partnership

election are

treated as

pass-through entities

for Puerto

Rico tax

purposes. Furthermore,

the Corporation

conducts business

through certain

entities

that

have

special

tax

treatments,

including

doing

business

through

IBE

unit

the

Bank

and

through

FirstBank

Overseas

Corporation,

each

which

are

generally

exempt

from

Puerto

Rico

income

taxation

under

the

International

Banking

Entity

Act

Puerto Rico

(“IBE Act”),

and through

a wholly-owned

subsidiary that

engages in

certain Puerto

Rico qualified

investing and

lending

activities that have certain tax advantages under Act 60 of 2019.

For the

first quarter

of 2025,

the Corporation

recorded an

income tax

expense of

23.2

million, compared

to $

23.9

million for

the

same period

in 2024.

The Corporation’s

estimated annual

effective

tax rate,

excluding

entities with

pre-tax

losses from

which

a tax

benefit cannot

be recognized

and discrete

items, was

23.7

% for

the first

quarter of

2025, compared

24.3

% for

the same

period in

2024.

The decrease in effective tax rate was due to a higher proportion of

exempt to taxable income.

Income

tax

expense

also

includes

USVI

income

taxes,

well

applicable

U.S.

federal

and

state

taxes.

Puerto

Rico

corporation, FirstBank

is treated as

a foreign corporation

for U.S. and

USVI income tax

purposes and is

generally subject to

U.S. and

USVI income

tax only

on its

income from

sources within

the U.S.

and USVI

or income

effectively

connected with

the conduct

of a

trade or business in those jurisdictions.

Such tax paid in the U.S. and USVI

is also creditable against the Corporation’s

Puerto Rico tax

liability,

subject to

certain conditions

and limitations.

For the

first quarter

of 2025,

FirstBank incurred

current income

tax expense

approximately $

2.6

million related to its U.S. operations, compared to $

2.2

million for the comparable period in 2024.

March

31,

2025,

the

Corporation

had

net

deferred

tax

asset

134.3

million,

net

valuation

allowance

108.7

million against

the deferred

tax asset,

compared to

a net

deferred tax

asset of

136.4

million, net

of a

valuation allowance

of $

119.1

million, as of

December 31, 2024.

The net deferred

tax asset of

the Corporation’s

banking subsidiary,

FirstBank, amounted

to $

134.3

million as of March 31, 2025, net of a valuation allowance of $

88.2

million, compared to a net deferred tax asset of $

136.4

million, net

of a

valuation allowance

of $

98.5

million, as

of December

31, 2024.

The decrease

in the

net deferred

tax asset

was mainly

related to

the usage of

alternative minimum

tax credits. Meanwhile,

the decrease

in the valuation

allowance was related

primarily to changes

the market value

of available-for-sale debt

securities which resulted

in an equal change

in the net deferred

tax asset without

impacting

earnings.

The Corporation

maintains a

full valuation

allowance for

its deferred

tax assets

associated with

capital loss

carryforwards,

NOL carryforwards and unrealized losses of available-for-sale debt

securities.

See Note 20

– “Income Taxes,”

to the audited

consolidated financial statements

included in the

2024 Annual Report

on Form 10-K

for information

on the

tax treatment

of net

operating loss

(“NOL”) carryforwards

and dividend

received deduction

under the

PR Tax

Code and the limitation under Section 382 of the U.S. Internal Revenue

Code.

The Corporation

accounts for

uncertain tax

positions under

the provisions

of ASC

Topic

740, “Income

Taxes.”

The Corporation’s

policy

report

interest

and

penalties

unrecognized

tax

positions

income

tax

expense.

March

31,

2025,

the

Corporation had

0.4

million in

uncertain tax

positions, which

includes $

0.1

million of

accrued interest

and penalties,

acquired from

BSPR, which, if

recognized, would

decrease the

effective income

tax rate in

future periods.

The amount

of unrecognized

tax benefits

may increase or

decrease in the future

for various reasons,

including adding amounts

for current tax year

positions, expiration of

open

income

tax returns

due

to the

statute of

limitations,

changes

in management’s

judgment about

the level

of uncertainty,

the status

examinations,

litigation

and

legislative activity,

and

the addition

or elimination

of uncertain

tax positions.

The statute

of limitations

under the

PR Tax

Code is

four years

after a

tax return

is due

or filed,

whichever is

later; the

statute of

limitations for

U.S. and

USVI

income

tax

purposes

three

years

after

tax

return

due

filed,

whichever

later.

The

completion

audit

the

taxing

authorities

the

expiration

the

statute

limitations

for

given

audit

period

could

result

adjustment

the Corporation’s

liability for

income taxes. Any

such adjustment could

be material to

the results of

operations for any

given quarterly

or annual period

based, in part, upon

the results of operations

for the given period.

For U.S. and USVI

income tax purposes,

all tax years subsequent

2020 remain open to examination. For Puerto Rico tax purposes, all tax

years subsequent to 2019 remain open to examination.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 15 –

FAIR VALUE

Fair Value

Measurement

ASC Topic

820, “Fair Value

Measurement,” defines

fair value as the

exchange price that

would be received

for an asset or

paid to

transfer

liability

(an

exit

price)

the

principal

most

advantageous

market

for

the

asset

liability

orderly

transaction

between market

participants on

the measurement

date. This

guidance also

establishes a

fair value

hierarchy for

classifying assets

and

liabilities, which is based on

whether the inputs to

the valuation techniques used

to measure fair value are

observable or unobservable.

One of three levels of inputs may be used to measure fair value:

Level 1

Valuations

Level

assets

and

liabilities

are

obtained

from

readily-available

pricing

sources

for

market

transactions involving identical assets or liabilities in active markets.

Level 2

luations of

Level 2 assets

and liabilities

are based on

observable inputs

other than Level

1 prices, such

as quoted

prices for similar assets or liabilities, or other inputs that are

observable or can be corroborated by observable market

data for substantially the full term of the assets or liabilities.

Level 3

luations of Level 3 assets and

liabilities are based on unobservable

inputs that are supported by

little or no market

activity and

are significant to

the fair value

of the assets

or liabilities. Level

3 assets and

liabilities include financial

instruments

whose value

is determined

by using

pricing models

for

which

the determination

of fair

value

requires

significant management judgment as to the estimation.

See Note 23 –

“Fair Value,”

to the audited consolidated

financial statements included

in the 2024 Annual

Report on Form 10-K

for

a description of the valuation methodologies used to measure financial instruments

at fair value on a recurring basis.

There

were

transfers

assets

and

liabilities

measured

fair

value

between

Level

and

Level

measurements

during

the

quarters ended March 31, 2025 and 2024.

Assets and liabilities measured at fair value on a recurring basis are summarized below as of

the indicated dates:

As of March 31, 2025

As of December 31, 2024

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

19,612

59,189

Noncallable U.S. agencies debt securities

445,864

533,296

Callable U.S. agencies debt securities

1,212,507

1,307,035

MBS

2,628,268

4,034

(1)

2,632,302

2,658,967

4,195

(1)

2,663,162

Puerto Rico government obligation

1,599

1,620

Other investments

1,000

Equity securities

4,956

4,886

Derivative assets

319

318

Liabilities:

Derivative liabilities

262

150

(1) Related to private label MBS.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The table below presents a reconciliation of the

beginning and ending balances of all assets measured at fair

value on a recurring

basis using significant unobservable inputs (Level 3) for the quarters

ended March 31, 2025 and 2024:

Quarter Ended March 31,

Level 3 Available-for-Sale

Debt Securities

(1)

2025

2024

(In thousands)

Beginning balance

6,815

6,200

Total gains:

Included in other comprehensive income (unrealized)

239

Included in earnings (unrealized)

(2)

Principal repayments and amortization

(233)

Ending balance

6,633

6,275

(1)

Amounts mostly related to private label MBS.

(2)

Changes in unrealized gains included in earnings were recognized within

provision for credit losses - expense and

relate to assets still held as of the reporting date.

The

tables

below

present

quantitative

information

for

significant

assets

measured

fair

value

recurring

basis

using

significant unobservable inputs (Level 3) as of the indicated dates:

March 31, 2025

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted

Average

Minimum

Maximum

(Dollars in thousands)

Available-for-sale

debt securities:

Private label MBS

4,034

Discounted cash flows

Discount rate

16.2%

Prepayment rate

1.6%

3.1%

2.5%

Projected cumulative loss rate

0.1%

9.8%

4.2%

Puerto Rico government obligation

1,599

Discounted cash flows

Discount rate

11.6%

Projected cumulative loss rate

24.0%

December 31, 2024

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted

Average

Minimum

Maximum

(Dollars in thousands)

Available-for-sale

debt securities:

Private label MBS

4,195

Discounted cash flows

Discount rate

16.6%

Prepayment rate

0.0%

5.7%

3.2%

Projected cumulative loss rate

0.1%

10.1%

4.9%

Puerto Rico government obligation

1,620

Discounted cash flows

Discount rate

11.5%

Projected cumulative loss rate

23.9%

Information about Sensitivity to Changes in Significant Unobservable Inputs

Private label

MBS: The

significant unobservable

inputs in

the valuation

include probability

of default,

the loss

severity

assumption,

and prepayment

rates. Shifts

in those

inputs would

result in different

fair value

measurements. Increases

in the probability

of default,

loss

severity

assumptions,

and

prepayment

rates

isolation

would

generally

result

adverse

effect

the

fair

value

the

instruments. The Corporation modeled meaningful and possible

shifts of each input to assess the effect on the fair value estimation.

Puerto Rico Government Obligation:

The significant unobservable input used in the

fair value measurement is the assumed loss rate of

the

underlying

residential

mortgage

loans

that

collateralize

pass-through

MBS

guaranteed

the

PRHFA.

significant

increase

(decrease) in

the assumed

rate would

lead to

a (lower)

higher fair

value estimate.

See Note

2 –

“Debt Securities”

for information

the methodology used to calculate the fair value of this debt security.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Additionally, fair value

is used on a non-recurring basis to evaluate certain assets in accordance with GAAP.

For the quarters ended March 31, 2025 and 2024, the Corporation recorded

losses 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,

2025

2024

2025

2024

(In thousands)

Level 3:

Loans receivable

(1)

4,647

9,654

(164)

(41)

OREO

(2)

335

859

(24)

(163)

(1)

Consists mainly of

collateral dependent

commercial and construction

loans. The

Corporation generally

measured losses

based on the

fair value of

the collateral.

The Corporation derived

the fair values from

external appraisals that

took into consideration

prices in observed

transactions involving similar

assets in similar

locations but adjusted

for specific characteristics

and

assumptions of the collateral (e.g.,

absorption rates), which are not

market observable. The adjustment applied

was of

% for the quarter ended March

31, 2025. There were no significant

adjustments applied on appraisals for the quarter ended March 31,

2024.

(2)

The Corporation

derived the

fair values

from appraisals

that took

into consideration

prices in

observed transactions

involving similar

assets in

similar locations

but adjusted

for specific

characteristics and assumptions of

the properties (e.g., absorption

rates and net operating

income of income producing

properties), which are

not market observable. Losses

were related to

market valuation adjustments

after the transfer of

the loans to the

OREO portfolio. The adjustments

applied ranged from

% to

% for the quarter

ended March 31, 2025

and from

% to

% for the quarter ended March 31, 2024.

See Note 23 –

“Fair Value,”

to the audited

consolidated financial statements

included in the

2024 Annual Report

on Form 10-K

for

qualitative

information

regarding

the

fair

value

measurements

for

Level

financial

instruments

measured

fair

value

nonrecurring basis.

The

following

tables

present

the

carrying

value,

estimated

fair

value

and

estimated

fair

value

level

the

hierarchy

financial

instruments as of the indicated dates:

Total Carrying Amount

in Statement of

Financial Condition as

of March 31, 2025

Fair Value Estimate as

March 31, 2025

Level 1

Level 2

Level 3

(In thousands)

Assets:

Cash and due from banks and money market investments

(amortized cost)

1,328,275

Available-for-sale debt

securities (fair value)

4,312,884

19,612

4,286,639

6,633

Held-to-maturity debt securities:

Held-to-maturity debt securities (amortized cost)

312,807

Less: ACL on held-to-maturity debt securities

(843)

Held-to-maturity debt securities, net of ACL

311,964

305,501

209,493

96,008

Equity securities (amortized cost)

39,857

(1)

Other equity securities (fair value)

4,956

Loans held for sale (lower of cost or market)

14,713

14,865

Loans held for investment:

Loans held for investment (amortized cost)

12,675,398

Less: ACL for loans and finance leases

(247,269)

Loans held for investment, net of ACL

12,428,129

12,315,996

MSRs (amortized cost)

24,624

42,613

Derivative assets (fair value)

(2)

319

Liabilities:

Deposits (amortized cost)

16,822,529

16,821,966

Long-term advances from the FHLB (amortized cost)

320,000

321,366

Junior subordinated debentures (amortized cost)

11,143

11,142

Derivative liabilities (fair value)

(2)

262

(1) Includes FHLB stock with a carrying value of $

26.0

million, which is considered restricted.

(2) Includes interest rate swap agreements and forward contracts.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Total Carrying Amount

in Statement of

Financial Condition as

of December 31, 2024

Fair Value Estimate as

December 31, 2024

Level 1

Level 2

Level 3

(In thousands)

Assets:

Cash and due from banks and money market investments (amortized

cost)

1,159,415

Available-for-sale debt

securities (fair value)

4,565,302

59,189

4,499,298

6,815

Held-to-maturity debt securities:

Held-to-maturity debt securities (amortized cost)

317,786

Less: ACL on held-to-maturity debt securities

(802)

Held-to-maturity debt securities, net of ACL

316,984

308,040

212,432

95,608

Equity securities (amortized cost)

47,132

(1)

Other equity securities (fair value)

4,886

Loans held for sale (lower of cost or market)

15,276

Loans held for investment:

Loans held for investment (amortized cost)

12,746,556

Less: ACL for loans and finance leases

(243,942)

Loans held for investment, net of ACL

12,502,614

12,406,405

MSRs (amortized cost)

25,019

43,046

Derivative assets (fair value)

(2)

318

Liabilities:

Deposits (amortized cost)

16,871,298

16,872,963

Long-term advances from the FHLB (amortized cost)

500,000

500,128

Junior subordinated debentures (amortized cost)

61,700

61,752

Derivative liabilities (fair value)

(2)

150

(1) Includes FHLB stock with a carrying value of $

34.0

million, which is considered restricted.

(2) Includes interest rate swap agreements, forward contracts and interest rate lock commitments.

The short-term nature

of certain assets and

liabilities result in their

carrying value approximating

fair value. These include

cash and

cash

due

from

banks

and

other

short-term

assets,

such

FHLB

stock.

Certain

assets,

the

most

significant

being

premises

and

equipment,

goodwill

and

other

intangible

assets, are

not

considered

financial

instruments

and

are

not

included

above. Accordingly,

this

fair

value

information

is not

intended

to, and

does not,

represent

the Corporation’s

underlying

value.

Many of

these assets

and

liabilities that

are subject

to the

disclosure requirements

are not

actively traded,

requiring management

to estimate

fair values.

These

estimates

necessarily

involve

the

use

assumptions

and

judgment

about

wide

variety

factors,

including

but

not

limited

to,

relevancy of market prices of comparable instruments, expected future

cash flows, and appropriate discount rates.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 16 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue Recognition

In accordance with

ASC Topic

606, “Revenue from

Contracts with Customers” (“ASC

Topic

606”), revenues are

recognized when

control

promised

goods

services

transferred

customers

and

amount

that

reflects

the

consideration

which

the

Corporation expects to be

entitled in exchange for those

goods or services. At contract

inception, once the contract is

determined to be

within the

scope of

ASC Topic

606, the

Corporation assesses

the goods

or services

that are

promised within

each contract,

identifies

the

respective

performance

obligations,

and

assesses

whether

each

promised

good

service

distinct.

The

Corporation

then

recognizes

as revenue

the amount

of the

transaction price

that is

allocated to

the respective

performance obligation

when (or

as) the

performance obligation is satisfied.

Disaggregation of Revenue

The

following

tables

summarize

the

Corporation’s

revenue,

which

includes

net

interest

income

financial

instruments

that

outside

ASC

Topic

606

and

non-interest

income,

disaggregated

type

service

and

business

segment

for

the

quarters

ended

March 31, 2025 and 2024:

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

181

5,805

Card and processing income

9,450

404

1,599

11,475

Other service charges and fees

1,580

282

140

2,041

Not in scope of ASC Topic

606

(1)

3,562

2,263

393

151

369

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

Quarter ended March 31, 2024

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)

18,146

133,139

37,576

(24,690)

17,985

14,364

196,520

Service charges and fees on deposit accounts

7,617

1,156

148

741

9,662

Insurance commission income

5,234

217

5,507

Card and processing income

9,639

224

1,371

11,312

Other service charges and fees

1,817

102

621

141

2,739

Not in scope of ASC Topic

606

(1)

3,063

1,412

170

111

4,763

Total non-interest income

3,121

25,719

1,652

111

907

2,473

33,983

Total Revenue (Loss)

21,267

158,858

39,228

(24,579)

18,892

16,837

230,503

(1)

Most of

the Corporation’s

revenue is

not within

the scope

of ASC

Topic

606. The

guidance explicitly

excludes net

interest income

from financial

assets and

liabilities, as well as other non-interest income from loans,

leases, investment securities and derivative financial instruments.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

For

the

quarters

ended

March

31,

2025

and

2024,

most

the

Corporation’s

revenue

within

the

scope

ASC

Topic

606

was

related to performance obligations satisfied at a point in time.

See

Note

–

“Revenue

from

Contracts

with

Customers,”

the

audited

consolidated

financial

statements

included

the

2024

Annual Report on Form 10-K for a discussion of major revenue streams under

the scope of ASC Topic 606.

Contract Balances

March

31,

2025

and

December

31,

2024,

the

Corporation

had

contract

assets

recorded

its

consolidated

financial

statements. In addition, the balances of contract liabilities as of those

dates were not significant.

Other

The Corporation

also did

not have

any material contract

acquisition costs

and did

not make

any significant

judgments or

estimates

in recognizing revenue for financial reporting purposes.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 17 – SEGMENT INFORMATION

The Corporation’s

operating segments

are based

primarily on

the Corporation’s

lines of

business for

its operations

in Puerto

Rico,

the

Corporation’s

principal

market,

and

geographic

areas

for

its

operations

outside

Puerto

Rico.

March

31,

2025,

the

Corporation

had

six

reportable

segments:

Mortgage

Banking;

Consumer

(Retail)

Banking;

Commercial

and

Corporate

Banking;

Treasury and

Investments; United States Operations;

and Virgin

Islands Operations. The Chief

Executive Officer (“CEO”),

who is the

designated

chief

operating

decision

maker

(“CODM”),

ultimate

decision

maker,

evaluates

performance

and

allocates

resources

based

on financial

information

provided

by management.

In determining

the reportable

segments,

the

Corporation

considers

factors

such as

the organizational

structure, nature

of the

products,

distribution

channels, customer

relationship

management,

and economic

characteristics

the

business

lines.

The

Corporation

evaluates

the

performance

the

segments

based

segment

income

loss,

which consists of

net interest income,

the provision for

credit losses, non-interest

income and

non-interest expenses.

Segment income

loss

measured

pre-tax

basis,

consistent

with

the

Corporation’s

consolidated

financial

statements

under

GAAP.

The

total

segment income or loss equals

consolidated pre-tax income or

loss, and no adjustments or

reconciliations are necessary.

The segments

are also

evaluated based

on the

average volume

of their

interest-earning assets

(net of

fair value

adjustments of

investment securities

and the ACL).

The

Mortgage

Banking

segment

consists

the

origination,

sale,

and

servicing

variety

residential

mortgage

loans.

The

Mortgage

Banking

segment

also

acquires

and

sells

mortgages

the

secondary

market.

The

Consumer

(Retail)

Banking

segment

includes the

Corporation’s

consumer lending,

commercial lending

to small

businesses, commercial

transaction banking,

and deposit-

taking activities

primarily conducted

through its

branch network

and loan

centers. The

Commercial and

Corporate Banking

segment

consists of the

Corporation’s

lending and other

services for large

customers represented

by specialized and

middle-market clients and

the government sector.

The Commercial and Corporate Banking segment

consists of the Corporation’s

commercial lending (other than

small

business

commercial

loans)

and

commercial

deposit-taking

activities

(other

than

the

government

sector).

The

Treasury

and

Investments segment

is responsible for

the Corporation’s

investment portfolio

and treasury functions

that are executed

to manage and

enhance

liquidity.

Under

the

Corporation’s

fund

transfer

pricing

(“FTP”)

methodology,

the

Treasury

and

Investments

segment

centrally

manages

funding

providing

funds

the

Mortgage

Banking,

Consumer

(Retail)

Banking,

Commercial

and

Corporate

Banking, United States

Operations, and Virgin

Islands Operations segments

to support their lending

activities and compensating

these

units

for

deposits

gathered.

The

mismatch

between

funds

provided

and

funds

used

managed

the

Treasury

and

Investments

segment.

The

funds

transfer

pricing

charged

credited

are

calculated

using

the

SOFR/swap

curve

with

term

rates,

adjusted

for

funding

spread

that

reflects

the

Corporation’s

cost

funds.

The

methodology,

which

performed

based

matched

maturity

funding,

ensures a

market-based

allocation of

funding costs

and credits,

impacting segment

profitability

by aligning

internal pricing

with external market conditions. The United States Operations segment

consists of all banking activities conducted by FirstBank in the

United States

mainland, including

commercial and

consumer banking

services. The

Virgin

Islands Operations

segment consists of

all

banking activities conducted by the Corporation in the USVI and the

BVI, including commercial and consumer banking services.

Prior period segment results

have been recast to

reflect certain refinements made

to enhance internal reporting

described in Note 25

– “Segment

Information”

to the

audited consolidated

financial statements

included

in the

2024 Annual

Report on

Form 10-K.

