FIRST BANCORP /PR/

SIGNATURES

Forward-Looking Statements

This Quarterly

Form 10-Q

(this “Form

10-Q”) contains

meaning of

Section 27A

of the Securities Act of 1933, as

amended (the “Securities Act”), and

Section 21E of the Securities Exchange

Act of 1934, as amended

(the “Exchange Act”),

which are subject to

the safe harbor created

by such sections. When

used in this Form

10-Q or future filings

by

First

(the

“Corporation,”

“we,”

“us,”

or

“our”)

with

the

U.S.

and

Commission

(the

“SEC”),

in

the

Corporation’s press

releases or in other public or

stockholder communications made by

the Corporation, or in oral statements

made on

behalf

of

the

by,

or

with

the

of,

an

authorized

executive

officer

of

the

the

words

or

phrases

“would,”

“intends,”

“will,”

“expect,”

“should,”

“plans,”

“forecast,”

“anticipate,”

“look

forward,”

“believes,”

and

other

terms

of

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

contained in

this Form

10-Q, the

date hereof,

and advises

readers that

any such

are not

guarantees of

future performance

and involve

certain risks,

uncertainties, estimates,

and

by us

difficult

to predict

.

Various

factors, some

are beyond

our

control,

could cause

actual results

to

differ materially from those expressed in, or implied

by, such forward-looking

statements.

Factors

that

could

cause

results

to

differ

materially

from

those

expressed

in,

or

implied

by,

the

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

environment

and inflation

levels on

the level,

and performance

of the

liabilities, and

corresponding

effects on

income, net

interest margin,

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

position;

●

volatility

in

the

which

could

result

in,

among

other

things,

bank

deposit

runoffs,

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

government and

other governments,

including those

determined by

the Board

of Governors

of

the Federal Reserve

System (the “Federal

Reserve Board”), the Federal

Reserve Bank of New

York

(the “FED”), the

Federal

Deposit

(the

“FDIC”),

government-sponsored

housing

and

regulators

in

Puerto

Rico,

the

U.S., and

Virgin

Islands (the

“USVI”) and

British Virgin

Islands (the

“BVI”), that

may affect

the future

the Corporation;

●

to the

ability of

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

to

repurchase,

Federal

Home

Loan

Bank

(“FHLB”)

advances,

and

certificates

of

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,

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

and

credit

market

prices

of

and

demand

for

the

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

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

disaster relief;

●

the ability

of the

FirstBank,

and

third-party

service providers

to identify

and prevent

cyber-security

incidents,

such

as

data

breaches,

ransomware,

malware,

“denial

of

service”

attacks,

“hacking,”

identity

theft,

and

state-

sponsored

cyberthreats,

and

the

of

and

response

to

any

incidents

that

occur,

which

may

result

in

misuse

or

misappropriation

of

confidential

or

proprietary

information,

disruption,

or

damage

to

our

systems

or

those

of

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

as

well

as

the

implementation

of

or

planned

growth

opportunities,

risks,

uncertainties,

and

other

factors

or

events

related

to

any

acquisitions,

dispositions,

partnerships,

operational

investments,

systems

conversions,

and

any

anticipated

efficiencies

or

other expected results related thereto;

●

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

on

June 5,

(the “2024

Fiscal Plan”)

by

the oversight

board

by the

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

of

changes

in

or

determinations

and

in

applying

those

and

of

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

or

armed

conflict,

such

as the

ongoing

conflict

in

Ukraine, the

conflict

in

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

portions

of

the

losses in

the

debt

securities portfolio

are

to

be

credit-related, resulting

in additional

charges to

the provision

losses on

and

the potential

that could

emerge

from further

downgrades of

the U.S.’s

Long-Term

Foreign-

Currency Issuer Default Rating and negative ratings outlooks;

●

the

impacts

of

legislative,

tax,

or

changes

or

changes

in

legislative,

tax,

or

priorities,

the

in

staffing

at

U.S.

governmental

agencies,

shutdowns,

and

political

impasses,

uncertainties

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

of

possible

failure

or

circumvention

of

the

internal

controls

and

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

impact

of the

of any

uncertainties on

capital would

preclude

further

growth of FirstBank and preclude the Corporation’s

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

●

to whether

FirstBank will

be able

to continue

to satisfy

its regulators

regarding,

things, its

asset

plans,

of

capital

levels,

and

with

laws,

regulations

and

related

The

does

not

undertake

to

and

specifically

disclaims

any

to

update

any

“forward-looking

statements”

to

reflect

occurrences

or

unanticipated

events

or

circumstances

after

the

date

of

such

except

as

by

the

federal

securities laws.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands, except for share information)

ASSETS

$

1,327,075

$

1,158,215

Money market investments:

Time deposit with another financial institution

Other short-term investments

Total money market investments

1,200

1,200

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

$

4,788,924

5,125,408

as of December 31, 2024; ACL of $

as of December 31, 2024)

Held-to-maturity debt securities, at amortized

cost, net of ACL of $

as of December 31, 2024 (fair value of

$

305,501

308,040

as of December 31, 2024)

311,964

316,984

44,813

52,018

Total investment securities

4,669,661

4,934,304

Loans, net of ACL of $

247,269

243,942

as of December 31, 2024

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

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

38,611

38,611

5,715

6,967

277,407

276,754

Total assets

$

$

LIABILITIES

Non-interest-bearing deposits

$

5,629,383

$

5,547,538

Interest-bearing deposits

11,193,146

11,323,760

Total deposits

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)

(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

22,366

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

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

(482,495)

(566,556)

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$

CONSOLIDATED STATEMENTS OF INCOME

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:

58,497

63,025

Short-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)

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:

9,640

9,662

Mortgage banking activities

3,177

2,882

5,805

5,507

11,475

11,312

Other non-interest income

5,637

4,620

35,734

33,983

62,137

59,506

22,630

21,381

3,278

3,842

Professional service fees

11,486

12,676

5,878

5,129

2,236

3,102

Net gain on OREO operations

(1,129)

