FIRST BANCORP /PR/

SIGNATURES

Forward-Looking Statements

This Quarterly

Form 10-Q

(this “Form

10-Q”) contains

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

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

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, 2025 (“the 2025

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

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

Insurance

(the

“FDIC”),

government-sponsored

housing

and

regulators

in

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

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

(“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

litigation or the

threat of litigation

or other dispute

resolutions,

including any adverse

settlements or judgments

against

the

and

the

resulting

costs,

negative

publicity

or

other

reputational

harm;

and

the

effects of asserted and unasserted claims and the extent of

available insurance coverage;

●

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;

●

uncertainty regarding

the implementation

of Puerto

debt restructuring

plan (“Plan

of Adjustment”

or “PoA”)

and the

revised fiscal plan for Puerto Rico, as certified on June

6, 2025 (the “2025 Fiscal Plan”) by the oversight

board established by

Rico Oversight,

Management,

and Economic

Stability Act

(“PROMESA”),

or any

revisions

to it,

on our

clients

and loan portfolios, and any potential impact of 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,

ongoing

in

the

Middle

East,

such

as

the

war

in

Iran,

recent

in

South

America,

the

possible

expansion

of

such

in

surrounding

areas

and

geopolitical

consequences,

and

the

threat

of

conflict

from

neighboring

countries

in

our

region),

terrorist

attacks,

or

other

catastrophic

events,

impacts

of

such

events

on

general

and

on

the

regarding forecasts of economic variables;

●

the

risk

that

portions

of

the

losses in

the

debt

securities portfolio

are

determined

to

be

credit-related, resulting

in additional

charges to

the provision

losses on

portfolio,

and

the potential

for additional

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,

as

a

result

of

the

One

Big

Beautiful

Bill

Act,

signed

into

law

on

July

4,

2025,

the

in

staffing

at

U.S.

governmental agencies,

the effects of

U.S. federal government

shutdowns and political

impasses, and uncertainties

the U.S. debt ceiling and federal budget, 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

that the

impact

of the

of any

of these

uncertainties on

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

plans,

maintenance

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

statements,

except

as

by

the

federal

securities laws.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands, except for share information)

ASSETS

Cash and due from banks

$

549,199

$

657,149

Money market investments:

Time deposit with another financial institution

1,000

Other short-term investments

Total money market investments

1,700

1,450

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

$

5,022,891

4,901,982

as of December 31, 2025; ACL of $

Held-to-maturity debt securities, at amortized

cost, net of ACL of $

as of December 31, 2025 (fair value of

$

253,485

262,055

256,881

264,563

46,432

44,753

Total investment securities

4,972,010

4,863,348

Loans held for investment, net of ACL of

$

245,060

249,037

as of December 31, 2025

Mortgage loans held for sale, at lower of

cost or market

12,805

16,697

Total loans, net

12,858,822

12,893,016

Accrued interest receivable on loans and

investments

67,722

71,351

Premises and equipment, net

127,865

126,920

Other real estate owned (“OREO”)

6,344

7,522

Deferred tax asset, net

143,565

149,012

38,611

38,611

3,240

3,458

317,027

321,055

Total assets

$

$

LIABILITIES

Non-interest-bearing deposits

$

5,554,751

$

5,549,416

Interest-bearing deposits

11,041,070

11,120,727

Total deposits

Short-term borrowings

90,000

Long-term borrowings

200,000

290,000

Accounts payable and other liabilities

233,045

205,884

Total liabilities

17,118,866

17,166,027

Commitments and contingencies (See

Note 18)

(nil)

(nil)

STOCKHOLDERS’ EQUITY

Common stock, $

0.10

par value,

2,000,000,000

shares authorized;

223,663,116

shares issued;

154,693,926

shares outstanding as of March 31, 2026

and

156,618,996

shares outstanding as of December

22,366

22,366

Additional paid-in capital

952,773

963,543

Retained earnings, includes legal surplus

reserve of $

262,534

as of each of March 31, 2026 and

2,325,256

2,268,011

Treasury stock (at cost),

68,969,190

shares as of March 31, 2026 and

67,044,120

shares as of December 31, 2025

(972,438)

(932,505)

Accumulated other comprehensive loss,

net of tax of $

7,986

as of each of March 31, 2026 and

(360,718)

(354,550)

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$

CONSOLIDATED STATEMENTS OF INCOME

Interest and dividend income:

Loans

$

241,521

$

241,332

Investment securities

32,698

23,528

Money market investments and interest-bearing cash accounts

5,630

12,205

Total interest and dividend income

279,849

277,065

Interest expense:

55,931

58,497

Short-term borrowings

Long-term borrowings

2,904

6,095

Total interest expense

58,893

64,668

220,956

212,397

Provision for credit losses - expense (benefit):

Loans and finance leases

17,170

24,837

Unfunded loan commitments

(63)

Debt securities

(4)

Provision for credit losses - expense

17,273

24,810

Net interest income after provision for credit losses

203,683

187,587

Non-interest income:

9,932

9,640

Mortgage banking activities

4,043

3,177

5,944

5,805

11,758

11,475

Other non-interest income

6,008

5,637

37,685

35,734

65,299

62,137

22,063

22,630

3,555

3,278

Professional service fees

12,912

11,486

6,184

5,878

2,058

2,236

Net gain on OREO operations

(937)

(1,129)

7,327

5,110

Communications

2,288

2,245

6,356

9,151

127,105

123,022

Income before income taxes

114,263

100,299

Income tax expense

25,485

23,240

$

88,778

$

77,059

Net income attributable to common stockholders

$

88,778

$

77,059

Net income per common share:

Basic

$

0.57

$

0.47

Diluted

$

0.57

$

0.47

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

$

88,778

$

77,059

Other comprehensive (loss) income, net of tax:

Available-for-sale debt securities:

Net unrealized holding (losses) gains on debt securities

(1)

(6,168)

84,061

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

(6,168)

84,061

Total comprehensive income

$

82,610

$

161,120

(1)

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

$

88,778

$

77,059

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization

4,066

4,453

Amortization of intangible assets

1,252

Provision for credit losses

17,273

24,810

Deferred income tax expense

5,448

2,010

Stock-based compensation

3,923

3,739

Unrealized gain on derivative instruments

(272)

(130)

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

(1,837)

(708)

Net amortization (accretion) of discounts, premiums, and

deferred loan fees and costs

(394)

Originations and purchases of loans held for sale

(36,749)

(44,824)

Sales and repayments of loans held for sale

42,998

46,192

Amortization of broker placement fees

Net (accretion) amortization of premiums and discounts on investment

(4,155)

1,073

Decrease in accrued interest receivable

8,081

Decrease in accrued interest payable

(1,581)

(3,864)

Decrease (increase) in other assets

12,541

(240)

Decrease in other liabilities

(10,849)

(10,450)

Net cash provided by operating activities

121,088

108,219

Cash flows from investing activities:

Net repayments on loans held for investment

32,663

Proceeds from sales of loans held for investment

2,475

Proceeds from sales of repossessed assets

13,153

12,238

Purchases of available-for-sale debt securities

(767,685)

(12,264)

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

690,519

347,267

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

8,046

5,384

Additions to premises and equipment

(5,173)

(1,485)

Net (purchases) redemptions of equity securities

(1,699)

7,276

Net cash (used in) provided by investing activities

(62,219)

393,554

Cash flows from financing activities:

Net decrease in deposits

(79,866)

(49,685)

Repayments of long-term borrowings

(90,000)

(229,040)

Proceeds from short-term borrowings

90,000

Repurchase of outstanding common stock

(54,626)

(24,872)

Dividends paid on common stock

(32,077)

(29,316)

Net cash used in financing activities

(166,569)

(332,913)

Net (decrease) increase in cash and cash equivalents

(107,700)