Also,

see Note

1 –

“Nature of

Business and

Summary of

Significant Accounting

Policies” to

the audited

consolidated financial

statements

included in the 2024

Annual Report on Form

10-K for the accounting

policies of the segments and

information related to the

adoption

of ASU 2023-07.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

The following tables present information about the reportable segments for

the 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, 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

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)

(69)

(1,129)

Credit and debit card processing expenses

4,002

260

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

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, 2024:

Interest income

31,557

104,644

62,150

28,058

34,765

7,331

268,505

Net (charge) credit for transfer of funds

(13,411)

66,558

(20,538)

(39,630)

(2,238)

9,259

Interest expense

(38,063)

(4,036)

(13,118)

(14,542)

(2,226)

(71,985)

Net interest income (loss)

18,146

133,139

37,576

(24,690)

17,985

14,364

196,520

Provision for credit losses - (benefit) expense

(266)

15,911

(2,926)

(69)

(565)

12,167

Non-interest income

3,121

25,719

1,652

111

907

2,473

33,983

Non-interest expenses:

Employees’ compensation and benefits

6,751

34,987

4,918

992

7,273

4,585

59,506

Occupancy and equipment

1,423

14,288

1,361

200

1,924

2,185

21,381

Business promotion

232

2,772

234

216

235

153

3,842

Professional fees

2,330

6,957

939

317

1,087

1,046

12,676

Taxes, other than income taxes

419

3,890

437

128

160

5,129

FDIC deposit insurance

574

1,071

917

311

229

3,102

Net (gain) loss on OREO operations

(1,523)

(1,452)

Credit and debit card processing expenses

4,811

194

744

5,751

Other non-interest expenses

(1)

817

6,601

1,505

604

629

832

10,988

Total non-interest expenses

11,023

75,377

10,551

2,424

11,589

9,959

120,923

Segment income (loss)

10,510

67,570

31,603

(26,934)

7,221

7,443

97,413

Average interest-earning assets

2,132,484

3,990,853

3,498,479

5,900,300

2,087,816

413,229

18,023,161

(1) Consists of communication expenses and the expense categories described

in Note 19 - “Other Non-Interest Expenses,” to the audited consolidated

financial statements included in the 2024 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,

2025

2024

(In thousands)

Average assets:

Total average interest-earning assets for segments

18,311,327

18,023,161

Average non-interest-earning assets

(1)

795,775

835,138

Total consolidated average assets

19,107,102

18,858,299

(1)

Includes, among other things, non-interest-earning cash, premises

and equipment, net deferred tax asset, ROU assets, and accrued interest receivable

on loans and investments.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 18 – SUPPLEMENTAL

STATEMENTS

OF CASH FLOWS INFORMATION

Supplemental statements of cash flows information is as follows for

the indicated periods:

Quarter Ended March 31,

2025

2024

(In thousands)

Cash paid for:

Interest

68,412

67,322

Income tax

15,401

Operating cash flow from operating leases

4,408

4,362

Non-cash investing and financing activities:

Additions to OREO

1,455

1,213

Additions to auto and other repossessed assets

15,407

15,710

Capitalization of servicing assets

641

460

Loan securitizations

41,518

24,266

Loans held for investment transferred to held for sale

118

Right-of-use assets obtained in exchange for operating lease liabilities,

net of lease terminations

3,926

Payable related to unsettled common stock repurchases

286

Redemption of investments in FBP Statutory Trusts

1,517

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 19 – REGULATORY

MATTERS, COMMITMENTS

AND CONTINGENCIES

Regulatory Matters

The

Corporation

and

FirstBank

are

each

subject

various

regulatory

capital

requirements

imposed

the

U.S.

federal

banking

agencies. Failure

to meet

minimum capital

requirements can

result in

certain mandatory

and possibly

additional discretionary

actions

by regulators

that, if

undertaken, could

have a

direct material

adverse effect

on the

Corporation’s

financial statements

and

activities.

Under

capital

adequacy

guidelines

and

the

regulatory

framework

for

prompt

corrective

action,

the

Corporation

must

meet

specific

capital

guidelines

that

involve

quantitative

measures

the Corporation’s

and

FirstBank’s

assets,

liabilities,

and

certain

off-balance

sheet items

as calculated

under regulatory

accounting practices.

The Corporation’s

capital amounts

and classification

are also

subject

to qualitative judgments and

adjustment by the regulators with respect

to minimum capital requirements, components,

risk weightings,

and

other factors.

As of

March 31,

2025 and

December 31,

2024,

the Corporation

and FirstBank

exceeded

the minimum

regulatory

capital

ratios

for

capital

adequacy

purposes and

FirstBank exceeded

the minimum

regulatory

capital ratios

be considered

well-

capitalized

institution

under

the

regulatory

framework

for

prompt

corrective

action.

March

31,

2025,

management

does

not

believe that any condition has changed or event has occurred that would have

changed the institution’s status.

The Corporation and FirstBank

compute risk-weighted assets

using the standardized

approach required by the

U.S. Basel III capital

rules (“Basel III rules”).

The

Basel

III

rules

require

the

Corporation

maintain

additional

capital

conservation

buffer

2.5

certain

regulatory

capital

ratios

avoid

limitations

both

(i)

capital

distributions

(

e.g.

repurchases

capital

instruments,

dividends

and

interest

payments on capital instruments) and (ii) discretionary bonus payments

to executive officers and heads of major business lines.

The regulatory capital position of the Corporation and FirstBank as of

March 31, 2025 and December 31, 2024 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, 2025

Total Capital (to Risk-Weighted

Assets)

First BanCorp.

2,366,470

17.96

1,054,347

8.0

N/A

FirstBank

2,315,631

17.58

1,054,043

8.0

1,317,554

10.0

CET1 Capital (to Risk-Weighted Assets)

First BanCorp.

2,190,351

16.62

593,070

4.5

N/A

FirstBank

2,050,369

15.56

592,899

4.5

856,410

6.5

Tier I Capital (to Risk-Weighted

Assets)

First BanCorp.

2,190,351

16.62

790,760

6.0

N/A

FirstBank

2,150,369

16.32

790,532

6.0

1,054,043

8.0

Leverage ratio

First BanCorp.

2,190,351

11.20

782,277

4.0

N/A

FirstBank

2,150,369

11.00

782,027

4.0

977,533

5.0

As of December 31, 2024

(1)

Total Capital (to Risk-Weighted

Assets)

First BanCorp.

2,404,581

18.02

1,067,380

8.0

N/A

FirstBank

2,369,441

17.76

1,067,033

8.0

1,333,791

10.0

CET1 Capital (to Risk-Weighted Assets)

First BanCorp.

2,177,748

16.32

600,401

4.5

N/A

FirstBank

2,102,512

15.76

600,206

4.5

866,964

6.5

Tier I Capital (to Risk-Weighted

Assets)

First BanCorp.

2,177,748

16.32

800,535

6.0

N/A

FirstBank

2,202,512

16.51

800,275

6.0

1,067,033

8.0

Leverage ratio

First BanCorp.

2,177,748

11.07

786,937

4.0

N/A

FirstBank

2,202,512

11.20

786,712

4.0

983,390

5.0

(1)

As of December 31, 2024, capital

ratios reflect the delay in the full

effect of CECL.

The Corporation elected the option provided by

the interim final rule issued by

the federal banking agencies on March 31,

2020, in response to the impact of

COVID-19,

to temporarily delay the effects of CECL on regulatory capital during a five-year transition period which ended on January 1, 2025.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

Commitments

The Corporation enters

into financial instruments

with off-balance sheet

risk in the normal

course of business to

meet the financing

needs

its

customers.

These

financial

instruments

may

include

commitments

extend

credit

and

standby

letters

credit.

Commitments to extend credit are agreements

to lend to a customer as long

as there is no violation of any conditions

established in the

contract. Commitments

generally have fixed

expiration dates or

other termination clauses.

Since certain commitments

are expected

expire without

being drawn

upon, the

total commitment

amount does

not necessarily

represent future

cash requirements.

For most

the

commercial

lines

credit,

the

Corporation

has

the

option

reevaluate

the

agreement

prior

additional

disbursements.

the

case of credit cards and personal lines of credit, the Corporation can

cancel the unused credit facility at any time and without cause.

of March 31, 2025,

commitments to extend

credit amounted to approximately

2.1

billion, of which $

0.8

billion relates to retail

credit

card

loans.

addition,

commercial

and

financial

standby

letters

credit

March

31,

2025

amounted

approximately

62.3

million.

Contingencies

March

31,

2025,

First

BanCorp.

and

its

subsidiaries

were

defendants

various

legal

proceedings,

claims

and

other

loss

contingencies

arising

the

ordinary

course

business.

least

quarterly

basis,

the

Corporation

assesses

its

liabilities

and

contingencies in connection

with threatened and

outstanding legal proceedings,

claims and other

loss contingencies utilizing

the latest

information

available,

advice

from

legal

counsel,

and

available

insurance

coverage.

For

legal

proceedings,

claims

and

other

loss

contingencies

where

both

probable

that

the

Corporation

will

incur

loss

and

the

amount

can

reasonably

estimated,

the

Corporation

establishes

accrual

for

the

loss.

Once

established,

the

accrual

adjusted

appropriate

reflect

any

relevant

developments. For legal proceedings,

claims and other loss contingencies where

a loss is not probable or the amount

of the loss cannot

be estimated, no accrual is established.

Any estimate involves significant judgment,

given the complexity of the facts, the

novelty of the legal theories, the varying

stages of

the

proceedings

(including

the

fact

that

some

them

are

currently

preliminary

stages),

the

existence

some

the

current

proceedings

multiple

defendants

whose

liability

has

yet

determined,

the

numerous

unresolved

issues

the

proceedings, and

the inherent

uncertainty of

the various

potential outcomes

of such

proceedings. Accordingly,

it may

take months

years after the filing of

a case or commencement of

a proceeding or an investigation

before an estimate of the

reasonably possible loss

can

made

and

the

Corporation’s

estimate

will change

from

time

time,

and

actual

losses may

or less

than

the

current

estimate.

While

the

final

outcome

legal

proceedings,

claims,

and

other

loss

contingencies

inherently

uncertain,

based

information

currently

available,

management

believes

that

the

final

disposition

the

Corporation’s

legal

proceedings,

claims

and

other

loss

contingencies,

the

extent

not

previously

provided

for,

will

not

have

material

adverse

effect

the

Corporation’s

consolidated

financial position as a whole.

If management believes that, based on available information,

it is at least reasonably possible that a material loss (or material

loss in

excess

any

accrual)

will

incurred

connection

with

any

legal

contingencies,

including

tax

contingencies,

the

Corporation

discloses an

estimate of

the possible

loss or

range of

loss, either

individually or

in the

aggregate, as

appropriate, if

such an

estimate

can

made,

discloses

that

estimate

cannot

made.

Based

the

Corporation’s

assessment

as of

March

31,

2025,

no such

disclosures were necessary.

In 2023,

the FDIC

issued a

final rule

to impose

a special

assessment to

recover

certain estimated

losses to

the Deposit

Insurance

Fund (“DIF”)

arising from

the closures

of Silicon

Valley

Bank and

Signature Bank.

The estimated

losses will

be recovered

through

quarterly

special assessments

collected from

certain insured

depository

institutions, including

the Bank,

and collection

began

during

the quarter

ended June 30,

2024. As of

March 31,

2025, the Corporation’s

total estimated FDIC

special assessment

amounted to

7.4

million, of which $

3.2

million has been paid. The Corporation

continues to monitor the FDIC’s

estimated loss to the DIF,

which could

affect the amount of its accrued liability.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

NOTE 20 – FIRST BANCORP.

(HOLDING COMPANY

ONLY) FINANCIAL

INFORMATION

The following condensed

financial information presents

the financial position

of First BanCorp.

at the holding

company level only

as of March 31, 2025 and December 31, 2024, and the results of its operations for the quarters

ended March 31, 2025 and 2024:

Statements of Financial Condition

As of March 31,

As of December 31,

2025

2024

(In thousands)

Assets

Cash and due from banks

26,114

13,295

Equity securities

1,425

1,275

Investment in First Bank Puerto Rico, at equity

1,739,360

1,694,000

Investment in First Bank Insurance Agency,

at equity

27,464

24,121

Investment in FBP Statutory Trust I

(1)

333

1,289

Investment in FBP Statutory Trust II

(1)

561

Dividends receivable

610

619

Other assets

702

459

Total assets

1,796,008

1,735,619

Liabilities and Stockholders’ Equity

Liabilities:

Long-term borrowings

(1)

11,143

61,700

Accounts payable and other liabilities

5,523

4,683

Total liabilities

16,666

66,383

Stockholders’ equity

1,779,342

1,669,236

Total liabilities and stockholders’

equity

1,796,008

1,735,619

(1)

During the first

quarter of 2025,

the Corporation redeemed

50.6

million of outstanding

TruPS, that resulted

in the full

redemption of the

remaining $

18.6

million (or $

18.0

million after

excluding the Corporation’s

interest in the

Trust of

approximately $

0.6

million) in TruPS

issued by FBP

Statutory Trust

II and

reduced the outstanding

amount of TruPS

issued by FBP

Statutory

Trust

32.0

million

(or

31.0

million

after

excluding

the

Corporation’s

interest

the

Trust

approximately

1.0

million),

further

explained

Note

–

“Non-

Consolidated Variable

Interest Entities (“VIEs”) and Servicing Assets”.

Statements of Income

Quarter Ended March 31,

2025

2024

(In thousands)

Income

Interest income on money market investments

Dividend income from banking subsidiaries

117,457

80,917

Other income

101

Total income

117,580

81,081

Expense

Interest expense on long-term borrowings

981

3,350

Other non-interest expenses

478

439

Total expense

1,459

3,789

Income before income taxes and equity in undistributed

earnings of subsidiaries

116,121

77,292

Income tax expense

Equity in undistributed earnings of subsidiaries (distribution in excess of

earnings)

(39,061)

(3,833)

Net income

77,059

73,458

Other comprehensive income (loss), net of tax

84,061

(15,065)

Comprehensive income

161,120

58,393

ITEM

MANAGEMENT’S

DISCUSSION

AND

ANALYSIS

FINANCIAL

CONDITION

AND

RESULTS

OPERATIONS (“MD&A”)

The

following

MD&A

relates

the

accompanying

unaudited

consolidated

financial

statements

First

BanCorp.

(the

“Corporation,” “we,” “us,”

“our,” or “First

BanCorp.”) and should be

read in conjunction with

such financial statements and

the notes

thereto,

and our

Annual Report

on Form

10-K for

the fiscal

year ended

December 31,

2024 (the

“2024 Annual

Report on

Form 10-

K”). This section

also presents certain

financial measures that

are not based

on generally accepted

accounting principles in

the United

States

America

(“GAAP”).

See

“Non-GAAP

Financial

Measures

and

Reconciliations”

below

for

information

about

why

non-

GAAP

financial

measures

are

presented,

reconciliations

non-GAAP

financial

measures

the

most

comparable

GAAP

financial

measures, and references to non-GAAP financial measures reconciliations

presented in other sections.

EXECUTIVE SUMMARY

First BanCorp. is

a diversified financial

holding company headquartered

in San Juan, Puerto

Rico, offering a

full range of financial

products to

consumers and

commercial customers

through various

subsidiaries. First

BanCorp.

is the

holding company

of FirstBank

Puerto

Rico

(“FirstBank”

or the

“Bank”)

and

FirstBank

Insurance

Agency.

Through

its wholly

-owned

subsidiaries,

the Corporation

operates

Puerto

Rico,

the

United

States

Virgin

Islands

(“USVI”),

the

British

Virgin

Islands

(“BVI”),

and

the

state

Florida,

concentrating on

commercial banking,

residential mortgage loans,

credit cards, personal

loans, small loans,

auto loans and

leases, and

insurance agency activities.

Recent Developments

Economy and Market Update

The Corporation

started the

year with

a strong

first quarter

showcasing

margin

expansion,

positive

operating

leverage, and

solid

profitability metrics.

In the

first quarter

of 2025,

the Corporation

reported a

net income

of $77

million and

a return

on average

assets

1.64%.

Additionally,

core

customer

deposits

rose

$29

million

during

the

quarter,

inclusive

$70

million

increase

non-

interest-bearing

deposits.

Stable

deposit

trends

enabled

the

Corporation

redeploy

investment

portfolio

cash

flows

into

higher-

yielding

assets

while

improving

its

funding

profile

reducing

higher-cost

wholesale

borrowings.

Credit

performance

remained

relatively stable, and credit normalization trends are expected to continue

Depending

on the

timing

and extent

of the

Federal

Reserve (the

“FED”) rate

cuts in

the second

half of

the year,

the Corporation

projects

that

the

net

interest

margin

will

keep

improving

throughout

the

rest

2025.

The

Corporation

expects

receive

approximately $1.

billion in

cash flows

from the

investment portfolio

during the

next twelve

months,

which will

be reinvested

into

loans, higher yielding

securities, or used

to further reduce higher-cost

borrowings. Additionally,

the Corporation aims

to achieve mid-

single-digit growth in the commercial, construction, and residential mortgage

loan portfolios for the year.

Despite growing concerns

about global trade,

tariffs, and other

potential policy changes

affecting markets globally,

the Corporation

remains committed to its disciplined approach of delivering consistent results

and creating value for all stakeholders.

Capital Deployment Actions

During the first

quarter of 2025,

the Corporation delivered

approximately $102.0 million,

or over 100%

of first quarter earnings,

the form of

capital deployment actions

that included the

$50.6 million redemption

of outstanding trust-preferred

securities (“TruPS”),

$29.6 million in common stock dividends declared, and $21.8 million in repurchases

of common stock.

From April 1, 2025

to May 5, 2025, the Corporation

repurchased approximately 1.6 million

shares of common stock

for a total cost

of approximately

$27.7 million.

In the

aggregate, as

of May

5, 2025,

the Corporation

has remaining

authorization

of approximately

$100.0 million.

CRITICAL ACCOUNTING POLICIES AND PRACTICES

The

accounting

principles

the

Corporation

and

the

methods

applying

these

principles

conform

GAAP.

preparing

the

consolidated

financial

statements,

management

required

make

estimates,

assumptions,

and

judgments

that

affect

the

amounts

recorded for assets,

liabilities and contingent

liabilities as of

the date of

the financial statements

and the reported

amounts of revenues

and

expenses

during

the

reporting

periods.

Note

the Notes

Consolidated

Financial

Statements

included

our

2024

Annual

Report

Form

10-K,

supplemented

this

Quarterly

Report

Form

10-Q,

including

this

MD&A,

describes

the

significant

accounting policies we used in our consolidated financial statements.

Not all significant

accounting policies require

management to make

difficult, subjective

or complex judgments.

Critical accounting

estimates

are

those

estimates

made

accordance

with

GAAP

that

involve

significant

level

uncertainty

and

have

had

are

reasonably

likely

have

material

impact

the

Corporation’s

financial

condition

and

results

operations.

The

Corporation’s

critical accounting

estimates that

are particularly

susceptible

to significant

changes include,

but are

not limited

to, the

following:

(i)

the allowance for credit losses (“ACL”);

(ii) valuation of financial instruments;

and (iii) income taxes. For more

information regarding

valuation

of financial

instruments and

income tax

policies, assumptions,

and judgments,

see “Critical

Accounting

Estimates” in

Part

II,

Item

“Management’s

Discussion

and

Analysis

Financial

Condition

and

Results

Operations

(“MD&A”),”

the

2024

Annual

Report

Form

10-K.

The

“Risk

Management

–

Credit

Risk

Management”

section

this

MD&A

details

the

policies,

assumptions, and

judgments related

to the

ACL. Actual

results could

differ

from estimates

and assumptions

if different

outcomes or

conditions prevail.

Overview of Results of Operations

The

Corporation’s

results

operations

depend

primarily

its

net

interest

income,

which

the

difference

between

the

interest

income

earned

its

interest-earning

assets,

including

investment

securities

and

loans,

and

the

interest

expense

incurred

its

interest-bearing

liabilities,

including

deposits

and

borrowings.

Net

interest

income

affected

various

factors,

including

the

following:

(i)

the

interest

rate

environment;

(ii)

the

volumes,

mix,

and

composition

interest-earning

assets,

and

interest-bearing

liabilities; and

(iii) the

repricing

characteristics of

these assets

and liabilities.

The Corporation

’s

results of

operations also

depend on

the

provision

for

credit

losses,

non-interest

expenses

(such

personnel,

occupancy,

professional

service

fees,

the

FDIC

insurance

premium,

and

other

costs),

non-interest

income

(mainly

service

charges

and

fees

deposits,

cards

and

processing

income,

and

insurance income), gains (losses) on mortgage banking activities, and income

taxes.

The

Corporation

had

net

income

$77.1

million

($0.47

per

diluted

common

share)

for

the

quarter

ended

March

31,

2025,

compared to $73.5

million ($0.44 per

diluted common

share), for the

quarter ended March

31, 2024. Other

relevant selected financial

indicators for the periods presented are included below:

Quarter Ended March 31,

2025

2024

Key Performance Indicator:

(1)

Return on Average

Assets

(2)

1.64

1.56

Return on Average

Common Equity

(3)

17.90

19.56

Efficiency Ratio

(4)

49.58

52.46

(1)

These financial ratios are used by management to monitor the Corporation’s

financial performance and whether it is using its assets efficiently.

(2)

Indicates how profitable the Corporation is in relation to its total assets

and is calculated by dividing net income on an annualized

basis by its average total assets.

(3)

Measures the Corporation’s

performance based on its

average common stockholders’ equity and

is calculated by dividing net

income on an annualized

basis by its average total

common

stockholders’ equity.

(4)

Measures how much the Corporation incurred to generate a

dollar of revenue and is calculated by dividing non-interest expenses

by total revenue.

The key drivers

of the Corporation’s

GAAP financial results

for the quarter

ended March 31,

2025, compared to

the first quarter of

2024, include the following:

●

Net interest

income for

the quarter

ended March

31, 2025

increased by $15.9

million to $212.4

million, compared

to $196.5

million for

the first

quarter of

2024. Net

interest margin

for the

first quarter

of 2025

increased by

36 basis

points (“bps”)

4.52%,

driven

change

asset

mix

associated

with

the

deployment

cash

flows

from

lower-yielding

investment

securities to

higher-yielding

interest-earning

assets, and

a decrease

in the

cost of

interest-bearing

liabilities. See

“Results of

Operations – Net Interest Income”

below for additional information.

●

The provision for credit

losses on loans, finance

leases, unfunded loan commitments

and debt securities for the

quarter ended

March

31,

2025

was

$24.8

million,

compared

$12.2

million

for

the

first

quarter

2024.

The

increase

the

provision

expense was

impacted by,

among other

things, a

$12.1 million

decrease in

recoveries associated

with the

bulk sales

of fully

charged-off consumer loans and

finance leases and a recovery of a commercial and industrial (“C&I”)

loan in the Puerto Rico

region

during

the first

quarter

2024,

and

$2.7

million

increase

qualitative

adjustments

due

the

uncertainty

the

economic environment.

Net

charge-offs

totaled

$21.4

million

for

the

quarter

ended

March

31,

2025,

annualized

0.68%

average

loans,

compared to $11.2 million,

or an annualized 0.37% of average loans,

for the first quarter of 2024. Net

charge-offs for the first

quarter of

2025 and

2024 include

$2.4 million

and $9.5

million, respectively,

in recoveries

associated with

the bulk

sales of

fully charged

-off consumer

loans and

finance leases

during such

periods, which

reduced by

8 bps

and 31

bps, respectively,

the ratio

of total

net charge

-offs to

average loans.

