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

Exchange

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

agencies

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

banking subsidiary,

FirstBank Puerto

Rico (“FirstBank”

or the

“Bank”), to

retain its core

deposits and

generate sufficient

cash flow through

its wholesale funding

sources, such as

securities sold under

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,

investments,

systems

conversions,

and

any

anticipated

efficiencies

or

other expected results related thereto;

●

uncertainty regarding

the implementation

debt restructuring

plan (“Plan

of Adjustment”

or “PoA”)

and the

revised fiscal

plan for Puerto

Rico, as

certified on

June 19, 202

(the “2026

Fiscal Plan”)

by the oversight

board established

by the Puerto Rico Oversight,

Management, and Economic Stability

Act (“PROMESA”), or any

revisions to it, on our

clients

and loan portfolios, and any potential impact 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

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

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

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

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 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

$

559,626

$

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

$

5,043,559

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

$

228,667

262,055

233,645

264,563

43,552

44,753

Total investment securities

4,958,785

4,863,348

Loans held for investment, net of ACL of

$

245,039

249,037

as of December 31, 2025

Mortgage loans held for sale, at lower of

cost or fair value

15,474

16,697

Total loans, net

13,027,658

12,893,016

Accrued interest receivable on loans and

investments

70,663

71,351

Premises and equipment, net

128,680

126,920

Other real estate owned (“OREO”)

6,939

7,522

Deferred tax asset, net

142,041

149,012

38,611

38,611

3,022

3,458

303,510

321,055

Total assets

$

$

LIABILITIES

Non-interest-bearing deposits

$

5,548,697

$

5,549,416

Interest-bearing deposits

11,320,832

11,120,727

Total deposits

Long-term borrowings

200,000

290,000

Accounts payable and other liabilities

194,873

205,884

Total liabilities

17,264,402

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;

shares outstanding as of June 30, 2026 and

156,618,996

shares outstanding as of December 31,

22,366

22,366

Additional paid-in capital

955,527

963,543

Retained earnings, includes legal surplus

reserve of $

262,534

as of each of June 30, 2026 and December

2,268,011

Treasury stock (at cost),

shares as of June 30, 2026 and

67,044,120

shares as of December 31, 2025

(932,505)

Accumulated other comprehensive loss,

net of tax of $

7,986

as of each of June 30, 2026 and December

(354,550)

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$

The accompanying notes are an integral part

of these statements.

CONSOLIDATED STATEMENTS OF INCOME

Interest and dividend income:

Loans

$

244,902

$

242,573

$

486,423

$

483,905

Investment securities

37,839

23,720

70,537

47,248

Money market investments and interest-bearing cash accounts

4,969

11,897

10,599

24,102

Total interest and dividend income

287,710

278,190

567,559

555,255

Interest expense:

56,193

58,638

112,124

117,135

Short-term borrowings

Long-term borrowings

2,132

3,693

5,036

9,788

Total interest expense

58,579

62,331

117,472

126,999

229,131

215,859

450,087

428,256

Provision for credit losses - expense (benefit):

Loans and finance leases

15,958

20,381

33,128

45,218

Unfunded loan commitments

1,479

1,586

Debt securities

(104)

(81)

(108)

(45)

17,333

20,587

34,606

45,397

Net interest income after provision for credit losses

211,798

195,272

415,481

382,859

Non-interest income:

9,885

9,756

19,817

19,396

Mortgage banking activities

3,727

3,401

7,770

6,578

3,114

2,538

9,058

8,343

12,512

11,880

24,270

23,355

Other non-interest income

6,494

3,375

12,502

9,012

35,732

30,950

73,417

66,684

63,439

60,058

128,738

122,195

22,108

22,297

44,171

44,927

4,435

3,495

7,990

6,773

Professional service fees

13,116

11,609

26,028

23,095

6,071

5,712

12,255

11,590

2,167

2,235

4,225

4,471

Net gain on OREO operations

(842)

(591)

(1,779)

(1,720)

8,514

7,747

15,841

12,857

Communications

2,234

2,208

4,522

4,453

6,082

8,567

12,438

17,718

127,324

123,337

254,429

246,359

Income before income taxes

120,206

102,885

234,469

203,184

24,052

22,705

49,537

45,945

$

96,154

$

80,180

$

184,932

$

157,239

Net income attributable to common stockholders

$

96,154

$

80,180

$

184,932

$

157,239

Net income per common share:

Basic

$

0.63

$

0.50

$

1.20

$

0.97

Diluted

$

0.62

$

0.50

$

1.19

$

0.97

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

$

96,154

$

80,180

$

184,932

$

157,239

Other comprehensive (loss) income, net of tax:

Available-for-sale debt securities:

Net unrealized holding (losses) gains on debt securities

(1)

(7,731)

41,205

125,266

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

(7,731)

41,205

125,266

Total comprehensive income

$

88,423

$

121,385

$

171,033

$

282,505

(1)

Net unrealized holding

(losses) gains on

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:

$

184,932

$

157,239

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization

8,281

8,809

Amortization of intangible assets

2,432

Provision for credit losses

34,606

45,397

Deferred income tax expense

6,971

1,584

Stock-based compensation

6,424

5,878

Unrealized gain on derivative instruments

(389)

(240)

Net gain on disposals or sales, and impairments of premises

and equipment and other assets

(657)

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

(3,337)

(2,230)

Net accretion of discounts, premiums, and deferred loan fees

and costs

(1,546)

(353)

Originations and purchases of loans held for sale

(81,260)

(85,836)

