# First Bancorp: Form 10-Q for the period ended Mar 31, 2025 - Company: [First Bancorp](/companies/fbp.md) (CIK 1057706) - Form: 10-Q - Filed: 2025-05-09 - Accepted by EDGAR: May 9, 2025, 12:10 ET - Period: 2025-03-31 - Accession: 0001057706-25-000005 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1057706/000105770625000005/fbp-20250331.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1057706/000105770625000005/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2025-03-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 3 months, 2025-01-01 to 2025-03-31 | $248.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Income tax | 3 months, 2025-01-01 to 2025-03-31 | $23.2m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 3 months, 2025-01-01 to 2025-03-31 | $77.1m | us-gaap:NetIncomeLoss | | Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.47 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.47 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 163,749,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $108.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $1.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $29.3m | us-gaap:PaymentsOfDividendsCommonStock | | Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $24.9m | us-gaap:PaymentsForRepurchaseOfCommonStock | | Total assets | at 2025-03-31 | $19.11bn | us-gaap:Assets | | Total liabilities | at 2025-03-31 | $17.33bn | us-gaap:Liabilities | | Long-term debt | at 2025-03-31 | $331.1m | us-gaap:LongTermDebt | | Shareholders' equity | at 2025-03-31 | $1.78bn | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 148,405 characters. ### OPERATIONS (“MD&A”) The following MD&A relates to the accompanying unaudited consolidated financial statements of First BanCorp. (the “Corporation,” “we,” “us,” “our,” or “First BanCorp.”) and should be read in conjunction with such financial statements and the notes thereto, and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Annual Report on Form 10- K”). This section also presents certain financial measures that are not based on generally accepted accounting principles in the United States of America (“GAAP”). See “Non-GAAP Financial Measures and Reconciliations” below for information about why non- GAAP financial measures are presented, reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures, and references to non-GAAP financial measures reconciliations presented in other sections. ### EXECUTIVE SUMMARY First BanCorp. is a diversified financial holding company headquartered in San Juan, Puerto Rico, offering a full range of financial products to consumers and commercial customers through various subsidiaries. First BanCorp. is the holding company of FirstBank Puerto Rico (“FirstBank” or the “Bank”) and FirstBank Insurance Agency. Through its wholly -owned subsidiaries, the Corporation operates in Puerto Rico, the United States Virgin Islands (“USVI”), the British Virgin Islands (“BVI”), and the state of Florida, concentrating on commercial banking, residential mortgage loans, credit cards, personal loans, small loans, auto loans and leases, and insurance agency activities. ### Recent Developments #### Economy and Market Update The Corporation started the year with a strong first quarter , showcasing margin expansion, positive operating leverage, and solid profitability metrics. In the first quarter of 2025, the Corporation reported a net income of $77 million and a return on average assets of 1.64%. Additionally, core customer deposits rose by $29 million during the quarter, inclusive of a $70 million increase in non- interest-bearing deposits. Stable deposit trends enabled the Corporation to redeploy investment portfolio cash flows into higher- yielding assets while improving its funding profile by reducing higher-cost wholesale borrowings. Credit performance remained relatively stable, and credit normalization trends are expected to continue . Depending on the timing and extent of the Federal Reserve (the “FED”) rate cuts in the second half of the year, the Corporation projects that the net interest margin will keep improving throughout the rest of 2025. The Corporation expects to receive approximately $1. 5 billion in cash flows from the investment portfolio during the next twelve months, which will be reinvested into loans, higher yielding securities, or used to further reduce higher-cost borrowings. Additionally, the Corporation aims to achieve mid- single-digit growth in the commercial, construction, and residential mortgage loan portfolios for the year. Despite growing concerns about global trade, tariffs, and other potential policy changes affecting markets globally, the Corporation remains committed to its disciplined approach of delivering consistent results and creating value for all stakeholders. #### Capital Deployment Actions During the first quarter of 2025, the Corporation delivered approximately $102.0 million, or over 100% of first quarter earnings, in the form of capital deployment actions that included the $50.6 million redemption of outstanding trust-preferred securities (“TruPS”), $29.6 million in common stock dividends declared, and $21.8 million in repurchases of common stock. From April 1, 2025 to May 5, 2025, the Corporation repurchased approximately 1.6 million shares of common stock for a total cost of approximately $27.7 million. In the aggregate, as of May 5, 2025, the Corporation has remaining authorization of approximately $100.0 million. ### CRITICAL ACCOUNTING POLICIES AND PRACTICES The accounting principles of the Corporation and the methods of applying these principles conform to GAAP. In preparing the consolidated financial statements, management is required to make estimates, assumptions, and judgments that affect the amounts recorded for assets, liabilities and contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Note 1 of the Notes to Consolidated Financial Statements included in our 2024 Annual Report on Form 10-K, as supplemented by this Quarterly Report on Form 10-Q, including this MD&A, describes the significant accounting policies we used in our consolidated financial statements. Not all significant accounting policies require management to make difficult, subjective or complex judgments. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of uncertainty and have had or are reasonably likely to have a material impact on the Corporation’s financial condition and results of operations. The Corporation’s critical accounting estimates that are particularly susceptible to significant changes include, but are not limited to, the following: (i) the allowance for credit losses (“ACL”); (ii) valuation of financial instruments; and (iii) income taxes. For more information regarding valuation of financial instruments and income tax policies, assumptions, and judgments, see “Critical Accounting Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” in the 2024 Annual Report on Form 10-K. The “Risk Management – Credit Risk Management” section of this MD&A details the policies, assumptions, and judgments related to the ACL. Actual results could differ from estimates and assumptions if different outcomes or conditions prevail. ### Overview of Results of Operations The Corporation’s results of operations depend primarily on its net interest income, which is the difference between the interest income earned on its interest-earning assets, including investment securities and loans, and the interest expense incurred on its interest-bearing liabilities, including deposits and borrowings. Net interest income is affected by various factors, including the following: (i) the interest rate environment; (ii) the volumes, mix, and composition of interest-earning assets, and interest-bearing liabilities; and (iii) the repricing characteristics of these assets and liabilities. The Corporation ’s results of operations also depend on the provision for credit losses, non-interest expenses (such as personnel, occupancy, professional service fees, the FDIC insurance premium, and other costs), non-interest income (mainly service charges and fees on deposits, cards and processing income, and insurance income), gains (losses) on mortgage banking activities, and income taxes. The Corporation had net income of $77.1 million ($0.47 per diluted common share) for the quarter ended March 31, 2025, compared to $73.5 million ($0.44 per diluted common share), for the quarter ended March 31, 2024. Other relevant selected financial indicators for the periods presented are included below: ### Quarter Ended March 31, ### 2025 ### 2024 ### Key Performance Indicator: (1) Return on Average Assets (2) 1.64 1.56 Return on Average Common Equity (3) 17.90 19.56 Efficiency Ratio (4) 49.58 52.46 (1) These financial ratios are used by management to monitor the Corporation’s financial performance and whether it is using its assets efficiently. (2) Indicates how profitable the Corporation is in relation to its total assets and is calculated by dividing net income on an annualized basis by its average total assets. (3) Measures the Corporation’s performance based on its average common stockholders’ equity and is calculated by dividing net income on an annualized basis by its average total common stockholders’ equity. (4) Measures how much the Corporation incurred to generate a dollar of revenue and is calculated by dividing non-interest expenses by total revenue. The key drivers of the Corporation’s GAAP financial results for the quarter ended March 31, 2025, compared to the first quarter of 2024, include the following: Net interest income for the quarter ended March 31, 2025 increased by $15.9 million to $212.4 million, compared to $196.5 million for the first quarter of 2024. Net interest margin for the first quarter of 2025 increased by 36 basis points (“bps”) to 4.52%, driven by a change in asset mix associated with the deployment of cash flows from lower-yielding investment securities to higher-yielding interest-earning assets, and a decrease in the cost of interest-bearing liabilities. See “Results of Operations – Net Interest Income” below for additional information. The provision for credit losses on loans, finance leases, unfunded loan commitments and debt securities for the quarter ended March 31, 2025 was $24.8 million, compared to $12.2 million for the first