The increase

in net

charge-offs

was also

impacted by

the aforementioned

$5.0 million recovery

associated with a

C&I loan during

the first quarter

of 2024. See “Results

of Operations –

Provision for

Credit Losses” and “Risk Management” below for analyses of the ACL and

non-performing assets and related ratios.

●

Non-interest

income

for

the

quarter

ended

March

31,

2025

increased

$1.7

million,

mainly

due

higher

realized

gains

from purchased income tax credits.

●

Non-interest

expenses

for

the

quarter

ended

March

31,

2025

increased

$2.1

million

$123.0

million,

mainly

employees’

compensation

and

benefits

expenses,

due

an increase

in bonuses.

See

“Results of

Operations

– Non-Interest

Expenses” below for additional information.

●

Income tax expense decreased

to $23.2 million for the

first quarter of 2025, compared

to $23.9 million for the

same period in

2024.

The Corporation’s

estimated effective

tax rate,

excluding entities

with pre-tax

losses from

which a

tax benefit

cannot

be recognized and

discrete items, decreased

to 23.7% for the

first quarter of

2025, compared to

24.3% for the

same period of

2024.

The decrease

in effective

tax rate

was due

to a

higher

proportion

of exempt

to taxable

income. See

“Income

Taxes”

below and Note 14 – “Income Taxes

,” to the unaudited consolidated financial statements herein for additional

information.

●

As of March

31, 2025,

total assets were

approximately $19.1

billion, a decrease

of $185.9 million

from December

31, 2024,

primarily related

to cash inflows

received from repayments

from the investment

securities and loan

portfolios that

were used

for

the

repayment

long-term

borrowings,

fund

the

decrease

total

deposits,

and

support

capital

deployment

actions,

partially offset by the increase in the fair value of available

-for-sale debt securities due to changes in market interest rates.

●

As of March

31, 2025, total

liabilities were $17.3

billion, a decrease

of $296.0 million

from December 31,

2024, mainly due

to a $230.6 million decrease in

borrowings and a $48.8 million decrease

in total deposits, mainly in government

deposits. See

“Risk Management – Liquidity Risk” below for additional information

about the Corporation’s funding

sources and strategy.

●

The

Corporation’s

primary

sources

funding

are

consumer

and

commercial

core

deposits,

which

exclude

government

deposits and brokered

certificates of deposit (“CDs”).

As of March

31, 2025, these core

deposits, amounting to

$12.9 billion,

funded 67.50% of

total assets. Excluding

fully collateralized government

deposits, estimated uninsured

deposits amounted to

$4.6

billion

March

31,

2025.

The

Corporation

had

approximately

$2.7

billion

cash

and

cash

equivalents

and

free

high-quality liquid securities.

In addition, as of

March 31, 2025, the

Corporation had approximately

$2.6 billion available for

funding

under

the

FED’s

Discount

Window

and

$862.2

million

available

for

additional borrowing

capacity

the

Federal

Home

Loan

Bank

(“FHLB”)

lines

credit based

on collateral

pledged

these

entities. In

the aggregate,

as of

March

31,

2025, the

Corporation had

$6.2 billion,

or 133%

of estimated

uninsured deposits

(excluding fully

collateralized government

deposits),

available to meet liquidity

needs. See “Risk Management

– Liquidity Risk” below

for additional information about

the Corporation’s funding

sources and strategy.

●

March

31,

2025,

the

Corporation’s

total

stockholders’

equity

was

$1.8

billion,

increase

$110.1

million

from

December

31,

2024.

The

increase

was

driven

$84.1

million

increase

the

fair

value

available-for-sale

debt

securities recorded as

part of accumulated other

comprehensive loss in the

consolidated statements of

financial condition and

the net income

generated in

the first quarter

of 2025, partially

offset by

common stock dividends

declared in the

first quarter

2025

totaling

$29.6

million

$0.18

per

common

share,

and

$21.8

million

common

stock

repurchases.

The

Corporation’s

CET1

capital,

tier

capital,

total

capital,

and

leverage

ratios

were

16.62%,

17.96%,

and

11.20%,

respectively,

March

31,

2025,

compared

CET1

capital,

tier

capital,

total

capital,

and

leverage

ratios

16.32%,

18.02%,

and

11.07%,

respectively,

December

31,

2024.

See

“Risk

Management

–

Capital”

below

for

additional information.

●

Total

loan

production,

including

purchases,

refinancings,

renewals,

and

draws

from

existing

revolving

and

non-revolving

commitments,

decreased

$24.7

million

$1.2

billion

for

the

quarter

ended

March

31,

2025,

compared

the

first

quarter of 2024. See “Results of Operations – Loan Production”

below for additional information.

●

Total

non-performing

assets

were

$129.4

million

March

31,

2025,

increase

$11.1

million

from

December

31,

2024,

mainly due to

the inflow to nonaccrual

status of a $12.6

million commercial mortgage

loan in the

Florida region in

the

hospitality

industry

during

the

first

quarter

2025.

See

“Risk

Management

–

Nonaccrual

Loans

and

Non-Performing

Assets” below for additional information.

●

Adversely classified

commercial and

construction loans

increased by

$13.6 million

to $100.9

million as

of March

31, 2025,

compared to December

31, 2024, driven

by the downgrades

of two commercial

mortgage loans in

the Florida region

totaling

$18.3 million,

which consist

of the

aforementioned $12.6

million inflow

to nonaccrual

status and

a $5.7

million loan

in the

hotel industry,

partially offset by the upgrade of a $5.0 million commercial mortgage

loan in the Puerto Rico region.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

The Corporation has included in this Quarterly Report on Form 10-Q

the 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, Excluding

Valuations

and on a Tax

-Equivalent Basis

Net interest

income, interest

rate spread,

and net

interest margin

are reported

excluding the

changes in

the fair

value of

derivative

instruments and

on a

tax-equivalent basis

in order

to provide

to investors

additional information

about the

Corporation’s

net interest

income

that management

uses and

believes should

facilitate comparability and

analysis of

the periods

presented.

The changes

in the

fair value

of derivative

instruments have

no effect

on interest

due or

interest earned

on interest-bearing

liabilities or

interest-earning

assets, respectively.

The tax-equivalent

adjustment to

net interest

income recognizes

the income

tax savings

when comparing

taxable

and

tax-exempt

assets

and

assumes

marginal

income

tax

rate.

Income

from

tax-exempt

earning

assets

increased

amount

equivalent to

the taxes

that would

have been

paid if

this income

had been

taxable at

statutory rates.

Management believes

that it

is a

standard

practice

the banking

industry

present

net

interest

income,

interest

rate

spread,

and

net

interest

margin

fully

tax-

equivalent basis. This adjustment

puts all earning assets, most

notably tax-exempt securities and

tax-exempt loans, on a common

basis

that facilitates comparison of results to the results of peers.

See “Results of Operations – Net Interest Income” below,

for the table that reconciles net interest income in accordance with GAAP

the

non-GAAP

financial

measure

net

interest

income,

excluding

valuations,

and

tax-equivalent

basis

for

the

indicated

periods. The table also reconciles

net interest spread and

net interest margin on

a GAAP basis to these items

excluding valuations, and

on a tax-equivalent basis.

Tangible

Common Equity Ratio and Tangible

Book Value

Per Common Share

The tangible

common equity

ratio and

tangible book

value per

common share

are non-GAAP

financial measures

that management

believes are generally

used by the financial

community to evaluate

capital adequacy.

Tangible

common equity is total

common equity

less goodwill

and other

intangible assets.

Similarly,

tangible assets

are total

assets less

goodwill and

other intangible

assets. Tangible

common

equity

ratio

tangible

common

equity

divided

tangible

assets.

Tangible

book

value

per

common

tangible

common

equity divided

by the

number of

common shares

outstanding.

Management uses

and believes

that many

stock analysts

use

the tangible

common equity

ratio and

tangible book

value per

common share

in conjunction

with other

more traditional

bank capital

ratios

compare

the

capital

adequacy

banking

organizations

with

significant

amounts

goodwill

other

intangible

assets,

typically

stemming

from

the use

the

purchase

method

accounting

for

mergers

and

acquisitions.

Accordingly,

the Corporation

believes that

disclosures of

these financial

measures may

be useful

to investors.

Neither tangible

common equity

nor tangible

assets,

or the related

measures, should be

considered in isolation

or as a substitute

for stockholders’

equity,

total assets, or any

other measure

calculated in accordance

with GAAP.

Moreover,

the manner in which

the Corporation calculates its

tangible common

equity, tangible

assets, and any other related measures may differ from

that of other companies reporting measures with similar names.

See “Risk

Management –

Capital” below

for the

table that

reconciles the

Corporation’s

total equity

and total

assets in

accordance

with GAAP to

the tangible common

equity and tangible

assets figures used

to calculate the

non-GAAP financial measures

of tangible

common equity ratio and tangible book value per common share.

Adjusted Net Income and Adjusted Non-Interest Expenses

supplement the

Corporation’s

financial statements

presented in

accordance with

GAAP,

the Corporation

uses, and believes

that

investors benefit from disclosure of, non

-GAAP financial measures that reflect

adjustments to net income and non-interest

expenses to

exclude

items that

management believes

are not

reflective of

core operating

performance (“Special

Items”). The

financial results

for

the quarter ended

March 31, 2025

did not include

any significant Special

Items. The

financial results for

the quarter ended

March 31,

2024 included the following Special Item:

FDIC Special Assessment Expense

A charge

$0.9

million

($0.6

million

after-tax,

calculated based

the

statutory

tax rate

37.5%)

was recorded

for the

quarter

ended

March

31,

2024

increase

the

special

assessment

imposed

the

FDIC

connection

with

losses

the

Deposit Insurance

Fund associated

with protecting

uninsured deposits

following

the failures

of certain

financial institutions

during the

first half of

2023. The estimated

FDIC special assessment

of $7.4 million

was the revised

estimated loss reflected

in the FDIC

invoice for

the first quarterly

collection period with

a payment

date of June

28, 2024. The

FDIC deposit special

assessment is reflected in the consolidated statements of income as part

of “FDIC deposit insurance” expenses.

Adjusted Net Income

– The following table

shows for the quarter

ended March 31, 2025

the reported net income

and reconciles for

the quarter

ended March

31, 2024,

net income

to adjusted

net income,

a non-GAAP

financial measure

that excludes

the Special

Item

identified above.

Quarter Ended March 31,

2025

2024

(In thousands)

Net income, as reported (GAAP)

77,059

73,458

Adjustments:

FDIC special assessment expense

947

Income tax impact of adjustments

(1)

(355)

Adjusted net income (Non-GAAP)

77,059

74,050

(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%.

RESULTS

OF OPERATIONS

Net Interest Income

Net interest

income is

the excess of

interest earned

by First

BanCorp. on

its interest-earning

assets over

the interest

incurred on its

interest-bearing

liabilities.

First

BanCorp.’s

net

interest

income

subject

interest

rate

risk

due

the

repricing

and

maturity

mismatch

the

Corporation’s

assets

and

liabilities.

addition,

variable

sources

interest

income,

such

loan

fees,

periodic

dividends, and collection of interest on nonaccrual loans, can fluctuate

from period to period. Net interest income for the quarter

ended

March

31,

2025 was

$212.4 million,

compared

$196.5 million

for

the

comparable

period

in 2024.

tax-equivalent basis

and

excluding the changes in the

fair value of derivative instruments,

net interest income for the quarter

ended March 31, 2025 was $218.6

million, compared to $201.3 million for the comparable period

in 2024.

The

following

tables

include a

detailed

analysis

of net

interest income

for

the indicated

periods.

Part I

presents

average volumes

(based

the

average

daily

balance)

and

rates

adjusted

tax-equivalent

basis

and

Part

presents,

also

adjusted

tax-

equivalent basis,

the extent

to which

changes in

interest rates

and changes

in the

volume of

interest-related assets

and liabilities

have

affected

the Corporation’s

net interest

income. For

each category

of interest-earning

assets and

interest-bearing

liabilities, the

tables

provide

information

changes

(i)

volume

(changes

volume

multiplied

prior

period

rates),

and

(ii)

rate

(changes

rate

multiplied by

prior period

volumes). The

Corporation has

allocated rate-volume

variances (changes

in rate

multiplied by

changes in

volume) to either the changes in volume or the changes in rate based upon the

effect of each factor on the combined totals.

Net interest

income on

an adjusted

tax-equivalent

basis and

excluding

the changes

in the

fair value

of derivative

instruments is

non-GAAP

financial

measure.

For

the

definition

this

non-GAAP

financial

measure,

refer

the

discussion

“Non-GAAP

Financial Measures and Reconciliations” above.

Part I

Average volume

Interest income

(1)

/ expense

Average rate

(1)

Quarter ended March 31,

2025

2024

2025

2024

2025

2024

(Dollars in thousands)

Interest-earning assets:

Money market and other short-term investments

1,111,087

533,747

12,205

7,254

4.45

5.45

Government obligations

(2)

1,971,327

2,684,169

6,970

9,053

1.43

1.35

MBS

3,308,964

3,451,293

17,497

15,238

2.14

1.77

FHLB stock

32,661

34,635

790

854

9.81

9.89

Other investments

19,977

16,551

247

5.01

1.60

Total investments

(3)

6,444,016

6,720,395

37,709

32,465

2.37

1.94

Residential mortgage loans

2,841,918

2,810,304

41,484

40,473

5.92

5.78

Construction loans

232,295

218,854

5,596

4,537

9.77

8.32

C&I and commercial mortgage loans

5,806,929

5,504,782

99,759

99,074

6.97

7.22

Finance leases

901,768

863,685

17,854

17,127

8.03

7.95

Consumer loans

2,849,591

2,810,215

80,898

79,640

11.51

11.37

Total loans

(4)(5)

12,632,501

12,207,840

245,591

240,851

7.88

7.91

Total interest-earning assets

19,076,517

18,928,235

283,300

273,316

6.02

5.79

Interest-bearing liabilities:

Time deposits

3,048,778

2,892,355

25,468

24,410

3.39

Brokered CDs

483,774

749,760

5,461

9,680

4.58

5.18

Other interest-bearing deposits

7,693,900

7,534,344

27,568

28,935

1.45

1.54

Advances from the FHLB

468,667

500,000

5,190

5,610

4.49

4.50

Other borrowings

53,892

161,700

981

3,350

7.38

8.31

Total interest-bearing liabilities

11,749,011

11,838,159

64,668

71,985

2.23

2.44

Net interest income on a tax-equivalent basis and excluding

valuations - non-GAAP

218,632

201,331

Interest rate spread

3.79

3.35

Net interest margin

4.65

4.27

(1)

On an adjusted tax-equivalent basis. The Corporation

estimated the adjusted tax-equivalent yield by dividing

the interest rate spread on exempt assets

by 1 less the Puerto Rico statutory tax

rate of

37.5% and

adding to

it the

cost of

interest-bearing liabilities.

The tax-equivalent

adjustment recognizes

the income

tax savings

when comparing

taxable and

tax-exempt assets.

Management

believes

that

it is

standard

practice

the

banking

industry

present

net

interest

income,

interest

rate

spread

and

net

interest

margin

fully

tax-equivalent

basis.

Therefore, management believes these

measures provide useful information to investors

by allowing them to make peer

comparisons. The Corporation excludes

changes in the fair value of

derivatives from interest income because the changes

in valuation do not affect interest received. See “Non-GAAP

Financial Measures and Reconciliations” above.

(2)

Government obligations include debt issued by government-sponsored

agencies.

(3)

Unrealized gains and losses on available-for-sale debt securities

are excluded from the average volumes.

(4)

Average loan balances include

the average of nonaccrual loans.

(5)

Interest income on loans includes

$5.4 million and $3.2 million

for the quarters ended March

31, 2025 and 2024, respectively,

of income from prepayment penalties

and late fees related to

the Corporation’s

loan portfolio.

The results

for the

first quarter

of 2025

include $0.7

million in

interest income

related to

prepayment

penalties

associated with

the payoff

of a

$73.8

million commercial mortgage loan, and higher income from late

fees in the consumer loans and finance leases portfolios.

Part II

Quarter Ended March 31,

2025 Compared to 2024

Variance due to:

Volume

Rate

Total

(In thousands)

Interest income on interest-earning assets:

Money market and other short-term investments

7,079

(2,128)

4,951

Government obligations

(2,460)

377

(2,083)

MBS

(674)

2,933

2,259

FHLB stock

(48)

(16)

(64)

Other investments

165

181

Total investments

3,913

1,331

5,244

Residential mortgage loans

459

552

1,011

Construction loans

291

768

1,059

C&I and commercial mortgage loans

5,294

(4,609)

685

Finance leases

761

(34)

727

Consumer loans

1,123

135

1,258

Total loans

7,928

(3,188)

4,740

Total interest income

11,841

(1,857)

9,984

Interest expense on interest-bearing liabilities:

Time deposits

1,321

(263)

1,058

Brokered CDs

(3,134)

(1,085)

(4,219)

Other interest-bearing deposits

583

(1,950)

(1,367)

Advances from the FHLB

(351)

(69)

(420)

Other borrowings

(2,022)

(347)

(2,369)

Total interest expense

(3,603)

(3,714)

(7,317)

Change in net interest income

15,444

1,857

17,301

Portions of the Corporation’s

interest-earning assets, mostly investments

in obligations of some U.S.

government agencies and U.S.

GSEs, generate

interest that

is exempt

from income

tax, principally

in Puerto

Rico. Also,

interest and

gains on

sales of

investments

held by

the Corporation’s

international banking

entities (“IBEs”)

are tax-exempt

under Puerto

Rico tax

law (see

Note 14

– “Income

Taxes”

to the

unaudited consolidated

financial statements

included herein

for additional

information).

Management believes

that the

presentation of interest income

on an adjusted tax-equivalent

basis facilitates the comparison

of all interest data related

to these assets.

The

Corporation

estimated

the

tax

equivalent

yield

dividing

the

interest

rate

spread

exempt

assets

less

the

Puerto

Rico

statutory

tax

rate

(37.5%)

and

adding

the

average

cost

interest-bearing

liabilities.

The

computation

considers

the

interest

expense disallowance required by Puerto Rico tax law.

Management

believes

that

the

presentation

net

interest

income,

excluding

the

effects

the

changes

the

fair

value

the

derivative

instruments

(“valuations”),

provides

additional

information

about

the

Corporation’s

net

interest

income

and

facilitates

comparability and analysis from

period to period. The changes

in the fair value of

the derivative instruments have

no effect on interest

earned on interest-earning assets.

The following

table reconciles

net interest

income in

accordance with

GAAP to

net interest

income, excluding

valuations, and

net

interest

income

adjusted

tax-equivalent

basis

for

the

indicated

periods.

The

table

also

reconciles

net

interest

spread

and

net

interest margin on a GAAP basis to these items excluding valuations, and

on an adjusted tax-equivalent basis:

Quarter Ended March 31,

2025

2024

(Dollars in thousands)

Interest income - GAAP

277,065

268,505

Unrealized loss (gain) on derivative instruments

(2)

Interest income excluding valuations - non-GAAP

277,068

268,503

Tax-equivalent adjustment

6,232

4,813

Interest income on a tax-equivalent basis

and excluding valuations - non-GAAP

283,300

273,316

Interest expense - GAAP

64,668

71,985

Net interest income - GAAP

212,397

196,520

Net interest income excluding valuations - non-GAAP

212,400

196,518

Net interest income on a tax-equivalent basis

and excluding valuations - non-GAAP

218,632

201,331

Average Balances

Loans and leases

12,632,501

12,207,840

Total securities, other short-term investments and interest-bearing

cash balances

6,444,016

6,720,395

Average interest-earning assets

19,076,517

18,928,235

Average interest-bearing liabilities

11,749,011

11,838,159

Average assets

(1)

19,107,102

18,858,299

Average non-interest-bearing deposits

5,425,836

5,308,531

Average Yield/Rate

Average yield on interest-earning assets - GAAP

5.89%

5.69%

Average rate on interest-bearing liabilities - GAAP

2.23%

2.44%

Net interest spread - GAAP

3.66%

3.25%

Net interest margin - GAAP

4.52%

4.16%

Average yield on interest-earning assets excluding valuations

- non-GAAP

5.89%

5.69%

Average rate on interest-bearing liabilities

2.23%

2.44%

Net interest spread excluding valuations

- non-GAAP

3.66%

3.25%

Net interest margin excluding valuations - non-GAAP

4.52%

4.16%

Average yield on interest-earning assets on a tax-equivalent

basis and excluding

valuations - non-GAAP

6.02%

5.79%

Average rate on interest-bearing liabilities

2.23%

2.44%

Net interest spread on a tax-equivalent basis

and excluding valuations - non-GAAP

3.79%

3.35%

Net interest margin on a tax-equivalent basis and excluding

valuations - non-GAAP

4.65%

4.27%

(1) Includes, among other things, the ACL on loans and finance leases

and debt securities, as well as unrealized gains and losses on available-for-sale

debt securities.

Net

interest

income

amounted

$212.4

million

for

the

quarter

ended

March

31,

2025,

increase

$15.9

million,

when

compared to $196.5 million for the same period in 2024. The $15.9

million increase in net interest income consisted of:

●

A $7.3 million decrease in interest expense on interest-bearing liabilities consisting

of:

●

A $4.5 million decrease in interest expense on interest-bearing deposits, consisting

of:

A $4.2 million

decrease in interest

expense on brokered

CDs, mainly due

to a $3.1

million decrease associated

with

a $266.0 million

decrease in the

average balance,

and a $1.1

million decrease mainly

associated with new

issuances

at lower interest rates than maturing brokered CDs.

A $1.4

million decrease

in interest

expense on

interest-bearing checking

and saving

accounts, mainly

due to

a $2.6

million

decrease

driven

the

effect

lower

interest

rates

when

compared

the

same

period

2024,

partially

offset by a $1.2 million increase associated with a $159.6 million increase

in the average balance.

Partially offset by:

$1.1

million

increase

in interest

expense

on time

deposits,

excluding

brokered CDs,

driven

by a

$156.4 million

increase in the average balance.

●

A $2.8

million decrease

in interest

expense on

borrowings, consisting

of a

$2.4 million

decrease in

interest expense

junior

subordinated debentures,

driven by

the $100.0

million redemption

of these

debentures during

the second

half of

2024,

and

$0.4

million

decrease

interest

expense

FHLB

advances,

mainly

associated

with

$31.3

million

decrease

the

average

balance

due

the

$180.0

million

FHLB

advances

that

matured

and

were

repaid

March

2025.