Sales and repayments of loans held for sale

86,319

93,508

Amortization of broker placement fees

Net (accretion) amortization of premiums and discounts on investment

(10,321)

1,630

Increase in accrued interest receivable

(4,205)

(2,605)

Decrease in accrued interest payable

(1,874)

(3,055)

Increase in other assets

(4,585)

(11,670)

Decrease in other liabilities

(6,863)

(7,151)

Net cash provided by operating activities

213,304

203,666

Cash flows from investing activities:

Net disbursements on loans held for investment

(189,758)

(194,164)

Proceeds from sales of loans held for investment

2,475

Proceeds from sales of repossessed assets

25,292

27,417

Purchases of available-for-sale debt securities

(1,552,658)

(404,332)

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

1,419,012

580,359

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

33,535

10,767

Additions to premises and equipment

(10,208)

(4,093)

Proceeds from sales of premises and equipment and other assets

Net redemptions of equity securities

1,162

6,901

Net cash (used in) provided by investing activities

(272,800)

25,330

Cash flows from financing activities:

Net increase (decrease) in deposits

220,227

(299,298)

Repayments of long-term borrowings

(90,000)

(239,850)

Repurchase of outstanding common stock

(104,940)

(53,534)

Dividends paid on common stock

(63,064)

(59,019)

Net cash used in financing activities

(37,777)

(651,701)

Net decrease in cash and cash equivalents

(97,273)

(422,705)

Cash and cash equivalents at beginning of year

658,599

1,159,415

Cash and cash equivalents at end of period

$

561,326

$

736,710

Cash and cash equivalents include:

Cash and due from banks

$

559,626

$

735,384

Money market investments

1,700

1,326

$

561,326

$

736,710

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITY

Common Stock

$

22,366

$

22,366

$

22,366

$

22,366

Additional Paid-In Capital:

952,773

957,380

963,543

964,964

Stock-based compensation expense

2,501

2,139

6,424

5,878

(82)

(14,775)

(11,356)

955,527

959,629

955,527

959,629

Retained Earnings:

2,325,256

2,086,276

2,268,011

2,038,812

96,154

80,180

184,932

157,239

Dividends on common stock ($

0.20

per share and $

0.18

per share for the quarters ended

June 30, 2026 and 2025, respectively; $

0.40

per share and $

0.36

per share for the

six-month periods ended June 30, 2026 and 2025, respectively)

(31,016)

(29,035)

(62,549)

(58,630)

2,137,421

2,137,421

Treasury Stock (at cost):

(972,438)

(804,185)

(932,505)

(790,350)

Common stock repurchases (See Note 10)

(50,314)

(28,376)

(104,940)

(53,534)

14,775

11,356

(335)

(110)

(335)

(143)

(832,671)

(832,671)

Accumulated Other Comprehensive Loss, net

of tax:

(360,718)

(482,495)

(354,550)

(566,556)

Other comprehensive (loss) income, net of tax

(7,731)

41,205

125,266

(441,290)

(441,290)

Total stockholders’ equity

$

$

1,845,455

$

$

1,845,455

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

and

period

ended

June

30,

(the

“unaudited

consolidated financial

statements”) of

(the “Corporation”)

have been

prepared in

conformity with

the accounting

stated

in

the

Audited

for

the

fiscal

year

ended

31,

(the

“audited

consolidated financial

statements”) included

in the

2025 Annual

Form 10-K,

as updated

by the

information contained

in this

report.

Certain

and

note

normally

in

the

prepared

in

with

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

the

audited

consolidated financial statements, which are included in the 2025 Annual Report on Form 10-K. All adjustments (consisting only of normal

recurring adjustments) that are, in the opinion of management,

necessary for a fair presentation of the statement of

financial position, results

of operations and cash flows

for the interim periods have

been reflected. All significant

intercompany accounts and transactions

have been

eliminated in consolidation. The Corporation evaluates subsequent events through

the date of filing with the SEC.

The results

of operations

for the

are not

necessarily indicative

of the

results to

be

for the

entire year.

Adoption of New Accounting Requirements

Standard

Description

Effective Date

Effect on the financial statements

Accounting Standards

Update (“ASU”) 2025-05,

“Financial Instruments –

Credit Losses (Topic 326):

Measurement of Credit

Losses for Accounts

Receivable and Contract

Assets”

In July 2025, the Financial Accounting

Standards Board (“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 June 30, 2026 and

December 31, 2025 were as follows:

(1)

Gross Unrealized

ACL

(2)

Gains

Losses

U.S. Treasury securities:

$

497,206

$

$

$

$

497,175

3.70

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

321,762

4,750

317,013

1.04

424,226

11,660

412,595

2.40

14,996

14,858

4.75

6,214

6,165

4.00

(3)

2,617

1,610

United States and Puerto Rico government obligations

1,267,021

17,337

1,249,416

2.60

Mortgage-backed securities (“MBS”):

2,347,131

265,126

2,082,936

1.93

U.S. Agencies collateralized mortgage

obligations (“CMOs”)

1,205,708

1,128

45,068

1,161,768

4.28

4,380

3,000

6.02

3,557,219

2,059

310,991

3,247,704

2.73

219,319

34,872

184,468

2.49

3,776,538

2,080

345,863

3,432,172

2.71

Total available-for-sale debt securities

$

5,043,559

$

2,114

$

363,200

$

$

2.68

(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

3,240,106

6,483

297,249

2,948,895

2.36

U.S Agencies Commercial MBS

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 debt securities

that totaled $

11.4

9.4

million as of June 30, 2026 and December 31, 2025, respectively,

reported as part of accrued interest receivable

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

(2)

Includes $

189.8

million (amortized cost

• $

209.8

million) and $

230.2

million (amortized cost

• $

251.0

million) as of

and December 31,

2025, respectively,

that was pledged

at the FHLB

as collateral for

borrowings and letters of credit,

as well as $

2.6

billion (amortized cost - $

2.8

billion) and $

2.5

billion (amortized cost - $

2.7

billion) as of June 30, 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.