quarter of 2024. The increase in the provision expense was impacted by, among other things, a $12.1 million decrease in recoveries associated with the bulk sales of fully charged-off consumer loans and finance leases and a recovery of a commercial and industrial (“C&I”) loan in the Puerto Rico region during the first quarter of 2024, and a $2.7 million increase in qualitative adjustments due to the uncertainty in the economic environment. Net charge-offs totaled $21.4 million for the quarter ended March 31, 2025, or an annualized 0.68% of average loans, compared to $11.2 million, or an annualized 0.37% of average loans, for the first quarter of 2024. Net charge-offs for the first quarter of 2025 and 2024 include $2.4 million and $9.5 million, respectively, in recoveries associated with the bulk sales of fully charged -off consumer loans and finance leases during such periods, which reduced by 8 bps and 31 bps, respectively, the ratio of total net charge -offs to average loans. The increase in net charge-offs was also impacted by the aforementioned $5.0 million recovery associated with a C&I loan during the first quarter of 2024. See “Results of Operations – Provision for Credit Losses” and “Risk Management” below for analyses of the ACL and non-performing assets and related ratios. Non-interest income for the quarter ended March 31, 2025 increased by $1.7 million, mainly due to higher realized gains from purchased income tax credits. Non-interest expenses for the quarter ended March 31, 2025 increased by $2.1 million to $123.0 million, mainly in employees’ compensation and benefits expenses, due to an increase in bonuses. See “Results of Operations – Non-Interest Expenses” below for additional information. Income tax expense decreased to $23.2 million for the first quarter of 2025, compared to $23.9 million for the same period in 2024\. The Corporation’s estimated effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, decreased to 23.7% for the first quarter of 2025, compared to 24.3% for the same period of 2024\. The decrease in effective tax rate was due to a higher proportion of exempt to taxable income. See “Income Taxes” below and Note 14 – “Income Taxes ,” to the unaudited consolidated financial statements herein for additional information. As of March 31, 2025, total assets were approximately $19.1 billion, a decrease of $185.9 million from December 31, 2024, primarily related to cash inflows received from repayments from the investment securities and loan portfolios that were used for the repayment of long-term borrowings, fund the decrease in total deposits, and support capital deployment actions, partially offset by the increase in the fair value of available -for-sale debt securities due to changes in market interest rates. As of March 31, 2025, total liabilities were $17.3 billion, a decrease of $296.0 million from December 31, 2024, mainly due to a $230.6 million decrease in borrowings and a $48.8 million decrease in total deposits, mainly in government deposits. See “Risk Management – Liquidity Risk” below for additional information about the Corporation’s funding sources and strategy. The Corporation’s primary sources of funding are consumer and commercial core deposits, which exclude government deposits and brokered certificates of deposit (“CDs”). As of March 31, 2025, these core deposits, amounting to $12.9 billion, funded 67.50% of total assets. Excluding fully collateralized government deposits, estimated uninsured deposits amounted to $4.6 billion as of March 31, 2025. The Corporation had approximately $2.7 billion in cash and cash equivalents and free high-quality liquid securities. In addition, as of March 31, 2025, the Corporation had approximately $2.6 billion available for funding under the FED’s Discount Window and $862.2 million available for additional borrowing capacity on the Federal Home Loan Bank (“FHLB”) lines of credit based on collateral pledged at these entities. In the aggregate, as of March 31, 2025, the Corporation had $6.2 billion, or 133% of estimated uninsured deposits (excluding fully collateralized government deposits), available to meet liquidity needs. See “Risk Management – Liquidity Risk” below for additional information about the Corporation’s funding sources and strategy. As of March 31, 2025, the Corporation’s total stockholders’ equity was $1.8 billion, an increase of $110.1 million from December 31, 2024. The increase was driven by an $84.1 million increase in the fair value of available-for-sale debt securities recorded as part of accumulated other comprehensive loss in the consolidated statements of financial condition and the net income generated in the first quarter of 2025, partially offset by common stock dividends declared in the first quarter of 2025 totaling $29.6 million or $0.18 per common share, and $21.8 million in common stock repurchases. The Corporation’s CET1 capital, tier 1 capital, total capital, and leverage ratios were 16.62%, 16.62%, 17.96%, and 11.20%, respectively, as of March 31, 2025, compared to CET1 capital, tier 1 capital, total capital, and leverage ratios of 16.32%, 16.32%, 18.02%, and 11.07%, respectively, as of December 31, 2024. See “Risk Management – Capital” below for additional information. Total loan production, including purchases, refinancings, renewals, and draws from existing revolving and non-revolving commitments, decreased by $24.7 million to $1.2 billion for the quarter ended March 31, 2025, as compared to the first quarter of 2024. See “Results of Operations – Loan Production” below for additional information. Total non-performing assets were $129.4 million as of March 31, 2025, an increase of $11.1 million from December 31, 2024, mainly due to the inflow to nonaccrual status of a $12.6 million commercial mortgage loan in the Florida region in the hospitality industry during the first quarter of 2025. See “Risk Management – Nonaccrual Loans and Non-Performing Assets” below for additional information. Adversely classified commercial and construction loans increased by $13.6 million to $100.9 million as of March 31, 2025, compared to December 31, 2024, driven by the downgrades of two commercial mortgage loans in the Florida region totaling $18.3 million, which consist of the aforementioned $12.6 million inflow to nonaccrual status and a $5.7 million loan in the hotel industry, partially offset by the upgrade of a $5.0 million commercial mortgage loan in the Puerto Rico region. ### NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS The Corporation has included in this Quarterly Report on Form 10-Q the following financial measures that are not recognized under GAAP, which are referred to as non-GAAP financial measures: #### Net Interest Income, Interest Rate Spread, and Net Interest Margin, Excluding Valuations , and on a Tax -Equivalent Basis Net interest income, interest rate spread, and net interest margin are reported excluding the changes in the fair value of derivative instruments and on a tax-equivalent basis in order to provide to investors additional information about the Corporation’s net interest income that management uses and believes should facilitate comparability and analysis of the periods presented. The changes in the fair value of derivative instruments have no effect on interest due or interest earned on interest-bearing liabilities or interest-earning assets, respectively. The tax-equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a marginal income tax rate. Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at statutory rates. Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread, and net interest margin on a fully tax- equivalent basis. This adjustment puts all earning assets, most notably tax-exempt securities and tax-exempt loans, on a common basis that facilitates comparison of results to the results of peers. See “Results of Operations – Net Interest Income” below, for the table that reconciles net interest income in accordance with GAAP to the non-GAAP financial measure of net interest income, excluding valuations, and on a tax-equivalent basis for the indicated periods. The table also reconciles net interest spread and net interest margin on a GAAP basis to these items excluding valuations, and on a tax-equivalent basis. #### Tangible Common Equity Ratio and Tangible Book Value Per Common Share The tangible common equity ratio and tangible book value per common share are non-GAAP financial measures that management believes are generally used by the financial community to evaluate capital adequacy. Tangible common equity is total common equity less goodwill and other intangible assets. Similarly, tangible assets are total assets less goodwill and other intangible assets. Tangible common equity ratio is tangible common equity divided by tangible assets. Tangible book value per common share is tangible common equity divided by the number of common shares outstanding. Management uses and believes that many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with other more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase method of accounting for mergers and acquisitions. Accordingly, the Corporation believes that disclosures of these financial measures may be useful to investors. Neither tangible common equity nor tangible assets, or the related measures, should be considered in isolation or as a substitute for stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Corporation calculates its tangible common equity, tangible assets, and any other related measures may differ from that of other companies reporting measures with similar names. See “Risk Management – Capital” below for the table that reconciles the Corporation’s total equity and total assets in accordance with GAAP to the tangible common equity and tangible assets figures used to calculate the non-GAAP financial measures of tangible common equity ratio and tangible book value per common share. #### Adjusted Net Income and Adjusted Non-Interest Expenses To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation uses, and believes that investors benefit from disclosure of, non -GAAP financial measures that reflect adjustments to net income and non-interest expenses to exclude items that management believes are not reflective of core operating performance (“Special Items”). The