●

A $5.0 million

increase in interest income

from interest-bearing

cash balances, driven

by a $577.3

million net increase

in the

average

balances,

which

consisted

primarily

deposits

maintained

the

FED,

which

than

compensated

for

the

reduction in the federal funds rate.

●

A $4.2 million increase in interest income on loans,

consisting of:

A $2.0

million

increase

interest

income

consumer

loans and

finance

leases,

due

higher

yields

and

higher

income from late fees, mainly in the auto loans portfolio,

and a $77.5 million increase in the average balance, mainly

auto loans and finance leases.

A $1.2

million increase

in interest

income on

commercial and

construction loans,

driven by

a $5.2

million increase

associated with

a $315.6

million increase

in the

average balance,

partially offset

by a

$4.0 million

net decrease

due

to the effect of

lower interest rates on the

downward repricing of variable-rate

loans, which was compensated in

part

$1.2

million

interest

income

recognized

during

the first

quarter

2025

as a

result of

the

payoff

of a

$73.8

million commercial

mortgage loan,

of which

$0.7 million

related to

prepayment penalties

and the

remainder to

the

acceleration of unamortized net deferred fees.

March

31,

2025,

the

interest

rate

approximately

52%

the

Corporation’s

commercial

and

construction

loans was

tied to

variable

rates, with

33% based

upon SOFR

of 3

months

or less,

11%

based upon

the Prime

rate

index,

and 8%

based on

other

indexes.

For

the first

quarter of

2025,

the

average one

-month

SOFR decreased

101

bps,

the average

three-month SOFR decreased

105 bps,

and the average

Prime rate decreased

100 bps,

compared to

the average rates during the first quarter of 2024.

A $1.0

million increase

in interest

income on

residential mortgage

loans,

in part

due to

a $31.6

million increase

the average balance.

Net interest margin

for the first quarter

of 2025 was

4.52%, an increase

of 36 bps,

compared to 4.16%

for the same

period in 2024.

The increase in the net

interest margin mostly reflects

a change in asset mix

associated with the deployment of cash

flows from lower-

yielding investment

securities to higher-yielding

interest-earning assets, and

a decrease in

the cost of

interest-bearing liabilities due

the effect of lower

interest rates on deposits and

the aforementioned redemption of

junior subordinated debentures.

These factors were

partially offset

by the

downward repricing

of variable-rate

commercial

loans and

a lower

federal funds

rate on

cash deposited

at the

FED.

Provision for Credit Losses

The provision

for credit

losses consists of

provisions for

credit losses on

loans and

finance leases,

unfunded loan

commitments, as

well as the debt securities portfolio. The principal changes in the provision

for credit losses by main categories follow:

Provision for credit losses for

loans and finance leases

The

provision

for

credit

losses

for

loans

and

finance

leases

was

$24.8

million

for

the

first

quarter

2025,

compared

$12.9

million

for

the

first

quarter

2024.

The

provision

for

the

first

quarter

2025

includes

increase

$2.7

million

qualitative

adjustments due to the uncertainty in the economic environment. The

variances by major portfolio category were as follows:

●

Provision

for

credit losses

for

the commercial

and

construction

loan

portfolios

was an

expense

of $4.6

million

for

the first

quarter of 2025,

compared to a

net benefit of

$2.6 million for

the first quarter

of 2024. The

expense recorded during

the first

quarter of

2025 was

driven by

the impact of

renewals of

lines of

credit, updated financial

information of

certain commercial

borrowers, and a deterioration

in the economic outlook

of the forecasted commercial

real estate (“CRE”) price

index.

The net

benefit

recorded

during

the

first

quarter

2024

was

driven

$5.0

million

recovery

C&I

loan

the

Puerto

Rico

region,

partially offset by increased volume.

●

Provision

for

credit losses

for

the consumer

loan

and

finance lease

portfolios

was an

expense

of $19.2

million

for

the first

quarter of 2025, compared

to an expense of $16.0

million for the first quarter

of 2024. The increase in

provision expense was

driven by a $7.1

million decrease in recoveries

associated with the bulk

sales of fully charged

-off loans and

the impact of the

aforementioned

higher

qualitative

adjustments,

partially

offset

lower

volume

and

improvements

macroeconomic

variables, mainly in the projection of the unemployment rate.

●

Provision for

credit losses

for the

residential mortgage

loan portfolio

was an

expense of

$1.0 million

for the

first quarter

2025, compared to a net benefit of $0.5 million for the first quarter of 2024.

Provision for credit losses for

unfunded loan commitments

The

provision

for

credit losses

for

unfunded

commercial

and

construction

loan

commitments and

standby

letters of

credit for

the

first quarter of 2025 was a net benefit of $63 thousand, compared to

an expense of $0.3 million for the first quarter of 2024.

Provision for credit losses for

debt securities

The

provision

for

credit losses

for

held-to-maturity

and available-for

-sale debt

securities was

an expense

of $36

thousand

for

the

first

quarter

2025,

compared

net

benefit

$1.0

million

for

the

first

quarter

2024.

The

net

benefit

recorded

for

the

first

quarter of

2024 was

driven by

improvements in

the underlying

updated financial

information of

certain Puerto

Rico municipal

bond

issuers.

Non-Interest Income

Non-interest income amounted to $35.7 million for the

first quarter of 2025, compared to $34.0 million for

the same period in 2024.

The

$1.7

million

increase

in non

-interest income

was primarily

due

a $1.0

million

increase

other

non-interest

income,

mainly

related to

a $1.7 million

increase related to

higher realized

gains from

purchased income tax

credits, partially

offset by

a $0.7

million

decrease in insurance proceeds collected during the first quarter of 2024 associated

with property damage caused by Hurricane Fiona.

Non-Interest Expenses

Non-interest expenses

for the quarter

ended March 31,

2025 amounted

to $123.0 million,

compared to

$120.9 million for

the same

period in

2024. The

efficiency ratio

for the

first quarter

of 2025

was 49.58%, compared

to 52.46% for

the first quarter

of 2024.

Non-

interest expenses

for the

first quarter

of 2024

include the

$0.9 million

additional FDIC

special assessment

expense. See

“Non-GAAP

Financial Measures and

Reconciliations” above for

additional information. On

a non-GAAP basis, excluding

the effect of

this Special

Item, adjusted non-interest expenses increased by $3.0 million

primarily due to:

●

A $2.6

million increase

in employees’

compensation and

benefits expenses,

driven by

a $2.1

million increase

in bonuses,

which

includes

a $0.8

million increase

in stock-based

compensation expense,

of which

$0.4 million

was associated

with

retirement-eligible employees.

●

$1.2

million

increase

occupancy

and

equipment

expenses,

primarily

reflecting

increases

software

maintenance

charges and a decrease in the property tax accrual during

the first quarter of 2024.

Partially offset by:

●

A $1.2

million

decrease

in professional

service

fees,

mainly

due

a $1.1

million

decrease

consulting

fees

driven by

information

technology

infrastructure

enhancements

during

the

first

quarter

2024

and

$0.8

million

decrease

collections, appraisals and other credit-related fees, partially offset

by a $0.5 million increase in outsourcing fees.

Income Taxes

For the

first quarter

of 2025,

the Corporation

recorded an

income tax

expense of

$23.2 million,

compared to

$23.9 million

for the

same period in 2024.

The

Corporation’s

annual effective

tax rate,

excluding

entities with

pre-tax

losses from

which

a tax

benefit cannot

be recognized

and discrete

items, was

23.7% for

the first quarter

of 2025,

compared to

24.3% for

the same

period in

2024. The

effective tax

rate of

the Corporation

is impacted

by,

among other

things, the

relationship of

taxable to

exempt income.

See Note

14 –

“Income Taxes

”

the unaudited consolidated financial statements herein for additional

information.

March

31,

2025,

the

Corporation

had

net

deferred

tax

asset

$134.3

million,

net

valuation

allowance

$108.7

million,

compared to

a net

deferred tax

asset of

$136.4

million,

net of

a valuation

allowance of

$119.1

million,

as of

December 31,

2024.

The decrease

in the

net deferred

tax assets

was mainly

related to

the usage

of alternative

minimum tax

credits. Meanwhile,

the

decrease

in the

valuation

allowance was

primarily

to changes

in the

market value

of available

-for-sale

debt

securities which

resulted in an equal change

in the net deferred tax assets

without impacting earnings as

they are fully reserved

as the Corporation does

not expect to realize such benefits.

Assets

The

Corporation’s

total

assets

were

$19.1

billion

March

31,

2025,

decrease

$185.9

million

from

December

31,

2024,

primarily related

to cash

inflows received

from repayments

from the

investment securities

and loan

portfolios that

were used

for the

repayment of long-term

borrowings,

fund the decrease

in total deposits, and

support capital deployment

actions, partially offset

by the

increase in the fair value of available-for-sale debt securities due to changes in market

interest rates.

Loans Receivable, including Loans Held for Sale

As of March 31,

2025,

the Corporation’s

total loan portfolio before

the ACL amounted to

$12.7 billion, a decrease

of $71.7 million

compared

December

31,

2024,

which

$64.4

million

was

commercial

and

construction

loans.

the

Puerto

Rico

region,

commercial and

construction loans decreased

by $144.7 million

driven by the

payoff of

a $73.8 million

commercial mortgage loan

the

hospitality

industry

and

$49.0

million

reduction

balance

floor

plan

lines

credit.

Meanwhile,

the

Florida

region,

commercial and

construction loans

increased by

$49.3 million

mainly due

to the

origination of

four commercial

loans totaling

$55.3

million. In the

Virgin

Islands region, commercial

and construction

loans increased by

$31.0 million, as

compared to the

balance as of

December 31, 2024, mainly associated with a $15.6 million disbursement

of a government line of credit.

As of

March 31,

2025, the

Corporation’s

loans held-for-investment

portfolio was

comprised of

commercial and

construction loans

(49%),

consumer

loans

and

finance

leases

(29%),

and

residential

real

estate

loans

(22%).

the

total

gross

loan

portfolio

held

for

investment of

$12.7 billion

as of

March 31,

2025, the

Corporation had

credit risk

concentration of

approximately 78%

in the

Puerto

Rico region,

18% in

the United

States region

(mainly

in the

state of

Florida),

and

4% in

the Virgin

Islands region,

as shown

in the

following table:

As of March 31, 2025

Puerto Rico

Virgin Islands

United States

Total

(In thousands)

Residential mortgage loans

2,181,346

153,307

503,193

2,837,846

Construction loans

183,220

10,571

40,650

234,441

Commercial mortgage loans

1,706,319

75,083

720,287

2,501,689

C&I loans

2,140,246

149,032

1,070,590

3,359,868

Total commercial loans

4,029,785

234,686

1,831,527

6,095,998

Consumer loans and finance leases

3,667,243

68,833

5,478

3,741,554

Total loans held for investment,

gross

9,878,374

456,826

2,340,198

12,675,398

Loans held for sale

14,713

Total loans, gross

9,893,087

456,826

2,340,198

12,690,111

As of December 31, 2024

Puerto Rico

Virgin Islands

United States

Total

(In thousands)

Residential mortgage loans

2,166,980

156,225

505,226

2,828,431

Construction loans

181,607

2,820

43,969

228,396

Commercial mortgage loans

1,800,445

67,449

698,090

2,565,984

C&I loans

2,192,468

133,407

1,040,163

3,366,038

Total commercial loans

4,174,520

203,676

1,782,222

6,160,418

Consumer loans and finance leases

3,680,628

69,577

7,502

3,757,707

Total loans held for investment,

gross

10,022,128

429,478

2,294,950

12,746,556

Loans held for sale

14,558

434

284

15,276

Total loans, gross

10,036,686

429,912

2,295,234

12,761,832

See “Risk Management –

Exposure to Puerto Rico Government”

and “Risk Management –

Exposure to USVI Government”

below

for information on the Corporation’s

credit exposure to PR and USVI government entities.

As of

March 31,

2025, the

Corporation’s

total commercial

mortgage loan

exposure amounted

to $2.5

billion, or

20% of

the total

loan portfolio.

In terms

of geography,

$1.7 billion

of the

exposure was

in the

Puerto Rico

region, $0.7

billion of

the exposure

was in

the

Florida

region,

and

$0.1

billion

the

exposure

was

the

Virgin

Islands

region.

The

$1.7

billion

exposure

in the

Puerto

Rico

region was

comprised mainly

of 42%

in the

retail industry,

26% in

office real

estate, and

19% in

the hotel

industry.

The $0.7

billion

exposure

in the

Florida region

was comprised

mainly of

35% in

the retail

industry,

21% in

the hotel

industry,

and 8%

in office

real

estate. Of

the Corporation’s

total commercial

mortgage

loan exposure

of $2.5

billion, $519.4

million matures

or reprices

within the

months.

this

amount,

$374.7

million

matures

within

the

months

and

has

weighted-average

interest

rate

approximately

6.26%.

Commercial

mortgage

loan

exposure

the

office

real

estate

industry,

which

matures

within

the

months, amounted to $119.3 million and has

a weighted-average interest rate of approximately 6.22%.

As of

each of

March 31,

2025 and

December 31,

2024, the

Corporation’s

total exposure

to shared

national credit

(“SNC”) loans

(including unused commitments)

amounted to $1.3

billion. As of March

31, 2025, approximately $359.4

million of the SNC

exposure

is related to the portfolio in the Puerto Rico region and $896.7 million is related

to the portfolio in the Florida region.

Loan Production

First BanCorp.

relies primarily

on its

retail network

of branches

to originate

residential and

consumer loans.

The Corporation

may

supplement

its residential

mortgage originations

with wholesale

servicing released

mortgage loan

purchases from

mortgage bankers.

The

Corporation

manages

its

construction

and

commercial

loan

originations

through

centralized

units

and

most

its

originations

come

from

existing

customers,

well

through

referrals

and

direct

solicitations.

Auto

loans

and

finance

leases

originations

rely

primarily on relationships with auto dealers and dedicated sales professionals who

serve selected locations to facilitate originations.

The

following

table

provides

breakdown

First

BanCorp.’s

loan

production,

including

purchases,

refinancings,

renewals

and

draws from existing revolving and non-revolving commitments by geographic

segment,

for the indicated periods:

Quarter Ended March 31,

2025

2024

(In thousands)

Puerto Rico:

Residential mortgage

101,420

67,643

Construction

26,714

35,651

Commercial mortgage

4,284

17,902

C&I

364,188

405,219

Consumer

369,436

393,906

Total loan production

866,042

920,321

Virgin Islands:

Residential mortgage

723

1,426

Construction

7,801

Commercial mortgage

8,450

125

C&I

24,465

11,109

Consumer

7,758

7,896

Total loan production

49,197

20,556

Florida:

Residential mortgage

11,687

19,101

Construction

14,791

11,046

Commercial mortgage

47,621

57,629

C&I

186,913

172,167

Consumer

333

457

Total loan production

261,345

260,400

Total:

Residential mortgage

113,830

88,170

Construction

49,306

46,697

Commercial mortgage

60,355

75,656

C&I

575,566

588,495

Consumer

377,527

402,259

Total loan production

1,176,584

1,201,277

Commercial

and

construction

loan

originations

(excluding

government

loans)

for the

quarter ended

March 31,

2025

amounted

$656.3

million,

compared

to $675.1

million

for

the

first

quarter

of 2024.

The

decrease of

$18.8

million

the first

quarter

of 2025

consisted of

a decrease

of $42.9

million in

the Puerto

Rico region,

partially offset

by increases

of $15.6

million in

the Virgin

Islands

region and $8.5 million in the Florida region.

Government

loan

originations

for

the

quarter

ended

March

31,

2025

amounted

$28.9

million,

decrease

$6.9

million,

compared to $35.8 million for the first quarter of 2024.

Originations

auto

loans

and

finance

leases

for

the

quarter

ended

March

31,

2025

amounted

$227.7

million,

compared

$228.0 million for the

first quarter of 2024.

Other consumer loan originations

other than credit cards,

for the quarter ended

March 31,

2025

amounted to

$47.6 million,

compared to

$59.9 million

for the

first quarter

of 2024.

The utilization

activity on

the outstanding

credit

card

portfolio

for

the

quarter

ended

March

31,

2025

amounted

$102.2

million,

compared

$114.3

million

for

the

same

period in 2024.

Investment Activities

part

its

liquidity,

revenue

diversification,

and

interest

rate

risk

management

strategies,

First

BanCorp.

maintains

debt

securities portfolio classified as available for sale or held to maturity.

Substantially

all

the

Corporation’s

available-for-sale

debt

securities

portfolio

was

invested

U.S.

government

and

agencies

debentures

and

fixed-rate

GSEs’

MBS.

The

Corporation’s

total

available-for-sale

debt

securities

portfolio

March

31,

2025

amounted to $4.3 billion, a $252.4 million

decrease from December 31, 2024. The decrease was driven

by $241.0 million in maturities

U.S.

agencies

debentures

and

U.S.

Treasury

securities

and

$106.3

million

principal

repayments

U.S.

agencies

MBS

and

debentures,

partially

offset

the

$84.1

million

increase

fair

value

attributable

changes

market

interest

rates,

and

approximately $12.3

million in

purchases of

GNMA MBS,

of which

$7.3 million

were commercial

MBS. As of

March 31, 2025,

the

Corporation

had

net

unrealized

loss

available-for-sale

debt

securities

$475.5

million.

This

net

unrealized

loss

primarily

attributable to

instruments on books

carrying a lower

interest rate than

market rates. The

Corporation expects

that this unrealized

loss

will reverse over time and it is likely that it will not be required

to sell the securities before their anticipated recovery.

The Corporation

expects the portfolio will

continue to decrease and

the accumulated other comprehensive

loss will decrease accordingly,

excluding the

impact of

market interest

rates. As

of March

31, 2025,

cash inflows

of approximately

$1.5 billion

are expected

to be

received during

the

twelve

months

from

maturities

and

expected

prepayments

the

available-for-sale

debt

securities

portfolio

which

has

average yield of 1.21%,

of which $1.3 billion are

expected to be received during

the remainder of 2025. These

inflows are expected to

be redeployed

to fund

loan growth,

reinvested into

higher-yielding

securities,

or used

to repay

maturing brokered

CDs. See

Note 2

–

“Debt Securities” for information and details about the Corporation’s

available-for-sale debt securities portfolio.

Held-to-maturity

debt

securities

include

fixed-rate

GSEs’

MBS

with

carrying

value

$220.3

million

(fair

value

$209.5

million) as of March 31,

2025, compared to $225.3 million as

of December 31, 2024. The decrease

in GSEs’ MBS was driven by

$5.1

million in principal

repayments. Held-to-maturity

debt securities also

include $92.5

million as of

March 31, 2025,

compared to $92.4

million

December

31,

2024,

financing

arrangements

with

Puerto

Rico

municipalities

issued

bond

form,

which

the

Corporation

accounts

for

securities,

but

which

were

underwritten

loans

with

features

that

are

typically

found

commercial

loans. As of

March 31, 2025, approximately

57% of the Corporation’s

municipal bonds consisted

of obligations issued

by three of the

largest municipalities in Puerto Rico.

See

“Risk Management

–

Exposure

to Puerto

Rico

Government”

below

for

information

and

details

about

the Corporation’s

total

direct exposure

to the

Puerto Rico

government, including

municipalities,

and “Risk

Management

– Credit

Risk Management”

below

and Note 2 – “Debt Securities” for the ACL of the exposure to Puerto

Rico municipal bonds.

The carrying

values of

debt securities

as of

March 31,

2025 and

December 31,

2024 by

contractual maturity

(excluding MBS)

and

weighted-average yield, are shown below:

March 31, 2025

December 31, 2024

Weighted-

Average Yield

Carrying

Amount

Weighted-

Average Yield

Carrying

Amount

(Dollars in thousands)

Available-for-sale

debt securities, at fair value

U.S government and agencies obligations:

Due within one year

0.72

1,017,241

0.79

1,127,041

Due after one year through five years

0.98

653,193

0.96

764,679

Due after ten years

4.69

7,549

4.73

7,800

0.84

1,677,983

(1)

0.87

1,899,520

Puerto Rico government obligation:

Due after ten years

1,599

1,620

MBS:

Residential

1.79

2,441,885

1.79

2,481,253

Commercial

2.23

190,417

2.12

181,909

Total MBS

1.82

2,632,302

1.82

2,663,162

Other:

Due within one year

2.31

1,000

2.32

1,000

Total available-for-sale

debt securities, at fair value

1.46

4,312,884

1.45

4,565,302

Held-to-maturity debt securities, at amortized cost

Puerto Rico municipal bonds:

Due within one year

4.87

2,297

5.07

2,214

Due after one year through five years

7.19

62,792

7.33

61,289

Due after five years through ten years

5.07

11,678

5.79

13,184

Due after ten years

7.78

15,755

8.07

15,755

6.97

92,522

7.18

92,442

ACL on held-to-maturity debt securities

(843)

(802)

MBS:

Residential

3.88

125,556

3.86

129,319

Commercial

2.05

94,729

3.88

96,025

Total MBS

3.09

220,285

3.87

225,344

Total held-to-maturity

debt securities, at amortized cost

4.24

311,964

4.83

316,984

Total debt securities

1.63

4,624,848

1.65

4,882,286

(1)

Includes approximately

$1.2 billion in

callable debt

securities with

an average yield

of 0.79% of

which approximately

65% were

purchased at a

discount and

2% at a

premium. See

“Risk

Management” below

for further

analysis of

the effects

of changing

interest rates

on the

Corporation's net

interest income

and the

Corporation's interest

risk management

strategies. Also,

refer to Note 2 - “Debt Securities” for additional information regarding

the Corporation's debt securities portfolio.

RISK MANAGEMENT

General

Risks

are

inherent

virtually

all

aspects

the

Corporation’s

business

activities

and

operations.

Consequently,

effective

risk

management

fundamental

the

success

the

Corporation.

The

primary

goals

risk

management

are

ensure

that

the

Corporation’s

risk-taking activities are

consistent with the

Corporation’s

objectives and risk

tolerance, and that

there is an appropriate

balance between risks and rewards to maximize stockholder value.

The

Corporation

has

place

risk

management

framework

monitor,

evaluate

and

manage

the

principal

risks

assumed

conducting its activities. First BanCorp.’s

business is subject to eleven

broad categories of risks: (i) liquidity

risk; (ii) interest rate risk;

(iii) market risk; (iv)

credit risk; (v) operational

risk; (vi) legal and

regulatory risk; (vii)

reputational risk; (viii) model

risk; (ix) capital

risk; (x)

strategic risk;

and (xi)

information technology

risk. First

BanCorp. has

adopted policies

and procedures

designed to

identify

and manage the risks to which the Corporation is exposed.