Corporation purchased

approximately $

1.6

billion in

debt securities,

of

which $

811.7

U.S. agencies’

residential MBS

and debentures

with an

average yield

of

4.73

%; and

$

741.0

U.S. Treasury securities with an average yield

of

3.68

%.

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 June 30, 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

$

461,244

$

1,824

$

531,975

$

14,808

$

993,219

$

16,632

1,610

(1)

1,610

MBS:

297,599

2,738

1,692,427

262,388

1,990,026

265,126

773,614

5,471

158,192

39,597

931,806

45,068

3,000

(1)

3,000

31,124

123,841

34,669

154,965

34,872

$

1,563,581

$

10,236

$

2,511,045

$

352,964

$

4,074,626

$

363,200

(1)

Unrealized losses do not include the credit loss component recorded

as part of the ACL. As of June 30, 2026, the PRHFA

bond and private label MBS had an ACL of $

0.3

$

0.6

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

interest rates, and

not credit quality,

and because, as

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

Total

MBS

Total

$

$

$

$

$

$

Provision for credit losses – expense (benefit)

(6)

(3)

(3)

(12)

(12)

ACL on available-for-sale debt securities

$

$

$

$

$

$

MBS

Total

MBS

Total

$

$

$

$

$

$

(16)

(8)

(8)

(24)

(24)

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 June 30, 2026

and December 31, 2025 were as follows:

(1) (2)

Gross Unrecognized

Gains

Losses

ACL

$

1,098

$

$

$

1,096

$

4.75

44,627

45,002

7.34

10,501

11,089

4.52

14,870

15,147

7.16

Total Puerto Rico municipal bonds

71,096

1,486

72,334

6.85

MBS:

83,383

3,253

80,130

4.01

19,962

19,370

3.42

103,345

3,845

99,500

3.90

59,683

2,850

56,833

1.94

163,028

6,695

156,333

3.18

$

234,124

$

1,486

$

6,943

$

228,667

$

4.30

(1) (2)

Gross Unrecognized

Gains

Losses

ACL

$

1,044

$

$

$

1,083

$

4.94

53,265

1,916

55,050

7.05

10,376

10,870

4.78

14,870

14,886

7.46

Total Puerto Rico municipal bonds

79,555

2,633

81,889

6.81

MBS:

89,798

2,245

87,553

3.99

21,653

21,261

3.40

111,451

2,637

108,814

3.87

72,944

2,943

70,001

2.13

184,395

5,580

178,815

3.19

Other

1,346

1,351

6.87

$

265,296

$

2,638

$

5,879

$

262,055

$

4.29

(1)

Excludes accrued interest receivable on

held-to-maturity debt securities that totaled $

2.8

3.2

million as of June 30, 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 $

121.1

million (fair

value -

$

119.1

million) and

$

153.0

million (fair

value -

$

150.9

million) as

of June

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 of

June

30, 2026 and December 31, 2025, including debt securities for which

an ACL was recorded:

Total

Losses

Losses

Losses

Puerto Rico municipal bonds

$

$

$

17,302

$

$

17,302

$

MBS:

13,546

66,584

3,049

80,130

3,253

19,370

19,370

56,833

2,850

56,833

2,850

$

13,546

$

$

160,089

$

6,739

$

173,635

$

6,943

Total

Losses

Losses

Losses

Puerto Rico municipal 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

guaranteed by

GSEs and

underlying collateral

and Puerto

Rico municipal

bonds. The

Corporation does

not recognize

an ACL

for MBS

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

municipal 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

for

the

and

periods

ended June 30, 2026 and 2025:

$

$

Provision for credit losses - benefit

(162)

(78)

(1)

$

$

Beginning Balance

$

$

Provision for credit losses - benefit

(254)

(37)

(1)

$

$

(1) Mostly related to Puerto Rico municipal bonds.

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

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,”

in the 2025

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 June 30, 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 June

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:

$

2,392,272

$

2,377,604

201,711

263,640

1,819,439

1,763,927

Commercial and Industrial (“C&I”) loans

2,602,654

2,519,002

3,655,151

3,703,019

$

10,671,227

$

10,627,192

Florida region:

$

534,895

$

530,698

2,919

1,928

817,913

790,325

6,335

5,857

$

$

Total:

$

$

204,630

265,568

(1)

(2)

ACL on loans and finance leases

(245,039)

(249,037)

Loans held for investment, net

$

$

(1)

As of June 30, 2026 and December 31, 2025, includes $

880.1

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 $

17.2

18.4

million as of June 30, 2026 and December 31, 2025, respectively.