168,860

Cash and cash equivalents at beginning of year

658,599

1,159,415

Cash and cash equivalents at end of year

$

550,899

$

1,328,275

Cash and cash equivalents include:

Cash and due from banks

$

549,199

$

1,327,075

Money market investments

1,700

1,200

$

550,899

$

1,328,275

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITY

Common Stock

$

22,366

$

22,366

Additional Paid-In Capital:

963,543

964,964

Stock-based compensation expense

3,923

3,739

(14,693)

(11,356)

952,773

957,380

Retained Earnings:

2,268,011

2,038,812

88,778

77,059

Dividends on common stock ($

0.20

per share and $

0.18

per share for the quarters ended

March 31, 2026 and 2025, respectively)

(31,533)

(29,595)

2,325,256

2,086,276

Treasury Stock (at cost):

(932,505)

(790,350)

Common stock repurchases (See Note 10)

(54,626)

(25,158)

14,693

11,356

(33)

(972,438)

(804,185)

Accumulated Other Comprehensive Loss, net of tax:

(354,550)

(566,556)

Other comprehensive (loss) income, net of tax

(6,168)

84,061

(360,718)

(482,495)

Total stockholders’ equity

$

$

1,779,342

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 –

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 –

Note 7 –

Borrowings

Note 8 –

Earnings per Common Share

Note 9 –

Stock-Based Compensation

Note 10 –

Stockholders’ Equity

Note 11 –

Accumulated Other Comprehensive Loss

Note 12 –

Employee Benefit Plans

Note 13 –

Income Taxes

Note 14

–

Note 15

–

Revenue from Contracts with Customers

Note 16 –

Segment Information

Note 17 –

Supplemental Statements

of Cash Flows Information

Note 18 –

Regulatory Matters, Commitments, and Contingencies

Note 19 –

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, 2025 (the “audited consolidated financial

statements”) included in the 2025 Annual Report on Form 10-K, as updated by the information contained in this report. Certain information

and note disclosures normally included 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

consolidated financial

statements, which

are included

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,

2026 are not necessarily

indicative of the results to

be expected for the entire

year.

Adoption of New Accounting Requirements

Standard

Description

Effective Date

Effect on the financial statements

ASU 2025-05, “Financial

Instruments – Credit Losses

(Topic 326): Measurement

of Credit Losses for

Accounts Receivable and

Contract Assets”

In July 2025, the FASB issued ASU 2025-

05, which provides a practical expedient for

current accounts receivable and current

contract assets accounted for pursuant to

ASC Topic 606. Such practical expedient, if

elected, allows an entity to assume that

current economic conditions as of the

reporting date remain unchanged over their

remaining lives.

Effective for annual reporting

periods beginning after December

15, 2025, and interim reporting

periods within those annual

reporting periods. Prospective

application is required.

Although ASU 2025-05 became

effective during the first quarter of

2026, the adoption of this ASU did

not have an impact on the

Corporation’s financial position or

results of operations, as the

Corporation did not elect the

practical expedient provided therein.

Recently Issued Accounting Standards Not 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 2025 Annual Report on Form 10-K.

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

debt securities by contractual maturities as of March 31, 2026 and

December 31, 2025 were as follows:

(1)

Gross Unrealized

ACL

(2)

Gains

Losses

U.S. Treasury securities:

$

497,272

$

$

$

$

497,254

3.65

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

455,779

6,614

449,174

0.98

381,229

11,614

369,615

2.08

14,995

14,865

4.75

6,298

6,263

3.95

(3)

2,655

1,609

United States and Puerto Rico government obligations

1,358,228

19,151

1,338,780

2.32

Mortgage-backed securities (“MBS”):

2,408,684

1,360

259,497

2,150,547

1.89

U.S. Agencies collateralized mortgage

obligations (“CMOs”)

1,017,683

2,196

41,833

978,046

4.10

4,847

1,203

3,113

5.95

(4)

3,431,214

3,556

302,533

3,131,706

2.55

(4)

233,449

35,537

198,211

2.42

3,664,663

3,855

338,070

3,329,917

2.54

Total available-for-sale debt securities

$

5,022,891

$

3,866

$

357,221

$

$

2.48

(1)

Gross Unrealized

ACL

(2)

Gains

Losses

U.S. Treasury securities:

$

497,159

$

$

$

$

497,342

3.85

U.S. GSEs’ obligations:

402,352

4,659

397,710

0.92

500,025

16,114

483,916

1.45

14,996

14,985

4.75

6,547

6,501

3.97

(3)

2,700

1,620

United States and Puerto Rico government obligations

1,423,779

21,592

1,402,074

2.18

MBS:

2,401,704

2,360

256,589

2,147,475

1.80

833,330

4,123

39,299

798,154

3.95

5,072

1,361

3,266

5.92

(4)

3,240,106

6,483

297,249

2,948,895

2.36

U.S Agencies Commercial MBS

(4)

238,097

35,542

203,063

2.42

3,478,203

6,991

332,791

3,151,958

2.36

Total available-for-sale debt securities

$

4,901,982

$

7,196

$

354,383

$

$

2.31

(1)

Excludes accrued

interest receivable

on available-for-sale

that totaled

$

11.4

$

9.4

as part

of accrued

receivable on loans and investment securities in the consolidated statements of financial condition, and excluded from the estimate of credit losses.

(2)

Includes $

226.4

million (amortized cost - $

247.2

million) and $

230.2

million (amortized cost - $

251.0

million) as of March 31,

2026 and December 31, 2025,

respectively, that was

pledged at the FHLB as

borrowings and letters of credit, as well as $

2.4

billion (amortized cost - $

2.6

billion) and $

2.5

billion (amortized cost - $

2.7

billion) as of March 31, 2026 and December 31, 2025, respectively,

pledged as collateral for the

uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.

(3)

Consists of a

residential pass-through MBS

issued by the

Puerto Rico Housing

Finance Authority ("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.

(4)

The weighted-average remaining

contractual life of

residential MBS and

commercial MBS was

16.9

28.8

years, respectively,

31, 2026, compared

to

16.3

29.1

years, respectively,

as of

During

2026,

purchased

$

807.6

million

in available-for-sale

debt

securities, of

which $

437.0

U.S. agencies’

residential MBS

and debentures

with an

average yield

of

4.57

%; and

$

370.6

U.S. Treasury securities with an average yield

of

3.65

%.

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, 2026 and December 31, 2025. The tables also include debt securities for

which an ACL was recorded.

Total

Losses

Losses

Losses

U.S. Treasury and U.S. GSEs’ obligations

$

484,473

$

$

673,704

$

17,539

$

1,158,177

$

18,413

1,609

(1)

1,609

MBS:

275,950

1,221

1,770,602

258,276

2,046,552

259,497

423,478

1,895

163,247

39,938

586,725

41,833

3,113

1,203

(1)

3,113

1,203

10,570

136,084

35,479

146,654

35,537

$

1,194,471

$

4,048

$

2,748,359

$

353,173

$

3,942,830

$

357,221

(1)

Unrealized losses do not include the credit loss component recorded

as part of the ACL. As of March 31, 2026, the

PRHFA bond and private label MBS

had an ACL of $

0.3

$

0.5

Total

Losses

Losses

Losses

U.S. Treasury and U.S. GSEs’ obligations

$

91,584

$

$

796,505

$

20,730

$

888,089

$

20,830

1,620

(1)

1,620

MBS:

52,599

1,851,881

256,441

1,904,480

256,589

74,773

170,490

38,897

245,263

39,299

3,266

1,361

(1)

3,266

1,361

2,810

138,412

35,392

141,222

35,542

$

221,766

$

$

2,962,174

$

353,583

$

3,183,940

$

354,383

(1)

Unrealized losses do

not include the credit

loss component recorded

as part of the

ACL. As of December

31, 2025, the PRHFA

bond and private

label MBS had an

ACL of $

0.3

million

and $0.5 million, respectively.