The

Corporation’s

risk

management

policies

are

described

below,

well

Part

II,

Item

“Management’s

Discussion

and

Analysis of Financial Condition and Results of Operations,” in the 2024

Annual Report on Form 10-K.

Liquidity Risk and Capital Adequacy

Liquidity

risk

involves

the

ongoing

ability

accommodate

liability

maturities

and

deposit

withdrawals,

fund

asset growth

and

business operations,

and meet

contractual obligations

through unconstrained

access to funding

at reasonable

market rates. Liquidity

management

involves

forecasting

funding

requirements

and

maintaining

sufficient

capacity

meet

liquidity

needs

and

accommodate

fluctuations

asset

and

liability

levels

due

changes

the

Corporation’s

business

operations

unanticipated

events.

The Corporation

manages liquidity

at two

levels. The

first is

the liquidity

of the

parent company,

or First

Bancorp., which

is the

holding

company

that

owns

the

banking

and

non-banking

subsidiaries.

The

second

the

liquidity

the

banking

subsidiary,

FirstBank.

The

Asset

and

Liability

Committee

the

Corporation’s

Board

Directors

responsible

for

overseeing

management’s

establishment

the

Corporation’s

liquidity

policy,

well

approving

operating

and

contingency

procedures

and

monitoring

liquidity

ongoing

basis.

The

Management’s

Investment

and

Asset

Liability

Committee

(“MIALCO”),

which

reports

the

Board’s

Asset

and

Liability

Committee,

uses

measures

liquidity

developed

management

that

involve

the

use

several

assumptions

review

the

Corporation’s

liquidity

position

monthly

basis.

The

MIALCO

oversees

liquidity

management,

interest rate risk, market risk, and other related matters.

The MIALCO is composed of

senior management officers, including

the Chief Executive Officer,

the Chief Financial Officer,

the

Chief Risk

Officer,

the Treasurer,

the Chief

Consumer Officer

and Corporate

Chief of

Staff, the

Corporate

Strategic and

Business

Development

Director,

the

Treasury

and

Investments

Risk

Manager,

the

Financial

Planning

and

Asset

and

Liability

Management

(“ALM”) Director,

and the

Chief Credit

Officer.

The Treasury

and Investments

Division is

responsible for

planning and

executing

the

Corporation’s

funding

activities

and

strategy,

monitoring

liquidity

availability

daily,

and

reviewing

liquidity

measures

weekly

basis.

The

Investments

Accounting

and

Operations

area

the

Corporate

Controller’s

Department

responsible

for

calculating the

liquidity measurements

used by

the Treasury

and Investment

Division to

review the

Corporation’s

liquidity position

on a weekly basis. The Financial Planning and ALM Division is responsible

for operating the liquidity and interest rate risk models.

ensure

adequate liquidity

through the

full range

of potential

operating

environments and

market conditions,

the Corporation

conducts

its

liquidity

management

and

business

activities

manner

that

intended

preserve

and

enhance

funding

stability,

flexibility,

and

diversity.

Key

components

this

operating

strategy

include

strong

focus

the

continued

development

customer-based

funding, the

maintenance

of direct

relationships with

wholesale

market funding

providers, and

the maintenance

the ability to liquidate certain assets when, and if, requirements warrant.

The

Corporation

develops

and

maintains

contingency

funding

plans.

These

plans

evaluate

the

Corporation’s

liquidity

position

under various

operating circumstances

and are

designed to

help ensure

that the

Corporation will

be able

to operate

through periods

of stress when

access to normal

sources of funds

is constrained. The

plans project funding

requirements during

a potential period

stress, specify and quantify sources of liquidity,

outline actions and procedures for effectively managing

liquidity through a period of

stress, and

define roles

and responsibilities

for the

Corporation’s

employees. Under

the contingency

funding plans,

the Corporation

stresses the

balance sheet

and the

liquidity position

to critical levels

that mimic

difficulties in

generating funds

or even maintaining

the current

funding position

of the

Corporation and

the Bank

and are

designed to

help ensure

the ability

of the

Corporation and

the

Bank to honor

their respective commitments.

The Corporation has

established liquidity

triggers that the

MIALCO monitors in

order

to maintain the

ordinary funding of

the banking business.

The MIALCO has

developed contingency funding

plans for the

following

three

scenarios:

credit rating

downgrade,

economic

cycle

downturn

event,

and

concentration

event.

The

Board’s

Asset and

Liability Committee reviews and approves these plans on an annual basis.

Liquidity Risk Management

The Corporation manages

its liquidity in

a proactive manner and

in an effort

to maintain a sound

liquidity position. It uses

multiple

measures

to monitor

its liquidity

position,

including

core

liquidity,

basic

liquidity,

and time-based

reserve

measures. Cash

and

cash

equivalents

amounted

$1.3

billion

as of

March

31,

2025,

compared

$1.2

billion

as of

December

31,

2024.

When

adding

$1.4

billion

free

high-quality

liquid

securities

that

could

liquidated

pledged

within

one

day

(which

includes

assets

such

as U.S.

government and

GSEs obligations),

the total

core liquidity

amounted to

$2.7 billion

as of

March 31,

2025, or

14.25% of

total assets,

compared to $2.4 billion, or 12.54%

of total assets as of December 31, 2024.

addition

the

aforementioned

$2.7

billion

cash

and

free

high

quality

liquid

assets,

the

Corporation

had

$862.2

million

available

for

credit

with

the FHLB

based

the

value

of loan

collateral

pledged

with

the

FHLB.

such,

the

basic

liquidity

ratio

(which

adds

such

available

secured

lines

credit

the

core

liquidity)

was

approximately

18.76%

total

assets

March

31,

2025,

compared to 17.27% of total assets as of December 31, 2024.

Further,

the

Corporation

also

maintains

borrowing

capacity

the

FED

Discount

Window

and

had

approximately

$2.6

billion

available for

funding under

the FED’s

Borrower-in-Custody (“BIC”)

Program as

of each

of March

31, 2025

and December

31, 2024

as an

additional

source of

liquidity.

Total

loans pledged

to the

FED BIC

Program

amounted to

$3.4 billion

as of

each of

March 31,

2025 and December 31, 2024. The

Corporation does not rely on uncommitted

inter-bank lines of credit (federal

funds lines) to fund its

operations.

the

aggregate,

March

31,

2025,

the

Corporation

had

$6.2

billion

available

meet

liquidity

needs,

133%

estimated uninsured

deposits, excluding

fully collateralized

government deposits,

compared to

$5.9 billion

or 124%,

respectively,

of December 31, 2024.

Liquidity

the Bank

level

is highly

dependent

bank deposits,

which

fund

88.3%

of the

Bank’s

assets (or

85.8%

excluding

brokered CDs).

In addition,

as further

discussed below,

the Corporation

maintains a

diversified base

of readily

available wholesale

funding

sources,

including

advances

from

the

FHLB

through

pledged

borrowing

capacity,

securities

sold

under

agreements

repurchase, and access to brokered CDs. Funding

through wholesale funding may continue to increase

the overall cost of funding for

the Corporation and adversely affect the net interest margin.

Commitments to extend credit and standby

letters of credit

provider

financial

services,

the

Corporation

routinely

enters

into

commitments

with

off-balance

sheet

risk

meet

the

financial

needs

its

customers.

These

financial

instruments

may

include

loan

commitments

and

standby

letters

credit.

These

commitments

are

subject

the

same

credit

policies

and

approval

processes

used

for

on-balance

sheet

instruments.

These

instruments involve, to varying degrees,

elements of credit and interest rate risk

in excess of the amount recognized in the

statements

financial

condition.

March

31,

2025,

the

Corporation’s

commitments

extend

credit

amounted

approximately

$2.1

billion.

Commitments

extend

credit

are

agreements

lend

customer

long

there

violation

any

condition

established

the

contract.

Since

certain

commitments

are

expected

expire

without

being

drawn

upon,

the

total

commitment

amount does

not necessarily

represent future

cash requirements. For

most of the

commercial lines of

credit, the

Corporation has

the

option

reevaluate

the

agreement

prior

additional

disbursements.

There

have

been

significant

unexpected

draws

existing commitments. In the case of

credit cards and personal lines

of credit, the Corporation can

cancel the unused credit facility

any time and without cause.

The following table summarizes commitments to extend credit and standby letters of

credit as of the indicated dates:

March 31, 2025

December 31, 2024

(In thousands)

Financial instruments whose contract amounts represent credit risk:

Commitments to extend credit:

Construction undisbursed funds

256,856

283,302

Unused credit card lines

793,955

787,849

Unused personal lines of credit

36,796

37,140

Commercial lines of credit

1,041,840

1,053,938

Letters of credit:

Commercial letters of credit

40,989

41,738

Standby letters of credit

21,355

24,635

The

Corporation

engages

the ordinary

course

of business

other

financial

transactions

that

are not

recorded

on the

balance

sheet

may

recorded

the

balance

sheet

amounts

that

are

different

from

the

full

contract

notional

amount

the

transaction

and, thus,

affect

the Corporation’s

liquidity position.

These transactions

are designed

to (i)

meet the

financial needs

customers, (ii) manage the

Corporation’s credit,

market and liquidity risks, (iii)

diversify the Corporation’s

funding sources, and (iv)

optimize capital.

In addition to the

aforementioned off-balance

sheet debt obligations

and unfunded commitments

to extend credit,

the Corporation

has obligations and commitments to make future

payments under contracts, amounting to approximately

$4.0 billion as of March 31,

2025.

Our

material

cash

requirements

comprise

primarily

contractual

obligations

make

future

payments

time

deposits,

long-term

borrowings,

and operating

lease obligations.

also have

other contractual

cash obligations

to certain

binding agreements

we have

entered into

for services

including outsourcing

of technology

services, security,

advertising and

other

services

which

are

not

material

our

liquidity

needs.

currently

anticipate

that

our

available

funds,

credit

facilities,

and

cash

flows from

operations will

be sufficient

to meet

our operational

cash needs

and support

loan growth

and capital

plan execution

for

the foreseeable future.

Off-balance sheet

transactions are continuously

monitored to consider

their potential impact

to our liquidity

position and changes

are applied to the balance between sources and uses of funds, as deemed appropriate,

to maintain a sound liquidity position.

Sources of Funding

The Corporation

utilizes different

sources of

funding to

help ensure

that adequate

levels of

liquidity are

available when

needed.

Diversification

funding

sources

great

importance

protect

the

Corporation’s

liquidity

from

market

disruptions.

The

principal

sources

short-term

funding

are

deposits,

including

brokered

CDs.

Additional

funding

provided

securities

sold

under agreements

to repurchase and

lines of credit

with the FHLB.

In addition,

the Corporation also

maintains as additional

sources

borrowing capacity at the FED’s BIC Program

as discussed above.

The Asset and Liability Committee reviews credit availability

on a regular basis. The Corporation may

also sell mortgage loans as

a supplementary source of funding and obtain long-term funding

through the issuance of notes and long-term brokered CDs.

While

liquidity

ongoing

challenge

for

all

financial

institutions,

management

believes

that

the

Corporation’s

available

borrowing capacity and

efforts to grow

core deposits will be

adequate to provide

the necessary funding

for the Corporation’s

business

plans in the next 12 months and beyond.

Retail

and

commercial

core

deposits

–

The

Corporation’s

deposit

products

include

regular

saving

accounts,

demand

deposit

accounts,

money

market

accounts,

and

retail

CDs.

each

March

31,

2025

and

December

31,

2024,

the

Corporation’s

core

deposits,

which

exclude

government

deposits

and

brokered

CDs,

totaled

$12.9

billion.

The

$29.0

million

increase

such

deposits

consisted of

increases of $75.0

million in the

Puerto Rico region

and $38.9 million

in the Virgin

Islands region,

partially offset

by an

$84.9

million

decrease

the Florida

region.

This

growth

includes

increases

$74.8

million

time

deposits

and

$69.8

million

non-interest-bearing deposits.

Government deposits

(fully collateralized)

– As

of March

31, 2025,

the Corporation

had $2.9

billion of

Puerto Rico

public sector

deposits

($2.8

billion

transactional

accounts

and

$161.0

million

time

deposits),

compared

$3.1

billion

December

31,

2024.

Government

deposits

are

insured

the

FDIC

the

applicable

limits

and

the

uninsured

portions

are

fully

collateralized.

Approximately

19% of

the public

sector

deposits as

March

31,

2025 were

from municipalities

and

municipal

agencies

Puerto

Rico and 81% were from public corporations, the central

government and its agencies, and U.S. federal government agencies in Puerto

Rico.

addition,

March

31,

2025,

the

Corporation

had

$0.5

billion

government

deposits

the

Virgin

Islands

region,

compared to $0.4 billion as of December 31, 2024.

The

uninsured

portions of

government

deposits were

collateralized

by securities

and

loans with

an amortized

cost of

$3.4

billion

and $3.7

billion as

of March

31, 2025

and December

31, 2024,

respectively,

and an

estimated market

value of

$3.1 billion

and $3.3

billion

March

31,

2025

and

December

31,

2024,

respectively.

addition

securities

and

loans,

March

31,

2025

and

December 31,

2024, the

Corporation used

$275.0 million

and $175.0

million, respectively,

in letters

of credit

issued by

the FHLB

pledges for a portion of public deposits in the Virgin

Islands.

Estimate

Uninsured

Deposits

–

March

31,

2025

and

December

31,

2024,

the

estimated

amounts

uninsured

deposits

totaled $7.8

billion and

$8.1 billion,

respectively,

generally representing

the portion

of deposits

that exceed

the FDIC

insurance limit

$250,000

and

amounts

any

other

uninsured

deposit

account.

March

31,

2025

and

December

31,

2024,

the

uninsured

portion

fully

collateralized

government

deposits

amounted

$3.2

billion

and

$3.3

billion,

respectively.

Excluding

fully

collateralized government

deposits, the estimated

amounts of uninsured

deposits amounted to

$4.6 billion, which

represent 28.44%

total deposits (excluding brokered CDs), as of March 31, 2025, compared

to $4.8 billion, or 29.36%, as of December 31, 2024.

The

amount of

uninsured

deposits

is calculated

based on

the

same

methodologies

and assumptions

used for

our bank

regulatory

reporting requirements adjusted for cash held by wholly-owned subsidiaries

at the Bank.

The following table presents by contractual maturities the amount of U.S. time deposits in

excess of FDIC insurance limits (over

$250,000) and other time deposits that are otherwise uninsured as of March

31, 2025:

(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

286,962

289,277

393,756

130,780

1,100,775

Other uninsured time deposits

24,408

9,374

16,570

4,015

54,367

Brokered

CDs

– Total

brokered CDs increased

by $4.3 million

to $482.5 million

as of March 31,

2025. The increase

reflects $40.0

million of

new issuances

with original

average maturities

of approximately

1.4 years

and an

all-in cost

of 4.36%,

partially offset

maturing brokered CDs amounting to $35.7 million with an all-in cost of

4.89% that were paid off during the first quarter of 2025.

The average remaining term to maturity of the brokered CDs outstanding

as of March 31, 2025 was approximately 1.4 years.

The future use

of brokered

CDs will depend

on multiple factors

including excess

liquidity at each

of the regions,

future cash needs

and

any

tax implications.

Also,

depending

lending or

other

investment

opportunities available,

cash

inflows from

repayments

investment securities

may be used

as well

to repay brokered

CDs. Brokered

CDs are insured

by the FDIC

up to regulatory

limits and

can be obtained faster than regular retail deposits.

The

following

table

presents

the

remaining

contractual

maturities

and

weighted-average

interest

rates

brokered

CDs

March 31, 2025:

Total

Weighted-average

interest rate %

(In thousands)

Three months or less

48,179

5.11

Over three months to six months

52,147

4.62

Over six months to one year

179,646

4.39

Over one year to two years

129,375

4.15

Over two years to three years

30,302

4.03

Over three years to four years

27,362

4.44

Over five years

15,456

4.61

Total

482,467

4.41

Refer to

“Net Interest

Income” above

for information

about average

balances of

interest-bearing deposits

and the

average interest

rate paid on such deposits for the quarters ended March 31, 2025

and 2024.

Securities

sold

under

agreements

repurchase

–

From

time

time,

the

Corporation

enters

into

repurchase

agreements

additional

source

funding.

each

March

31,

2025

and

December

31,

2024,

there

were

outstanding

repurchase

agreements.

When

the

Corporation

enters

into

repurchase

agreements,

as is

the

case

with

derivative

contracts,

the

Corporation

required

pledge

cash

qualifying

securities

meet

margin

requirements.

the

extent

that

the

value

securities

previously

pledged

collateral

declines

due

changes

interest

rates,

liquidity

crisis

any

other

factor,

the

Corporation

required

deposit

additional

cash

securities

meet

its

margin

requirements,

thereby

adversely

affecting

its

liquidity.

Given

the

quality

the

collateral

pledged,

the

Corporation

has

not

experienced

margin

calls

from

counterparties

arising

from

credit-quality-related

write-

downs in valuations.

Advances

from

the

FHLB

–

The

Bank

member

the

FHLB

system

and

obtains

advances

fund

its

operations

under

collateral

agreement

with

the

FHLB

that

requires

the

Bank

maintain

qualifying

mortgages

and/or

investments

collateral

for

advances taken.

As of March

31, 2025

and December

31, 2024,

the outstanding

balance of

long-term fixed-rate

FHLB advances

was

$320.0 million

and $500.0 million,

respectively.

Of the $320.0

million in FHLB

advances as of

March 31, 2025,

$220.0 million were

pledged with investment

securities and $100.0

million were pledged

with mortgage loans. As

of March 31,

2025, the Corporation

had

$862.2 million available for additional credit on FHLB lines of credit based

on collateral pledged at the FHLB of New York.

The following

table presents the

remaining contractual

maturities and

weighted-average interest

rates of

advances from

the FHLB

as of March 31, 2025:

Total

Weighted-average

interest rate %

(In thousands)

Over three months to six months

30,000

4.83

Over six months to one year

90,000

4.49

Over two years to three years

200,000

4.25

Total

(1)

320,000

4.37

(1) Average remaining term to maturity

of 1.96 years.

Trust-Preferred

Securities –

In 2004,

FBP Statutory

Trusts

I and

II, statutory

trusts that

are wholly-owned

by the

Corporation and

not consolidated

in the Corporation’s

financial statements, sold

to institutional investors

variable-rate TruPS

and used the

proceeds of

these issuances, together

with the proceeds

of the purchases by

the Corporation of

variable rate common

securities, to purchase

junior

subordinated

deferrable

debentures.

The

subordinated

debentures

are

reflected

the

Corporation’s

consolidated

statements

financial condition as part of “Long-term borrowings.”

During the

first quarter of

2025, the Corporation

redeemed $50.6

million of outstanding

TruPS at

a contractual

call price of

100%.

This transaction resulted

in the full

redemption of the

remaining $18.6 million

in TruPS issued

by FBP Statutory

Trust II

and reduced

by $32.0 million the outstanding amount of the

TruPS issued by FBP Statutory

Trust I. As of March 31, 2025

and December 31, 2024,

the

Corporation

had

junior

subordinated

debentures

outstanding

the

aggregate

amount

$11.1

million

and

$161.7

million,

respectively.

The Corporation

expects

to execute

the redemption

of the

remaining

junior subordinated

debentures

during the

second

quarter

of 2025.

See

Note

–

“Non-Consolidated

Variable

Interest

Entities

(“VIEs”)

and

Servicing

Assets”

and

Note

–

“First

Bancorp.

(Holding Company Only) Financial Information” for additional informatio

FED Discount Window

– The Corporation participates in

the BIC Program of the FED.

Through the BIC Program, a

broad range of

loans

may

pledged

collateral

for

borrowings

through

the

FED

Discount

Window.

previously

mentioned,

March

31,

2025,

the

Corporation

had

approximately

$2.6

billion

fully

available

for

funding

under

the

FED’s

Discount

Window

based

collateral pledged at the FED.

Effect of Credit Ratings on Access to Liquidity

The

Corporation’s

liquidity

contingent

upon

its

ability

obtain

deposits

and

other

external

sources

funding

finance

its

operations.

The Corporation’s

current

credit ratings

and any

downgrade

in credit

ratings can

hinder the

Corporation’s

access to

new

forms

external

funding

and/or

cause

external

funding

expensive,

which

could,

turn,

adversely

affect

its

results

operations. Also, changes in credit ratings may further affect

the fair value of unsecured derivatives whose value takes into account

the

Corporation’s own credit risk.

The Corporation

does not

have any

outstanding debt

or derivative

agreements that

would be

affected by

credit rating

downgrades.

Furthermore, given the Corporation’s

non-reliance on corporate debt or other

instruments directly linked in terms

of pricing or volume

to credit

ratings, the

liquidity of

the Corporation

has not been

affected in

any material

way by downgrades.

The Corporation’s

ability

to access new non-deposit sources of funding, however,

could be adversely affected by credit downgrades.

As of

the date

hereof, the

Corporation’s

credit as

a long-term

issuer is

rated BB+

by S&P

and BB

by Fitch.

As of

the date

hereof,

FirstBank’s

credit ratings

as a long

-term issuer

are BB+ by

S&P and

Fitch, one notch

below the

minimum BBB- level

required to

considered investment grade.

The Corporation’s

credit ratings are dependent

on a number of

factors, both quantitative

and qualitative,

and are

subject to

change at

any time.

The disclosure

of credit

ratings is

not a

recommendation to

buy,

sell or

hold the

Corporation’s

securities. Each rating should be evaluated independently of any

other rating.

Cash Flows

Cash and cash

equivalents were

$1.3 billion

as of March

31, 2025,

an increase of

$168.9 million

when compared

to December

31,

2024.

The following

discussion highlights

the major

activities and

transactions that

affected the

Corporation’s

cash flows

during the

first quarters of 2025 and 2024:

Cash Flows from Operating Activities

First BanCorp.’s

operating assets and

liabilities vary significantly

in the normal course

of business due to

the amount and timing

cash flows.

Management believes

that cash

flows from

operations, available

cash balances,

and the

Corporation’s

ability to

generate

cash through

short and long-term

borrowings will be

sufficient to

fund the Corporation’s

operating liquidity

needs for the

foreseeable

future.

For the quarters

ended March 31,

2025 and 2024,

net cash provided

by operating activities

was $108.2 million

and $118.2

million,

respectively.

Net cash

generated from

operating activities

was higher

than reported

net income

largely as

a result

of adjustments

for

non-cash items such

as depreciation and

amortization, deferred income

tax expense and the

provision for credit

losses, as well as

cash

generated from sales and repayments of loans held for sale.