Various

loans were

assigned as

collateral for

borrowings, government

deposits, certain

time deposits

accounts, and

related unused

commitments. The

carrying value

pledged as

collateral amounted

to $

5.7

of each

of June

31, 2025. As of each of June 30, 2026 and December

31, 2025, loans pledged as collateral include $

2.1

billion that were pledged at the

FHLB

as

for

borrowings

and

letters

of

credit;

$

3.3

billion

pledged

as

to

secure

at

the

FED

Window

as

of

June

30,

2026,

to

$

3.4

billion

as

of

31,

2025;

$

78.5

million

pledged

to

secure

as

collateral for the uninsured

portion of government deposits

as of June 30, 2026,

126.1

million as of December 31,

2025;

and $

111.5

million pledged

to secure certain

time deposits accounts

as of June

30, 2026, compared

to $

111.2

.

aging of

the loan

for investment,

as well

as information

about nonaccrual

loans with

no ACL,

by

portfolio classes as of June 30, 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

Loans with no

ACL

(6)

Residential mortgage loans, mainly secured by first mortgages:

FHA/VA government-guaranteed

loans

(1)

(2) (4)

$

71,325

$

$

2,373

$

12,920

$

$

86,618

$

(1) (3) (5)

2,784,351

27,996

4,792

23,410

2,840,549

199,167

5,463

204,630

(1) (3)

2,624,604

4,901

7,067

4,769

(5)

3,778,552

4,670

1,342

41,053

12,020

1,948,401

58,140

10,179

11,486

2,028,206

859,186

13,629

2,598

3,573

878,986

324,876

4,308

2,284

1,216

332,684

265,680

3,506

2,464

5,521

277,171

138,412

3,226

1,504

1,297

144,439

Total loans held for investment

$

12,994,554

$

92,380

$

50,988

$

24,736

$

94,565

$

$

18,277

(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.

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

2026 amounted to $

7.3

million, $

49.5

million, and $

0.7

(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

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 $

3.6

million of residential mortgage loans

guaranteed by the FHA that were over 15 months delinquent as of June 30, 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

$

3.6

June 30, 2026 ($

3.1

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

$

4.6

of

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 financial statements with an offsetting liability.

(5)

Nonaccrual loans in the Florida region amounted to $

21.7

million as of June 30, 2026, of which $

6.4

million were residential mortgage loans and $

15.3

million were C&I loans.

(6)

no

nonaccrual loans with no ACL in the Florida region as of June 30, 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)

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

mortgage loans

as past-due

loans 90

days and

still accruing

as opposed

loans. The

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

any net

deferred fees

is suspended.

The amount

of accrued

interest reversed

against interest

income

totaled $

0.8

1.5

million for the quarter and six-month

period ended June 30, 2026, respectively,

0.7

million

and $

1.6

million for the same periods in 2025, respectively.

For the quarter and six-month period ended June 30,

2026, interest income

on nonaccrual

loans amounted

to $

0.5

$

1.2

to $

0.4

$

0.7

million

for the same periods in 2025, respectively.

As of

June

30,

2026,

the recorded

on

loans collateralized

by

real

estate property

that

were in

the process

of foreclosure

to $

23.2

$

6.1

million of

FHA/VA

government-guaranteed

loans, and

$

2.7

million of

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

gross charge

-offs for

2026 by

portfolio classes

and by

origination year,

and the

of commercial

loans by

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

$

4,318

$

22,603

$

127,548

$

8,339

$

2,598

$

1,592

$

$

166,998

$

258,104

29,250

29,250

4,201

1,262

5,463

5,536

$

4,318

$

22,603

$

127,548

$

41,790

$

2,598

$

2,854

$

$

201,711

$

263,640

$

$

$

$

$

$

$

$

Pass

$

134,341

$

211,274

$

300,803

$

216,348

$

325,936

$

603,910

$

8,546

$

1,801,158

$

1,741,159

3,257

3,512

3,588

14,355

14,769

19,180

$

134,341

$

211,529

$

300,803

$

220,019

$

325,936

$

618,265

$

8,546

$

1,819,439

$

1,763,927

$

$

$

$

$

$

$

$

C&I

Pass

$

375,982

$

469,523

$

248,119

$

122,864

$

234,214

$

303,053

$

777,023

$

2,530,778

$

2,440,152

1,618

36,745

38,363

40,643

1,671

27,548

4,051

33,513

38,207

$

375,982

$

471,194

$

248,126

$

124,613

$

234,319

$

330,601

$

817,819

$

2,602,654

$

2,519,002

$

$

$

$

$

$

$

$

As of

Florida Region

(1)

Prior

Loans

Total

Total

Pass

$

$

2,258

$

$

$

$

$

$

2,919

$

1,928

$

$

2,258

$

$

$

$

$

$

2,919

$

1,928

$

$

$

$

$

$

$

$

Pass

$

49,080

$

163,586

$

75,051

$

25,749

$

178,165

$

252,982

$

43,259

$

787,872

$

771,997

11,932

11,932

17,307

18,109

18,328

$

49,080

$

175,518

$

75,051

$

25,749

$

195,472

$

253,784

$

43,259

$

817,913

$

790,325

$

$

$

$

$

$

$

$

C&I

Pass

$

98,931

$

252,870

$

288,099

$

148,742

$

119,705

$

108,196

$

192,070

$

1,208,613

$

1,154,271

14,898

10,894

4,248

15,321

$

98,931

$

252,870

$

298,993

$

148,742

$

119,705

$

108,375

$

196,318

$

$

$

$

$

$

$

$

$

$

As of

Total

(1)