financial results for the quarter ended March 31, 2025 did not include any significant Special Items. The financial results for the quarter ended March 31, 2024 included the following Special Item: #### FDIC Special Assessment Expense A charge of $0.9 million ($0.6 million after-tax, calculated based on the statutory tax rate of 37.5%) was recorded for the quarter ended March 31, 2024 to increase the special assessment imposed by the FDIC in connection with losses to the Deposit Insurance Fund associated with protecting uninsured deposits following the failures of certain financial institutions during the first half of 2023. The estimated FDIC special assessment of $7.4 million was the revised estimated loss reflected in the FDIC invoice for the first quarterly collection period with a payment date of June 28, 2024. The FDIC deposit special assessment is reflected in the consolidated statements of income as part of “FDIC deposit insurance” expenses. Adjusted Net Income – The following table shows for the quarter ended March 31, 2025 the reported net income and reconciles for the quarter ended March 31, 2024, net income to adjusted net income, a non-GAAP financial measure that excludes the Special Item identified above. ### Quarter Ended March 31, ### 2025 ### 2024 (In thousands) Net income, as reported (GAAP) 77,059 73,458 Adjustments: FDIC special assessment expense 947 Income tax impact of adjustments (1) (355) Adjusted net income (Non-GAAP) 77,059 74,050 (1) See “Adjusted Net Income and Adjusted Non-Interest Expenses” above for the individual tax impact related to the above adjustment, which was based on the Puerto Rico statutory tax rate of 37.5%. ### RESULTS OF OPERATIONS ### Net Interest Income Net interest income is the excess of interest earned by First BanCorp. on its interest-earning assets over the interest incurred on its interest-bearing liabilities. First BanCorp.’s net interest income is subject to interest rate risk due to the repricing and maturity mismatch of the Corporation’s assets and liabilities. In addition, variable sources of interest income, such as loan fees, periodic dividends, and collection of interest on nonaccrual loans, can fluctuate from period to period. Net interest income for the quarter ended March 31, 2025 was $212.4 million, compared to $196.5 million for the comparable period in 2024. On a tax-equivalent basis and excluding the changes in the fair value of derivative instruments, net interest income for the quarter ended March 31, 2025 was $218.6 million, compared to $201.3 million for the comparable period in 2024. The following tables include a detailed analysis of net interest income for the indicated periods. Part I presents average volumes (based on the average daily balance) and rates on an adjusted tax-equivalent basis and Part II presents, also on an adjusted tax- equivalent basis, the extent to which changes in interest rates and changes in the volume of interest-related assets and liabilities have affected the Corporation’s net interest income. For each category of interest-earning assets and interest-bearing liabilities, the tables provide information on changes in (i) volume (changes in volume multiplied by prior period rates), and (ii) rate (changes in rate multiplied by prior period volumes). The Corporation has allocated rate-volume variances (changes in rate multiplied by changes in volume) to either the changes in volume or the changes in rate based upon the effect of each factor on the combined totals. Net interest income on an adjusted tax-equivalent basis and excluding the changes in the fair value of derivative instruments is a non-GAAP financial measure. For the definition of this non-GAAP financial measure, refer to the discussion in “Non-GAAP Financial Measures and Reconciliations” above. ### Part I ### Average volume ### Interest income (1) ### / expense ### Average rate (1) ### Quarter ended March 31, ### 2025 ### 2024 ### 2025 ### 2024 ### 2025 ### 2024 (Dollars in thousands) Interest-earning assets: Money market and other short-term investments 1,111,087 533,747 12,205 7,254 4.45 5.45 Government obligations (2) 1,971,327 2,684,169 6,970 9,053 1.43 1.35 MBS 3,308,964 3,451,293 17,497 15,238 2.14 1.77 FHLB stock 32,661 34,635 790 854 9.81 9.89 Other investments 19,977 16,551 247 66 5.01 1.60 Total investments (3) 6,444,016 6,720,395 37,709 32,465 2.37 1.94 Residential mortgage loans 2,841,918 2,810,304 41,484 40,473 5.92 5.78 Construction loans 232,295 218,854 5,596 4,537 9.77 8.32 C&I and commercial mortgage loans 5,806,929 5,504,782 99,759 99,074 6.97 7.22 Finance leases 901,768 863,685 17,854 17,127 8.03 7.95 Consumer loans 2,849,591 2,810,215 80,898 79,640 11.51 11.37 Total loans (4)(5) 12,632,501 12,207,840 245,591 240,851 7.88 7.91 Total interest-earning assets 19,076,517 18,928,235 283,300 273,316 6.02 5.79 Interest-bearing liabilities: Time deposits 3,048,778 2,892,355 25,468 24,410 3.39 3.39 Brokered CDs 483,774 749,760 5,461 9,680 4.58 5.18 Other interest-bearing deposits 7,693,900 7,534,344 27,568 28,935 1.45 1.54 Advances from the FHLB 468,667 500,000 5,190 5,610 4.49 4.50 Other borrowings 53,892 161,700 981 3,350 7.38 8.31 Total interest-bearing liabilities 11,749,011 11,838,159 64,668 71,985 2.23 2.44 Net interest income on a tax-equivalent basis and excluding valuations - non-GAAP 218,632 201,331 Interest rate spread 3.79 3.35 Net interest margin 4.65 4.27 (1) On an adjusted tax-equivalent basis. The Corporation estimated the adjusted tax-equivalent yield by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate of 37.5% and adding to it the cost of interest-bearing liabilities. The tax-equivalent adjustment recognizes the income tax savings when comparing taxable and tax-exempt assets. Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread and net interest margin on a fully tax-equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. The Corporation excludes changes in the fair value of derivatives from interest income because the changes in valuation do not affect interest received. See “Non-GAAP Financial Measures and Reconciliations” above. (2) Government obligations include debt issued by government-sponsored agencies. (3) Unrealized gains and losses on available-for-sale debt securities are excluded from the average volumes. (4) Average loan balances include the average of nonaccrual loans. (5) Interest income on loans includes $5.4 million and $3.2 million for the quarters ended March 31, 2025 and 2024, respectively, of income from prepayment penalties and late fees related to the Corporation’s loan portfolio. The results for the first quarter of 2025 include $0.7 million in interest income related to prepayment penalties associated with the payoff of a $73.8 million commercial mortgage loan, and higher income from late fees in the consumer loans and finance leases portfolios. ### Part II ### Quarter Ended March 31, ### 2025 Compared to 2024 ### Variance due to: ### Volume ### Rate ### Total (In thousands) Interest income on interest-earning assets: Money market and other short-term investments 7,079 (2,128) 4,951 Government obligations (2,460) 377 (2,083) MBS (674) 2,933 2,259 FHLB stock (48) (16) (64) Other investments 16 165 181 Total investments 3,913 1,331 5,244 Residential mortgage loans 459 552 1,011 Construction loans 291 768 1,059 C&I and commercial mortgage loans 5,294 (4,609) 685 Finance leases 761 (34) 727 Consumer loans 1,123 135 1,258 Total loans 7,928 (3,188) 4,740 Total interest income 11,841 (1,857) 9,984 Interest expense on interest-bearing liabilities: Time deposits 1,321 (263) 1,058 Brokered CDs (3,134) (1,085) (4,219) Other interest-bearing deposits 583 (1,950) (1,367) Advances from the FHLB (351) (69) (420) Other borrowings (2,022) (347) (2,369) Total interest expense (3,603) (3,714) (7,317) Change in net interest income 15,444 1,857 17,301 Portions of the Corporation’s interest-earning assets, mostly investments in obligations of some U.S. government agencies and U.S. GSEs, generate interest that is exempt from income tax, principally in Puerto Rico. Also, interest and gains on sales of investments held by the Corporation’s international banking entities (“IBEs”) are tax-exempt under Puerto Rico tax law (see Note 14 – “Income Taxes” to the unaudited consolidated financial statements included herein for additional information). Management believes that the presentation of interest income on an adjusted tax-equivalent basis facilitates the comparison of all interest data related to these assets. The Corporation estimated the tax equivalent yield by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate (37.5%) and adding to it the average cost of interest-bearing liabilities. The computation considers the interest expense disallowance required by Puerto Rico tax law. Management believes that the presentation of net interest income, excluding the effects of the changes in the fair value of the derivative instruments (“valuations”), provides additional information about the Corporation’s net interest income and facilitates comparability and analysis from period to period. The changes in the fair value of the derivative instruments have no effect on interest earned on interest-earning assets. The following table reconciles net interest income in accordance with GAAP to net interest income, excluding valuations, and net interest income on an adjusted tax-equivalent basis for the indicated periods. The table also reconciles net interest spread and net interest margin on a GAAP basis to these items excluding valuations, and on an adjusted tax-equivalent basis: ### Quarter Ended March 31, ### 2025 ### 2024 (Dollars in thousands) Interest income - GAAP 277,065 268,505 Unrealized loss (gain) on derivative instruments 3 (2) Interest income excluding valuations - non-GAAP 277,068 268,503 Tax-equivalent adjustment 6,232 4,813 Interest income on a tax-equivalent basis and excluding valuations - non-GAAP 283,300 273,316 Interest expense - GAAP 64,668 71,985 Net interest income - GAAP 212,397 196,520 Net interest income excluding valuations - non-GAAP 212,400 196,518 Net interest income on a tax-equivalent basis and excluding valuations - non-GAAP 218,632 201,331 ### Average Balances Loans and leases 12,632,501 12,207,840 Total securities, other short-term investments and