Cash Flows from Investing Activities

The Corporation’s

investing activities primarily

relate to originating

loans to be

held for investment,

as well as

purchasing, selling,

and

repaying

available-for-sale

and

held-to-maturity

debt

securities.

For

the

quarter

ended

March

31,

2025,

net

cash

provided

investing

activities

was

$393.6

million,

primarily

due

maturities

U.S.

agencies

debentures

and

U.S.

Treasury

securities

and

principal

repayments

U.S.

agencies

MBS

and

debentures,

net

repayments

loans

held

for

investment,

proceeds

from

sales

repossessed

assets,

and

proceeds

from

the

bulk

sale

fully

charged-off

consumer

loans

and

finance

leases,

partially

offset

purchases of MBS during the first quarter of 2025.

For the quarter

ended March 31,

2024, net

cash provided by

investing activities

was $39.7

million, primarily

due to repayments

U.S. agencies

MBS and debentures;

proceeds from the

bulk sale of

fully charged-off

consumer loans

and finance leases

and proceeds

from sales of repossessed assets; partially offset by net disbursements

on loans held for investment.

Cash Flows from Financing Activities

The Corporation’s

financing activities

primarily

include the

receipt of

deposits and

the issuance

of brokered

CDs, the

issuance of

and

payments

long-term

borrowings,

the

issuance

equity

instruments,

return

capital, and

activities

its

short-term

funding.

For

the

quarter

ended

March

31,

2025,

net

cash

used

financing

activities

was

$332.9

million,

mainly

reflecting

the

repayments

long-term

borrowings,

consisting

$180.0

million

FHLB

advances

and

the

redemption

junior

subordinated

debentures,

capital

returned

stockholders;

and

decrease

total

deposits.

See

Note

–

“Non-Consolidated

Variable

Interest

Entities (“VIEs”) and Servicing Assets” and Note 20 – “First Bancorp.

(Holding Company Only) Financial Information” for additional

information on the redemption of junior subordinated debentures.

For the quarter ended March 31,

2024, net cash used in financing activities

was $136.6 million, mainly reflecting capital

returned to

stockholders and a decrease in total deposits.

Capital

As of

March 31,

2025, the

Corporation’s

stockholders’ equity

was $1.8

billion, an

increase of

$110.1

million from

December 31,

2024.

The increase

was driven

$84.1

million

increase

the

fair

value

available-for-sale

debt

securities

due

changes

market interest rates

recognized as part

of accumulated other

comprehensive loss in

the consolidated statements

of financial condition

and net income

generated in the

first quarter of

2025, partially offset

by common stock

dividends declared

in the first

quarter of 2025

totaling $29.6 million or $0.18 per common share, and $21.8 million in

common stock repurchases.

April

24,

2025,

the

Corporation’s

Board

Directors

declared

quarterly

cash

dividend

$0.18

per

common

share.

The

dividend is

payable on

June 13,

2025 to

shareholders of

record at

the close

of business

on May

29, 2025.

The Corporation

intends to

continue

pay

quarterly

dividends

common

stock.

However,

the

Corporation’s

common

stock

dividends,

including

the

declaration, timing,

and amount, remain

subject to consideration

and approval by

the Corporation’s

Board of Directors

at the relevant

times.

July

22,

2024,

the

Corporation

announced

that

its

Board

Directors

approved

repurchase

program,

under

which

the

Corporation

may repurchase

to $250

million that

could include

repurchases

of common

stock or

junior subordinated

debentures,

which it expects to execute

during the remainder

of 2025. Under this

program, the Corporation

repurchased approximately 1.2

million

shares of common

stock for a total

cost of $21.8

million during the

first quarter of

2025. In addition,

the Corporation redeemed

$50.6

million

junior

subordinated

debentures.

March

31,

2025,

the

Corporation

has

remaining

authorization

approximately

$127.7 million. For more

information, see Part II, Item

2, “Unregistered Sales of

Equity Securities and Use

of Proceeds,” and Note

– “Stockholders’ Equity”, of this Quarterly Report on Form 10-Q.

From April 1, 2025

to May 5, 2025, the Corporation

repurchased approximately 1.6 million

shares of common stock

for a total cost

of approximately $27.7

million. Therefore, the Corporation

has remaining authorization

of approximately $100.0

million as of May

2025.

The tangible common

equity ratio and

tangible book value

per common share

are non-GAAP financial

measures generally used

the

financial

community

evaluate

capital

adequacy.

Tangible

common

equity

total

common

equity

less

goodwill

and

other

intangible assets. Tangible

assets are total assets less

the previously mentioned

intangible assets. See “Non-GAAP

Financial Measures

and Reconciliations” above for additional information.

The

following

table

reconciliation

the

Corporation’s

tangible

common

equity

and

tangible

assets,

non-GAAP

financial

measures, to total equity and total assets, respectively,

as of the indicated dates:

March 31, 2025

December 31, 2024

(In thousands, except ratios and per share information)

Total common equity

- GAAP

1,779,342

1,669,236

Goodwill

(38,611)

Other intangible assets

(5,715)

(6,967)

Tangible common

equity - non-GAAP

1,735,016

1,623,658

Total assets - GAAP

19,106,983

19,292,921

Goodwill

(38,611)

Other intangible assets

(5,715)

(6,967)

Tangible assets - non

-GAAP

19,062,657

19,247,343

Common shares outstanding

163,104

163,869

Tangible common

equity ratio - non-GAAP

9.10%

8.44%

Tangible book value

per common share - non-GAAP

10.64

9.91

See Note 19 – “Regulatory

Matters, Commitments and Contingencies”

to the unaudited consolidated

financial statements herein for

the regulatory capital positions of the Corporation and FirstBank as of

March 31, 2025 and December 31, 2024, respectively.

The

Puerto

Rico

Banking

Law

1933,

amended

(the

“Puerto

Rico

Banking

Law”),

requires

that

minimum

10%

FirstBank’s

net income

for

the year

be transferred

to a

legal surplus

reserve

until such

surplus

equals the

total of

paid-in-capital

common and preferred

stock. Amounts transferred

to the legal surplus

reserve from retained

earnings are not available

for distribution

to the Corporation without the

prior consent of the Puerto

Rico Commissioner of Financial Institutions.

The Puerto Rico Banking

Law

provides that,

when the

expenditures of

a Puerto

Rico commercial

bank are

greater than

receipts, the

excess of

the expenditures

over

receipts

must

charged

against

the

undistributed

profits

the

bank,

and

the

balance,

any,

must

charged

against

the

legal

surplus

reserve,

reduction

thereof.

the

legal

surplus

reserve

not

sufficient

cover

such

balance

whole

part,

the

outstanding

amount

must

be charged

against

the

capital

account

and

the

Bank

cannot

pay

dividends

until

can

replenish

the

legal

surplus reserve

to an

amount of

at least

20% of

the original

capital contributed.

FirstBank’s

legal surplus

reserve, included

as part

retained earnings in

the Corporation’s

consolidated statements of

financial condition, amounted

to $230.2 million as

of each of March

31, 2025 and December 31, 2024. There were no transfers to the legal

surplus reserve during the quarter ended March 31, 2025.

Interest Rate Risk Management

First

BanCorp

manages

its

asset/liability

position

limit

the

effects

changes

interest

rates

net

interest

income

and

maintain stability

of profitability

under varying

interest rate

scenarios. The

MIALCO oversees

interest rate

risk and

monitors, among

other things,

current and expected

conditions in global

financial markets, competition

and prevailing rates

in the local

deposit market,

liquidity,

loan

originations

pipeline,

securities

market

values,

recent

proposed

changes

the

investment

portfolio,

alternative

funding sources

and related costs,

hedging and the

possible purchase of

derivatives such as

swaps and caps,

and any tax

or regulatory

issues which may be

pertinent to these areas.

The MIALCO approves funding

decisions in light of

the Corporation’s

overall strategies

and objectives.

least

quarterly

basis,

the

Corporation

performs

consolidated

net

interest

income

simulation

analysis

estimate

the

potential change

in future

earnings from

projected changes

in interest

rates. These

simulations are

carried out

over a

one-to-five-year

time horizon.

The rate

scenarios considered

in these

simulations reflect

gradual upward

or downward

interest rate

movements in

the

yield

curve,

for

gradual

(ramp)

parallel

shifts

the

yield

curve

200

and

300

bps

during

twelve-month

period,

immediate

upward or downward

changes in interest

rate movements of 200

bps, for interest

rate shock scenarios.

The Corporation carries

out the

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 current

strategies.

The balance

sheet is

divided into

groups of

assets and

liabilities by

maturity or

repricing structure

and their

corresponding interest

yields and

costs. As interest

rates rise or

fall, these

simulations incorporate

expected future

lending rates,

current and

expected future

funding sources

and costs,

the possible

exercise of

options, changes

in prepayment

rates, deposit

decay and

other factors,

which may

be important in projecting net interest income.

The

Corporation

uses a

simulation

model

project

future movements

the

Corporation’s

balance

sheet

and

income

statement.

The starting

point of

the projections

corresponds to

the actual

values on

the balance

sheet on

the simulation

date. These

simulations

are

highly

complex

and

are

based

many

assumptions

that

are

intended

reflect

the

general

behavior

the

balance

sheet

components over

the modeled

periods. It

is unlikely

that actual

events will

match these

assumptions in

all cases.

For this

reason, the

results of

these forward-looking

computations are

only approximations

of the

sensitivity of

net interest

income to

changes in

market

interest rates. Several

benchmark and market

rate curves were used

in the modeling process,

primarily,

SOFR curve, Prime Rate,

U.S.

Treasury yield curve, FHLB rates, and brokered

CDs rates.

As of

March 31,

2025, the

Corporation forecasted

the 12-month

net interest

income assuming

March 31,

2025 interest

rate curves

remain

constant.

Then,

net

interest

income

was

estimated

under

rising

and

falling

rates

scenarios.

For

the

rising

rate

scenario,

gradual (ramp)

and immediate

(shock) parallel

upward shift

of the

yield curve

is assumed

during the

first twelve

months (the

“+300

ramp”, “+200

ramp” and

“+200 shock”

scenarios). Conversely,

for the

falling rate

scenario, a

gradual (ramp)

and immediate

(shock)

parallel downward shift

of the yield

curve is assumed during

the first twelve months

(the “-300 ramp”,

“-200 ramp” and “-200

shock”

scenarios).

The SOFR

curve for

March 31,

2025, as

compared with

December 31,

2024, reflects

a decrease

of 9

bps on

average in

the short-

term sector of

the curve, or between

one to twelve months;

a decrease of 39

bps in the medium-term

sector of the curve,

or between 2

to 5

years; and

a decrease

of 29

bps in

the long-term

sector of

the curve,

or over

5-year maturities.

A similar

change in

market rates

was observed in

the Constant Maturity

Treasury yield

curve with a decrease

of 5 bps

on average

in the short-term

sector of the curve,

a decrease of 39 bps in the medium-term sector of the curve, and a decrease

of 26 bps in the long-term sector of the curve.

The following table presents the results of the static simulations as of March 31, 2025

and December 31, 2024. 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, 2025

December 31, 2024

Gradual Change in Interest Rates:

+ 300 bps ramp

3.53

3.05

+ 200 bps ramp

2.37

2.04

- 300 bps ramp

-5.15

-4.79

- 200 bps ramp

-3.38

-3.15

Immediate Change in Interest Rates:

+ 200 bps shock

4.63

3.51

- 200 bps shock

-7.98

-7.17

The Corporation

continues to

manage its

balance sheet

structure to

control and

limit the

overall interest

rate risk

by managing

its

asset

composition

while

maintaining

sound

liquidity

position.

See

“Risk

Management

–

Liquidity

Risk

Management”

above

for

liquidity ratios.

As of March

31, 2025 and

December 31, 2024,

the net interest

income simulations

show that the

Corporation continues

to have an

asset sensitive position for the next twelve months under a static balance sheet

simulation.

Under

gradual

rising

and

falling

rate

scenarios,

the

net

interest

income

simulation

shows

increase

interest

rate

sensitivity,

when compared with December 31, 2024,

due to a higher sensitivity in

the assets side driven by a higher

interest-bearing cash position

and

earlier

scheduled

maturities

U.S.

agencies

debentures

coupled

with

lower

sensitivity

the

liabilities

side

due

lower

balance of variable-rate junior

subordinated debentures and a

decrease in the level of

scheduled maturities of FHLB advances

over the

next twelve months.

Under

the

static

simulation,

the

Corporation

assumes

that

maturing

instruments

are

replaced

with

similar

instruments

the

repricing rate upon maturity.

The Corporation’s results may vary

significantly from the ones presented above under alternative balance

sheet compositions,

such as a

dynamic balance

sheet scenario which,

for example, would

assume that cash

flows from the

investment

securities portfolio and loan repayments could be redeployed into higher

yielding alternatives.

Credit Risk Management

First BanCorp.

is subject

credit

risk

mainly

with

respect

its portfolio

of loans

receivable

and

off-balance-sheet

instruments,

principally

loan

commitments.

Loans

receivable

represents

loans

that

First

BanCorp.

holds

for

investment

and,

therefore,

First

BanCorp. is at risk for

the term of the loan.

Loan commitments represent commitments

to extend credit, subject

to specific conditions,

for specific amounts

and maturities. These commitments

may expose the Corporation

to credit risk and

are subject to the

same review

and

approval

process

for

loans

made

the

Bank.

See

“Risk

Management

–

Liquidity

Risk”

above

for

further

details.

The

Corporation

manages

its

credit

risk

through

its

credit

policy,

underwriting,

monitoring

loan

concentrations

and

credit

quality,

counterparty

credit

risk,

economic

and

market

conditions,

and

legislative

regulatory

mandates.

The

Corporation

also

performs

independent

loan

review

and

quality

control

procedures,

statistical

analysis,

comprehensive

financial

analysis,

established

management committees,

and employs

proactive collection

and loss

mitigation efforts.

Furthermore, personnel

performing structured

loan

workout

functions

are

responsible

for

mitigating

defaults

and

minimizing

losses

upon

default

within

each

region

and

for

each

business segment.

In the

case of

the C&I,

commercial

mortgage and

construction loan

portfolios,

the Special

Asset Group

(“SAG”)

focuses on

strategies for

the accelerated

reduction of

non-performing assets

through note

sales, short

sales, loss

mitigation programs,

and sales of OREO. In addition to the management of

the resolution process for problem loans, the SAG oversees collection

efforts for

all loans

to prevent

migration to

the nonaccrual

and/or

adversely classified

status.

The

SAG utilizes

relationship

officers,

collection

specialists and attorneys.

The

Corporation

may

also

have

risk

default

the

securities

portfolio.

The

securities

held

the

Corporation

are

principally

fixed-rate U.S. agencies

MBS and U.S. Treasury

and agencies securities. Thus,

a substantial portion

of these instruments is

backed by

mortgages, a guarantee of a U.S. GSE or the full faith and credit of the U.S. government.

Management, consisting of the Corporation’s

Chief Risk Officer,

Commercial Credit Risk Officer,

Retail Credit Risk Officer,

Chief

Credit Officer,

and other senior executives,

has the primary responsibility

for setting strategies to achieve

the Corporation’s

credit risk

goals and objectives. Management has documented these goals and objectives

in the Corporation’s Credit Policy.

Allowance for Credit Losses and Non-Performing Assets

Allowance for Credit Losses for Loans and

Finance Leases

The ACL

for loans

and finance

leases represents

the estimate

of the

level of

reserves appropriate

to absorb

expected credit

losses

over the estimated life of

the loans. The amount of the allowance

is determined using relevant available

information, from internal and

external sources, relating

to past events, current

conditions, and reasonable

and supportable forecasts.

Historical credit loss experience

significant

input

for

the

estimation

expected

credit

losses,

well

adjustments

historical

loss

information

made

for

differences in current loan-specific

risk characteristics, such as differences

in underwriting standards, portfolio mix,

delinquency level,

term.

Additionally,

the

Corporation’s

assessment

involves

evaluating

key

factors,

which

include

credit

and

macroeconomic

indicators,

such as

changes in

unemployment

rates, property

values, and

other relevant

factors to

account for

current and

forecasted

market conditions

that are

likely to

cause estimated

credit losses

over the

life of the

loans to differ

from historical

credit losses.

Such

factors

are

subject

regular

review

and

may

change

reflect

updated

performance

trends

and

expectations.

The

process includes

judgments

and

quantitative

elements

that

may

subject

significant

change.

Further,

the

Corporation

periodically

considers

the

need for qualitative

reserves to the

ACL. Qualitative adjustments

may be related

to and include,

but are not limited

to, factors such

the

following:

(i)

management’s

assessment

economic

forecasts

used

the

model

and

how

those

forecasts

align

with

management’s

overall

evaluation

current

and

expected

economic

conditions;

(ii)

organization

specific

risks

such

credit

concentrations, collateral

specific risks, nature

and size of

the portfolio and

external factors that

may ultimately

impact credit quality

;

and

(iii)

other

limitations associated

with factors

such as

changes

in underwriting

and loan

resolution

strategies,

among

others.

The

ACL for loans and

finance leases is reviewed

at least on a quarterly

basis as part of

the Corporation’s

continued evaluation of its

asset

quality.

The Corporation

generally applies probability

weights to the

baseline and alternative

downside economic

scenarios to estimate

the

ACL with

the

baseline

scenario

carrying

the highest

weight.

The

scenarios

that are

chosen each

quarter

and

the

weighting

given

each

scenario

for

the

different

loan

portfolio

categories

depend

variety

factors

including

recent

economic

events,

leading

national

and

regional

economic

indicators,

and

industry

trends.

March

31,

2025

and

December

31,

2024,

the

Corporation

applied

100%

probability

the

baseline

scenario

for

the

commercial

mortgage

and

construction

loan

portfolios

since

certain

macroeconomic

variables

associated

with

commercial

real estate

property

performance

and

the CRE

price

index,

particularly

the

Puerto Rico region,

are expected to continue

to perform in a

more favorable manner

than the alternative downside

economic scenario.

The

economic

scenarios

used

the

ACL

determination

contained

assumptions

economic

uncertainties

associated

with

geopolitical instability,

the CRE

price index,

unemployment rate,

inflation levels,

and expected

future interest

rate adjustments

in the

Federal Reserve Board’s funds rate.

March

31,

2025,

the

Corporation’s

ACL

model

considered

the

following

assumptions

for

key

economic

variables

the

probability-weighted economic scenarios:

●

CRE price

index at

the national level

with an

average projected

appreciation of

0.27% and

1.03% for

the remainder

of 2025

and for the year

2026, respectively,

compared to an average

projected contraction of

0.74% for the remainder

of 2025 and an

average projected appreciation of 4.42% for the year 2026 as of December

31, 2024.

●

Regional

Home Price Index forecast

in Puerto Rico (purchase

only prices) shows an

improvement of 11.91

and 11.75%

for

the remainder of 2025

and for the year 2026,

respectively, when

compared to the same

periods as of December

31, 2024. For

the Florida

region, the

Home Price Index

forecast is

projected to

remain relatively

flat for the

remainder of

2025 and

for the

year 2026, respectively,

when compared to the same periods

as of December 31, 2024.

●

Average

regional unemployment rate

in Puerto Rico is

forecasted at 6.16%

for the remainder

of 2025 and 6.42%

for the year

2026, compared

to 6.35%

for the

remainder of

2025

and 6.21%

for the

year 2026

as of December

31, 2024.

For the

Florida

region and

the U.S. mainland,

average unemployment

rate is forecasted

at 4.33%

and 4.83%,

respectively,

for the

remainder

2025,

and

4.54%

and

4.99%,

respectively,

for

the

year

2026,

compared

4.56%

and

5.07%,

respectively,

for

the

remainder of 2025, and 4.15% and 4.60%, respectively,

for the year 2026, as of December 31, 2024.

●

Annualized change in

GDP in the U.S.

mainland of 1.57% for

the remainder of 2025

and 1.24% for the year

2026, compared

to 1.22% for the remainder of 2025

and 1.91%

for the year 2026, as of December 31, 2024.

It is difficult to estimate how potential changes

in one factor or input might affect the overall ACL because

management considers a

wide variety of

factors and inputs in

estimating the ACL.

Changes in the

factors and inputs considered

may not occur

at the same rate

and may not be consistent

across all geographies or product

types, and changes in factors

and inputs may be directionally

inconsistent,

such that improvement

in one factor

or input may

offset deterioration

in others. However,

to demonstrate the

sensitivity of credit

loss

estimates

macroeconomic

forecasts

March

31,

2025,

management

compared

the

modeled

estimates

under

the

probability-

weighted

economic

scenarios

against

adverse

scenario.

Such

scenario

incorporates

additional

adverse

scenario

and

decreases the

weight applied

to the

baseline scenario.

Under this

more adverse

scenario, as

an example,

average unemployment

rate

for the

Puerto Rico

region increases

to 6.55%

for the

remainder of

2025, compared

to 6.16%

for the

same period

on the

probability-

weighted economic scenario projections.

demonstrate

the

sensitivity

key

economic

parameters

used

the

calculation

the

ACL

March

31,

2025,

management

calculated

the

difference

between

the

quantitative

ACL

and

this

adverse

scenario.

Excluding

consideration

qualitative

adjustments,

this sensitivity

analysis

would

result in

a hypothetical

increase

in the

ACL of

approximately

$49

million at

March

31,

2025.

This analysis

relates only

to the

modeled credit

loss estimates

and is

not intended

to estimate

changes in

the overall

ACL as

does

not

reflect

any

potential

changes

other

adjustments

the

qualitative

calculation,

which

would

also

influenced

the

judgment

management

applies

the

modeled

lifetime

loss

estimates

reflect

the

uncertainty

and

imprecision

these

estimates

based

current

circumstances

and

conditions.

Recognizing

that

forecasts

macroeconomic

conditions

are

inherently

uncertain,

particularly in

light of

recent economic

conditions and

challenges, which

continue to

evolve, management

believes that

its process

consider the

available information

and associated

risks and

uncertainties is

appropriately governed

and that

its estimates

of expected

credit losses were reasonable and appropriate for the period ended

March 31, 2025.

As of March 31, 2025, the ACL for loans and finance leases was $247.3

million, an increase of $3.4 million, from $243.9 million as

of December 31, 2024.

The ACL for the first quarter

of 2025 includes an increase

of $2.7 million in qualitative

adjustments due to the

uncertainty in

the economic

environment. The

increase was

mainly related

to the

ACL for

commercial and

construction loans,

which

increased by $4.7 million,

mainly due to the impact

of renewals of lines of credit,

updated financial information of

certain commercial

borrowers,

and

deterioration

the

economic

outlook

the

forecasted

CRE

price

index.

Also,

the

ACL for

residential

mortgage

loans increased by

$0.9 million mainly

due to newly

originated loans that

carry a higher

loss rate, partially

offset by improvements

macroeconomic variables, such as the unemployment rate

and the Housing Price Index.