(1,452)

5,110

5,751

Communications

2,245

2,097

9,151

8,891

123,022

120,923

Income before income taxes

100,299

97,413

Income tax expense

23,240

23,955

$

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE 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

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

84,061

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.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

$

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

Net amortization of premiums and discounts on investment securities

1,073

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

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

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

663,164

Cash and cash equivalents at end of year

$

$

684,519

Cash and cash equivalents include:

$

1,327,075

$

680,734

Money market investments

1,200

3,785

$

$

684,519

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITY

Common Stock

$

22,366

$

22,366

Additional Paid-In Capital:

964,964

965,707

Stock-based compensation expense

3,739

2,925

(11,356)

(9,336)

957,380

959,319

Retained Earnings:

2,038,812

1,846,112

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)

2,086,276

1,892,714

Treasury Stock (at cost):

(790,350)

(697,406)

Common stock repurchases (See Note 11)

(25,158)

(52,354)

11,356

9,336

(33)

(23)

(804,185)

(740,447)

Accumulated Other Comprehensive Loss, net of tax:

(566,556)

(639,170)

Other comprehensive income (loss), net of tax

84,061

(482,495)

(654,235)

Total stockholders’ equity

$

$

1,479,717

The accompanying notes are an integral part of these statements.

INDEX TO NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

PAGE

Note 1 –

Basis of Presentation and Significant Accounting Policies

Note 2 –

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 –

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

–

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

STATEMENTS

NOTE 1 – BASIS

OF PRESENTATION AND

SIGNIFICANT

ACCOUNTING

POLICIES

The

(unaudited)

for

the

quarter

ended

March

31,

(the

“unaudited

statements”)

of

First

(the

“Corporation”)

have

been

prepared

in

conformity

with

the

stated

in

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

should be

read in

conjunction with

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

intercompany

and

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.

NOTE 2 – DEBT SECURITIES

Available-for-Sale

The amortized

cost, gross

unrealized gains

and losses,

ACL, estimated

fair value,

and weighted-average

yield of

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

December 31, 2024 were as follows:

(1)

Gross Unrealized

ACL

(2)

Gains

Losses

U.S. Treasury securities:

$

19,960

$

$

$

$

19,612

0.65

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

1,015,466

17,837

997,629

0.72

692,123

38,962

653,193

0.98

7,584

7,549

4.69

(3)

2,899

1,599

United States and Puerto Rico government obligations

1,738,032

58,142

1,679,582

0.84

Mortgage-backed securities (“MBS”):

Freddie Mac (“FHLMC”) certificates:

12,881

12,535

2.14

116,041

8,184

107,857

1.52

912,039

147,069

765,311

1.52

1,040,961

155,599

885,703

1.53

Ginnie Mae (“GNMA”) certificates:

2.46

6,889

6,622

0.72

64,042

5,001

59,044

1.84

139,482

19,576

119,955

2.78

210,805

24,846

186,011

2.43

Fannie Mae (“FNMA”) certificates:

19,453

18,932

2.13

232,359

15,249

217,118

1.75

950,195

135,749

814,878

1.50

1,202,007

151,519

1,050,928

1.56

Collateralized mortgage obligations (“CMOs”) issued

or guaranteed by the FHLMC, FNMA, and GNMA:

361,783

47,198

315,209

2.82

Private label:

5,905

1,695

4,034

6.60

2,821,461

1,457

380,857

2,441,885

1.79

33,658

1,893

31,778

2.56

10,549

1,413

9,136

1.67

184,224

34,809

149,503

2.21

228,431

38,115

190,417

2.23

3,049,892

1,558

418,972

1.82

Other:

1,000

1,000

2.31

Total available-for-sale debt securities

$

4,788,924

$

1,590

$

477,114

$

$

1.46

(1)

debt

totaled

$

9.0

part of

loans

and investment

securities in

the

(2)

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.

(1)

Gross Unrealized

ACL

(2)

Gains

Losses

U.S. Treasury securities:

$

59,992

$

$

$

$

59,189

0.75

U.S. GSEs’ obligations:

1,090,678

22,826

1,067,852

0.79

817,835

53,195

764,679

0.96

7,835

7,800

4.73

(3)

2,951

1,620

United States and Puerto Rico government obligations

1,979,291

77,845

1,901,140

0.87

MBS:

14,477

14,017

2.14

122,548

9,977

112,571

1.52

936,531

168,691

767,865

1.51

1,073,556

179,128

894,453

1.52

2.68

8,025

7,675

0.71

67,181

6,125

61,056

1.86

142,330

22,041

120,305

2.78

218,417

28,522

189,911

2.42

21,921

21,232

2.13

244,966

18,874

226,092

1.74

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:

377,812

52,338

325,548

2.88

Private label:

After

5 to 10 years

4,886

1,430

3,399

6.69

1,200

6.32

6,086

1,715

4,195

6.62

2,922,124

440,826

2,481,253

1.79

33,835

2,286

31,562

2.59

10,621

1,653

8,968

1.67

178,537

37,158

141,379

2.06

222,993

41,097

181,909

2.12

3,145,117

481,923

1.82

Other

1,000

1,000

2.32

Total available-for-sale debt securities

$

5,125,408

$

$

559,768

$

$

1.45

(1)

debt

totaled $

9.6

part of

securities in

the

(2)

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.

During

the

first

quarter

of

2025,

the

$

12.3

million

in

GNMA

MBS,

of

which $

7.3

million were commercial MBS.

Maturities

of

debt

are

based

on

the

period

of

final

maturity.

Expected

might

differ

from

because

they

may

be

subject

to

prepayments

and/or

call

options.

The

yield

on

debt

is

based

on

cost

and,

therefore,

does

not

give

effect

to

changes

in

fair

value.