Assessment for Credit Losses

expects no

credit losses on

issued by

U.S. government

agencies, U.S.

GSEs and

the U.S. Treasury

given the explicit

and implicit guarantees

provided by the

U.S. federal government.

Because the decline

in fair value

is attributable to

changes in interest rates, and not credit quality,

and because,

as of March 31, 2026, the Corporation did not have the

intent to sell these

debt securities and determined

that it was likely that

it will not be required

to sell these securities before

their anticipated recovery,

the

does

not

consider

impairments

on

these

to

be

credit

related.

The

credit

loss

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.

table presents

a roll-forward

of the ACL

on available-for-sale

by major

security type

for the quarters

MBS

Obligation

Total

MBS

Obligation

Total

$

$

$

$

$

$

Provision for credit losses – expense (benefit)

(10)

(5)

(5)

(12)

(12)

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, 2026 and

December 31, 2025 were as follows:

(1) (2)

Gross Unrecognized

Gains

Losses

ACL

$

1,071

$

$

$

1,089

$

4.75

53,409

1,858

55,121

6.85

10,438

10,956

4.49

14,870

14,966

7.13

Total government bonds

79,788

2,639

82,132

6.57

MBS:

86,675

3,064

83,611

4.00

21,146

20,605

3.40

(3)

107,821

3,605

104,216

3.89

(3)

69,913

2,776

67,137

2.14

177,734

6,381

171,353

3.20

$

257,522

$

2,639

$

6,676

$

253,485

$

4.24

(1) (2)

Gross Unrecognized

Gains

Losses

ACL

$

1,044

$

$

$

1,083

$

4.94

54,611

1,921

56,401

7.05

10,376

10,870

4.78

14,870

14,886

7.46

Total government bonds

80,901

2,638

83,240

6.81

MBS:

89,798

2,245

87,553

3.99

21,653

21,261

3.40

(3)

111,451

2,637

108,814

3.87

(3)

72,944

2,943

70,001

2.13

184,395

5,580

178,815

3.19

$

265,296

$

2,638

$

5,879

$

262,055

$

4.29

(1)

Excludes accrued interest receivable on held-to-maturity debt securities that totaled $

1.8

3.2

million as of March 31, 2026 and December 31, 2025, respectively, reported as part of accrued interest

on loans and investment securities in the consolidated statements of financial condition, and excluded from the estimate of credit losses.

(2)

Includes $

136.9

million (fair

value - $

135.1

million) and $

153.0

million (fair

value - $

150.9

million) as of

2026 and December

31, 2025, respectively,

that serves as

the uninsured portion

of

government deposits. The secured parties are not permitted to sell or repledge the collateral.

(3)

The weighted-average remaining contractual

life of residential MBS

and commercial MBS was

20.9

11.6

years, respectively, as

2026, compared to

21.0

11.9

years, respectively, as

of

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, 2026 and December 31, 2025, including debt securities for which

an ACL was recorded:

Total

Losses

Losses

Losses

Government bonds

$

$

$

16,663

$

$

16,663

$

MBS:

13,948

69,663

2,840

83,611

3,064

20,605

20,605

67,137

2,776

67,137

2,776

$

13,948

$

$

174,068

$

6,452

$

188,016

$

6,676

Total

Losses

Losses

Losses

Government bonds

$

$

$

21,460

$

$

21,460

$

MBS:

U.S Agencies MBS

87,553

2,245

87,553

2,245

21,261

21,261

70,001

2,943

70,001

2,943

$

$

$

200,275

$

5,879

$

200,275

$

5,879

The

classifies

the

debt

into

the

major

types:

MBS

issued

or

by

GSEs

and

and

bonds,

consisting

of

Puerto

Rico

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

government bonds,

determines the

ACL based

on the

product of

a

cumulative probability

of default

and loss-given

default, and

the amortized

cost basis

of the

bonds over

their remaining

expected life

as

described in Note 1 – “Nature of Business and Summary of Significant Accounting Policies” to the audited financial statements included in

the 2025 Annual Report on Form 10-K.

The

table

the

in

the

ACL

for

debt

by

major

type

for

the

Government Bonds

$

$

Provision for credit losses - (benefit) expense

(92)

ACL on held-to-maturity debt securities

$

$

Credit Quality Indicators:

The

debt

of

GSEs’

MBS,

for

which

the

expects

no

credit

losses,

and

financing arrangements

government issued

in bond form

,

which are

accounted for as

securities but

are underwritten

as loans

with

features

that

are

found

in

loans.

Accordingly,

the

monitors

the

credit

quality

of

these

bonds through

the use

of internal

credit-risk ratings,

which

are generally

updated

on a

basis. The

a government

bond as

a criticized

asset if

its risk

rating

is Special

Mention,

Substandard,

Doubtful, or

Loss. Government

bonds that do not meet the criteria

for classification as criticized assets are

considered to be Pass-rated securities.

For the definitions of

the internal-credit ratings,

see Note 2

— “Debt Securities,”

Form 10-K.

Loan Review Group

reports to the Risk

Management Committee

and administratively to

the Chief Risk Officer.

It

performs

annual

reviews

of

the

Bank’s

loan

the

above-mentioned

bonds.

These

reviews assess

the accuracy

of loan

risk ratings

and compliance

with lending

policies and

procedures.

The monitoring

performed by

this

group

helps

credit

risk,

adherence

to

underwriting

and

the

effectiveness

of

credit

while

identifying any

deficiencies. Based on

its findings,

it recommends corrective

actions, as needed.

Results of the

credit process reviews

are reported to the Risk Management Committee.

As of March 31, 2026 and December 31, 2025, all government 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, 2026

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

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:

$

2,378,388

$

2,377,604

192,977

263,640

1,826,549

1,763,927

Commercial and Industrial (“C&I”) loans

2,494,701

2,519,002

3,653,100

3,703,019

$

10,545,715

$

10,627,192

Florida region:

$

536,510

$

530,698

2,290

1,928

800,564

790,325

5,856

5,857

$

$

Total:

$

$

195,267

265,568

(1)

(2)

ACL on loans and finance leases

(245,060)

(249,037)

Loans held for investment, net

$

$

(1)

As of March 31, 2026 and

December 31, 2025, includes $

871.1

887.5

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 $

17.8

18.4

million as of March 31, 2026 and December 31, 2025, respectively.

Various

loans were

assigned as

borrowings, government

deposits, certain

time deposits

accounts, and

related unused

commitments. The carrying

value of loans pledged

as collateral amounted

to $

5.7

billion as of each

2026 and December

31, 2025. As

of each of

2025, loans pledged

as collateral include

$

2.1

billion that were

pledged at

the FHLB as

collateral for borrowings

and letters of

credit; $

3.4

billion pledged

as collateral to

secure borrowing capacity

at the FED

Window

as

of

each

of

March

31,

and

31,

2025;

$

125.3

million

pledged

to

secure

as

for

the

portion

of government

as of

2026,

$

126.1

31, 2025;

and $

107.6

million pledged to secure certain time deposits accounts as of March 31, 2026,

compared to $

111.2

million as of December 31, 2025

.

aging of

the loan

for investment,

as well

as information

about nonaccrual

loans with

no ACL,

by

portfolio classes as of March 31, 2026 and December 31, 2025 are as follows:

Days Past Due and Accruing

Current

(1)

30-59

60-89

90+

(2) (3) (4)

(5)

Total loans held

Nonaccrual Loans

with no ACL

(6)

Residential mortgage loans, mainly secured by first mortgages:

FHA/VA government-guaranteed

loans

(1)

(2) (4)

$

70,773

$

$

2,034

$

15,532

$

$

88,339

$

(1) (3) (5)

2,767,996

24,963

5,529

28,071

2,826,559

189,786

5,414

195,267

(1) (3)

2,617,658

1,265

7,442

4,558

(5)

3,665,543

1,248

27,100

12,447

1,962,478

42,189

6,778

12,483

2,023,928

861,882

13,141

2,544

4,235

881,802

323,143

4,125

2,119

1,517

330,904

267,401

4,205

2,725

6,033

280,364

137,204

1,875

1,397

1,482

141,958

Total loans held for investment

$

12,863,864

$

67,436

$

43,084

$

28,949

$

87,744

$

$

19,046

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

Veterans Affairs (“VA”)

government-guaranteed loans, conventional residential mortgage loans, and commercial mortgage loans past due 30-59 days, but

less than two payments in arrears, as of March 31, 2026 amounted to

$

7.4

million, $

54.4

million, and $

1.2

(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 $

3.9

million of residential mortgage loans guaranteed by

the FHA that were over 15 months delinquent as of March 31, 2026.