Meanwhile, the

ACL for

consumer loans

decreased by

$2.2 million,

driven by

improvements in

macroeconomic variables,

mainly

in the projection of the unemployment rate.

The

ratio

the

ACL

for

loans

and

finance

leases

total

loans

held

for

investment

increased

1.95%

March

31,

2025,

compared to 1.91% as of December 31, 2024. An explanation for the change

for each portfolio follows:

●

The ACL to

total loans ratio

for the residential

mortgage loan portfolio

increased from 1.44%

as of December

31, 2024 to

1.47% as of

March 31, 2025,

mainly due to

the aforementioned

increase in newly

originated loans

that carry a

higher loss

rate, partially offset by the aforementioned improvements

in macroeconomic variables.

●

The ACL

to total

loans ratio

for the construction

loan portfolio

decreased from

1.67% as

of December

31, 2024

to 1.46%

as of March 31, 2025,

mainly due to the conversion

of certain loans to the

commercial mortgage loan portfolio

that carried

a higher loss rate.

●

The ACL to total loans ratio for the commercial mortgage

loan portfolio increased from 0.87% as of December 31, 2024 to

0.97% as of March 31, 2025, driven by the aforementioned deterioration

in the forecasted CRE price index.

●

The

ACL to

total loans

ratio for

the C&I

loan portfolio

increased

from

0.98%

as of

December

31,

2024

to 1.09%

as of

March 31,

2025,

driven by

the aforementioned

updates in

financial information

of certain

commercial borrowers

and the

impact of renewals of lines of credit.

●

The ACL to

total loans ratio

for the consumer

loan portfolio decreased

from 3.83% as

of December

31, 2024

to 3.78% as

of March 31, 2025, mainly due to the aforementioned improvements

in macroeconomic variables.

The ratio of

the total ACL

for loans and

finance leases to

nonaccrual loans held

for investment was

251.13% as of

March 31, 2025,

compared

to 278.90%

as of

December

31, 2024,

driven by

the inflow

to nonaccrual

status of

a $12.6

million

commercial mortgage

loan in the Florida region, which did not trigger any additional ACL based on

the collateral value.

See “Results of

Operations -

Provision for

Credit Losses”

above and

Note 4 –

“Allowance for

Credit Losses for

Loans and Finance

Leases” above for additional information.

Quarter Ended March 31,

2025

2024

(Dollars in thousands)

ACL for loans and finance leases, beginning of year

243,942

261,843

Provision for credit losses - expense (benefit):

Residential mortgage

1,004

(464)

Construction

(421)

571

Commercial mortgage

1,656

(10)

C&I

3,353

(3,160)

Consumer and finance leases

19,245

15,980

Total provision for credit losses

- expense

24,837

12,917

Charge-offs:

Residential mortgage

(235)

(516)

C&I

(77)

(532)

Consumer and finance leases

(27,898)

(28,291)

Total charge offs

(28,210)

(29,339)

Recoveries:

Residential mortgage

217

272

Construction

Commercial mortgage

C&I

154

5,119

Consumer and finance leases

(1)

6,275

12,730

Total recoveries

6,700

18,171

Net charge-offs

(21,510)

(11,168)

ACL for loans and finance leases, end of period

247,269

263,592

ACL for loans and finance leases to period-end total loans

held for investment

1.95%

2.14%

Net charge-offs to average loans outstanding

during the period

(2)

0.68%

0.37%

Provision for credit losses - expense for loans and

finance leases to net charge-offs during the period

1.15x

1.16x

(1)

For the quarters ended March 31, 2025 and 2024, includes recoveries totaling $2.4 million and $9.5 million, respectively, associated with the bulk sales of fully charged-off consumer loans and finance leases.

(2)

The recoveries associated with the aforementioned bulk sales reduced the ratio of total net charge-offs to related average loans by 8 bps and 31 bps for the first quarter of 2025 and 2024, respectively.

The following tables set forth information concerning the composition of the

Corporation's loan portfolio and related ACL by loan

category, and the percentage

of loan balances in each category to the total of such loans as of the indicated dates:

As of March 31, 2025

Residential

Mortgage

Loans

Commercial

Mortgage

Loans

C&I Loans

Consumer and

Finance

Leases

Construction

Loans

(Dollars in thousands)

Total

Total loans held for investment:

Amortized cost of loans

2,837,846

234,441

2,501,689

3,359,868

3,741,554

12,675,398

Percent of loans in each category to total loans

100

Allowance for credit losses

41,640

3,417

24,143

36,464

141,605

247,269

Allowance for credit losses to amortized cost

1.47

1.46

0.97

1.09

3.78

1.95

As of December 31, 2024

Residential

Mortgage

Loans

Commercial

Mortgage

Loans

C&I Loans

Consumer and

Finance Leases

Construction

Loans

(Dollars in thousands)

Total

Total loans held for investment:

Amortized cost of loans

2,828,431

228,396

2,565,984

3,366,038

3,757,707

12,746,556

Percent of loans in each category to total loans

100

Allowance for credit losses

40,654

3,824

22,447

33,034

143,983

243,942

Allowance for credit losses to amortized cost

1.44

1.67

0.87

0.98

3.83

1.91

Allowance for Credit Losses for Unfunded

Loan Commitments

The Corporation estimates

expected credit losses

over the contractual

period in which

the Corporation is

exposed to credit

risk as a

result

contractual

obligation

extend

credit,

such as

pursuant

to unfunded

loan

commitments

and

standby

letters of

credit

for

commercial and

construction loans,

unless the

obligation is

unconditionally cancellable

by the

Corporation. The

ACL for

off-balance

sheet credit exposures

is adjusted

as a provision

for credit

loss expense. The

ACL for off

-balance sheet

credit exposures

amounted to

$3.1 million as of each of March 31, 2025 and December 31, 2024.

Allowance for Credit Losses for Debt Securities

As of

March 31,

2025, the

ACL for

debt securities

was $1.4

million, of

which $0.9

million was

related to

Puerto Rico

municipal

bonds classified as held-to-maturity,

compared to $1.3 million and $0.8 million, respectively,

as of December 31, 2024.

Nonaccrual Loans and Non-Performing Assets

Total

non-performing

assets consist

of nonaccrual

loans (generally

loans held

for

investment or

loans held

for

sale for

which

the

recognition of

interest income

was discontinued

when the

loan became

90 days

past due

or earlier

if the

full and

timely collection

interest or principal

is uncertain), foreclosed

real estate and

other repossessed properties,

and non-performing

investment securities, if

any.

When a

loan is placed

in nonaccrual

status, any

interest previously

recognized and

not collected

is reversed

and charged

against

interest

income.

Cash

payments

received

are

recognized

when

collected

accordance

with

the

contractual

terms

the

loans.

The

principal

portion

of the

payment is

used to

reduce

the principal

balance

of the

loan,

whereas the

interest portion

is recognized

on a

cash basis

(when collected).

However,

when management

believes that

the ultimate

collectability of

principal is

in doubt,

the interest

portion

applied

the

outstanding

principal.

The

risk

exposure

this

portfolio

diversified

individual

borrowers

and

industries, among other factors. In addition, a large portion

is secured with real estate collateral.

Nonaccrual Loans Policy

Residential Real Estate Loans

— The Corporation generally classifies real estate loans in

nonaccrual status when it has not received

interest and principal for a period of 90 days or more.

Commercial

and

Construction

Loans

—

The

Corporation

classifies

commercial

loans

(including

commercial

real

estate

and

construction loans) in nonaccrual

status when it has not

received interest and principal

for a period of 90

days or more or when

it does

not expect to collect all of the principal or interest due to deterioration in the financial

condition of the borrower.

Finance Leases

— The Corporation

classifies finance leases

in nonaccrual status

when it has

not received interest

and principal for

a period of 90 days or more.

Consumer Loans

— The Corporation

classifies consumer

loans in nonaccrual

status when it

has not received

interest and

principal

for a period of 90 days or more. Credit card loans continue to accrue finance

charges and fees until charged-off at 180

days delinquent.

Purchased

Credit

Deteriorated

Loans

(“PCD”)

For PCD

loans,

the nonaccrual

status is

determined

in the

same

manner

as for

other loans, except for PCD

loans that prior to the

adoption of CECL were classified as

purchased credit impaired

(“PCI”) loans under

ASC

Subtopic

310-30,

“Receivables

–

Loan

and

Debt

Securities

Acquired

with

Deteriorated

Credit

Quality”

(“ASC

Subtopic

310-

30”). The

Corporation elected

to treat

each pool

as a single

asset and

applied a

prospective transition

approach, freezing

the effective

interest rate of the

pools as of January

1, 2020. Regulatory guidance

allows the Corporation to

determine nonaccrual status

at the pool

level and

continue accruing

interest if

the timing

and amount

of cash

flows expected

to be collected

can be

reasonably estimated

and

the asset

was not

primarily

acquired

for collateral

ownership.

Thus,

the Corporation

continues to

exclude

these pools

of PCD

loans

from nonaccrual loan statistics.

Loans Past-Due

90 Days

and Still

Accruing

— These

are accruing

loans that

are contractually

delinquent 90

days or

more. These

past-due

loans

are

either

current

interest

but

delinquent

the

payment

principal

(

i.e.

well

secured

and

process

collection)

are

insured

guaranteed

under

applicable

FHA,

VA,

other

government-guaranteed

programs

for

residential

mortgage loans.

Furthermore, as required

by instructions in

regulatory reports,

loans past due

90 days and

still accruing include

loans

previously pooled into

GNMA securities for which

the Corporation has the

option but not the

obligation to repurchase loans

that meet

GNMA’s

specified

delinquency

criteria

(

e.g.

borrowers

fail

make

any

payment

for

three

consecutive

months).

For

accounting

purposes, these GNMA loans subject

to the repurchase option are

required to be reflected in the

financial statements with an offsetting

liability.

In addition,

loans past due

90 days

and still accruing

include PCD

loans, as

mentioned above,

and credit

cards that

continue

accruing interest until charged-off

at 180 days.

Other Real Estate Owned

OREO

acquired

settlement

loans

carried

fair

value

less

estimated

costs

sell

the

real

estate

acquired.

Appraisals

are

obtained periodically,

generally on an annual basis.

Other Repossessed Property

The other

repossessed property

category generally

includes repossessed

automobiles

acquired in

settlement of

loans. Repossessed

automobiles

are recorded at the lower of cost or estimated fair value.

Other Non-Performing Assets

This

category

consists

of a

residential

pass-through

MBS

issued

the

PRHFA placed

non-performing

status

the

second

quarter of 2021 based on the delinquency status of the underlying second

mortgage loans.

The following table shows non-performing assets by geographic segment as of

the indicated dates:

March 31, 2025

December 31, 2024

(In thousands)

Puerto Rico:

Nonaccrual loans held for investment:

Residential mortgage

15,081

16,854

Construction

396

403

Commercial mortgage

2,583

2,716

C&I

19,672

19,595

Consumer and finance leases

22,460

22,538

Total nonaccrual loans held for investment

60,192

62,106

OREO

12,265

13,691

Other repossessed property

13,309

11,637

Other assets

1,599

1,620

Total non-performing assets

87,365

89,054

Past due loans 90 days and still accruing

34,056

39,307

Virgin Islands:

Nonaccrual loans held for investment:

Residential mortgage

6,820

6,555

Construction

960

962

Commercial mortgage

8,075

8,135

C&I

672

919

Consumer

335

205

Total nonaccrual loans held for investment

16,862

16,776

OREO

3,615

Other repossessed property

127

219

Total non-performing assets

20,604

20,610

Past due loans 90 days and still accruing

3,061

3,083

United States:

Nonaccrual loans held for investment:

Residential mortgage

8,892

8,540

Commercial mortgage

12,497

Consumer

Total nonaccrual loans held for investment

21,407

8,585

Other repossessed property

Total non-performing assets

21,415

8,588

Total

Nonaccrual loans held for investment:

Residential mortgage

30,793

31,949

Construction

1,356

1,365

Commercial mortgage

23,155

10,851

C&I

20,344

20,514

Consumer and finance leases

22,813

22,788

Total nonaccrual loans held for investment

98,461

87,467

OREO

15,880

17,306

Other repossessed property

13,444

11,859

Other assets

(1)

1,599

1,620

Total non-performing assets

129,384

118,252

Past due loans 90 days and still accruing

(2) (3) (4)

37,117

42,390

Non-performing assets to total assets

0.68%

0.61%

Nonaccrual loans held for investment to total loans held for investment

0.78%

0.69%

ACL for loans and finance leases

247,269

243,942

ACL for loans and finance leases to total nonaccrual loans held

for investment

251.13%

278.90%

ACL for loans and finance leases to total nonaccrual loans held

for investment, excluding residential real estate loans

365.41%

439.39%

(1)

Residential pass-through MBS issued by the PRHFA held as

part of the available-for-sale debt securities portfolio.

(2)

Includes PCD

loans previously

accounted for

under ASC

Subtopic 310-30

for which

the Corporation

made the

accounting policy

election to

treat each

pool as

a single

asset, both

at the

time of

adoption of CECL on

January 1, 2020 and

on an ongoing

basis for credit loss

measurement. These loans

will continue to be

excluded from nonaccrual

loan statistics as long

as the Corporation

can

reasonably estimate the timing

and amount of cash flows

expected to be collected on

the loan pools.

The portion of such loans

contractually past due 90

days or more amounted to

$5.7 million and

$6.2 million as of March 31, 2025 and December 31, 2024, respectively.

(3)

Includes FHA/VA

government-guaranteed residential

mortgage as

loans past

due 90

days and

still accruing

as opposed

to nonaccrual

loans. The

Corporation continues

accruing interest

on these

loans

until

they

have

passed

the

months

delinquency

mark,

taking

into

consideration

the

FHA

interest

curtailment

process.

These

balances

include

$6.8

million

and

$8.0

million

FHA

government guaranteed residential mortgage loans that were over 15 months delinquent as of March 31, 2025 and

December 31, 2024, respectively.

(4)

These includes rebooked loans,

which were previously pooled into

GNMA securities, amounting to

$6.4 million and $5.7 million

as of March 31, 2025

and December 31, 2024,

respectively. Under

the GNMA program,

the Corporation

has the option

but not

the obligation to

repurchase loans that

meet GNMA’s

specified delinquency

criteria. For

accounting purposes,

the loans subject

to the

repurchase option are required to be reflected on the financial statements with an offsetting liability.

Total

non-performing assets

increased by

$11.1 million

to $129.4

million as

of March

31, 2025,

compared to

$118.3

million as

December

31,

2024.

The

increase

non-performing

assets

was

driven

$12.1

million

increase

nonaccrual

commercial

and

construction loans,

mainly due to

the aforementioned

inflow to nonaccrual

status of a

$12.6 million

commercial mortgage

loan in the

Florida

region

in the

hospitality

industry

during

the first

quarter

2025

and

$1.5

million

increase

other

repossessed

property,

consisting of

repossessed automobiles,

partially offset

by a

$1.4 million

decrease in

the OREO

portfolio balance,

mainly attributable

to the sale of residential properties in the Puerto Rico region, and a $1.1 million

decrease in nonaccrual residential mortgage loans.

The following tables present the activity of commercial and construction

nonaccrual loans held for investment for the indicated

periods:

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)

Loan collections

(9)

(275)

(611)

(895)

Ending balance

1,356

23,155

20,344

44,855

Construction

Commercial

Mortgage

C&I

Total

(In thousands)

Quarter Ended March 31, 2024

Beginning balance

1,569

12,205

15,250

29,024

Plus:

Additions to nonaccrual

11,041

Less:

Nonaccrual loans transferred to OREO

(48)

Nonaccrual loans charge-offs

(459)

Loan collections

(23)

(229)

(765)

(1,017)

Ending balance

1,498

11,976

25,067

38,541

100

The following table presents the activity of residential nonaccrual loans

held for investment for the indicated periods:

Quarter Ended March 31,

2025

2024

(In thousands)

Beginning balance

31,949

32,239

Plus:

Additions to nonaccrual

4,585

4,596

Less:

Loans returned to accrual status

(3,699)

(2,833)

Nonaccrual loans transferred to OREO

(647)

(404)

Nonaccrual loans charge-offs

(36)

(125)

Loan collections

(1,359)

(788)

Ending balance

30,793

32,685

The amount of nonaccrual consumer loans, including finance

leases, amounted to $22.8 million as of March 31, 2025,

relatively flat

when compared to December 31, 2024.

The inflows of nonaccrual consumer loans

during the quarter ended March

31, 2025 amounted

to $24.9 million, compared to inflows of $31.2 million for the same period

in 2024.

March

31,

2025,

approximately

$37.3

million,

38%,

the

loans

placed

nonaccrual

status,

mainly

commercial

and

residential

mortgage

loans,

were

current,

had

delinquencies

less

than

days

their

interest

payments.

Collections

nonaccrual loans are being recorded on a cash basis through earnings,

or on a cost-recovery basis, as conditions warrant.

During the quarter ended March 31, 2025,

interest income of approximately $0.4 million related

to nonaccrual loans with a carrying

value of

$41.8 million

as of

March 31,

2025, mainly

nonaccrual commercial

and construction

loans,

was applied

against the

principal balances under the cost-recovery method.

Total loans in early

delinquency (

i.e.

, 30-89 days past due loans, as defined in regulatory reporting

instructions) amounted to $131.2

million

March

31,

2025,

decrease

$21.8

million,

compared

$153.0

million

December

31,

2024,

mainly

due

$19.5

million

decrease

consumer

loans,

mainly

the

auto

loans

portfolio,

and

$3.9

million

decrease

residential

mortgage

loans, partially offset by a $1.6 million increase in

commercial and construction loans.

101

The OREO portfolio,

which is part of non

-performing assets, amounted

to $15.9 million as of

March 31, 2025 and

$17.3 million as

of December

31, 2024.

The following

tables show

the composition

of the

OREO portfolio

as of

March 31,

2025 and

December 31,

2024,

as well as the activity of the OREO portfolio by geographic area during the quarter

ended

March 31, 2025:

OREO Composition by Region

As of March 31, 2025

(In thousands)

Puerto Rico

Virgin Islands

Florida

Consolidated

Residential

10,742

805

11,547

Construction

451

Commercial

1,072

2,810

3,882

12,265

3,615

15,880

As of December 31, 2024

(In thousands)

Puerto Rico

Virgin Islands

Florida

Consolidated

Residential

12,092

805

12,897

Construction

522

Commercial

1,077

2,810

3,887

13,691

3,615

17,306

OREO Activity by Region

Quarter Ended March 31, 2025

(In thousands)

Puerto Rico

Virgin Islands

Florida

Consolidated

Beginning Balance

13,691

3,615

17,306

Additions

1,455

Sales

(2,603)

Subsequent measurement adjustments

(140)

Other adjustments

(138)

Ending Balance

12,265

3,615

15,880

102

Net Charge-offs and Total

Credit Losses

Net

charge-offs

totaled

$21.4

million

for

the

first

quarter

2025,

annualized

0.68%

average

loans,

compared

$11.2

million, or

an annualized

0.37% of

average loans,

for the

first quarter

of 2024.

Net charge-offs

for the

first quarter

of 2025

and 2024

include $2.4

million and

$9.5 million,

respectively,

in recover

ies associated

with the

bulk sales

of fully

charged-off

consumer

loans

and finance

leases during

such periods,

which reduced

by 8

bps and

31 bps,

respectively,

the ratio

of total

net charge-offs

to average

loans.

Consumer

loans

and

finance

leases

net

charge-offs

for

the

first

quarter

2025

were

$21.5

million,

annualized

2.31%

average

loans,

compared

net

charge-offs

$15.6

million,

annualized

1.69%

average

loans,

for

the

first

quarter of

2024.

The increase

in net

charge-offs

was mostly

associated with

lower recoveries

from the

aforementioned

bulk sales

fully charged-off consumer loans and

finance leases, which reduced the ratio of consumer net charge

-offs to average loans ratio for the

first quarters of 2025 and 2024 by 25 bps and 104 bps, respectively.

C&I loans net recoveries

for the first quarter

of 2025 were $0.1 million,

or an annualized 0.01% of

related average loans, compared

to net recoveries

of $4.6 million,

or an annualized

0.58% of related

average loans, for

the first quarter

of 2024. The

net recoveries for

the first quarter of 2024 included a $5.0 million recovery associated

with a C&I loan in the Puerto Rico region.

The following table presents net charge-offs (recoveries)

to average loans held-in-portfolio for the indicated periods:

Quarter Ended March 31,

2025

2024

Residential mortgage

0.00

0.03

Construction

(0.02)

Commercial mortgage

(0.01)

C&I

(0.01)

(0.58)

Consumer and finance leases

(1)

2.31

1.69

Total loans

(1)

0.68

0.37

(1)

The net charge-offs for the quarters ended March

31, 2025 and 2024 included $2.4 million and $9.5 million, respectively,

in recoveries associated with the bulk sales of fully charged

-off

consumer loans and finance leases. The aforementioned recoveries reduced

the ratios of consumer loans and finance leases and

total net charge-offs to related average loans for the quarter

ended March 31, 2025 by 25 bps and 8 bps, respectively,

and by 104 bps and 31 bps, respectively,

for the quarter ended March 31, 2024.

103

The following table presents net charge-offs (recoveries)

to average loans held in various portfolios by geographic segment for the

indicated periods:

Quarter Ended March 31,

2025

2024

PUERTO RICO:

Residential mortgage

0.00

0.05

C&I

(0.02)

(0.91)

Consumer and finance leases

(1)

2.34

1.66

Total loans

(1)

0.87

0.42

VIRGIN ISLANDS:

Commercial mortgage

(0.20)

(0.22)

C&I

0.06

(0.00)

Consumer and finance leases

0.95

3.73

Total loans

0.14

0.57

FLORIDA:

Residential mortgage

(0.01)

(0.00)

Construction

(0.13)

(0.05)

C&I

(0.00)

0.11

Consumer and finance leases

(0.17)

0.55

Total loans

(0.01)

0.05

(1)

The recoveries associated with the aforementioned bulk sales of fully charged-offs consumer loans and finance leases reduced the ratios of consumer loans and finance leases and total net charge-offs to related average

loans for the quarter ended March 31, 2025 by 25 bps and 9 bps, respectively, and by 106 bps and 40 bps, respectively, for the

quarter ended March 31, 2024.