interest-bearing cash balances 6,444,016 6,720,395 Average interest-earning assets 19,076,517 18,928,235 Average interest-bearing liabilities 11,749,011 11,838,159 Average assets (1) 19,107,102 18,858,299 Average non-interest-bearing deposits 5,425,836 5,308,531 ### Average Yield/Rate Average yield on interest-earning assets - GAAP 5.89% 5.69% Average rate on interest-bearing liabilities - GAAP 2.23% 2.44% Net interest spread - GAAP 3.66% 3.25% Net interest margin - GAAP 4.52% 4.16% Average yield on interest-earning assets excluding valuations - non-GAAP 5.89% 5.69% Average rate on interest-bearing liabilities 2.23% 2.44% Net interest spread excluding valuations - non-GAAP 3.66% 3.25% Net interest margin excluding valuations - non-GAAP 4.52% 4.16% Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations - non-GAAP 6.02% 5.79% Average rate on interest-bearing liabilities 2.23% 2.44% Net interest spread on a tax-equivalent basis and excluding valuations - non-GAAP 3.79% 3.35% Net interest margin on a tax-equivalent basis and excluding valuations - non-GAAP 4.65% 4.27% (1) Includes, among other things, the ACL on loans and finance leases and debt securities, as well as unrealized gains and losses on available-for-sale debt securities. Net interest income amounted to $212.4 million for the quarter ended March 31, 2025, an increase of $15.9 million, when compared to $196.5 million for the same period in 2024. The $15.9 million increase in net interest income consisted of: A $7.3 million decrease in interest expense on interest-bearing liabilities consisting of: A $4.5 million decrease in interest expense on interest-bearing deposits, consisting of: A $4.2 million decrease in interest expense on brokered CDs, mainly due to a $3.1 million decrease associated with a $266.0 million decrease in the average balance, and a $1.1 million decrease mainly associated with new issuances at lower interest rates than maturing brokered CDs. A $1.4 million decrease in interest expense on interest-bearing checking and saving accounts, mainly due to a $2.6 million decrease driven by the effect of lower interest rates when compared to the same period in 2024, partially offset by a $1.2 million increase associated with a $159.6 million increase in the average balance. Partially offset by: A $1.1 million increase in interest expense on time deposits, excluding brokered CDs, driven by a $156.4 million increase in the average balance. A $2.8 million decrease in interest expense on borrowings, consisting of a $2.4 million decrease in interest expense on junior subordinated debentures, driven by the $100.0 million redemption of these debentures during the second half of 2024, and a $0.4 million decrease in interest expense on FHLB advances, mainly associated with a $31.3 million decrease in the average balance due to the $180.0 million in FHLB advances that matured and were repaid in March 2025. A $5.0 million increase in interest income from interest-bearing cash balances, driven by a $577.3 million net increase in the average balances, which consisted primarily of deposits maintained at the FED, which more than compensated for the reduction in the federal funds rate. A $4.2 million increase in interest income on loans, consisting of: A $2.0 million increase in interest income on consumer loans and finance leases, due to higher yields and higher income from late fees, mainly in the auto loans portfolio, and a $77.5 million increase in the average balance, mainly auto loans and finance leases. A $1.2 million increase in interest income on commercial and construction loans, driven by a $5.2 million increase associated with a $315.6 million increase in the average balance, partially offset by a $4.0 million net decrease due to the effect of lower interest rates on the downward repricing of variable-rate loans, which was compensated in part by $1.2 million in interest income recognized during the first quarter of 2025 as a result of the payoff of a $73.8 million commercial mortgage loan, of which $0.7 million related to prepayment penalties and the remainder to the acceleration of unamortized net deferred fees. As of March 31, 2025, the interest rate on approximately 52% of the Corporation’s commercial and construction loans was tied to variable rates, with 33% based upon SOFR of 3 months or less, 11% based upon the Prime rate index, and 8% based on other indexes. For the first quarter of 2025, the average one -month SOFR decreased 101 bps, the average three-month SOFR decreased 105 bps, and the average Prime rate decreased 100 bps, compared to the average rates during the first quarter of 2024. A $1.0 million increase in interest income on residential mortgage loans, in part due to a $31.6 million increase in the average balance. Net interest margin for the first quarter of 2025 was 4.52%, an increase of 36 bps, compared to 4.16% for the same period in 2024. The increase in the net interest margin mostly reflects a change in asset mix associated with the deployment of cash flows from lower- yielding investment securities to higher-yielding interest-earning assets, and a decrease in the cost of interest-bearing liabilities due to the effect of lower interest rates on deposits and the aforementioned redemption of junior subordinated debentures. These factors were partially offset by the downward repricing of variable-rate commercial loans and a lower federal funds rate on cash deposited at the FED. ### Provision for Credit Losses The provision for credit losses consists of provisions for credit losses on loans and finance leases, unfunded loan commitments, as well as the debt securities portfolio. The principal changes in the provision for credit losses by main categories follow: #### Provision for credit losses for loans and finance leases The provision for credit losses for loans and finance leases was $24.8 million for the first quarter of 2025, compared to $12.9 million for the first quarter of 2024. The provision for the first quarter of 2025 includes an increase of $2.7 million in qualitative adjustments due to the uncertainty in the economic environment. The variances by major portfolio category were as follows: Provision for credit losses for the commercial and construction loan portfolios was an expense of $4.6 million for the first quarter of 2025, compared to a net benefit of $2.6 million for the first quarter of 2024. The expense recorded during the first quarter of 2025 was driven by the impact of renewals of lines of credit, updated financial information of certain commercial borrowers, and a deterioration in the economic outlook of the forecasted commercial real estate (“CRE”) price index. The net benefit recorded during the first quarter of 2024 was driven by a $5.0 million recovery of a C&I loan in the Puerto Rico region, partially offset by increased volume. Provision for credit losses for the consumer loan and finance lease portfolios was an expense of $19.2 million for the first quarter of 2025, compared to an expense of $16.0 million for the first quarter of 2024. The increase in provision expense was driven by a $7.1 million decrease in recoveries associated with the bulk sales of fully charged -off loans and the impact of the aforementioned higher qualitative adjustments, partially offset by lower volume and improvements in macroeconomic variables, mainly in the projection of the unemployment rate. Provision for credit losses for the residential mortgage loan portfolio was an expense of $1.0 million for the first quarter of 2025, compared to a net benefit of $0.5 million for the first quarter of 2024. #### Provision for credit losses for unfunded loan commitments The provision for credit losses for unfunded commercial and construction loan commitments and standby letters of credit for the first quarter of 2025 was a net benefit of $63 thousand, compared to an expense of $0.3 million for the first quarter of 2024. #### Provision for credit losses for debt securities The provision for credit losses for held-to-maturity and available-for -sale debt securities was an expense of $36 thousand for the first quarter of 2025, compared to a net benefit of $1.0 million for the first quarter of 2024. The net benefit recorded for the first quarter of 2024 was driven by improvements in the underlying updated financial information of certain Puerto Rico municipal bond issuers. ### Non-Interest Income Non-interest income amounted to $35.7 million for the first quarter of 2025, compared to $34.0 million for the same period in 2024. The $1.7 million increase in non -interest income was primarily due to a $1.0 million increase in other non-interest income, mainly related to a $1.7 million increase related to higher realized gains from purchased income tax credits, partially offset by a $0.7 million decrease in insurance proceeds collected during the first quarter of 2024 associated with property damage caused by Hurricane Fiona. ### Non-Interest Expenses Non-interest expenses for the quarter ended March 31, 2025 amounted to $123.0 million, compared to $120.9 million for the same period in 2024. The efficiency ratio for the first quarter of 2025 was 49.58%, compared to 52.46% for the first quarter of 2024. Non- interest expenses for the first quarter of 2024 include the $0.9 million additional FDIC special assessment expense. See “Non-GAAP Financial Measures and Reconciliations” above for additional information. On a non-GAAP basis, excluding the effect of this Special Item, adjusted non-interest expenses increased by $3.0 million primarily due to: A $2.6 million increase in employees’ compensation and benefits expenses, driven by a $2.1 million increase in bonuses, which includes a $0.8 million increase in stock-based compensation expense, of which $0.4 million was associated with retirement-eligible employees. A $1.2 million increase in occupancy and equipment expenses, primarily reflecting increases in software maintenance charges and a decrease in the property tax accrual during the first quarter of 2024. Partially offset by: A $1.2 million decrease in professional service fees, mainly due to a $1.1 million decrease in consulting fees driven by information technology infrastructure enhancements during the first quarter of 2024 and a $0.8 million decrease in collections, appraisals and other credit-related