The

net

unrealized loss

is presented

as part

of accumulated

other comprehensive

loss in

the consolidated

statements of financial condition.

The

tables

present

the

fair

value

and

gross

losses

of

the

debt

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.

Total

Losses

Losses

Losses

U.S. Treasury and U.S. GSEs’

$

8,099

$

$

1,664,851

$

57,147

$

1,672,950

$

57,182

1,599

(1)

1,599

MBS:

FHLMC

1,188

851,798

155,598

852,986

155,599

GNMA

15,671

162,660

24,650

178,331

24,846

FNMA

999,306

151,519

999,306

151,519

CMOs issued or guaranteed by the FHLMC,

3,094

184,045

47,197

187,139

47,198

4,034

1,695

(1)

4,034

1,695

20,856

132,121

37,671

152,977

38,115

$

48,908

$

$

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

$

0.2

Total

Losses

Losses

Losses

U.S. Treasury and U.S. GSEs’

$

8,005

$

$

1,886,046

$

76,824

$

1,894,051

$

76,859

1,620

(1)

1,620

MBS:

FHLMC

36,224

857,492

179,043

893,716

179,128

GNMA

22,281

166,470

28,014

188,751

28,522

FNMA

53,325

1,012,331

178,991

1,065,656

179,123

CMOs issued or guaranteed by the FHLMC,

52,778

187,772

52,090

240,550

52,338

4,195

1,715

(1)

4,195

1,715

44,831

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

Assessment for Credit Losses

Debt securities

issued by

U.S. government

agencies,

U.S. GSEs,

and

Treasury,

notes and

MBS, accounted

for

substantially

all of

as of

2025, and

expects no

on these

given

the

explicit

and

implicit

guarantees

by

the

U.S.

federal

government.

Because

the

decline

in

fair

value

is

attributable to

interest rates,

and not

credit quality,

and because

,

as of

Corporation did

not have

the

intent to

sell these

U.S. government

and agencies

and determined

that it

was likely

that it

will not

be required

to sell

these

before

their

anticipated

recovery,

the

does

not

consider

impairments

on

these

to

be

credit

related. The

credit loss

assessment was

concentrated mainly

on private

label MBS and

on the

debt security, for

which credit losses are evaluated on a quarterly basis.

held as part

of the Corporation’s

available for sale

portfolio consist of

trust certificates issued

by an unaffiliated

party

backed

by

fixed-rate,

single-family

loans

in

the

U.S.

mainland

with

FICO

scores

over

and

moderate

ratios (under

%), as

well

as moderate

levels.

The interest

rate

on

these

MBS is

variable, tied

to

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

plus a

tenor spread

adjustment of

0.26161

% and

the

spread

limited

to

the

coupon

of

the

collateral.

The

the

ACL

for

private

label

MBS

based

on

a

risk-adjusted

discounted

cash

flow

methodology

that

the

structure

and

terms

of

the

instruments.

The

utilized

of default

(“PDs”)

and

loss-given

default

(“LGDs”)

that

considered,

among

other

things, historical

payment performance,

loan-to-value attributes,

and relevant

macroeconomic variables,

such as

regional unemployment

rates and

the housing

price index.

Under this

approach, expected

(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

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

For the residential

pass-through MBS issued

by the PRHFA

held as part of

available-for-sale portfolio

backed by

second

loans

in

Puerto

Rico,

the

ACL

was

based

on

a

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,

attributes,

and

relevant

current

and

variables, such as

regional unemployment

rates, the housing

price index,

and expected recovery

from the PRHFA

guarantee. PRHFA,

not the

government, provides

a guarantee

in the event

of default

and subsequent

foreclosure of

the properties

the

second

loans.

In

the

event

that

the

second

loans

default

and

the

is

insufficient

to

satisfy

the

balance

of

this

MBS,

PRHFA’s

ability

to

honor

such

guarantee

will

depend

on,

among

other

its

at

the

time

such

becomes

due

and

payable.

Deterioration

of

the

Puerto

Rico

economy

or

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

MBS

Obligation

Total

MBS

Obligation

Total

$

$

$

$

$

$

Provision for credit losses – (benefit)

(5)

(5)

(69)

(69)

ACL on available-for-sale debt securities

$

$

$

$

$

$

Held-to-Maturity Debt Securities

The

cost,

gross

gains

and

losses,

fair

value,

ACL,

yield

and

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

December 31, 2024 were as follows:

(1) (2)

Gross Unrecognized

Gains

Losses

ACL

$

2,297

$

$

$

2,357

$

4.87

62,792

2,797

65,336

7.19

11,678

12,285

5.07

15,755

16,030

7.78

Total Puerto Rico municipal bonds

92,522

3,908

96,008

6.97

MBS:

11,120

10,881

3.03

16,654

15,774

4.33

27,774

1,119

26,655

3.81

12,987

12,382

3.30

59,962

2,759

57,203

4.19

CMOs issued or guaranteed by

FHLMC, FNMA, and GNMA:

24,833

1,060

23,773

3.49

125,556

5,543

120,013

3.88

9,209

9,100

3.48

85,520

5,140

80,380

1.90

94,729

5,249

89,480

2.05

220,285

10,792

209,493

3.09

$

312,807

$

3,908

$

11,214

$

305,501

$

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)

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.

(1) (2)

Gross Unrecognized

Gains

Losses

ACL

$

2,214

$

$

$

2,342

$

5.07

61,289

2,724

63,575

7.33

13,184

13,790

5.79

15,755

15,901

8.07

Total Puerto Rico municipal bonds

92,442

3,815

95,608

7.18

MBS:

12,112

11,759

3.03

16,936

1,142

15,794

4.30

29,048

1,495

27,553

3.77

13,472

12,630

3.29

61,233

3,786

57,447

4.19

CMOs issued or guaranteed by

FHLMC, FNMA, and GNMA:

25,566

1,321

24,245

3.49

129,319

7,444

121,875

3.86

9,258

9,107

3.48

86,767

5,317

81,450

3.92

96,025

5,468

90,557

3.88

225,344

12,912

212,432

3.87

$

317,786

$

3,815

$

13,561

$

308,040

$

4.83

(1)

on held-to-maturity

that totaled

$

4.1

part of

in the

(2)

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.