(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 $

4.2

million as of March

31, 2026 ($

3.7

million conventional residential mortgage loans and $

0.5

million commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above.

(4)

Included rebooked loans, which were previously

pooled into Government National Mortgage Association

(“GNMA”) securities, amounting to $

6.7

million as of March 31, 2026.

Under the GNMA program, the Corporation

has the 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

statements with an offsetting liability.

(5)

Nonaccrual loans in the Florida region amounted to $

11.8

million as of March 31, 2026, of which $

11.3

million were residential mortgage loans and $

0.5

million were C&I loans.

(6)

no

nonaccrual loans with no ACL in the Florida region as of March 31, 2026.

Days Past Due and Accruing

Current

(1)

30-59

60-89

90+

(2) (3) (4)

(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)

$

70,781

$

$

2,163

$

15,776

$

$

88,720

$

(1) (3) (5)

2,758,359

25,985

6,069

29,169

2,819,582

260,032

5,536

265,568

(1) (3)

2,544,283

8,382

(5)

3,653,509

1,514

2,563

2,730

28,042

13,752

1,952,600

63,085

12,661

14,665

2,043,011

871,810

14,049

2,670

3,510

892,039

325,474

5,185

2,705

1,792

335,156

278,938

4,479

3,266

6,405

293,088

140,117

2,157

1,841

1,467

145,582

Total loans held for investment

$

12,855,903

$

90,610

$

54,367

$

31,913

$

92,563

$

$

16,391

(1)

According to

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, 2025 amounted to

$

8.7

million, $

59.1

million, and $

0.8

(2)

It is

policy to

report delinquent

FHA/VA

government-guaranteed residential

as past-due

loans 90

days and

still accruing

as opposed

to nonaccrual

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 $

4.1

million of residential mortgage

loans

guaranteed by the FHA that were over 15 months delinquent as of December 31, 2025.

(3)

Includes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation elected to treat pools of these loans as single assets both at the time of adoption of CECL on January 1, 2020 and on an

ongoing basis for credit loss measurement. These loans 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

$

4.8

million as of December

31, 2025 ($

3.9

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

$

6.7

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 $

11.3

million as of December 31, 2025, of which $

11.1

million were residential mortgage loans and $

0.2

million was a C&I loan.

(6)

no

nonaccrual loans with no ACL in the Florida region as of December 31, 2025.

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 $

0.7

0.9

quarters ended March

2025, respectively.

2026 and 2025, interest income recognized on nonaccrual loans amounted

to $

0.7

0.4

As of

recorded investment

on residential

collateralized by

residential real

estate property

that

were in

the process

of foreclosure

to $

23.2

$

6.2

FHA/VA

government-guaranteed

loans, and

$

3.0

PCD loans

acquired prior

to the

adoption, on

January 1,

2020, of

CECL. The

Corporation commences

the

foreclosure

process on

residential real

estate loans

after

days of

have passed.

Foreclosure

procedures and

timelines

vary depending on whether the property 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

bonds

accounted

for

as

debt

as

discussed

in

Note

“Debt

Securities,”

to the audited consolidated financial statements included in the 2025

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, 2026, the gross charge

-offs for the quarter

classes and

by origination

year,

and the

cost of

classes

based on the internal credit-risk category as of December 31, 2025, were

as follows:

As of

Puerto Rico and Virgin Islands Region

(1)

Prior

Loans

Total

Total

Pass

$

$

18,221

$

101,993

$

60,062

$

3,409

$

3,878

$

$

187,563

$

258,104

4,201

1,213

5,414

5,536

$

$

18,221

$

101,993

$

64,263

$

3,409

$

5,091

$

$

192,977

$

263,640

$

$

$

$

$

$

$

$

Pass

$

52,412

$

210,368

$

303,036

$

215,899

$

326,291

$

688,276

$

8,466

$

1,804,748

$

1,741,159

3,271

3,540

3,588

3,001

14,749

18,261

19,180

$

52,412

$

210,700

$

303,036

$

219,618

$

329,292

$

703,025

$

8,466

$

1,826,549

$

1,763,927

$

$

$

$

$

$

$

$

C&I

Pass

$

24,068

$

468,181

$

249,028

$

279,784

$

238,446

$

330,870

$

835,993

$

2,426,370

$

2,440,152

1,647

33,030

34,677

40,643

1,740

28,975

2,065

33,654

38,207

$

24,068

$

469,921

$

249,035

$

282,193

$

238,551

$

359,845

$

871,088

$

2,494,701

$

2,519,002

$

$

$

$

$

$

$

$

As of

Florida Region

(1)

Prior

Loans

Total

Total

Pass

$

$

1,614

$

$

$

$

$

$

2,290

$

1,928

$

$

1,614

$

$

$

$

$

$

2,290

$

1,928

$

$

$

$

$

$

$

$

Pass

$

19,443

$

172,849

$

75,268

$

25,876

$

195,926

$

261,144

$

31,834

$

782,340

$

771,997

17,407

18,224

18,328

$

19,443

$

172,849

$

75,268

$

25,876

$

213,333

$

261,961

$

31,834

$

800,564

$

790,325

$

$

$

$

$

$

$

$

C&I

Pass

$

14,929

$

227,076

$

272,917

$

174,151

$

131,876

$

148,113

$

215,749

$

1,184,811

$

1,154,271

10,884

3,968

14,852

14,898

$

14,929

$

227,076

$

283,801

$

174,151

$

131,876

$

148,294

$

220,015

$

$

$

$

$

$

$

$

$

$

As of

Total

Amortized Cost Basis by Origination Year (1)

Prior

Loans

Total

Total

Pass

$

$

19,835

$

102,669

$

60,062

$

3,409

$

3,878

$

$

189,853

$

260,032

4,201

1,213

5,414

5,536

$

$

19,835

$

102,669

$

64,263

$

3,409

$

5,091

$

$

195,267

$

265,568

$

$

$

$

$

$

$

$

Pass

$

71,855

$

383,217

$

378,304

$

241,775

$

522,217

$

949,420

$

40,300

$

2,587,088

$

2,513,156

3,271

3,540

3,588

20,408

15,566

36,485

37,508

$

71,855

$

383,549

$

378,304

$

245,494

$

542,625

$

964,986

$

40,300

$

$

$

$

$

$

$

$

$

$

C&I

Pass

$

38,997

$

695,257

$

521,945

$

453,935

$

370,322

$

478,983

$

1,051,742

$

3,611,181

$

3,594,423

10,884

1,647

36,998

49,529

55,541

1,740

29,156

2,363

34,133

38,394

$

38,997

$

696,997

$

532,836

$

456,344

$

370,427

$

508,139

$

1,091,103

$

$

$

$

$

$

$

$

$

$

tables present the

amortized cost of

residential mortgage

loans by portfolio

classes and by

origination year

accrual status as of March 31, 2026,

the gross charge-offs for

the quarter ended March 31, 2026 by

origination year, and the

cost of residential mortgage loans by portfolio classes based on accrual

status as of December 31, 2025:

As of

(1)

Prior

Loans

Total

Total

Puerto Rico and Virgin Islands Region:

$

$

$

$

1,115

$

1,107

$

84,456

$

$

87,007

$

87,635

$

$

$

$

1,115

$

1,107

$

84,456

$

$

87,007

$

87,635

$

52,607

$

238,810

$

177,607

$

153,731

$

141,017

$

1,510,811

$

$

2,274,583

$

2,271,925

16,431

16,798

18,044

$

52,607

$

238,849

$

177,607

$

153,731

$

141,345

$

1,527,242

$

$

2,291,381

$

2,289,969

Total

$

52,607

$

238,897

$

177,849

$

154,846

$

142,124

$

1,595,267

$

$

2,361,590

$

2,359,560

16,431

16,798

18,044

$

52,607

$

238,936

$

177,849

$

154,846

$

142,452

$

1,611,698

$

$

2,378,388

$

2,377,604

$

$

$

$

$

$

$

$

(1)

As of

(1)

Prior

Loans

Total

Total

Florida Region:

$

$

$

$

$

$

1,332

$

$

1,332

$

1,085

$

$

$

$

$

$

1,332

$

$

1,332

$

1,085

$

19,073

$

72,055

$

82,184

$

72,788

$

61,636

$

216,169

$

$

523,905

$

518,488

1,814

2,442

7,017

11,273

11,125

$

19,073

$

72,055

$

82,184

$

74,602

$

64,078

$

223,186

$

$

535,178

$

529,613

Total

$

19,073

$

72,055

$

82,184

$

72,788

$

61,636

$

217,501

$

$

525,237

$

519,573

1,814

2,442

7,017

11,273

11,125

$

19,073

$

72,055

$

82,184

$

74,602

$

64,078

$

224,518

$

$

536,510

$

530,698

$

$

$

$

$

$

$

$

(1)

As of

(1)

Prior

Loans

Total

Total

Total:

$

$

$

$

1,115

$

1,107

$

85,788

$

$

88,339

$

88,720

$

$

$

$

1,115

$

1,107

$

85,788

$

$

88,339

$

88,720

$

71,680

$

310,865

$

259,791

$

226,519

$

202,653

$

1,726,980

$

$

2,798,488

$

2,790,413

1,814

2,770

23,448

28,071

29,169

$

71,680

$

310,904

$

259,791

$

228,333

$

205,423

$

1,750,428

$

$

2,826,559

$

2,819,582

Total

$

71,680

$

310,952

$

260,033

$

227,634

$

203,760

$

1,812,768

$

$

2,886,827

$

2,879,133

1,814

2,770

23,448

28,071

29,169

$

71,680

$

310,991

$

260,033

$

229,448

$

206,530

$

1,836,216

$

$

$

$

$

$

$

$

$

$

$

(1)

The

the

cost

of

loans

by

classes

and

by origination

year

accrual

status as of

gross charge-offs

for the quarter

31, 2026 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, 2025:

As of

Total

(1)

Prior

Loans

Total

Total

$

144,722

$

558,732

$

478,783

$

352,065

$

257,925

$

219,218

$

$

2,011,445

$

2,028,346

1,144

2,116

2,385

2,606

4,232

12,483

14,665

Total auto loans

$

144,722

$

559,876

$

480,899

$

354,450

$

260,531

$

223,450

$

$

2,023,928

$

2,043,011

Charge-offs on auto loans

$

$

1,615

$

2,328

$

3,049

$

1,614

$

1,383

$

$

10,005

$

54,180

$

217,931

$

200,464

$

196,600

$

128,607

$

79,785

$

$

877,567

$

888,529

1,643

4,235

3,510

Total finance leases

$

54,180

$

218,002

$

201,236

$

197,550

$

129,406

$

81,428

$

$

881,802

$

892,039

Charge-offs on finance leases

$

$

$

$

$

$

$

$

2,715

$

31,838

$

105,208

$

77,904

$

63,537

$

38,136

$

12,764

$

$

329,387

$

333,364

1,517

1,792

Total personal loans

$

31,838

$

105,498

$

78,264

$

64,004

$

38,436

$

12,864

$

$

330,904

$

335,156

Charge-offs on personal loans

$

$

$

1,153

$

1,414

$

$

$

$

4,348

$

$

$

$

$

$

$

280,364

$

280,364

$

293,088

Total credit cards

$

$

$

$

$

$

$

280,364

$

280,364

$

293,088

Charge-offs on credit cards

$

$

$

$

$

$

$

4,772

$

4,772

$

19,609

$

56,256

$

26,028

$

16,523

$

7,180

$

5,339

$

9,541

$

140,476

$

144,115

1,482

1,467

Total other consumer loans

$

19,609

$

56,696

$

26,478

$

16,821

$

7,283

$

5,386

$

9,685

$

141,958

$

145,582

Charge-offs on other consumer loans

$

$

1,701

$

1,356

$

$

$

$

$

4,279

Total

$

250,349

$

938,127

$

783,179

$

628,725

$

431,848

$

317,106

$

289,905

$

3,639,239

$

3,687,442

1,945

3,698

4,100

3,808

6,022

19,717

21,434

Total consumer loans

$

250,349

$

940,072

$

786,877

$

632,825

$

435,656

$

323,128

$

290,049

$

$

Charge-offs on total consumer loans

$

$

4,040

$

5,356

$

6,010

$

3,390

$

2,402

$

4,905

$

26,119

(1)

As of March 31, 2026 and December 31, 2025, the balance of revolving loans converted

to term loans was

no

t material.

Accrued

on

loans

totaled

$

54.5

million

as

of

March

31,

($

58.7

million

as

of

31,

2025),

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.

The

tables

present

about

loans

that

were

individually

evaluated

for

purposes

of

determining the ACL as of March 31, 2026 and December 31, 2025:

Collateral Dependent Loans -

With Allowance

Collateral Dependent

Loans - With No

Related Allowance

Collateral Dependent Loans - Total

Related

Related

Residential mortgage loans:

$

22,044

$

1,200

$

$

22,044

$

1,200

4,201

5,157

17,130

17,130

12,447

12,447

$

26,245

$

1,797

$

30,533

$

56,778

$

1,797

Collateral Dependent Loans -

With Allowance

Collateral Dependent

Loans - With No

Related Allowance

Collateral Dependent Loans - Total

Related

Related

Residential mortgage loans:

$

22,919

$

1,233

$

$

22,919

$

1,233

4,321

5,277

4,454

19,009

23,463

13,753

13,753

$

31,694

$

1,990

$

33,718

$

65,412

$

1,990

The

for

and

loans consisted

of

single-family

properties,

and for

consisted primarily

of office

buildings, multifamily

residential properties,

and

retail

establishments.

The

loan-to-value

coverage

for

loans

as

of

March

31,

was

%,

% as

a $

1.2

million repayment

of a

C&I loan

in the

region in

the food

retail industry with a loan-to-value ratio of

% and a $

4.7

million outflow from the collateral-dependent loan

portfolio, attributable to

a commercial mortgage loan in the Puerto Rico 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

Federal

National

Association

(“FNMA”)

and

Federal

Home

Loan

(“FHLMC”).

quarters ended

2025, loans

pooled

into GNMA

MBS amounted

to approximately

$

41.6

$

42.2

for

which

the

a

net

gain

on

sale of

$

2.4

million

and

$

1.1

Also, during

sold approximately

$

4.1

performing residential

loans to GSEs,

for which the

Corporation recognized

a net gain on

sale of $

0.2

million. There were

no

sales of performing

to GSEs

for the

2026. The

continuing involvement

loans that

it sells

of

servicing

the

loans.