fees, partially offset by a $0.5 million increase in outsourcing fees. ### Income Taxes For the first quarter of 2025, the Corporation recorded an income tax expense of $23.2 million, compared to $23.9 million for the same period in 2024. The Corporation’s annual effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, was 23.7% for the first quarter of 2025, compared to 24.3% for the same period in 2024. The effective tax rate of the Corporation is impacted by, among other things, the relationship of taxable to exempt income. See Note 14 – “Income Taxes ” to the unaudited consolidated financial statements herein for additional information. As of March 31, 2025, the Corporation had a net deferred tax asset of $134.3 million, net of a valuation allowance of $108.7 million, compared to a net deferred tax asset of $136.4 million, net of a valuation allowance of $119.1 million, as of December 31, 2024\. The decrease in the net deferred tax assets was mainly related to the usage of alternative minimum tax credits. Meanwhile, the decrease in the valuation allowance was primarily related to changes in the market value of available -for-sale debt securities which resulted in an equal change in the net deferred tax assets without impacting earnings as they are fully reserved as the Corporation does not expect to realize such benefits. ### Assets The Corporation’s total assets were $19.1 billion as of March 31, 2025, a decrease of $185.9 million from December 31, 2024, primarily related to cash inflows received from repayments from the investment securities and loan portfolios that were used for the repayment of long-term borrowings, fund the decrease in total deposits, and support capital deployment actions, partially offset by the increase in the fair value of available-for-sale debt securities due to changes in market interest rates. ### Loans Receivable, including Loans Held for Sale As of March 31, 2025, the Corporation’s total loan portfolio before the ACL amounted to $12.7 billion, a decrease of $71.7 million compared to December 31, 2024, of which $64.4 million was in commercial and construction loans. In the Puerto Rico region, commercial and construction loans decreased by $144.7 million driven by the payoff of a $73.8 million commercial mortgage loan in the hospitality industry and a $49.0 million reduction in balance of floor plan lines of credit. Meanwhile, in the Florida region, commercial and construction loans increased by $49.3 million mainly due to the origination of four commercial loans totaling $55.3 million. In the Virgin Islands region, commercial and construction loans increased by $31.0 million, as compared to the balance as of December 31, 2024, mainly associated with a $15.6 million disbursement of a government line of credit. As of March 31, 2025, the Corporation’s loans held-for-investment portfolio was comprised of commercial and construction loans (49%), consumer loans and finance leases (29%), and residential real estate loans (22%). Of the total gross loan portfolio held for investment of $12.7 billion as of March 31, 2025, the Corporation had credit risk concentration of approximately 78% in the Puerto Rico region, 18% in the United States region (mainly in the state of Florida), and 4% in the Virgin Islands region, as shown in the following table: ### As of March 31, 2025 ### Puerto Rico ### Virgin Islands ### United States ### Total (In thousands) Residential mortgage loans 2,181,346 153,307 503,193 2,837,846 Construction loans 183,220 10,571 40,650 234,441 Commercial mortgage loans 1,706,319 75,083 720,287 2,501,689 C&I loans 2,140,246 149,032 1,070,590 3,359,868 Total commercial loans 4,029,785 234,686 1,831,527 6,095,998 Consumer loans and finance leases 3,667,243 68,833 5,478 3,741,554 Total loans held for investment, gross 9,878,374 456,826 2,340,198 12,675,398 Loans held for sale 14,713 14,713 Total loans, gross 9,893,087 456,826 2,340,198 12,690,111 ### As of December 31, 2024 ### Puerto Rico ### Virgin Islands ### United States ### Total (In thousands) Residential mortgage loans 2,166,980 156,225 505,226 2,828,431 Construction loans 181,607 2,820 43,969 228,396 Commercial mortgage loans 1,800,445 67,449 698,090 2,565,984 C&I loans 2,192,468 133,407 1,040,163 3,366,038 Total commercial loans 4,174,520 203,676 1,782,222 6,160,418 Consumer loans and finance leases 3,680,628 69,577 7,502 3,757,707 Total loans held for investment, gross 10,022,128 429,478 2,294,950 12,746,556 Loans held for sale 14,558 434 284 15,276 Total loans, gross 10,036,686 429,912 2,295,234 12,761,832 See “Risk Management – Exposure to Puerto Rico Government” and “Risk Management – Exposure to USVI Government” below for information on the Corporation’s credit exposure to PR and USVI government entities. As of March 31, 2025, the Corporation’s total commercial mortgage loan exposure amounted to $2.5 billion, or 20% of the total loan portfolio. In terms of geography, $1.7 billion of the exposure was in the Puerto Rico region, $0.7 billion of the exposure was in the Florida region, and $0.1 billion of the exposure was in the Virgin Islands region. The $1.7 billion exposure in the Puerto Rico region was comprised mainly of 42% in the retail industry, 26% in office real estate, and 19% in the hotel industry. The $0.7 billion exposure in the Florida region was comprised mainly of 35% in the retail industry, 21% in the hotel industry, and 8% in office real estate. Of the Corporation’s total commercial mortgage loan exposure of $2.5 billion, $519.4 million matures or reprices within the next 12 months. Of this amount, $374.7 million matures within the next 12 months and has a weighted-average interest rate of approximately 6.26%. Commercial mortgage loan exposure in the office real estate industry, which matures within the next 12 months, amounted to $119.3 million and has a weighted-average interest rate of approximately 6.22%. As of each of March 31, 2025 and December 31, 2024, the Corporation’s total exposure to shared national credit (“SNC”) loans (including unused commitments) amounted to $1.3 billion. As of March 31, 2025, approximately $359.4 million of the SNC exposure is related to the portfolio in the Puerto Rico region and $896.7 million is related to the portfolio in the Florida region. ### Loan Production First BanCorp. relies primarily on its retail network of branches to originate residential and consumer loans. The Corporation may supplement its residential mortgage originations with wholesale servicing released mortgage loan purchases from mortgage bankers. The Corporation manages its construction and commercial loan originations through centralized units and most of its originations come from existing customers, as well as through referrals and direct solicitations. Auto loans and finance leases originations rely primarily on relationships with auto dealers and dedicated sales professionals who serve selected locations to facilitate originations. The following table provides a breakdown of First BanCorp.’s loan production, including purchases, refinancings, renewals and draws from existing revolving and non-revolving commitments by geographic segment, for the indicated periods: ### Quarter Ended March 31, ### 2025 ### 2024 (In thousands) ### Puerto Rico: Residential mortgage 101,420 67,643 Construction 26,714 35,651 Commercial mortgage 4,284 17,902 C&I 364,188 405,219 Consumer 369,436 393,906 Total loan production 866,042 920,321 ### Virgin Islands: Residential mortgage 723 1,426 Construction 7,801 Commercial mortgage 8,450 125 C&I 24,465 11,109 Consumer 7,758 7,896 Total loan production 49,197 20,556 ### Florida: Residential mortgage 11,687 19,101 Construction 14,791 11,046 Commercial mortgage 47,621 57,629 C&I 186,913 172,167 Consumer 333 457 Total loan production 261,345 260,400 ### Total: Residential mortgage 113,830 88,170 Construction 49,306 46,697 Commercial mortgage 60,355 75,656 C&I 575,566 588,495 Consumer 377,527 402,259 Total loan production 1,176,584 1,201,277 Commercial and construction loan originations (excluding government loans) for the quarter ended March 31, 2025 amounted to $656.3 million, compared to $675.1 million for the first quarter of 2024. The decrease of $18.8 million in the first quarter of 2025 consisted of a decrease of $42.9 million in the Puerto Rico region, partially offset by increases of $15.6 million in the Virgin Islands region and $8.5 million in the Florida region. Government loan originations for the quarter ended March 31, 2025 amounted to $28.9 million, a decrease of $6.9 million, compared to $35.8 million for the first quarter of 2024. Originations of auto loans and finance leases for the quarter ended March 31, 2025 amounted to $227.7 million, compared to $228.0 million for the first quarter of 2024. Other consumer loan originations , other than credit cards, for the quarter ended March 31, 2025 amounted to $47.6 million, compared to $59.9 million for the first quarter of 2024. The utilization activity on the outstanding credit card portfolio for the quarter ended March 31, 2025 amounted to $102.2 million, compared to $114.3 million for the same period in 2024. ### Investment Activities As part of its liquidity, revenue diversification, and interest rate risk management strategies, First BanCorp. maintains a debt securities portfolio classified as available for sale or held to maturity. Substantially all of the Corporation’s available-for-sale debt securities portfolio was invested in U.S. government and agencies debentures and fixed-rate GSEs’ MBS. The Corporation’s total available-for-sale debt securities portfolio as of March 31, 2025 amounted to $4.3 billion, a $252.4 million decrease from December 31, 2024. The decrease was driven by $241.0 million in maturities of U.S. agencies debentures and U.S. Treasury securities and $106.3 million in principal repayments of U.S. agencies MBS and debentures, partially offset by the $84.1 million increase in fair value attributable to changes in market interest rates, and approximately $12.3 million in purchases of GNMA MBS, of which $7.3 million were commercial MBS. As of March 31, 2025, the Corporation had a net unrealized loss on available-for-sale debt securities of $475.5 million. This net unrealized loss is primarily attributable to instruments on books carrying a lower interest