The

tables

present

the

debt

securities’

fair

value

and

gross

losses,

aggregated by

category and length

of time that

individual securities had

been in a

continuous unrecognized

loss position, as

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

an ACL was recorded:

Total

Losses

Losses

Losses

Puerto Rico municipal bonds

$

$

$

20,287

$

$

20,287

$

MBS:

FHLMC certificates

26,655

1,119

26,655

1,119

GNMA certificates

12,382

12,382

FNMA certificates

57,203

2,759

57,203

2,759

CMOs issued or guaranteed by FHLMC,

23,773

1,060

23,773

1,060

89,480

5,249

89,480

5,249

$

$

$

229,780

$

11,214

$

229,780

$

11,214

Total

Losses

Losses

Losses

Puerto Rico municipal bonds

$

$

$

20,071

$

$

20,071

$

MBS:

FHLMC certificates

27,553

1,495

27,553

1,495

GNMA certificates

12,630

12,630

FNMA certificates

57,447

3,786

57,447

3,786

CMOs issued or guaranteed by FHLMC,

24,245

1,321

24,245

1,321

90,557

5,468

90,557

5,468

$

$

$

232,503

$

13,561

$

232,503

$

13,561

The

classifies

the

debt

into

the

major

types:

MBS

issued

or

guaranteed by

GSEs and

underlying collateral

and Puerto

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

cost

basis

of

the

bonds

over

their

life

as

in

Note

–

of

and

Summary

of

Significant

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

2024 Annual Report on Form 10-K.

performs periodic

credit quality

reviews on

these issuers.

All of

bonds were

current as

to

scheduled contractual payments

31, 2025. The ACL

of Puerto Rico

municipal bonds was

$

0.9

compared to $

0.8

million as of December 31, 2024.

The

table

the

activity

in

the

ACL

for

debt

by

major

type

for

the

Puerto Rico Municipal Bonds

$

$

2,197

Provision for credit losses – expense (benefit)

(962)

ACL on held-to-maturity debt securities

$

$

1,235

Credit Quality Indicators:

The

debt

of

GSEs’

MBS,

for

which

the

expects

no

credit

losses,

and

financing arrangements

with Puerto

Rico municipalities

issued in

bond form.

The Puerto

bonds are

as

but

are

underwritten

as

loans

with

features

that

are

found

in

loans.

Accordingly,

the

monitors the

credit quality

municipal bonds

through the

use of

internal credit-risk

ratings, which

are generally

updated on

a

basis.

The

a

bond

as

a

criticized

asset

if

its

risk

rating

is

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

For

the

definitions

of

the

internal-credit

ratings,

see

Note

–

“Debt

Securities,”

to

the

audited

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

The

periodically

reviews

its Puerto

Rico

bonds

to

if

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

has

a

Loan

Review

Group

that

reports

directly

to

the

Risk

and

administratively

to

the

Chief

Risk

Officer.

The

Loan

Review

Group

annual

credit

process

reviews

of

the

loan

portfolios,

the

above-mentioned

Puerto

Rico

bonds

accounted

for

as

debt

The objective

of

these

loan

reviews is

to

assess accuracy

of the

and

of

loan

risk

rating

and

its

adherence

to

lending

policies,

practices

and

procedures.

The

performed

by

this

group

contributes

to

the

of

with

credit

and

underwriting

the

of

the

current

level

of

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

2024,

all Puerto

Rico

bonds

classified

as held-to-maturity

were

classified as

Pass.

No

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

31,

A

is

to

be

past

due

once

it

is

days

contractually

past

due

under

the

terms

of

the

agreement.

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 December 31,

Puerto Rico and Virgin Islands region:

$

2,334,653

$

2,323,205

193,791

184,427

1,781,402

1,867,894

Commercial and Industrial (“C&I”) loans

2,289,278

2,325,875

3,736,076

3,750,205

$

10,335,200

$

10,451,606

Florida region:

$

503,193

$

505,226

40,650

43,969

720,287

698,090

5,478

7,502

$

$

2,294,950

Total:

$

$

234,441

228,396

(1)

(2)

ACL on loans and finance leases

(247,269)

(243,942)

Loans held for investment, net

$

$

(1)

As of March 31, 2025 and

December 31, 2024, includes $

830.8

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

23.6

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

Various

loans

were

assigned

as

for

time

and

related

unused

commitments.

The carrying

to $

5.5

$

5.4

and

As of

include $

1.8

$

1.7

billion

that

were

pledged

at

the

FHLB

as

for

borrowings

and

letters

of

credit;

$

3.4

billion

pledged

as

collateral to

secure borrowing

capacity at

the FED

Discount Window

as of

each of

2024; $

162.7

million pledged

to secure

for the uninsured

portion of

government deposits,

$

163.5

31, 2024; and $

120.2

million pledged to secure time deposits accounts, compared to $

123.0

million as of December 31, 2024

.

aging of

the loan

portfolio held

for investment,

as well

as information

about nonaccrual

loans with

no ACL,

by

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

Days Past Due and Accruing

Current

(1)

30-59

60-89

90+

(5)

Total loans held

Loans with no

ACL

(6)

Residential mortgage loans, mainly secured by first mortgages:

FHA/VA government-guaranteed

loans

(1)

(2) (4)

$

71,785

$

$

2,529

$

17,569

$

$

91,883

$

(1) (3) (5)

2,681,724

26,393

7,053

30,793

2,745,963

233,027

1,356

234,441

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

2,476,055

1,142

1,045

23,155

14,602

3,333,347

2,169

3,893

20,344

1,961,832

49,747

9,490

15,088

2,036,157

1,875

881,101

15,854

3,571

4,509

905,035

339,289

5,464

2,744

1,952

349,449

290,313

4,587

3,438

7,488

305,826

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

$

$

19,176

(1)

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

amounted to $

7.1

million, $

57.3

million, and $

1.3

(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.