104

The following table presents information about the OREO inventory

and related gains and losses for the indicated periods:

Quarter Ended March 31,

2025

2024

(Dollars in thousands)

OREO

OREO balances, carrying value:

Residential

11,547

16,706

Construction

451

1,681

Commercial

3,882

10,477

Total

15,880

28,864

OREO activity (number of properties):

Beginning property inventory

181

277

Properties acquired

Properties disposed

(33)

(46)

Ending property inventory

161

247

Average holding period (in days)

Residential

522

526

Construction

1,641

2,399

Commercial

3,820

1,579

Total average holding period (in days)

1,360

1,017

OREO operations (gain) loss:

Market adjustments and (gains) losses on sale:

Residential

(1,199)

(1,826)

Construction

(48)

(9)

Commercial

(12)

Total net gain

(1,259)

(1,816)

Other OREO operations expenses

130

364

Net Gain on OREO operations

(1,129)

(1,452)

105

Operational Risk

The

Corporation

faces

ongoing

and

emerging

risk

and

regulatory

pressure

the

activities

that

surround

the

delivery

banking

and

financial

products.

Coupled

with

external

influences,

such

market

conditions,

security

risks,

and

legal

risks,

the

potential for

operational and

reputational loss

has increased.

mitigate and

control operational

risk, the

Corporation has

developed,

and continues

to enhance, specific

internal controls,

policies and procedures

that are designed

to identify and

manage operational risk

appropriate

levels

throughout

the

organization.

The

purpose

these

mechanisms

provide

reasonable

assurance

that

the

Corporation’s business operations

are functioning within the policies and limits established by management.

The

Corporation

classifies operational

risk

into

two

major

categories:

business-specific

and

corporate-wide

affecting

all business

lines. For business specific risks,

Enterprise Risk Management

works with the various

business units to ensure consistency

in policies,

processes

and

assessments.

With

respect

corporate-wide

risks,

such

information

security,

business

recovery,

and

legal

and

compliance,

the

Corporation

has

specialized

groups,

such

the

Legal

Department,

Information

Security,

Corporate

Compliance,

Operations and Enterprise

Risk Management. These

groups assist the lines

of business in

the development and

implementation of risk

management practices specific to the needs of the business groups.

Legal and Compliance Risk

Legal and compliance risk includes

the risk of noncompliance with applicable

legal and regulatory requirements, the

risk of adverse

legal

judgments

against

the

Corporation,

and

the

risk

that

counterparty’s

performance

obligations

will

unenforceable.

The

Corporation

subject

extensive

regulation

the

different

jurisdictions

which

conducts

its

business,

and

this

regulatory

scrutiny has

been significantly

increasing over

the years.

The Corporation

has established,

and continues

to enhance,

procedures that

are designed

to ensure

compliance with

all applicable

statutory,

regulatory

and any

other legal

requirements.

The Corporation

has a

Compliance

Director

who

reports

the

Chief

Risk

Officer

and

responsible

for

the

oversight

regulatory

compliance

and

implementation

of an

enterprise-wide compliance

risk assessment

process.

The Compliance

division

has officer

roles in

each major

business area with direct reporting responsibilities to the Corporate Compliance

Group.

Concentration Risk

The Corporation conducts

its operations in

a geographically concentrated

area, as its main

market is Puerto

Rico. Of the

total gross

loan portfolio

held for investment

of $12.7 billion

as of March

31, 2025, the

Corporation had

credit risk of

approximately 78% in

the

Puerto Rico region, 18% in the United States region, and 4% in the Virgin

Islands region.

Update on the Puerto Rico Fiscal and Economic Situation

A significant

portion

of the

Corporation’s

business activities

and credit

exposure

is concentrated

in the

Commonwealth of

Puerto

Rico,

which

has

experienced

economic

and

fiscal

distress

over

the

last

decade.

See

“Risk

Management

–

Exposure

Puerto

Rico

Government”

below.

Since

declaring

bankruptcy

and

benefitting

from

the

enactment

the

federal

Puerto

Rico

Oversight,

Management and Economic Stability Act (“PROMESA”)

in 2016, the Government of Puerto Rico has made

progress on fiscal matters

primarily

by restructuring

a large

portion of

its outstanding

public debt

and identifying

funding

sources for

its underfunded

pension

system.

Economic Indicators

March

2025,

the

Puerto

Rico Planning

Board

(“PRPB”)

published

its annual

analysis

the Puerto

Rico’s

economy

for

fiscal

year

2024,

as well

as a

revised

short-term

forecast

for fiscal

years 2025

and 2026.

According

to the

PRPB’s

preliminary

estimates,

Puerto Rico’s

real gross

national product

(“GNP”) grew

by 2.1%

in fiscal year

2024, marking

the fourth consecutive

year of

positive

economic growth. The main drivers for growth during

fiscal year 2024 were personal consumption expenditures and

fixed investments

in both

construction

and machinery

and equipment.

These positive

variances

were partially

offset

by a

reduction

in inventories.

For

fiscal years 2025 and 2026, the PRPB’s baseline

projections contemplate real GNP growth of 1.1% and 0.5%, respectively.

There

are

other

indicators

that

gauge

economic

activity

and

are

published

with

greater

frequency,

for

example,

the

Economic

Development

Bank

for

Puerto

Rico’s

Economic

Activity

Index

(“EDB-EAI”).

Although

not

direct

measure

Puerto

Rico’s

real

GNP,

the EDB-EAI is correlated

to Puerto Rico’s

real GNP.

For November 2024,

estimates showed that the

EDB-EAI stood at

126.4,

down

1.1%

year-over-year

basis.

Over

the

12-month

period

ended

November

30,

2024,

the

EDB-EAI

averaged

126.1,

0.4%

below the comparable figure a year earlier.

106

Labor

market

trends

remain

positive.

Data

published

the

Bureau

Labor

Statistics

showed

that

non-farm

payrolls

March

2025

Puerto

Rico

increased

0.6%

when

compared

March

2024,

primarily

driven

payrolls

the

private

sector

these

increased

1.1%

from

the

comparable

figure

year

earlier.

Key

industries

driving

private-sector

payroll

growth

include

Construction with

a year-over-year

increase of

5.3% and

Leisure &

Hospitality with

a positive

variance of

1.8%. The

unemployment

rate remained stable at 5.5% in March 2025.

Fiscal Plan

On June 5, 2024,

the PROMESA oversight board

certified the 2024 Fiscal

Plan for Puerto Rico.

The Fiscal Plan intends

to serve as

a roadmap

to promote

economic growth

and achieve

long-term fiscal

stability.

See “Risk

Management –

Update on

the Puerto

Rico

Fiscal

and

Economic

Situation”

Part

II,

Item

“Management’s

Discussion

and

Analysis

Financial

Condition

and

Results

Operations (“MD&A”),” in the 2024 Annual Report on Form 10-K for additional

information.

Debt Restructuring

Over

80%

Puerto

Rico’s

outstanding

debt

has

been

restructured

date.

March

15,

2022,

the

Plan

Adjustment

the

central

government’s

debt

became

effective

through

the

exchange

of more

than

$33

billion

existing

bonds

and

other

claims

into

approximately

billion

new

bonds,

saving

Puerto

Rico

than

$50

billion

debt

payments

creditors.

Also,

the

restructurings

the

Puerto

Rico

Sales

Tax

Financing

Corporation

(“COFINA”),

the

Highways

and

Transportation

Authority

(“HTA”),

and

the

Puerto

Rico

Aqueducts

and

Sewers

Authority

(“PRASA”)

are

expected

yield

savings

approximately

$17.5

billion, $3.0 billion, and $400 million, respectively,

in future debt service payments.

The main restructuring

pending is that

of the Puerto

Rico Electric Power

Authority (“PREPA”).

All PREPA

plan confirmation

and

bond-related litigation

is currently

stayed with

no appointed

date for

resumption, except

for certain

matters detailed

in a

Court order

dated

March

20,

2025,

including

permitting

the

PROMESA

oversight

board

file

amended

proposed

plan

adjustment.

The

PROMESA oversight

board filed

the fifth

amended plan

of adjustment

on March

28, 2025,

reflecting the

projections and

findings of

the new

PREPA

fiscal plan.

The amended

plan would

reduce PREPA’s

debt almost

80%, to

the equivalent

of $2.6

billion in

cash or

bonds,

excluding

pension

liabilities.

also

incorporates

several

amendments

the

structure,

including

Rate

Reduction

Fund

to support

PREPA’s

pensions,

and

the elimination

of the

Legacy

Charge

contemplated

in the

versions of

the plan

adjustment to repay the significantly reduced debt.

Other Developments

Notable

progress

continues

made

part

the

ongoing

efforts

prioritizing

the

restoration,

improvement,

and

modernization of

Puerto Rico’s

infrastructure,

particularly in

the aftermath

of Hurricane

Maria in

2017. During

the 12-month

period

ended

February

28,

2025,

over

$3.8

billion

disaster

relief

funds

were

disbursed

through

the

Federal

Emergency

Management

Agency

(“FEMA”)

Public

Assistance

program

and

the

HUD

Community

Development

Block

Grant

(“CDBG”)

program,

14%

increase

when

compared

the

same

period

2024.

These

funds

will

continue

play

key

role

supporting

Puerto

Rico’s

economic stability

and are

expected to

have a

positive impact

on the

Island’s

infrastructure. For

example, approximately

86% of

the

projects

that

FEMA

has

obligated

address

damage

caused

Hurricane

Maria

have

resources

reinforce

their

infrastructure,

among other

hazard mitigation

measures, that

will prepare

these facilities for

future weather

events. As of

April 14,

2025, over

3,900

projects

had

already

been

completed

under

FEMA’s

Public

Assistance

Permanent

Work

programs

while

over

20,300

projects

were

active

across

different

stages

execution

for

total

cost

$12.2

billion,

equivalent

approximately

33%

the

agency’s

$37.1

billion obligation, according to the Central Office for Recovery,

Reconstruction and Resiliency (“COR3”).

107

Exposure to Puerto Rico Government

As of March 31,

2025, the Corporation

had $288.1 million of

direct exposure to the

Puerto Rico government,

its municipalities and

public corporations, compared to $288.6 million

as of December 31, 2024. As of March 31, 2025,

approximately $196.0 million of the

exposure consisted

of loans and

obligations of municipalities

in Puerto Rico

that are supported

by assigned property

tax revenues and

for which,

in most

cases, the

good faith,

credit and

unlimited taxing

power of

the applicable

municipality have

been pledged

to their

repayment,

and

$50.9

million

consisted

of loans

and obligations

which

are supported

by one

or more

specific

sources of

municipal

revenues.

The

Corporation’s

exposure

Puerto

Rico

municipalities

consisted

primarily

senior

priority

loans

and

obligations

concentrated in

five of the

largest municipalities

in Puerto Rico.

The municipalities

are required by

law to levy

special property taxes

such

amounts

are

required

for

the

payment

all

their

respective

general

obligation

bonds

and

notes.

addition

municipalities, the

total direct exposure

also included $8.8

million in a

loan extended to

an affiliate

of PREPA,

$29.5 million in

loans

to public

corporations of

the Puerto

Rico government,

and obligations

of the

Puerto Rico

government, specifically

a residential

pass-

through MBS issued

by the PRHFA,

at an amortized

cost of $2.9

million as part

of its available-for-sale

debt securities portfolio

(fair

value of $1.6 million as of March 31, 2025).

The

following

table

details

the

Corporation’s

total

direct

exposure

Puerto

Rico

government

obligations

according

their

maturities:

As of March 31, 2025

Investment

Portfolio

(Amortized cost)

Loans

Total

Exposure

(In thousands)

Puerto Rico Housing Finance Authority:

After 10 years

2,899

Total Puerto Rico Housing Finance Authority

2,899

Public corporation of the Puerto Rico government:

After 1 to 5 years

8,641

After 5 to 10 years

20,842

Total public corporation of the Puerto Rico government

29,483

Affiliate of the Puerto Rico Electric Power Authority:

After 1 to 5 years

8,753

Total Puerto Rico government affiliate

8,753

Total Puerto Rico public corporations and government affiliate

38,236

Municipalities:

Due within one year

2,297

26,349

28,646

After 1 to 5 years

62,792

39,220

102,012

After 5 to 10 years

11,678

88,825

100,503

After 10 years

15,755

Total Municipalities

92,522

154,394

246,916

Total Direct

Government Exposure

95,421

192,630

288,051

Also, as

of March

31, 2025,

the outstanding

balance of

construction loans

funded through

conduit financing

structures to

support

the

federal

programs

LIHTC

combined

with

CDBG-DR

funding

amounted

$62.6

million,

compared

$59.2

million

December

31,

2024.

The

main

objective

these

programs

spur

development

new

rehabilitated

and

affordable

rental

housing. PRHFA,

as program

subrecipient and

conduct issuer,

issues tax-exempt

obligations which

are acquired

by private

financial

institutions and are

required to co-underwrite

with PRHFA

a mirror construction

loan agreement for

the specific project loan

to which

the Corporation will serve as ultimate lender but where the PRHFA

will be the lender of record.

In addition,

as of March

31, 2025, the

Corporation had

$71.5 million

in exposure

to residential mortgage

loans that are

guaranteed

by the PRHFA,

a governmental instrumentality

that has been

designated as a

covered entity under

PROMESA (December

31, 2024 –

$72.5

million).

Residential

mortgage

loans

guaranteed

the

PRHFA

are

secured

the

underlying

properties

and

the

guarantees

serve to

cover shortfalls

in collateral

in the

event of

a borrower

default. The

Puerto Rico government

guarantees up

to $75 million

the

principal

for

all

loans

under

the

mortgage

loan

insurance

program.

According

the

most

recently

released

audited

financial

statements of the PRHFA,

as of June 30, 2023, the PRHFA’s

mortgage loans insurance program covered

loans in an aggregate amount

of approximately $388 million. The regulations adopted

by the PRHFA require

the establishment of adequate reserves to guarantee

the

solvency of the mortgage

loans insurance program. As

of June 30, 2023,

the most recent date

as of which information

is available, the

PRHFA had a liability

of approximately $1.3 million as an estimate of the losses inherent in the portfolio.

108

March

31,

2025

and

December

31,

2024,

the

Corporation

had

$2.9

billion

and

$3.1

billion,

respectively,

public

sector

deposits

Puerto

Rico.

Approximately

19%

the

public

sector

deposits

March

31,

2025

were

from

municipalities

and

municipal agencies in Puerto Rico and 81% were from

public corporations, the Puerto Rico central government

and agencies, and U.S.

federal government agencies in Puerto Rico.

Exposure to USVI Government

The Corporation has operations in the USVI and has credit exposure

to USVI government entities.

For many years, the

USVI has been experiencing

several fiscal and economic

challenges that have deteriorated

the overall financial

and

economic

conditions

the

area.

June

17,

2024,

the

United

States

Bureau

Economic

Analysis

(the

“BEA”)

released

its

estimates of GDP

for 2022.

According to

the BEA, the

USVI’s

real GDP decreased

1.3% in 2022

after increasing

3.7% in 2021.

The

decrease

real

GDP

reflected

declines

exports,

private

fixed

investment,

government

spending,

and

personal

consumption

expenditures. These

negative variances were

partly offset

by an increase

in inventory investment,

while imports,

a subtraction item

the calculation of GDP,

decreased.

Over the past

three years, the

USVI has been

recovering from the

adverse impact caused

by COVID-19 and

has continued to

make

progress

its

rebuilding

efforts

Hurricanes

Irma

and

Maria,

which

occurred

September

2017.

According

data

published by

FEMA, there

were over

$26 billion

in obligated

disaster recovery

funds for

the USVI

as of

February 28,

2025, up

$12

billion (or

89%) from

the comparable

figure a

year earlier.

During the

12-month period

ended February

28, 2025,

over $724

million

were disbursed in the territory,

representing a year-over-year increase

of 65%.

Finally, PROMESA

does not apply to

the USVI and, as such,

there is currently no federal

legislation permitting the restructuring

the debts of the USVI and

its public corporations and instrumentalities.

To the

extent that the fiscal condition of the

USVI government

deteriorates

again,

the

U.S.

Congress

the

government

the

USVI

may

enact

legislation

allowing

for

the

restructuring

the

financial

obligations

the

USVI

government

entities

imposing

stay

creditor

remedies,

including

making

PROMESA

applicable to the USVI.

As of

March

31,

2025 and

December 31,

2024,

the

Corporation

had $116.0

million

and $100.4

million,

respectively,

loans to

USVI public

corporations, of

which $83.6

million and

$68.2 million,

respectively,

were fully

collateralized by

cash balances

held at

the Bank. As of March 31, 2025, all loans were currently performing

and up to date on principal and interest payments.

109

ITEM 3. QUANTITATIVE

AND QUALITATIVE DISCLOSURES

ABOUT MARKET

RISK

For

information

regarding

market

risk

which

the

Corporation

exposed,

see

the

information

contained

Part

Item

“Management’s

Discussion

and

Analysis

Financial

Condition

and

Results of

Operations

— Risk

Management”

this Quarterly

Report on Form 10-Q.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

First

BanCorp.’s

management,

including

its

Chief

Executive

Officer

and

Chief

Financial

Officer,

evaluated

the

effectiveness

First

BanCorp.’s

disclosure

controls

and

procedures

(as

defined

Rules

13a-15(e)

and

15d-15(e)

under

the

Exchange

Act)

March 31, 2025,

the end of

the period covered

by this Quarterly

Report on Form

10-Q. Based on

this evaluation, the

Chief Executive

Officer

and Chief

Financial Officer

concluded that

the Corporation’s

disclosure

controls and

procedures were

effective

as of

March

31,

2025

and

provide

reasonable

assurance

that

the

information

required

disclosed

the

Corporation

reports

that

the

Corporation

files

submits

under

the

Exchange

Act

recorded,

processed,

summarized

and

reported

within

the

time

periods

specified

in SEC

rules and

forms and

is accumulated

and reported

to the

Corporation’s

management,

including

the Chief

Executive

Officer and Chief Financial Officer,

as appropriate, to allow timely decisions regarding required disclosures.

Internal Control over Financial Reporting

There were

no changes

to the

Corporation’s

internal control

over financial

reporting (as

defined

in Rules

13a-15(f) and

15d-15(f)

under the

Exchange Act)

during the

most recent

quarter ended

March 31,

2025 that have

materially affected,

or are reasonably

likely

to materially affect, the Corporation’s

internal control over financial reporting.

110

PART II - OTHER INFORMATION

In accordance with the instructions to Part II

of Form 10-Q, the other specified items in

this part have been omitted because they are not

applicable, or the information has been previously reported.

ITEM 1.

LEGAL PROCEEDINGS

For

discussion

legal

proceedings,

see

Note

–

“Regulatory

Matters,

Commitments

and

Contingencies,”

the

unaudited

consolidated financial statements herein, which is incorporated by reference

in 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 detailed

discussion of certain

risk factors that

could affect

the Corporation’s future

operations, financial

condition or results

for

future periods is set forth in Part I, Item 1A, “Risk Factors,” in the 2024 Annual Report on Form 10-K. These risk factors, and others, could

cause actual

results to

differ materially

from historical

results or

the results

contemplated by

the forward-looking statements

contained in

this report. Also,

refer to the

discussion in

“Forward-Looking Statements” and

Part I, Item

2, “Management’s

Discussion and

Analysis of

Financial Condition and Results

of Operations,” in this Quarterly

Report on Form 10-Q for

additional information that may supplement

update the discussion of risk factors in the

2024 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 2024 Annual

Report on Form 10-K.

111

ITEM 2.

UNREGISTERED

SALES OF

EQUITY SECURITIES

AND USE OF

PROCEEDS

The Corporation did not have any unregistered sales

of equity securities during the quarter ended March

31, 2025.

Issuer Purchases of Equity Securities

The following table provides information in relation

to the Corporation’s purchases of its common stock during

the quarter ended March

31, 2025.

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 Yet

Purchased Under the Plans

or Programs (in

thousands) (1)

January 1, 2025 - January 31, 2025

327

18.16

200,000

February 1, 2025 - February 28, 2025

200,000

March 1, 2025 - March 31, 2025

1,376,489

18.27

1,194,567

127,692

Total

1,376,816

(2) (3)

1,194,567

(1)

As of March

31, 2025, the

Corporation was

authorized to purchase

up to $250

million that

could include

repurchases of common

stock and/or

junior subordinated

debentures under

the

program that was

publicly announced on July

22, 2024. During the

first quarter of

2025, the Corporation

repurchased approximately

$21.8 million in common

stock and redeemed

$50.6

million of junior subordinated debentures,

as further explained in Note 6

- “Non-Consolidated Variable

Interest Entities (“VIEs”) and

Servicing Assets.” The repurchase program

does not

obligate

acquire

any

specific

number

and

does

not

have

expiration

date.

The

repurchase

program

may

modified,

suspended,

terminated

any

time

the

Corporation’s

discretion.

Repurchases

under

the program

may be

executed

through

open market

purchases,

accelerated

share repurchases,

privately

negotiated

transactions,

or plans,

including plans complying with Rule 10b5-1 under the Exchange

Act, and/or redemption of junior subordinated debentures.

(2)

Includes 1,194,567 shares of common stock repurchased in the open

market at an average price of $18.21 for a total purchase price

of approximately $21.8 million.

(3)

Includes 182,249 shares of common stock acquired

by the Corporation to cover minimum tax withholding

obligations upon the vesting of equity-based awards.

The Corporation intends to

continue to satisfy statutory tax withholding obligations in connection

with the vesting of outstanding restricted stock and

performance units through the withholding of shares.

ITEM 5.

OTHER INFORMATION

During

the

quarter

ended

March

31,

2025,

none

the

Corporation’s

directors

officers

(as

defined

Rule

16a-1(f)

the

Exchange Act)

adopted

terminated

a “Rule 10b5-1 trading

arrangement” or

“non-Rule

10b5-1

trading arrangement,” as those

terms

are defined in Item 408 of Regulation S-K.

112

ITEM 6.

EXHIBITS

See the Exhibit Index below, which is incorporated by

reference herein:

EXHIBIT INDEX

Exhibit No.

Description

31.1

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

31.2

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

32.1

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

2002

32.2

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

2002

101.INS

Inline XBRL Instance Document, filed herewith. The

instance document does not appear in the interactive

data file because

its XBRL tags are embedded within the inline XBRL

document.

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-Q

for the quarter ended March 31, 2025, formatted in

Inline XBRL (included within the Exhibit 101 attachments)

113

SIGNATURES

Pursuant to

the requirements

of the

Securities Exchange

Act of

1934, the

Corporation has

duly caused

this report

to be

signed on

its

behalf by the undersigned hereunto duly authorized:

First BanCorp.

Registrant

Date:

May 9, 2025

By:

/s/ Aurelio Alemán

Aurelio Alemán

President and Chief Executive Officer

Date: May 9, 2025

By:

/s/ Orlando Berges

Orlando Berges

Executive Vice President and Chief Financial Officer