rate than market rates. The Corporation expects that this unrealized loss will reverse over time and it is likely that it will not be required to sell the securities before their anticipated recovery. The Corporation expects the portfolio will continue to decrease and the accumulated other comprehensive loss will decrease accordingly, excluding the impact of market interest rates. As of March 31, 2025, cash inflows of approximately $1.5 billion are expected to be received during the next twelve months from maturities and expected prepayments of the available-for-sale debt securities portfolio which has an average yield of 1.21%, of which $1.3 billion are expected to be received during the remainder of 2025. These inflows are expected to be redeployed to fund loan growth, reinvested into higher-yielding securities, or used to repay maturing brokered CDs. See Note 2 – “Debt Securities” for information and details about the Corporation’s available-for-sale debt securities portfolio. Held-to-maturity debt securities include fixed-rate GSEs’ MBS with a carrying value of $220.3 million (fair value of $209.5 million) as of March 31, 2025, compared to $225.3 million as of December 31, 2024. The decrease in GSEs’ MBS was driven by $5.1 million in principal repayments. Held-to-maturity debt securities also include $92.5 million as of March 31, 2025, compared to $92.4 million as of December 31, 2024, of financing arrangements with Puerto Rico municipalities issued in bond form, which the Corporation accounts for as securities, but which were underwritten as loans with features that are typically found in commercial loans. As of March 31, 2025, approximately 57% of the Corporation’s municipal bonds consisted of obligations issued by three of the largest municipalities in Puerto Rico. See “Risk Management – Exposure to Puerto Rico Government” below for information and details about the Corporation’s total direct exposure to the Puerto Rico government, including municipalities, and “Risk Management – Credit Risk Management” below and Note 2 – “Debt Securities” for the ACL of the exposure to Puerto Rico municipal bonds. The carrying values of debt securities as of March 31, 2025 and December 31, 2024 by contractual maturity (excluding MBS) and weighted-average yield, are shown below: ### March 31, 2025 ### December 31, 2024 ### Weighted- ### Average Yield % ### Carrying ### Amount ### Weighted- ### Average Yield % ### Carrying ### Amount (Dollars in thousands) ### Available-for-sale debt securities, at fair value U.S government and agencies obligations: Due within one year 0.72 1,017,241 0.79 1,127,041 Due after one year through five years 0.98 653,193 0.96 764,679 Due after ten years 4.69 7,549 4.73 7,800 0.84 1,677,983 (1) 0.87 1,899,520 Puerto Rico government obligation: Due after ten years 1,599 1,620 MBS: Residential 1.79 2,441,885 1.79 2,481,253 Commercial 2.23 190,417 2.12 181,909 Total MBS 1.82 2,632,302 1.82 2,663,162 Other: Due within one year 2.31 1,000 2.32 1,000 Total available-for-sale debt securities, at fair value 1.46 4,312,884 1.45 4,565,302 ### Held-to-maturity debt securities, at amortized cost Puerto Rico municipal bonds: Due within one year 4.87 2,297 5.07 2,214 Due after one year through five years 7.19 62,792 7.33 61,289 Due after five years through ten years 5.07 11,678 5.79 13,184 Due after ten years 7.78 15,755 8.07 15,755 6.97 92,522 7.18 92,442 ACL on held-to-maturity debt securities (843) (802) MBS: Residential 3.88 125,556 3.86 129,319 Commercial 2.05 94,729 3.88 96,025 Total MBS 3.09 220,285 3.87 225,344 Total held-to-maturity debt securities, at amortized cost 4.24 311,964 4.83 316,984 Total debt securities 1.63 4,624,848 1.65 4,882,286 (1) Includes approximately $1.2 billion in callable debt securities with an average yield of 0.79% of which approximately 65% were purchased at a discount and 2% at a premium. See “Risk Management” below for further analysis of the effects of changing interest rates on the Corporation's net interest income and the Corporation's interest risk management strategies. Also, refer to Note 2 - “Debt Securities” for additional information regarding the Corporation's debt securities portfolio. ### RISK MANAGEMENT ### General Risks are inherent in virtually all aspects of the Corporation’s business activities and operations. Consequently, effective risk management is fundamental to the success of the Corporation. The primary goals of risk management are to ensure that the Corporation’s risk-taking activities are consistent with the Corporation’s objectives and risk tolerance, and that there is an appropriate balance between risks and rewards to maximize stockholder value. The Corporation has in place a risk management framework to monitor, evaluate and manage the principal risks assumed in conducting its activities. First BanCorp.’s business is subject to eleven broad categories of risks: (i) liquidity risk; (ii) interest rate risk; (iii) market risk; (iv) credit risk; (v) operational risk; (vi) legal and regulatory risk; (vii) reputational risk; (viii) model risk; (ix) capital risk; (x) strategic risk; and (xi) information technology risk. First BanCorp. has adopted policies and procedures designed to identify and manage the risks to which the Corporation is exposed. The Corporation’s risk management policies are described below, as well as in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the 2024 Annual Report on Form 10-K. ### Liquidity Risk and Capital Adequacy Liquidity risk involves the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet liquidity needs and accommodate fluctuations in asset and liability levels due to changes in the Corporation’s business operations or unanticipated events. The Corporation manages liquidity at two levels. The first is the liquidity of the parent company, or First Bancorp., which is the holding company that owns the banking and non-banking subsidiaries. The second is the liquidity of the banking subsidiary, FirstBank. The Asset and Liability Committee of the Corporation’s Board of Directors is responsible for overseeing management’s establishment of the Corporation’s liquidity policy, as well as approving operating and contingency procedures and monitoring liquidity on an ongoing basis. The Management’s Investment and Asset Liability Committee (“MIALCO”), which reports to the Board’s Asset and Liability Committee, uses measures of liquidity developed by management that involve the use of several assumptions to review the Corporation’s liquidity position on a monthly basis. The MIALCO oversees liquidity management, interest rate risk, market risk, and other related matters. The MIALCO is composed of senior management officers, including the Chief Executive Officer, the Chief Financial Officer, the Chief Risk Officer, the Treasurer, the Chief Consumer Officer and Corporate Chief of Staff, the Corporate Strategic and Business Development Director, the Treasury and Investments Risk Manager, the Financial Planning and Asset and Liability Management (“ALM”) Director, and the Chief Credit Officer. The Treasury and Investments Division is responsible for planning and executing the Corporation’s funding activities and strategy, monitoring liquidity availability daily, and reviewing liquidity measures on a weekly basis. The Investments Accounting and Operations area of the Corporate Controller’s Department is responsible for calculating the liquidity measurements used by the Treasury and Investment Division to review the Corporation’s liquidity position on a weekly basis. The Financial Planning and ALM Division is responsible for operating the liquidity and interest rate risk models. To ensure adequate liquidity through the full range of potential operating environments and market conditions, the Corporation conducts its liquidity management and business activities in a manner that is intended to preserve and enhance funding stability, flexibility, and diversity. Key components of this operating strategy include a strong focus on the continued development of customer-based funding, the maintenance of direct relationships with wholesale market funding providers, and the maintenance of the ability to liquidate certain assets when, and if, requirements warrant. The Corporation develops and maintains contingency funding plans. These plans evaluate the Corporation’s liquidity position under various operating circumstances and are designed to help ensure that the Corporation will be able to operate through periods of stress when access to normal sources of funds is constrained. The plans project funding requirements during a potential period of stress, specify and quantify sources of liquidity, outline actions and procedures for effectively managing liquidity through a period of stress, and define roles and responsibilities for the Corporation’s employees. Under the contingency funding plans, the Corporation stresses the balance sheet and the liquidity position to critical levels that mimic difficulties in generating funds or even maintaining the current funding position of the Corporation and the Bank and are designed to help ensure the ability of the Corporation and the Bank to honor their respective commitments. The Corporation has established liquidity triggers that the MIALCO monitors in order to maintain the ordinary funding of the banking business. The MIALCO has developed contingency funding plans for the following three scenarios: a credit rating downgrade, an economic cycle downturn event, and a concentration event. The Board’s Asset and Liability Committee reviews and approves these plans on an annual basis. #### Liquidity Risk Management The Corporation manages its liquidity in a proactive manner and in an effort to maintain a sound liquidity position. It uses multiple measures to monitor its liquidity position, including core liquidity, basic liquidity, and time-based reserve measures. Cash and cash equivalents amounted to $1.3 billion as of March 31, 2025, compared to $1.2 billion as of December 31, 2024. When adding $1.4 billion of free high-quality liquid securities that could be liquidated or pledged within one day (which includes assets such as U.S. government and GSEs obligations), the total core liquidity amounted to $2.7 billion as of March 31, 2025, or 14.25% of total assets, compared