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

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

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

the repurchase

option are

be reflected

on the

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)

12.5

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

Days Past Due and Accruing

Current

(1)

30-59

60-89

90+

(5)

Total loans held

Loans with no

ACL

(6)

Residential mortgage loans, mainly secured by first mortgages:

FHA/VA government-guaranteed

loans

(1)

(2) (4)

$

70,529

$

$

2,907

$

18,816

$

$

92,252

$

(1) (3) (5)

2,666,959

29,867

7,404

31,949

2,736,179

227,031

1,365

228,396

(1) (3)

2,554,226

10,851

6,732

3,336,465

1,589

6,895

20,514

1,189

1,935,995

61,524

13,354

15,305

2,026,178

1,032

875,663

15,879

4,092

3,812

899,446

349,588

6,591

3,593

2,136

361,908

303,311

5,366

3,969

8,368

321,014

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

$

$

10,199

(1)

delinquency policy

and consistent

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

(2)

It is

policy to

report delinquent

FHA/VA

government-guaranteed residential

as past-due

loans 90

days and

still accruing

as opposed

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

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

no

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

When

a

loan

is placed

in

status,

any

accrued

but uncollected

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

0.8

million for the

quarters ended March

2025 and 2024, interest income recognized on nonaccrual loans amounted

to $

0.4

0.6

As of

recorded investment

on residential

collateralized by

residential real

estate property

that

were in

the process

of foreclosure

to $

27.6

$

8.8

FHA/VA

government-guaranteed

loans, and

$

3.9

PCD loans

acquired prior

to the

adoption, on

January 1,

2020, of

CECL. The

Corporation commences

the

foreclosure

process

on

real

estate

loans

when

a

becomes

days

delinquent.

Foreclosure

and

timelines

vary

depending

on

whether

the

is

located

in

a

judicial

or

non-judicial

state.

Occasionally,

foreclosures

may

be

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

court delays, and title issues.

Credit Quality Indicators:

categorizes loans

into risk

categories based

on relevant

about the

ability of

the borrowers

to service

their debt

such as

current financial

information, historical

payment experience,

credit documentation,

public information,

and current

trends,

among

other

factors.

The

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

loans

to

if

they

are

properly

classified.

The

frequency

of

these

reviews

will

depend

on

the

amount

of

the

aggregate

debt,

and

the

risk

rating

classification

of

the

obligor.

In

during

the

renewal

and

annual

review

process

of

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

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.

Based on

the most

recent analysis

performed, the

of commercial

loans by portfolio

classes and

by

origination year based

on the internal credit-risk

category as of March

31, 2025, the gross charge

-offs for the quarter

2025 by

classes and

by origination

year,

and the

cost of

by portfolio

classes

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

as follows:

As of

Puerto Rico and Virgin Islands Region

(1)

Prior

Loans

Total

Total

Pass

$

7,459

$

65,179

$

99,812

$

9,823

$

2,564

$

3,465

$

$

188,302

$

179,755

4,133

1,356

5,489

4,672

Loss

$

7,459

$

65,179

$

103,945

$

9,823

$

2,564

$

4,821

$

$

193,791

$

184,427

$

$

$

$

$

$

$

$

Pass

$

12,201

$

320,262

$

168,300

$

348,207

$

137,398

$

731,644

$

5,645

$

1,723,657

$

1,804,876

3,694

3,127

30,167

36,988

37,035

20,757

20,757

25,983

Loss

$

12,201

$

320,262

$

171,994

$

351,334

$

137,398

$

782,568

$

5,645

$

1,781,402

$

1,867,894

$

$

$

$

$

$

$

$

C&I

Pass

$

69,210

$

240,936

$

371,992

$

273,170

$

122,396

$

415,175

$

712,273

$

2,205,152

$

2,249,680

3,072

10,004

39,512

52,588

44,900

3,225

13,824

6,305

7,909

31,538

31,295

Loss

$

69,210

$

241,020

$

375,255

$

276,395

$

146,224

$

421,480

$

759,694

$

2,289,278

$

2,325,875

$

$

$

$

$

$

$

$

As of

Florida Region

(1)

Prior

Loans

Total

Total

Pass

$

$

17,919

$

17,098

$

$

$

$

5,633

$

40,650

$

43,969

Loss

$

$

17,919

$

17,098

$

$

$

$

5,633

$

40,650

$

43,969

$

$

$

$

$

$

$

$

Pass

$

41,522

$

80,763

$

28,567

$

219,070

$

100,836

$

177,266

$

29,137

$

677,161

$

672,736

17,798

25,328

43,126

25,354

Loss

$

41,522

$

80,763

$

28,567

$

236,868

$

100,836

$

202,594

$

29,137

$

720,287

$

698,090

$

$

$

$

$

$

$

$

C&I

Pass

$

15,080

$

294,989

$

177,258

$

174,614

$

125,880

$

109,327

$

162,432

$

1,059,580

$

1,029,100

11,010

11,010

11,063

Loss

$

15,080

$

294,989

$

177,258

$

174,614

$

125,880

$

120,337

$

162,432

$

$

$

$

$

$

$

$

$

$

As of

Total

(1)