In

the

agrees

to

loans

if

it

breaches

any

of

the

representations

and

warranties

in

the

sale

agreement.

These

representations

and

warranties

are

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

to

have

regained

control

over

the

loans,

it

is

to

recognize

the

loans

and

a

regardless of

its intent

to repurchase

the loans.

As of

each of

2025, rebooked

GNMA delinquent

loans that were included in the residential mortgage loan portfolio

amounted to $

6.7

million.

During

the

ended

March

31,

and

2025,

the

repurchased,

pursuant

to

the

option, $

0.4

0.2

of loans previously pooled

into GNMA MBS. The

principal balance of these

loans

is fully

guaranteed,

and the

risk of

loss related

to the

repurchased loans

is generally

limited to

the difference

between the

delinquent

interest payment

advanced

to GNMA,

which

is computed

at the

loan’s

interest rate,

and

the interest

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.

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

the Florida

region totaling

$

35.7

15.0

million during the quarter ended March 31, 2025.

During

the

quarter

ended

March

31,

2025,

the

of

$

2.4

million

from

the

bulk

sale

of

fully

loans

and

finance

leases.

There

were

no

sales

of

loans

during

the

quarter

ended

March

31,

2026,

other than sales of conforming residential mortgage loans mentioned above.

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 $

13.1

credit risk

concentration was

% in

Puerto Rico,

% in

the U.S.,

and

% in

the USVI and the BVI.

As

of

March

31,

2026,

the

had

$

215.0

million

in

loans

to

the

Puerto

Rico

its

municipalities and

public corporations,

$

215.5

As of

2026, approximately

$

155.4

million

of

loans

to

in

Puerto

Rico

that

are

general

supported

by

assigned

tax

revenues,

and $

18.6

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

addition

to

loans

extended to municipalities, the

Corporation’s exposure

to the Puerto Rico government

as of March 31, 2026 included

$

8.6

million in a

loan granted to

an affiliate of

the Puerto Rico

Electric Power Authority

(“PREPA”)

and $

32.4

million in loans

to a public corporation

of the Puerto Rico government.

Moreover,

as

of

March

31,

2026,

the

balance

of

loans

funded

through

conduit

structures

to

support

the

federal

of

Low-Income

Housing

Tax

Credit

(“LIHTC”)

combined

with

other

federal

to

$

81.6

million, compared

to $

92.4

The main

objective of

these programs

is to

spur development

in

new or rehabilitated

and affordable rental

housing. PRHFA,

as program subrecipient

and conduit issuer,

issues tax-exempt obligations

which

are

acquired

by

private

institutions

and

are

to

co-underwrite

with

PRHFA

a

mirror

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.

$

66.0

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

$

67.1

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

$

168.3

million

in loans

to USVI

government public

corporations, compared

to $

138.7

As of

2026, 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

deferred

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

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

–

These

types

of

loan

are granted

for

loans

and

home

equity

credit. Borrowers

continue making reduced monthly

payments during the

trial period, which is

generally up to six

months. The

reduced

that

are

made

by

the

borrower

during

the

trial

period

will

result

in

a

payment

delay

with

respect

to

the

original contractual terms of

the loan since the loan has

not yet been contractually

modified. After successful completion

of the

trial period, the mortgage loan is contractually modified.

Modifications

in the

form

of a

rate,

term extension,

change in

amortization

term,

an other

-than-insignificant

payment

delay,

or

any

combination

of

these

types

of

loan

that

have

occurred

in

the

current

period

for

a

borrower

are

disclosed

in

the

tables

below.

Many

factors

are

when

evaluating

whether

there is

an other-than-insignificant

payment delay,

such as

the significance

of the

restructured 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

$

0.8

million

in

restructured

loans

that

are

government-guaranteed

(e.g.

FHA/VA

loans)

and

were

modified

during

the

quarter

ended March 31, 2026, compared to $

1.4

million for the comparable period in 2025.

the amortized

cost basis

and 2025

of loans

modified to

borrowers experiencing

financial difficulty

during the quarters

ended March 31, 2026

and 2025, 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

Payment

Plan

Trial

Modification

Amortization

term

Term

Combination

of Interest

Rate

and Term

Other

Total

Percentage

of Total by

Classes

$

$

$

$

$

$

$

$

$

0.01%

0.01%

(1)

1,559

(2)

1,896

0.05%

(2)

0.04%

0.06%

(1)

0.20%

0.04%

$

$

$

$

$

$

$

1,900

$

$

4,096

Payment Delay Only

Forbearance

Payment

Plan

Trial

Modification

Amortization

Term

Term

Combination

of Interest

Rate

and Term

Other

Total

Percentage

of Total by

Classes

$

$

$

$

$

$

$

$

0.01%

(3)

(1)

0.02%

(2)

1,056

0.05%

0.03%

(1)

0.32%

0.09%

$

$

$

$

$

$

$

$

3,017

(1)

Modification consists of reduction in interest rate and revocation of revolving line privileges.

(2)

Modification consists of court mandated reduction to 0% interest rate for remaining loan term to borrowers in bankruptcy proceedings unless dismissal occurs.

(3)

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

plan.

The

tables

present

by

classes

the

effects

of

the

granted

to

financial difficulty,

other than those

associated to payment

delay,

during the quarters

2025. 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 Extension

months)

months)

Amortization Term

(in months)

%

%

%

%

%

%

15.27

%

2.25

%

%

4.04

%

%

4.79

%

14.60

%

%

%

2.00

%

Combination of Interest Rate Reduction

and Term Extension

months)

months)

Amortization Term

(in months)

%

%

%

%

%

%

14.23

%

%

%

1.88

%

%

3.65

%

16.01

%

%

%

3.14

%

classes the

performance of

loans modified

last twelve

months ended

March

31, 2026 and 2025 that were granted to borrowers experiencing financial difficulty:

Last Twelve Months Ended March 31, 2026

30-59

60-89

90+

Total

Delinquency

Current

Total

$

$

$

$

$

1,374

$

1,539

30,530

30,530

3,007

3,029

3,630

3,912

2,194

3,033

$

$

$

$

1,435

$

41,726

$

43,161

Last Twelve Months Ended March 31, 2025

30-59

60-89

90+

Total

Delinquency

Current

Total

$

$

$

$

$

$

126,974

126,974

10,519

10,529

3,313

3,642

2,651

3,085

$

$

$

$

$

145,312

$

146,136

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:

Loans

Loans

Leases

Loans

C&I

Loans

Total

ACL:

$

41,071

$

5,672

$

23,832

$

41,416

$

137,046

$

249,037

(2,361)

1,017

17,915

17,170

Charge-offs

(130)

(562)

(390)

(26,119)

(27,201)

Recoveries

5,566

6,054

$

41,534

$

3,324

$

23,670

$

42,124

$

134,408

$

245,060

Loans

Loans

Loans

C&I

Loans

Leases

Total

ACL:

$

40,654

$

3,824

$

22,447

$

33,034

$

143,983

$

243,942

1,004

(421)

1,656

3,353

19,245

24,837

Charge-offs

(235)

(77)

(27,898)

(28,210)

Recoveries

6,275

(1)

6,700

$

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.

The

the

ACL

the

methodologies

described

in

Note

–

of

and

Summary

of

Significant Accounting

Policies” to

consolidated financial

statements included

in the

2025 Annual

Form 10-K,

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

generally applies

probability weights

to the

baseline and

alternative downside

economic scenarios

the

ACL with

the

the highest

weight.

The

chosen

each quarter

and

the

weighting

given

to

each

for

the

loan

categories

depend

on

a

variety

of

factors

recent

events,

leading

and

regional

and

industry

trends.