to $2.4 billion, or 12.54% of total assets as of December 31, 2024. In addition to the aforementioned $2.7 billion in cash and free high quality liquid assets, the Corporation had $862.2 million available for credit with the FHLB based on the value of loan collateral pledged with the FHLB. As such, the basic liquidity ratio (which adds such available secured lines of credit to the core liquidity) was approximately 18.76% of total assets as of March 31, 2025, compared to 17.27% of total assets as of December 31, 2024. Further, the Corporation also maintains borrowing capacity at the FED Discount Window and had approximately $2.6 billion available for funding under the FED’s Borrower-in-Custody (“BIC”) Program as of each of March 31, 2025 and December 31, 2024 as an additional source of liquidity. Total loans pledged to the FED BIC Program amounted to $3.4 billion as of each of March 31, 2025 and December 31, 2024. The Corporation does not rely on uncommitted inter-bank lines of credit (federal funds lines) to fund its operations. In the aggregate, as of March 31, 2025, the Corporation had $6.2 billion available to meet liquidity needs, or 133% of estimated uninsured deposits, excluding fully collateralized government deposits, compared to $5.9 billion or 124%, respectively, as of December 31, 2024. Liquidity at the Bank level is highly dependent on bank deposits, which fund 88.3% of the Bank’s assets (or 85.8% excluding brokered CDs). In addition, as further discussed below, the Corporation maintains a diversified base of readily available wholesale funding sources, including advances from the FHLB through pledged borrowing capacity, securities sold under agreements to repurchase, and access to brokered CDs. Funding through wholesale funding may continue to increase the overall cost of funding for the Corporation and adversely affect the net interest margin. #### Commitments to extend credit and standby letters of credit As a provider of financial services, the Corporation routinely enters into commitments with off-balance sheet risk to meet the financial needs of its customers. These financial instruments may include loan commitments and standby letters of credit. These commitments are subject to the same credit policies and approval processes used for on-balance sheet instruments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statements of financial condition. As of March 31, 2025, the Corporation’s commitments to extend credit amounted to approximately $2.1 billion. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since certain commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. There have been no significant or unexpected draws on existing commitments. In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause. The following table summarizes commitments to extend credit and standby letters of credit as of the indicated dates: ### March 31, 2025 ### December 31, 2024 (In thousands) Financial instruments whose contract amounts represent credit risk: Commitments to extend credit: Construction undisbursed funds 256,856 283,302 Unused credit card lines 793,955 787,849 Unused personal lines of credit 36,796 37,140 Commercial lines of credit 1,041,840 1,053,938 Letters of credit: Commercial letters of credit 40,989 41,738 Standby letters of credit 21,355 24,635 The Corporation engages in the ordinary course of business in other financial transactions that are not recorded on the balance sheet or may be recorded on the balance sheet in amounts that are different from the full contract or notional amount of the transaction and, thus, affect the Corporation’s liquidity position. These transactions are designed to (i) meet the financial needs of customers, (ii) manage the Corporation’s credit, market and liquidity risks, (iii) diversify the Corporation’s funding sources, and (iv) optimize capital. In addition to the aforementioned off-balance sheet debt obligations and unfunded commitments to extend credit, the Corporation has obligations and commitments to make future payments under contracts, amounting to approximately $4.0 billion as of March 31, 2025\. Our material cash requirements comprise primarily of contractual obligations to make future payments related to time deposits, long-term borrowings, and operating lease obligations. We also have other contractual cash obligations related to certain binding agreements we have entered into for services including outsourcing of technology services, security, advertising and other services which are not material to our liquidity needs. We currently anticipate that our available funds, credit facilities, and cash flows from operations will be sufficient to meet our operational cash needs and support loan growth and capital plan execution for the foreseeable future. Off-balance sheet transactions are continuously monitored to consider their potential impact to our liquidity position and changes are applied to the balance between sources and uses of funds, as deemed appropriate, to maintain a sound liquidity position. #### Sources of Funding The Corporation utilizes different sources of funding to help ensure that adequate levels of liquidity are available when needed. Diversification of funding sources is of great importance to protect the Corporation’s liquidity from market disruptions. The principal sources of short-term funding are deposits, including brokered CDs. Additional funding is provided by securities sold under agreements to repurchase and lines of credit with the FHLB. In addition, the Corporation also maintains as additional sources borrowing capacity at the FED’s BIC Program , as discussed above. The Asset and Liability Committee reviews credit availability on a regular basis. The Corporation may also sell mortgage loans as a supplementary source of funding and obtain long-term funding through the issuance of notes and long-term brokered CDs. While liquidity is an ongoing challenge for all financial institutions, management believes that the Corporation’s available borrowing capacity and efforts to grow core deposits will be adequate to provide the necessary funding for the Corporation’s business plans in the next 12 months and beyond. #### Retail and commercial core deposits – The Corporation’s deposit products include regular saving accounts, demand deposit accounts, money market accounts, and retail CDs. As of each of March 31, 2025 and December 31, 2024, the Corporation’s core deposits, which exclude government deposits and brokered CDs, totaled $12.9 billion. The $29.0 million increase in such deposits consisted of increases of $75.0 million in the Puerto Rico region and $38.9 million in the Virgin Islands region, partially offset by an $84.9 million decrease in the Florida region. This growth includes increases of $74.8 million in time deposits and $69.8 million in non-interest-bearing deposits. #### Government deposits (fully collateralized) - As of March 31, 2025, the Corporation had $2.9 billion of Puerto Rico public sector deposits ($2.8 billion in transactional accounts and $161.0 million in time deposits), compared to $3.1 billion as of December 31, 2024\. Government deposits are insured by the FDIC up to the applicable limits and the uninsured portions are fully collateralized. Approximately 19% of the public sector deposits as of March 31, 2025 were from municipalities and municipal agencies in Puerto Rico and 81% were from public corporations, the central government and its agencies, and U.S. federal government agencies in Puerto Rico. In addition, as of March 31, 2025, the Corporation had $0.5 billion of government deposits in the Virgin Islands region, as compared to $0.4 billion as of December 31, 2024. The uninsured portions of government deposits were collateralized by securities and loans with an amortized cost of $3.4 billion and $3.7 billion as of March 31, 2025 and December 31, 2024, respectively, and an estimated market value of $3.1 billion and $3.3 billion as of March 31, 2025 and December 31, 2024, respectively. In addition to securities and loans, as of March 31, 2025 and December 31, 2024, the Corporation used $275.0 million and $175.0 million, respectively, in letters of credit issued by the FHLB as pledges for a portion of public deposits in the Virgin Islands. #### Estimate of Uninsured Deposits – As of March 31, 2025 and December 31, 2024, the estimated amounts of uninsured deposits totaled $7.8 billion and $8.1 billion, respectively, generally representing the portion of deposits that exceed the FDIC insurance limit of $250,000 and amounts in any other uninsured deposit account. As of March 31, 2025 and December 31, 2024, the uninsured portion of fully collateralized government deposits amounted to $3.2 billion and $3.3 billion, respectively. Excluding fully collateralized government deposits, the estimated amounts of uninsured deposits amounted to $4.6 billion, which represent 28.44% of total deposits (excluding brokered CDs), as of March 31, 2025, compared to $4.8 billion, or 29.36%, as of December 31, 2024. The amount of uninsured deposits is calculated based on the same methodologies and assumptions used for our bank regulatory reporting requirements adjusted for cash held by wholly-owned subsidiaries at the Bank. The following table presents by contractual maturities the amount of U.S. time deposits in excess of FDIC insurance limits (over $250,000) and other time deposits that are otherwise uninsured as of March 31, 2025: (In thousands) ### 3 months or ### less ### 3 months to ### 6 months ### 6 months to ### 1 year ### Over 1 year ### Total U.S. time deposits in excess of FDIC insurance limits 286,962 289,277 393,756 130,780 1,100,775 Other uninsured time deposits 24,408 9,374 16,570 4,015 54,367 #### Brokered CDs - Total brokered CDs increased by $4.3 million to $482.5 million as of March 31, 2025. The increase reflects $40.0 million of new issuances with original average maturities of approximately 1.4 years and an all-in cost of 4.36%, partially offset by maturing brokered CDs amounting to $35.7 million with an all-in cost of 4.89% that were paid off during the first quarter of 2025. The average remaining term to maturity of the brokered CDs outstanding as of March 31, 2025 was approximately 1.4 years. The future use of brokered CDs will depend on multiple factors