Prior

Loans

Total

Total

Pass

$

4,318

$

24,861

$

128,209

$

8,339

$

2,598

$

1,592

$

$

169,917

$

260,032

29,250

29,250

4,201

1,262

5,463

5,536

$

4,318

$

24,861

$

128,209

$

41,790

$

2,598

$

2,854

$

$

204,630

$

265,568

$

$

$

$

$

$

$

$

Pass

$

183,421

$

374,860

$

375,854

$

242,097

$

504,101

$

856,892

$

51,805

$

2,589,030

$

2,513,156

12,187

3,257

15,444

3,588

17,307

15,157

32,878

37,508

$

183,421

$

387,047

$

375,854

$

245,768

$

521,408

$

872,049

$

51,805

$

$

$

$

$

$

$

$

$

$

C&I

Pass

$

474,913

$

722,393

$

536,218

$

271,606

$

353,919

$

411,249

$

969,093

$

3,739,391

$

3,594,423

1,618

36,745

38,363

55,541

1,671

10,901

27,727

8,299

48,834

38,394

$

474,913

$

724,064

$

547,119

$

273,355

$

354,024

$

438,976

$

1,014,137

$

$

$

$

$

$

$

$

$

$

tables present the

amortized cost of

loans by portfolio

classes and by

origination year

accrual

status as

of June

30,

2026,

the gross

for the

2026 by

origination year,

and

the

amortized cost of residential mortgage loans by portfolio classes based on accrual

status as of December 31, 2025:

As of

Puerto Rico and Virgin Islands Region

(1)

Prior

Loans

Total

Total

$

$

$

$

1,175

$

$

82,655

$

$

85,300

$

87,635

$

$

$

$

1,175

$

$

82,655

$

$

85,300

$

87,635

$

122,517

$

234,292

$

174,037

$

150,595

$

137,799

$

1,470,678

$

$

2,289,918

$

2,271,925

16,047

17,054

18,044

$

122,517

$

234,331

$

174,677

$

150,595

$

138,127

$

1,486,725

$

$

2,306,972

$

2,289,969

Total

$

122,517

$

234,613

$

174,239

$

151,770

$

138,746

$

1,553,333

$

$

2,375,218

$

2,359,560

16,047

17,054

18,044

$

122,517

$

234,652

$

174,879

$

151,770

$

139,074

$

1,569,380

$

$

2,392,272

$

2,377,604

$

$

$

$

$

$

$

$

(1)

As of

Florida Region

(1)

Prior

Loans

Total

Total

$

$

$

$

$

$

1,318

$

$

1,318

$

1,085

$

$

$

$

$

$

1,318

$

$

1,318

$

1,085

$

39,929

$

70,158

$

80,576

$

69,850

$

59,799

$

206,909

$

$

527,221

$

518,488

1,628

1,212

3,516

6,356

11,125

$

39,929

$

70,158

$

80,576

$

71,478

$

61,011

$

210,425

$

$

533,577

$

529,613

Total

$

39,929

$

70,158

$

80,576

$

69,850

$

59,799

$

208,227

$

$

528,539

$

519,573

1,628

1,212

3,516

6,356

11,125

$

39,929

$

70,158

$

80,576

$

71,478

$

61,011

$

211,743

$

$

534,895

$

530,698

$

$

$

$

$

$

$

$

(1)

As of

Total

(1)

Prior

Loans

Total

Total

$

$

$

$

1,175

$

$

83,973

$

$

86,618

$

88,720

$

$

$

$

1,175

$

$

83,973

$

$

86,618

$

88,720

$

162,446

$

304,450

$

254,613

$

220,445

$

197,598

$

1,677,587

$

$

2,817,139

$

2,790,413

1,628

1,540

19,563

23,410

29,169

$

162,446

$

304,489

$

255,253

$

222,073

$

199,138

$

1,697,150

$

$

2,840,549

$

2,819,582

Total

$

162,446

$

304,771

$

254,815

$

221,620

$

198,545

$

1,761,560

$

$

2,903,757

$

2,879,133

1,628

1,540

19,563

23,410

29,169

$

162,446

$

304,810

$

255,455

$

223,248

$

200,085

$

1,781,123

$

$

$

$

$

$

$

$

$

$

$

(1)

The

tables present

the

cost

of

loans

by

classes

and

by origination

year

accrual

status as of

the gross charge

-offs for

the six-month period

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

$

301,217

$

530,076

$

448,119

$

323,884

$

232,582

$

180,842

$

$

2,016,720

$

2,028,346

1,431

1,448

2,246

2,481

3,797

11,486

14,665

Total auto loans

$

301,300

$

531,507

$

449,567

$

326,130

$

235,063

$

184,639

$

$

2,028,206

$

2,043,011

Charge-offs on auto loans

$

$

2,989

$

3,926

$

4,522

$

2,461

$

2,252

$

$

16,339

$

115,957

$

209,786

$

189,421

$

182,571

$

115,464

$

62,214

$

$

875,413

$

888,529

1,450

3,573

3,510

Total finance leases

$

115,957

$

209,995

$

189,949

$

183,418

$

116,003

$

63,664

$

$

878,986

$

892,039

Charge-offs on finance leases

$

$

$

1,189

$

1,546

$

1,238

$

1,159

$

$

5,588

$

68,463

$

95,651

$

68,907

$

56,033

$

32,871

$

9,543

$

$

331,468

$

333,364

1,216

1,792

Total personal loans

$

68,468

$

95,905

$

69,229

$

56,368

$

33,056

$

9,658

$

$

332,684

$

335,156

Charge-offs on personal loans

$

$

1,331

$

2,195

$

2,707

$

1,672

$

$

$

8,396

$

$

$

$

$

$

$

277,171

$

277,171

$

293,088

Total credit cards

$

$

$

$

$

$

$

277,171

$

277,171

$

293,088

Charge-offs on credit cards

$

$

$

$

$

$

$

9,432

$

9,432

$

43,722

$

43,460

$

22,230

$

14,226

$

5,958

$

3,775

$

9,771

$

143,142

$

144,115

1,297

1,467

Total other consumer loans

$

43,763

$

44,034

$

22,491

$

14,419

$

6,022

$

3,805

$

9,905

$

144,439

$

145,582

Charge-offs on other consumer loans

$

$

3,140

$

2,356

$

1,264

$

$

$

$

7,696

Total

$

529,359

$

878,973

$

728,677

$

576,714

$

386,875

$

256,374

$

286,942

$

3,643,914

$

3,687,442

2,468

2,559

3,621

3,269

5,392

17,572

21,434

Total consumer loans

$

529,488

$

881,441

$

731,236

$

580,335

$

390,144

$

261,766

$

287,076

$

$

Charge-offs on total consumer loans

$

$

7,902

$

9,666

$

10,039

$

5,838

$

4,071

$

9,670

$

47,451

(1)