As

of

March

31,

and

31,

2025,

the

applied

100%

probability

to

the

for

the

and

loan

since

certain

macroeconomic variables

associated with

commercial real

estate property

performance and

the commercial

(“CRE”) price

index,

in

the

Puerto

Rico

region,

are

to

to

perform

in

a

more

manner

than

the

downside economic scenario.

2026, the ACL for loans

and finance leases was $

245.1

million, a decrease of

$

3.9

million, from $

249.0

was mainly

related to

the ACL

for consumer

loans, which

$

2.6

million, driven

by

improvements in macroeconomic variables,

mainly in the projection of the unemployment

rate, and lower delinquency levels, partially

offset by higher qualitative reserves associated with geopolitical

uncertainty driven by,

among other things, higher oil prices as a result

of the conflict

in the Middle

East. In addition,

the ACL for

construction loans decreased

by $

1.8

million, mainly due

to

in

the

projections

of

the

rate

and

the

CRE

price

index,

net

of

reserves,

partially offset by renewals and refinancings.

Meanwhile,

the

ACL

for

loans

by

$

0.5

driven

by

loan

growth

and

the

geopolitical uncertainty,

partially offset by an improvement in the projection of the unemployment

rate.

were $

21.1

$

21.4

The $

0.3

was driven by

a $

1.1

million reduction

in consumer loans

and finance leases

net charge-offs,

mainly in

the

unsecured loan portfolios, after considering the

impact of $

2.4

million in recoveries related to the aforementioned bulk

sale recognized

during the first quarter of 2025. This improvement was partially offset

by a $

0.9

million increase in commercial and construction loans

net charge-offs,

driven by a $

0.6

million charge-off

on a nonaccrual commercial

mortgage loan in the Virgin

Islands region during the

first quarter of 2026.

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, 2026 and December 31, 2025:

Loans

Loans

Loans

C&I

Loans

Leases

Total

$

$

195,267

$

$

$

$

41,534

3,324

23,670

42,124

134,408

245,060

Allowance for credit losses to

1.42

%

1.70

%

0.90

%

1.14

%

3.67

%

1.87

%

Loans

Loans

Loans

C&I

Loans

Leases

Total

$

$

265,568

$

$

$

$

41,071

5,672

23,832

41,416

137,046

249,037

Allowance for credit losses to

1.41

%

2.14

%

0.93

%

1.12

%

3.70

%

1.90

%

In

the

credit

losses

over

the

period

in

which

the

is

exposed

to

credit

risk

via

a

to

extend

credit,

such

as

unfunded

loan

and

standby

letters

of

credit

for

and

loans,

unless

the

is

unconditionally

cancellable

by

the

Corporation.

See

Note

–

“Regulatory

Matters,

and

Contingencies”

for

on

sheet

exposures

as

of

March

31,

and

Corporation estimates

the ACL

for these

sheet exposures

following the

methodology described

in

Note

1 –

of Business

and

Summary

of Significant

Accounting

Policies”

to

on Form 10-K.

As of March

ACL for off-balance

sheet credit exposures

to $

3.1

3.0

million as of December 31, 2025.

table presents

the activity

in the

ACL for

unfunded loan

commitments and

standby letters

for the

$

3,013

$

3,143

(63)

$

3,120

$

3,080

NOTE 5

–

OTHER REAL ESTATE

OWNED (“OREO”)

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

OREO balances, carrying value:

(1)

$

5,107

$

6,524

Total

$

6,344

$

7,522

(1)

Excludes $

3.1

4.1

2025, respectively,

of foreclosures that

met the conditions

of ASC Subtopic

310-40 “Reclassification

of

Residential Real

Estate Collateralized Consumer

Mortgage Loans upon

Foreclosure,” and

are presented as

a receivable as

part of other

the consolidated statements

of financial

condition.

See Note 14 – “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, 2026 and 2025.

NOTE 6 – DEPOSITS

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

Type of account:

Non-interest-bearing deposit accounts

$

5,554,751

$

5,549,416

Interest-bearing checking accounts

3,545,690

3,512,649

Interest-bearing saving accounts

3,505,401

3,452,192

3,482,968

3,562,331

507,011

593,555

Total

$

$

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

including brokered CDs, as of March 31, 2026:

Total

$

937,286

Over three months to six months

789,420

Over six months to one year

1,372,283

665,539

Over two years to three years

126,660

Over three years to four years

41,270

Over four years to five years

41,715

Over five years

15,806

Total

$

3,989,979

Total

Puerto

Rico

and

U.S.

time

with

of

more

than

$250,000

to

$

1.7

billion

and

$

1.8

billion

as

of

2025, respectively.

This amount does

not include brokered

CDs that are

generally participated

out

by

brokers

in

shares

of

less

than

the

FDIC

limit.

As

of

March

31,

and

31,

2025,

unamortized

broker

placement

fees

to

$

0.8

million

and

$

0.9

which

are

over

the

of

the

brokered CDs under the interest method.

NOTE 7 – BORROWINGS

As of March 31, 2026 and December 31, 2025, total borrowings consisted of FHLB advances

as set forth below:

Short-term

Fixed

-rate advances from the FHLB

(1)

$

90,000

$

Long-term

Fixed

-rate advances from the FHLB

(2)

200,000

290,000

$

290,000

$

290,000

(1)

Interest rate of

3.86

% as of March 31, 2026.

(2)

Weighted-average interest rate of

4.25

% and

4.32

% as of March 31, 2026 and December 31, 2025, respectively. Contractual maturity

date of November 2027 as of

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

$

90,000

200,000

Total

(1)

$

290,000

(1) Average remaining term to maturity of

1.13

years.

During the first

quarter of 2026, the

Corporation added a $

90.0

million short-term fixed-rate

FHLB advance with

an interest rate of

3.86

% and repaid at maturity $

90.0

million of long-term FHLB advances at an average rate of

4.49

%.

NOTE 8 – EARNINGS PER COMMON

.

SHARE

The calculations of earnings per common share for the quarters ended March 31, 2026

and 2025 are as follows:

Net income attributable to common stockholders

$

88,778

$

77,059

Shares:

Average common

shares outstanding

155,262

162,934

Average potential

dilutive common shares

Average common

shares outstanding - assuming dilution

156,101

163,749

Earnings per common share:

Basic

$

0.57

$

0.47

Diluted

$

0.57

$

0.47

Earnings

per

common

share

is

computed

by

dividing

net

income

to

common

stockholders

by

the

number

of

common

shares

issued

and

outstanding.

Basic

common

shares

exclude

unvested shares

of

restricted stock that do not contain non-forfeitable dividend rights

.

Potential dilutive

common

shares consist

of unvested

stock

and

units (if

any

of the

are

met

as

of

the

end

of

the

period)

that

do

not

contain

non-forfeitable

or

rights

using the

treasury stock

method. This

method assumes

that proceeds

equal to

the amount

of compensation

cost attributable

to future

is

used

to

shares

on

the

open

market

at

the

average

market

price

for

the

period.

The

between

the

number

of

dilutive

shares

issued

and

the

shares

purchased

is

added

as

incremental

shares

to

the

actual

number

of

shares

to

compute

diluted

per

share.

Unvested

shares

of

stock

during

the

period

that

result

in

lower potentially

dilutive shares issued

than shares purchased

treasury stock method

are not included

in the computation

of

dilutive

per

share

since

their

inclusion

would

have an

antidilutive

effect

on

per

share.

There

were

no

antidilutive

shares of common stock during the quarters ended March 31, 2026

and 2025.

NOTE 9 – STOCK-BASED

.

COMPENSATION

The First BanCorp.

2016 Omnibus Plan (the “2016

Omnibus Plan”), provided for

equity-based and non-equity-based

incentives (the

“awards”), and

authorized the

issuance of

up to

14,169,807

common stock,

adjustments for

stock

splits,

reorganizations

and

other

similar

events.