Prior

Loans

Total

Total

Pass

$

7,459

$

83,098

$

116,910

$

9,823

$

2,564

$

3,465

$

5,633

$

228,952

$

223,724

4,133

1,356

5,489

4,672

Loss

$

7,459

$

83,098

$

121,043

$

9,823

$

2,564

$

4,821

$

5,633

$

234,441

$

228,396

$

$

$

$

$

$

$

$

Pass

$

53,723

$

401,025

$

196,867

$

567,277

$

238,234

$

908,910

$

34,782

$

2,400,818

$

2,477,612

3,694

3,127

30,167

36,988

37,035

17,798

46,085

63,883

51,337

Loss

$

53,723

$

401,025

$

200,561

$

588,202

$

238,234

$

985,162

$

34,782

$

$

$

$

$

$

$

$

$

$

C&I

Pass

$

84,290

$

535,925

$

549,250

$

447,784

$

248,276

$

524,502

$

874,705

$

3,264,732

$

3,278,780

3,072

10,004

11,010

39,512

63,598

55,963

3,225

13,824

6,305

7,909

31,538

31,295

Loss

$

84,290

$

536,009

$

552,513

$

451,009

$

272,104

$

541,817

$

922,126

$

$

$

$

$

$

$

$

$

$

tables present the

amortized cost of

loans by portfolio

classes and by

origination year

accrual status as of March 31, 2025

,

the gross charge-offs for

the quarter ended March 31, 2025

by origination year, and

cost of residential mortgage loans by portfolio classes based on accrual

status as of December 31, 2024:

As of

(1)

Prior

Loans

Total

Total

Puerto Rico and Virgin Islands Region:

$

$

$

1,140

$

1,041

$

1,575

$

87,007

$

$

90,763

$

91,124

$

$

$

1,140

$

1,041

$

1,575

$

87,007

$

$

90,763

$

91,124

$

52,444

$

187,942

$

163,584

$

149,257

$

61,696

$

1,607,066

$

$

2,221,989

$

2,208,672

21,834

21,901

23,409

$

52,444

$

187,942

$

163,584

$

149,324

$

61,696

$

1,628,900

$

$

2,243,890

$

2,232,081

Total

$

52,444

$

187,942

$

164,724

$

150,298

$

63,271

$

1,694,073

$

$

2,312,752

$

2,299,796

21,834

21,901

23,409

$

52,444

$

187,942

$

164,724

$

150,365

$

63,271

$

1,715,907

$

$

2,334,653

$

2,323,205

$

$

$

$

$

$

$

$

(1)

As of

(1)

Prior

Loans

Total

Total

Florida Region:

$

$

$

$

$

$

1,120

$

$

1,120

$

1,128

$

$

$

$

$

$

1,120

$

$

1,120

$

1,128

$

11,054

$

88,123

$

83,245

$

67,541

$

40,570

$

202,648

$

$

493,181

$

495,558

1,158

1,224

6,510

8,892

8,540

$

11,054

$

88,123

$

84,403

$

68,765

$

40,570

$

209,158

$

$

502,073

$

504,098

Total

$

11,054

$

88,123

$

83,245

$

67,541

$

40,570

$

203,768

$

$

494,301

$

496,686

1,158

1,224

6,510

8,892

8,540

$

11,054

$

88,123

$

84,403

$

68,765

$

40,570

$

210,278

$

$

503,193

$

505,226

$

$

$

$

$

$

$

$

(1)

As of

(1)

Prior

Loans

Total

Total

Total:

$

$

$

1,140

$

1,041

$

1,575

$

88,127

$

$

91,883

$

92,252

$

$

$

1,140

$

1,041

$

1,575

$

88,127

$

$

91,883

$

92,252

$

63,498

$

276,065

$

246,829

$

216,798

$

102,266

$

1,809,714

$

$

2,715,170

$

2,704,230

1,158

1,291

28,344

30,793

31,949

$

63,498

$

276,065

$

247,987

$

218,089

$

102,266

$

1,838,058

$

$

2,745,963

$

2,736,179

Total

$

63,498

$

276,065

$

247,969

$

217,839

$

103,841

$

1,897,841

$

$

2,807,053

$

2,796,482

1,158

1,291

28,344

30,793

31,949

$

63,498

$

276,065

$

249,127

$

219,130

$

103,841

$

1,926,185

$

$

$

$

$

$

$

$

$

$

$

(1)

The

the

cost

of

loans

by

classes

and

by

origination

year

accrual

status as of

gross charge-offs

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

(1)

Prior

Loans

Total

Total

Puerto Rico and Virgin Islands Region:

$

162,352

$

601,698

$

473,335

$

368,843

$

245,610

$

169,131

$

$

2,020,969

$

2,010,690

1,712

3,941

3,254

2,493

3,687

15,087

15,295

$

162,352

$

603,410

$

477,276

$

372,097

$

248,103

$

172,818

$

$

2,036,056

$

2,025,985

$

$

1,442

$

3,257

$

1,997

$

1,027

$

$

$

8,714

$

65,078

$

243,748

$

252,129

$

180,652

$

103,616

$

55,303

$

$

900,526

$

895,634

1,790

1,348

4,509

3,812

$

65,078

$

243,942

$

253,919

$

182,000

$

103,945

$

56,151

$

$

905,035

$

899,446

$

$

$

1,205

$

$

$

$

$

3,040

$

28,490

$

117,519

$

102,811

$

64,734

$

14,920

$

18,842

$

$

347,316

$

358,033

1,952

2,136

$

28,490

$

117,951

$

103,536

$

65,264

$

14,989

$

19,038

$

$

349,268

$

360,169

$

$

$

2,634

$

1,675

$

$

$

$

5,998

$

$

$

$

$

$

$

305,826

$

305,826

$

321,014

$

$

$

$

$

$

$

305,826

$

305,826

$

321,014

$

$

$

$

$

$

$

6,074

$

6,074

$

17,156

$

57,023

$

31,352

$

14,606

$

4,138

$

5,791

$

8,578

$

138,644

$

142,091

1,247

1,500

$

17,156

$

57,501

$

31,680

$

14,731

$

4,175

$

5,944

$

8,704

$

139,891

$

143,591

$

$

1,628

$

1,456

$

$

$

$

$

4,056

Total

$

273,076

$

1,019,988

$

859,627

$

628,835

$

368,284

$

249,067

$

314,404

$

3,713,281

$

3,727,462

2,816

6,784

5,257

2,928

4,884

22,795

22,743

$

273,076

$

1,022,804

$

866,411

$

634,092

$

371,212

$

253,951

$

314,530

$

3,736,076

$

3,750,205

$

$

4,254

$

8,552

$

5,123

$

1,903

$

1,793

$

6,239

$

27,882

(1)