As of June 30, 2026 and December 31, 2025, the balance of revolving loans

converted to term loans was

no

t material.

Accrued

on

loans

totaled

$

56.5

million

as

of

June

30,

($

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 June 30, 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:

$

20,641

$

1,448

$

$

20,641

$

1,448

4,201

5,157

16,914

16,914

12,020

12,020

$

24,842

$

2,045

$

29,890

$

54,732

$

2,045

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

construction loans

consisted primarily

of office

buildings, multifamily

residential properties,

and

retail

establishments.

The

loan-to-value

coverage

for

loans

as

of

June

30,

was

%,

% as of December 31,

2025, primarily driven by

repayments on a C&I loan

in the Puerto Rico region

in the food retail

industry

with a

loan-to-value

ratio of

% and

a $

4.7

million outflow

collateral-dependent

loan

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”).

During

six

2025,

loans pooled

into GNMA

MBS amounted

to approximately

$

77.8

million

and $

86.2

for

which

the

a

net

gain

on

sale

of

$

4.3

million

and

$

3.0

Also,

during

the

first

six

months

of

and

2025,

the

sold

$

5.9

million

and

$

6.8

of

performing

loans

to

GSEs,

for

which

the

a

net

gain

on

sale

of

$

0.2

million

and

$

0.3

The Corporation’s continuing

involvement with the loans that it

sells consists primarily 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 consistent

with the GSEs’

selling and servicing

guidelines (

i.e.

, ensuring that

the

mortgage was properly underwritten according to established guidelines).

For loans

pooled into

GNMA MBS,

the Corporation,

as servicer,

holds an

option to

repurchase individual

delinquent loans

issued

on or after

January 1, 2003,

when certain delinquency

criteria are met. This

option gives the

Corporation the unilateral

ability,

but not

the obligation, to

repurchase the delinquent

loans at par without

prior authorization from

GNMA. Since the

Corporation is considered

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

2025, rebooked

GNMA delinquent

loans that

were included in the residential mortgage loan portfolio amounted

to $

4.6

6.7

During the first

six months of 2026

and 2025, the Corporation

repurchased, pursuant to

the aforementioned repurchase

option, $

1.2

million

and

$

1.0

of

loans

pooled

into

GNMA

MBS.

The

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

payments reimbursed

by FHA, which

are

computed

at a

pre-determined

debenture

rate.

of GNMA

loans allow

the

among

other

things, to

acceptable

rates

on

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.

During

the

first

six

months

of

2026,

the

C&I

loan

participations

in

the

Florida

region

totaling

$

115.4

million, compared to $

72.7

million during the same period in 2025.

During

six

months

of

2025,

the

of

$

2.4

million

from

a

bulk

sale of

fully charged-off

finance

leases.

There

were no

significant sales

during

other than

sales of

conforming residential mortgage loans mentioned above.

Loan Portfolio Concentration

primary

lending area

is Puerto

Rico. The

banking subsidiary,

FirstBank, also

lends in

the USVI

and the BVI markets and

in the United States (principally

in the state of Florida).

Of the total gross loans held

for investment portfolio

of $

13.3

billion as of

credit risk concentration

was approximately

% in Puerto

Rico,

% in the

U.S., and

% in the

USVI and the BVI.

As

of

June

30,

2026,

the

had

$

305.7

million

in

loans

extended

to

the

Puerto

Rico

government,

its

and

public

to

$

215.5

million

as

of

31,

As

of

June

30,

2026,

$

236.8

million

of

loans

extended

to

in

Puerto

Rico

that

are

general

by

assigned

tax

revenues,

and $

18.7

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

exposure to

Rico government

as of

2026 included

$

8.6

a

loan granted to

an affiliate of

the Puerto Rico

Electric Power Authority

(“PREPA”)

and $

41.6

million in loans

to a public corporation

of the Puerto Rico government.

Moreover,

as of June 30, 2026, the outstanding balance of construction

loans funded through conduit financing structures to support

the

federal

of

Low-Income

Housing

Tax

Credit

(“LIHTC”)

combined

with

other

federal

to

$

75.0

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 financial

institutions and

are required

to co-underwrite

with PRHFA

a mirror

agreement for

the specific project loan to which the Corporation will serve as ultimate lender

,

but where the PRHFA will be the

lender of record.

In addition, as of

June 30, 2026, the Corporation

had $

64.8

million in exposure to

residential mortgage loans that

are guaranteed by

the PRHFA,

a government

instrumentality that

has been designated

as a covered

entity under PROMESA,

$

67.1

million

as

of

31,

loans

by

the

PRHFA

are

secured

by

the

and

the

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

The Corporation also

has credit exposure

to USVI government entities.

had

$

144.2

loans to

USVI government

public corporations,

$

138.7

As of

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

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

lines of

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

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

exclude

$

2.2

million

and

$

3.0

million in restructured

loans that are

government-guaranteed (e.g.