As

of

March

31,

2026,

there

were

1,336,410

authorized

shares

of

common

stock

available for issuance under the 2016 Omnibus Plan.

On

May 6,

2026,

stockholders

approved the

adoption

of the

2026 Omnibus

Incentive

Plan

(the

“2026

Omnibus

Plan”).

The 2026

Omnibus

Plan

is

the

successor

to

the

Omnibus

Plan

(referred

together

herein

as

“Omnibus

Plan”) and

effective as

of May

6, 2026,

no awards

will be granted

2016 Omnibus

Incentive Plan.

The 2026 Omnibus

Plan,

which is

effective until

May 6, 2036,

authorizes up

to

5,000,000

common stock,

certain adjustments.

any shares of

common stock subject

to outstanding

awards granted under

the 2016 Omnibus

Incentive Plan

that are payable

in shares

and that are

forfeited or

otherwise terminate on

or after

May 6, 2026,

without the delivery

of shares of

common stock, may

be issued

with respect to

awards under

the 2026 Omnibus

Plan. The Corporation’s

Compensation and

Benefits Committee of

the Board has

the

power and

authority to

determine those

eligible to

receive awards

and to

establish the

terms and

conditions of

any awards,

various limits and vesting restrictions that apply to individual and aggregate

awards.

Restricted Stock

Under the

Omnibus Plan,

may grant

to plan

participants, subject

to forfeiture

upon the

of certain

events until

the dates

specified in

the participant’s

award agreement.

While the

is subject

to forfeiture

and

does

not

contain

non-forfeitable

rights,

participants

may

exercise

full

voting

rights

with

respect

to

the

shares

of

stock

granted

to

them.

The

fair

value

of

the

shares

of

stock

granted

was

based

on

the

market

price

of

the

common

stock on

the date

of the

respective grant.

The shares

of restricted

stocks granted

to employees

to the

vesting period:

fifty percent

(

%) of

those shares

vest on

the two-year

anniversary of

the grant

date and

the remaining

% vest

on

the three-year

anniversary of

the grant

date. The

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 2016 Omnibus

Plan during the quarters ended March 31,

2026 and 2025:

March 31, 2025

Number of

Number of

Average

Average

stock

stock

Unvested shares outstanding at beginning of year

1,033,690

$

16.71

1,007,621

$

14.39

Granted

(1)

436,540

20.59

447,631

18.35

Forfeited

(2,180)

15.22

Vested

(404,613)

14.48

(364,677)

12.44

Unvested shares outstanding at end of period

1,065,617

$

19.14

1,088,395

$

16.67

(1)

For the quarter ended March 31, 2026, includes

1,872

shares of restricted stock awarded to independent directors and

434,668

shares of restricted stock awarded to employees, of which

87,895

shares were granted to retirement-eligible employees and thus

charged to earnings as of the grant date. 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.

the Corporation recognized

$

3.2

3.1

of stock-

based compensation

expense related

to restricted

stock awards.

As of

2026, there

was $

10.8

total unrecognized

cost

related

to

unvested

shares

of

stock

that

the

expects

to

recognize

over

a

period of

2.0

years.

Performance Units

Under the Omnibus Plan, the Corporation may award

performance units to participants, with each unit representing

the value of one

share

of

the

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. During the

quarter ended March 31, 2026,55,805 additional shares related to the 2023 performance share award, which vested in March 2026,

were awarded as a result of performance achieved in excess of target opportunity.

table summarizes

the performance

units activity under

the 2016

Omnibus Plan

quarters ended

2026 and 2025:

March 31, 2025

Number

Weighted -

Number

Weighted -

of

Average

of

Average

Performance

Performance

Units

Units

Performance units at beginning of year

544,107

$

16.02

549,032

$

14.37

Additions

(1)

(3)

144,458

20.22

160,744

18.66

Vested

(2)

(3)

(216,876)

12.24

(166,669)

13.15

Performance units at end of period

471,689

$

19.04

543,107

$

16.01

(1)

Units granted during the quarters ended March 31, 2026 and 2025

are based on the achievement of the Relative TSR and TBVPS

performance goals during a three-year performance cycle

beginning January 1, 2026 and January 1, 2025, respectively,

and ending on December 31, 2028 and December 31, 2027,

(2)

Units vested during the quarters ended March 31, 2026 and

2025 are related to performance units granted in

2023 and 2022, respectively,

that met the pre-established target and were

settled with shares of common stock reissued from treasury shares.

(3)

Excludes the aforementioned

55,805

additional shares awarded

in connection with the

2023 performance share award

which were also

settled with shares of

common stock reissued

from

treasury shares.

The

fair

value

of

the

units

awarded,

that

was

based

on

the

TBVPS

goal

component,

was

based

on

the

market

price

of

the

common

stock

on

the

date

of

the

grant

and

assuming

attainment

of

100%

of

target

opportunity. As of March

31, 2026, 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

of the

portion

of

the award

based

on Relative

TSR is

not

revised subsequent to grant date based on actual performance.

The following table

summarizes the valuation

assumptions used to

calculate the fair

value as of

the grant date

of the Relative

TSR

component of the performance units granted under the 2016 Omnibus Plan during

the quarters March 31, 2026 and 2025:

Risk-free interest rate

(1)

3.75

%

3.92

%

Correlation coefficient

77.54

74.96

Expected dividend yield

(2)

Expected volatility

(3)

29.07

31.94

Expected life (in years)

2.79

2.79

(1)

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

the Corporation recognized

$

0.7

0.6

of stock-

based

expense

related

to

units.

As

of

March

31,

2026,

there

was

$

5.9

million

of

total

compensation cost

related to unvested

performance units that

expects to recognize

over a weighted

-average period of

2.3

years.

Shares withheld

During

the

first

quarter

of

2026,

the

withheld

225,099

shares

(2025

–

182,249

shares)

of

the

stock

and

performance units that

vested during such period

to cover the participants’

payroll and income

tax withholding liabilities; these

shares

are held

as treasury

shares. The

Corporation paid

in cash

any fractional

share of

salary stock

to which

an officer

was entitled.

In the

consolidated financial statements, the Corporation presents shares

withheld for tax purposes as common stock repurchases.

NOTE 10 –

STOCKHOLDERS’

EQUITY

Stock Repurchase Program

On October

22, 2025, the

Corporation announced

that its Board

of Directors had

approved a stock

repurchase program authorizing

the

of up

to $

million

of its

common

stock.

Under

this program,

2,409,192

shares

of

common

stock

through

open

market

at

an

average

price

of

$

20.75

,

for

a

total

cost

of

$

50.0

million during

2026. As

has remaining

authorization of

approximately $

138.3

million, which it expects to execute during the remainder of 2026.

Repurchases

under

the

program

may

be

executed

through

open

market

accelerated

share

repurchases

and

privately

negotiated

or

plans,

plans

complying

with

Rule

10b5-1

under

the

Act,

and

will

be

in

with

legal

and

The

stock

program

is

subject

to

various

the

capital

position,

and

uses

of

capital,

stock

trading

price, and

general market

conditions. The stock

repurchase program

does not obligate

it to acquire

any specific

number of shares

and

does

not

have

an

expiration

date.

The

stock

program

may

be

modified,

suspended,

or

terminated

at

any

time

at

the

discretion.

Any

shares

of

common

stock

are

to

be

held

as

treasury

shares.

The

holding company has

no operations and depends

on dividends, distributions

and other payments from

its subsidiaries to fund

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, 2026 and 2025:

Total

Number of Shares

Common stock outstanding, beginning of year

156,618,996

163,868,877

Common stock repurchased

(1)

(2,634,291)

(1,376,816)

(2)

709,221