As of

(1)

Prior

Loans

Total

Total

Florida Region:

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

1,739

$

$

$

$

$

$

$

$

$

1,739

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

1,184

$

$

$

$

2,125

$

1,529

$

5,179

$

5,535

$

$

1,184

$

$

$

$

2,140

$

1,531

$

5,196

$

5,570

$

$

$

$

$

$

$

$

Total

$

$

1,322

$

$

$

$

2,225

$

1,529

$

5,460

$

7,457

$

$

1,322

$

$

$

$

2,241

$

1,531

$

5,478

$

7,502

$

$

$

$

$

$

$

$

(1)

As of

(1)

Prior

Loans

Total

Total

Total:

$

162,352

$

601,698

$

473,335

$

368,843

$

245,610

$

169,231

$

$

2,021,069

$

2,010,873

1,712

3,941

3,254

2,493

3,688

15,088

15,305

$

162,352

$

603,410

$

477,276

$

372,097

$

248,103

$

172,919

$

$

2,036,157

$

2,026,178

$

$

1,442

$

3,257

$

1,997

$

1,027

$

$

$

8,730

$

65,078

$

243,748

$

252,129

$

180,652

$

103,616

$

55,303

$

$

900,526

$

895,634

1,790

1,348

4,509

3,812

$

65,078

$

243,942

$

253,919

$

182,000

$

103,945

$

56,151

$

$

905,035

$

899,446

$

$

$

1,205

$

$

$

$

$

3,040

$

28,490

$

117,657

$

102,854

$

64,734

$

14,920

$

18,842

$

$

347,497

$

359,772

1,952

2,136

$

28,490

$

118,089

$

103,579

$

65,264

$

14,989

$

19,038

$

$

349,449

$

361,908

$

$

$

2,634

$

1,675

$

$

$

$

5,998

$

$

$

$

$

$

$

305,826

$

305,826

$

321,014

$

$

$

$

$

$

$

305,826

$

305,826

$

321,014

$

$

$

$

$

$

$

6,074

$

6,074

$

17,284

$

58,207

$

31,352

$

14,606

$

4,351

$

7,916

$

10,107

$

143,823

$

147,626

1,264

1,535

$

17,284

$

58,685

$

31,680

$

14,731

$

4,388

$

8,084

$

10,235

$

145,087

$

149,161

$

$

1,628

$

1,456

$

$

$

$

$

4,056

Total

$

273,204

$

1,021,310

$

859,670

$

628,835

$

368,497

$

251,292

$

315,933

$

3,718,741

$

3,734,919

2,816

6,784

5,257

2,928

4,900

22,813

22,788

$

273,204

$

1,024,126

$

866,454

$

634,092

$

371,425

$

256,192

$

316,061

$

$

$

$

4,254

$

8,552

$

5,123

$

1,903

$

1,809

$

6,239

$

27,898

(1)

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

to term loans was

no

t material.

Accrued

on

loans

totaled

$

52.5

million

as

of

March

31,

($

58.2

million

as

of

31,

2024),

was

reported as part

of accrued interest receivable

on loans and

investment securities in

of financial condition,

and is excluded from the estimate of credit losses.

The

tables

present

about

loans

that

were

individually

evaluated

for

of

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

:

Collateral Dependent Loans -

With Allowance

Collateral Dependent

Loans - With No

Related Allowance

Collateral Dependent Loans - Total

Related

Related

Residential mortgage loans:

$

22,951

$

1,222

$

$

22,951

$

1,222

9,395

49,466

58,861

15,359

5,761

21,120

$

47,856

$

1,632

$

56,183

$

104,039

$

1,632

Collateral Dependent Loans -

With Allowance

Collateral Dependent

Loans - With No

Related Allowance

Collateral Dependent Loans - Total

Related

Related

Residential mortgage loans:

$

24,163

$

1,285

$

$

24,243

$

1,285

4,981

41,784

46,765

15,684

6,120

21,804

$

44,979

$

1,892

$

48,940

$

93,919

$

1,892

The

for

and

loans consisted

of

single-family

properties,

and for

consisted primarily

of office

buildings, multifamily

residential properties,

and

retail

establishments.

The

coverage

for

loans

as

of

March

31,

was

%,

% 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

%.

Purchases and Sales of Loans

In

the

ordinary

course

of

business,

the

enters

into

securitization

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

to

42.2

$

24.7

recognized a

net gain

on sale

of $

1.1

million

and

$

0.9

Also,

during

the quarters

ended

March

31,

and 2024,

the

sold

$

4.1

$

6.8

of performing

loans to

GSEs, for which

recognized a

net

gain on

sale of

$

0.2

each of

those quarters.

continuing involvement

it sells

primarily of

servicing the

loans. In

addition, the

Corporation agrees

to repurchase

loans if

it breaches

any of

the representations

and

warranties

in the

sale agreement.

These representations

and

warranties

are consistent

with

the GSEs’

selling

and

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

to

have

regained

control

over

the

loans,

it

is

to

recognize

the

loans

and

a

corresponding

regardless of its

intent to repurchase

the loans. As

of March 31, 2025

2024, rebooked GNMA

delinquent loans that

were included in the residential mortgage loan portfolio amounted

to $

6.4

5.7

During

each

of

the

ended

March

31,

and

2024,

the

repurchased,

pursuant

to

the

repurchase option, $

0.2

million of loans previously

pooled into GNMA MBS. The

principal balance of these

loans is fully guaranteed,

and

the

risk

of

loss

related

to

the

loans

is

limited

to

the

between

the

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

to

these

loans

is

also

minimal

as

these

loans

are

performing

loans

with

documentation

deficiencies.