FHA/VA

loans) and were

modified during the

quarter and six-month period ended June 30, 2026, compared

to $

1.8

3.0

million for the comparable period in 2025.

tables present

the amortized

cost basis

as of

to borrowers

during

the

and

periods

ended

June

30,

and

2025,

by

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

Plan

Trial

term

Term

Rate

Other

Total

Classes

$

$

$

$

$

$

$

$

$

0.00%

0.00%

0.01%

(1)

0.04%

0.04%

(2)

0.29%

0.01%

$

$

$

$

$

$

$

$

$

2,193

Payment

Plan

Trial

Term

Term

Rate

Other

Total

Classes

$

$

$

$

$

$

$

$

$

0.01%

30,166

30,449

1.22%

(1)

0.00%

(1)

1,132

0.06%

0.06%

1,474

(2)

1,474

0.49%

(1)

0.14%

$

$

$

$

30,166

$

1,474

$

$

$

1,001

$

33,957

Payment

Plan

Trial

Term

Term

Rate

Other

Total

Classes

$

$

$

$

$

$

$

$

0.01%

0.00%

0.03%

(2)

1,517

1,836

0.05%

1,222

(1)

1,591

0.08%

0.10%

1,327

(2)

1,327

0.48%

0.05%

$

$

$

$

1,357

$

$

2,346

$

1,222

$

6,095

Payment

Plan

Trial

Term

Term

Rate

Other

Total

Classes

$

$

$

$

$

$

$

$

0.02%

30,166

30,449

1.22%

(3)

(2)

(1)

0.02%

1,640

(1)

2,035

0.10%

0.09%

2,334

(2)

2,334

0.78%

(1)

0.22%

$

$

$

30,166

$

2,353

$

1,150

$

$

1,687

$

36,642

(1)

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

(2)

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

(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 and

six-month periods ended

June 30, 2026 and

2025. The financial

effects of the

modifications associated to

payment delay were

discussed above and,

as such, were

excluded from

the tables below:

months)

months)

%

%

%

%

%

3.25

%

%

%

%

2.80

%

2.74

%

6.22

%

14.51

%

%

%

2.00

%

months)

months)

%

%

%

%

%

%

%

0.50

%

%

3.55

%

%

4.90

%

15.72

%

%

%

2.97

%

months)

months)

%

%

%

%

%

3.25

%

15.27

%

2.25

%

%

3.45

%

2.74

%

5.24

%

14.51

%

%

%

2.00

%

months)

months)

%

%

%

%

%

%

14.22

%

0.50

%

%

2.91

%

%

4.49

%

15.79

%

%

%

3.25

%

The following tables

present by portfolio

classes the performance

of loans modified

during the last

twelve months ended

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

Last Twelve Months Ended June 30, 2026

30-59

60-89

90+

Total

Delinquency

Current

Total

$

$

$

$

$

$

1,101

2,581

2,591

3,192

3,569

2,000

2,581

$

$

$

$

1,192

$

10,176

$

11,368

Last Twelve Months Ended June 30, 2025

30-59

60-89

90+

Total

Delinquency

Current

Total

$

$

$

$

$

$

42,496

42,779

10,420

10,435

3,159

3,547

3,007

3,561

$

$

$

$

1,335

$

60,862

$

62,197

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:

$

41,534

$

3,324

$

23,670

$

42,124

$

134,408

$

245,060

1,303

(1,008)

(319)

1,094

14,888

15,958

(529)

(330)

(21,332)

(22,191)

5,523

6,212

$

42,758

$

2,329

$

23,506

$

42,959

$

133,487

$

245,039

Loans

Loans

Loans

C&I

Loans

Leases

Total

ACL:

$

41,640

$

3,417

$

24,143

$

36,464

$

141,605

$

247,269

1,121

(1,448)

2,135

17,780

20,381

(285)

(66)

(24,178)

(24,529)

4,267

5,457

$

42,448

$

4,551

$

22,746

$

39,359

$

139,474

$

248,578

Loans

Loans

Loans

C&I

Loans

Leases

Total

ACL:

$

41,071

$

5,672

$

23,832

$

41,416

$

137,046

$

249,037

1,542

(3,369)

2,111

32,803

33,128

(659)

(562)

(720)

(47,451)

(49,392)

11,089

12,266

$

42,758

$

2,329

$

23,506

$

42,959

$

133,487

$

245,039

Loans

Loans

Loans

C&I

Loans

Leases

Total

ACL:

$

40,654

$

3,824

$

22,447

$

33,034

$

143,983

$

243,942

1,797

5,488

37,025

45,218

(520)

(143)

(52,076)

(52,739)

10,542

(1)

12,157

$

42,448

$

4,551

$

22,746

$

39,359

$

139,474

$

248,578

(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 the

audited consolidated

included in

the 2025

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

to estimate

the

ACL with

the

baseline

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

national and

regional economic indicators,

and industry

trends. As of

2026 and December

applied

100% probability

to the baseline

scenario for

the commercial mortgage

loan portfolios since

certain macroeconomic

with

real

estate

and

the

real

estate

(“CRE”)

price

index,

particularly in

to perform

in a

more favorable

manner than

the alternative

downside

economic scenario.

the ACL for loans and

finance leases was $

245.0

million, a decrease of $

4.0

million from $

249.0

31,

related

to

the

ACL for

loans

and

finance

leases, which

by

$

3.6

driven

by

lower

levels

in

the

unsecured

loan

and

in

in

the

secured loan

by loan

growth and

higher qualitative

reserves associated

with geopolitical

uncertainty driven

by,

among

other

things,

higher

oil

prices

as

a

result

of

the

in

the

Middle

East.