Corporation purchased

C&I loan

participations in

region totaling

$

15.0

Meanwhile,

during

the

quarter

ended

March

31,

2024,

the

loan

participations

in

the

Florida region

totaling $

23.2

million, which

13.7

mortgage portfolio

and $

9.5

million in the C&I portfolio.

During

the

ended

March

31,

and

2024,

the

recoveries

of

$

2.4

million

and

$

9.5

from

the

bulk

sales

of

fully

loans

and

finance

leases.

These

recoveries

are

net

of

a

liability of $

0.1

0.5

million, respectively, during

such periods.

Loan Portfolio Concentration

primary

lending area

is Puerto

Rico. The

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

concentration was

% in

Puerto Rico,

% in

the U.S.,

and

% in

the USVI and the BVI.

As

of

March

31,

2025,

the

had

$

192.7

million

in

loans

extended

to

the

Puerto

Rico

government,

its

municipalities and

public corporations,

$

193.3

As of

2025, approximately

$

132.2

million

of

loans

extended

to

in

Puerto

Rico

that

are

general

supported

by

assigned

tax

revenues,

and $

22.2

million

of

loans which

are supported

by one

or

more

specific sources

of municipal

revenues. The

vast

majority

of

revenues

of the

in

the

loan

are

independent

of

budgetary

subsidies

by

the

Puerto

Rico

central

government.

These

are

by

law

to

levy

special

taxes

in

such

amounts

as

are

to

satisfy

the

payment

of

all

of

their

general

bonds

and

notes.

In

to

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,

as

of

March

31,

2025,

the

balance

of

loans

funded

through

conduit

structures

to

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

The main

objective

of

these

is

to

spur

in

new

or

rehabilitated

and

affordable

rental

housing.

PRHFA,

as

program

subrecipient and

conduit issuer,

issues tax-exempt

obligations which

are acquired

by private

financial institutions

and are

co-underwrite with

PRHFA

a mirror

construction loan

agreement for

the specific

project loan

will serve

as

ultimate lender but where the PRHFA

will be the lender of record.

$

71.5

million in exposure

to residential mortgage

loans that are

by

the

PRHFA,

a

instrumentality

that

has

been

designated

as

a

covered

entity

under

PROMESA,

to

$

72.5

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.

also has credit

exposure to

USVI government

entities. As of

had

$

116.0

million

in loans

to USVI

government public

corporations, compared

to $

100.4

As of

2025, all

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

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

condition,

or

loan

through

this

program

are

provided,

as

well

as

other

of

individual

C&I,

mortgage,

construction,

and

loans.

The

may

also

modify

terms to comply with regulations regarding the treatment of certain bankruptcy

filings and discharge situations.

The

loan

granted

to

that

are

with

payment

delays

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

in

any

given

year.

The

and/or

is

repaid

as

either

a

lump

sum

payment

at

maturity date or by extending the loan’s

maturity date by the number of forbearance months granted.

Payment

plans

–

Borrowers

are

allowed

to

pay

the

regular

monthly

payment

plus

the

pre-established

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

s

continue making

reduced monthly payments during the

trial period, which is generally up to

six months. The reduced payments that

are made by

the

during

the

trial

period

will

result

in

a

payment

delay

with

respect

to

the

terms

of

the

loan

since

the

loan

has

not

yet

been

contractually

modified.

After

successful

completion

of

the

trial

period,

the

loan

is

contractually modified.

Modifications

in

the

form

of

a

in

rate,

term

extension,

an

other-than-insignificant

payment

delay,

or

any

combination

of

these

types

of

loan

that

have

occurred

in

the

current

period

for

a

are

disclosed

in

the

tables

below.

Many

factors

are

when

whether

there

is

an

other-than-

insignificant

payment

delay,

such as

the significance

of the

payment

amount relative

to the

unpaid

principal balance

or

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

the original loan terms.

The

below

disclosures

relate

to

loan

granted

to

in

which

there

was

a

change

in

the

timing

and/or

amount

of

cash

flows

in

the

form

of

any

of

the

types

of

modifications,

that

resulted

in

a

more-than-insignificant

payment

delay.

These

disclosures

exclude

$

1.4

million

in

are government

-guaranteed

(e.g., FHA/VA

loans)

and

were modified

during

ended March 31, 2025, compared to $

1.1

million for the comparable period in 2024.

cost basis

and 2024

modified to

borrowers experiencing

financial difficulty

during the quarters

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:

Payment Delay Only

Forbearance

Trial

Modification

Change in

term

Interest Rate

Term

Combination

of Interest

Rate

Reduction and

Term

Other

Total

Percentage

of Total by

Classes

$

$

$

$

$

$

$

$

0.01%

(1)

(3)

0.02%

(2)

1,056

0.05%

0.03%

(3)

0.32%

0.09%

$

$

$

$

$

$

$

$

3,017

Payment Delay Only

Forbearance

Trial

Modification

Change in

Term

Interest Rate

Term

Combination

of Interest

Rate

Reduction and

Term

Other

Total

Percentage of

Total by

Classes

$

$

$

$

$

$

$

$

0.02%

(3)

0.00%

1,036

(2)

1,335

0.07%

0.01%

(3)

0.17%

(2)

0.11%

$

$

$

$

$

$

$

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.

The

tables

present

by

classes

the

effects

of

the

granted

to

financial difficulty,

other than those

associated to payment

delay,

during the quarters

2024. The financial

effects of the modifications associated to payment delay were discussed

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

Combination of Interest Rate Reduction and Term

(%)

(%)

%

%

%

%

%

%

14.23

%

%

%

1.88

%

%

3.65

%

16.01

%