In

the

ACL

for

and

construction loans decreased by

$

2.1

million, mainly due to an

improvement in the projection

of certain macroeconomic variables,

net

of aforementioned qualitative reserves, partially offset by

loan growth.

the

ACL

for

loans

by

$

1.7

driven

by

loan

growth

and

the

geopolitical uncertainty,

partially offset by an improvement in the projection of the unemployment

rate.

Net charge-offs were

$

16.1

37.1

million for the second quarter

and first six months of 2026,

respectively, compared

to

$

19.1

million

and

$

40.5

for

the

same

periods

in

The

$

3.0

million

in

net

for

the

of 2026

was primarily

a $

4.1

across

all major portfolio classes, partially offset

by $

0.8

million in C&I net recoveries in

the Puerto Rico region during the

2025. The $

3.4

million decrease in net

charge-offs for

the first six months

of 2026 was

mainly attributable to

a $

5.2

in consumer loans and

finance leases net charge

-offs, particularly within

the unsecured loan portfolios,

after considering the impact

of

the aforementioned

$

2.4

recoveries related

to the

bulk sale

2025. This

improvement

was partially

the aforementioned

C&I net

recoveries recorded

in the

of 2025,

and a

$

0.6

million charge-off

associated with 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

June 30, 2026 and December 31, 2025:

Loans

Loans

Loans

C&I

Loans

Leases

Total

$

$

204,630

$

$

$

$

42,758

2,329

23,506

42,959

133,487

245,039

Allowance for credit losses to

1.46

%

1.14

%

0.89

%

1.12

%

3.65

%

1.85

%

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

June

30,

and

2025. The

Corporation estimates

the ACL

for these

sheet exposures

following the

methodology described

in

Note

1 –

of Business

and

Summary

of Significant

Accounting

Policies”

to

the audited

on Form 10-K.

2026, the ACL

for off-balance sheet

credit exposures increased

to

$

4.6

million, compared to $

3.0

million as of December 31, 2025, primarily driven by renewals of existing C&I

lines of credit.

table presents

the activity

in the

ACL for

unfunded loan

commitments and

standby letters

for the

$

3,120

$

3,080

$

3,013

$

3,143

1,479

1,586

$

4,599

$

3,367

$

4,599

$

3,367

NOTE 5

–

OTHER REAL ESTATE

OWNED (“OREO”)

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

OREO balances, carrying value:

(1)

$

5,702

$

6,524

Total

$

6,939

$

7,522

(1)

Excludes $

2.4

$

4.1

of June

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

assets in

the consolidated statements

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 and six-month

periods ended June 30,

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

$

5,548,697

$

5,549,416

Interest-bearing checking accounts

3,689,428

3,512,649

Interest-bearing saving accounts

3,501,275

3,452,192

3,535,375

3,562,331

594,754

593,555

Total

$

$

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

including brokered CDs, as of June 30, 2026:

Total

Three months or less

$

1,019,638

Over three months to six months

764,373

Over six months to one year

1,466,438

669,742

Over two years to three years

117,763

Over three years to four years

35,331

Over four years to five years

41,085

Over five years

15,759

Total

$

4,130,129

Total Puerto

Rico and U.S. time deposits with balances

of more than $250,000 amounted to

$

1.8

billion as of each of June 30,

This amount

does not

include brokered

CDs that

out by

brokers in

less

than

the

FDIC

limit. As

of

June

30,

and

31,

2025,

broker

placement

fees

to $

0.7

million

and

$

0.9

which

are

over

the

of

the

CDs

under

the

method.

NOTE 7 – BORROWINGS

As of June 30, 2026 and December 31, 2025, total borrowings consisted of FHLB advances

as set forth below:

Long-term

Fixed

-rate advances from the FHLB

(1)

$

200,000

$

290,000

(1)

Weighted-average interest rate of

4.25

% and

4.32

% as of June 30, 2026 and December 31, 2025, respectively. Contractual maturity date of November

2027 as of

June 30, 2026.

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

(1)

$

200,000

(1) Average remaining term to maturity of

1.39

years.

NOTE 8 – EARNINGS PER COMMON

.

SHARE

The

calculations

of

per

common

share

for

the

and

periods

ended

June

30,

and

are

as

follows:

Net income attributable to common stockholders

$

96,154

$

80,180

$

184,932

$

157,239

Shares:

Average common

shares outstanding

153,466

160,884

154,359

161,903

Average potential

dilutive common shares

Average common

shares outstanding - assuming dilution

154,162

161,513

155,126

162,625

Earnings per common share:

Basic

$

0.63

$

0.50

$

1.20

$

0.97

Diluted

$

0.62

$

0.50

$

1.19

$

0.97

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

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 and six-month periods

ended June 30, 2026 and 2025.

NOTE 9 – STOCK-BASED

.

COMPENSATION

The

Omnibus Incentive

Plan (the

“2026

Omnibus

Plan”),

which

became effective

on May

6, 2026

and

will

remain

in

effect

through

May

5,

2036,

for

equity-based

incentive

and

succeeds

the

First

Omnibus Incentive Plan, as

amended (the “2016 Omnibus Plan”).

No

awards will be granted under

the 2016 Omnibus Plan on

or after

May 6, 2026. Collectively,

the 2026 Omnibus Plan and the 2016 Omnibus Plan are referred to herein as the “Omnibus

Plan”.