including excess liquidity at each of the regions, future cash needs and any tax implications. Also, depending on lending or other investment opportunities available, cash inflows from repayments of investment securities may be used as well to repay brokered CDs. Brokered CDs are insured by the FDIC up to regulatory limits and can be obtained faster than regular retail deposits. The following table presents the remaining contractual maturities and weighted-average interest rates of brokered CDs as of March 31, 2025: ### Total ### Weighted-average ### interest rate % (In thousands) Three months or less 48,179 5.11 Over three months to six months 52,147 4.62 Over six months to one year 179,646 4.39 Over one year to two years 129,375 4.15 Over two years to three years 30,302 4.03 Over three years to four years 27,362 4.44 Over five years 15,456 4.61 Total 482,467 4.41 Refer to “Net Interest Income” above for information about average balances of interest-bearing deposits and the average interest rate paid on such deposits for the quarters ended March 31, 2025 and 2024. #### Securities sold under agreements to repurchase – From time to time, the Corporation enters into repurchase agreements as an additional source of funding. As of each of March 31, 2025 and December 31, 2024, there were no outstanding repurchase agreements. When the Corporation enters into repurchase agreements, as is the case with derivative contracts, the Corporation is required to pledge cash or qualifying securities to meet margin requirements. To the extent that the value of securities previously pledged as collateral declines due to changes in interest rates, a liquidity crisis or any other factor, the Corporation is required to deposit additional cash or securities to meet its margin requirements, thereby adversely affecting its liquidity. Given the quality of the collateral pledged, the Corporation has not experienced margin calls from counterparties arising from credit-quality-related write- downs in valuations. #### Advances from the FHLB – The Bank is a member of the FHLB system and obtains advances to fund its operations under a collateral agreement with the FHLB that requires the Bank to maintain qualifying mortgages and/or investments as collateral for advances taken. As of March 31, 2025 and December 31, 2024, the outstanding balance of long-term fixed-rate FHLB advances was $320.0 million and $500.0 million, respectively. Of the $320.0 million in FHLB advances as of March 31, 2025, $220.0 million were pledged with investment securities and $100.0 million were pledged with mortgage loans. As of March 31, 2025, the Corporation had $862.2 million available for additional credit on FHLB lines of credit based on collateral pledged at the FHLB of New York. The following table presents the remaining contractual maturities and weighted-average interest rates of advances from the FHLB as of March 31, 2025: ### Total ### Weighted-average ### interest rate % (In thousands) Over three months to six months 30,000 4.83 Over six months to one year 90,000 4.49 Over two years to three years 200,000 4.25 Total (1) 320,000 4.37 (1) Average remaining term to maturity of 1.96 years. #### Trust-Preferred Securities – In 2004, FBP Statutory Trusts I and II, statutory trusts that are wholly-owned by the Corporation and not consolidated in the Corporation’s financial statements, sold to institutional investors variable-rate TruPS and used the proceeds of these issuances, together with the proceeds of the purchases by the Corporation of variable rate common securities, to purchase junior subordinated deferrable debentures. The subordinated debentures are reflected in the Corporation’s consolidated statements of financial condition as part of “Long-term borrowings.” During the first quarter of 2025, the Corporation redeemed $50.6 million of outstanding TruPS at a contractual call price of 100%. This transaction resulted in the full redemption of the remaining $18.6 million in TruPS issued by FBP Statutory Trust II and reduced by $32.0 million the outstanding amount of the TruPS issued by FBP Statutory Trust I. As of March 31, 2025 and December 31, 2024, the Corporation had junior subordinated debentures outstanding in the aggregate amount of $11.1 million and $161.7 million, respectively. The Corporation expects to execute the redemption of the remaining junior subordinated debentures during the second quarter of 2025. See Note 6 – “Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets” and Note 20 – “First Bancorp. (Holding Company Only) Financial Information” for additional informatio n. #### FED Discount Window - The Corporation participates in the BIC Program of the FED. Through the BIC Program, a broad range of loans may be pledged as collateral for borrowings through the FED Discount Window. As previously mentioned, as of March 31, 2025, the Corporation had approximately $2.6 billion fully available for funding under the FED’s Discount Window based on collateral pledged at the FED. #### Effect of Credit Ratings on Access to Liquidity The Corporation’s liquidity is contingent upon its ability to obtain deposits and other external sources of funding to finance its operations. The Corporation’s current credit ratings and any downgrade in credit ratings can hinder the Corporation’s access to new forms of external funding and/or cause external funding to be more expensive, which could, in turn, adversely affect its results of operations. Also, changes in credit ratings may further affect the fair value of unsecured derivatives whose value takes into account the Corporation’s own credit risk. The Corporation does not have any outstanding debt or derivative agreements that would be affected by credit rating downgrades. Furthermore, given the Corporation’s non-reliance on corporate debt or other instruments directly linked in terms of pricing or volume to credit ratings, the liquidity of the Corporation has not been affected in any material way by downgrades. The Corporation’s ability to access new non-deposit sources of funding, however, could be adversely affected by credit downgrades. As of the date hereof, the Corporation’s credit as a long-term issuer is rated BB+ by S&P and BB by Fitch. As of the date hereof, FirstBank’s credit ratings as a long -term issuer are BB+ by S&P and Fitch, one notch below the minimum BBB- level required to be considered investment grade. The Corporation’s credit ratings are dependent on a number of factors, both quantitative and qualitative, and are subject to change at any time. The disclosure of credit ratings is not a recommendation to buy, sell or hold the Corporation’s securities. Each rating should be evaluated independently of any other rating. #### Cash Flows Cash and cash equivalents were $1.3 billion as of March 31, 2025, an increase of $168.9 million when compared to December 31, 2024\. The following discussion highlights the major activities and transactions that affected the Corporation’s cash flows during the first quarters of 2025 and 2024: #### Cash Flows from Operating Activities First BanCorp.’s operating assets and liabilities vary significantly in the normal course of business due to the amount and timing of cash flows. Management believes that cash flows from operations, available cash balances, and the Corporation’s ability to generate cash through short and long-term borrowings will be sufficient to fund the Corporation’s operating liquidity needs for the foreseeable future. For the quarters ended March 31, 2025 and 2024, net cash provided by operating activities was $108.2 million and $118.2 million, respectively. Net cash generated from operating activities was higher than reported net income largely as a result of adjustments for non-cash items such as depreciation and amortization, deferred income tax expense and the provision for credit losses, as well as cash generated from sales and repayments of loans held for sale. #### Cash Flows from Investing Activities The Corporation’s investing activities primarily relate to originating loans to be held for investment, as well as purchasing, selling, and repaying available-for-sale and held-to-maturity debt securities. For the quarter ended March 31, 2025, net cash provided by investing activities was $393.6 million, primarily due to maturities of U.S. agencies debentures and U.S. Treasury securities and principal repayments of U.S. agencies MBS and debentures, net repayments on loans held for investment, proceeds from sales of repossessed assets, and proceeds from the bulk sale of fully charged-off consumer loans and finance leases, partially offset by purchases of MBS during the first quarter of 2025. For the quarter ended March 31, 2024, net cash provided by investing activities was $39.7 million, primarily due to repayments of U.S. agencies MBS and debentures; proceeds from the bulk sale of fully charged-off consumer loans and finance leases and proceeds from sales of repossessed assets; partially offset by net disbursements on loans held for investment. #### Cash Flows from Financing Activities The Corporation’s financing activities primarily include the receipt of deposits and the issuance of brokered CDs, the issuance of and payments on long-term borrowings, the issuance of equity instruments, return of capital, and activities related to its short-term funding. For the quarter ended March 31, 2025, net cash used in financing activities was $332.9 million, mainly reflecting the repayments of long-term borrowings, consisting of $180.0 million in FHLB advances and the redemption of junior subordinated debentures, capital returned to stockholders; and a decrease in total deposits. See Note 6 – “Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets” and Note 20 – “First Bancorp. (Holding Company Only) Financial Information” for additional information on the redemption of junior subordinated debentures. For the quarter ended March 31, 2024, net cash used in financing activities was $136.6 million, mainly reflecting capital returned to stockholders and a decrease in total deposits. ### Capital As of March 31, 2025, the Corporation’s stockholders’ equity was $1.8 billion, an increase of $110.1 million from December 31, 2024\. The increase was driven by an $84.1 million increase in the fair value of available-for-sale debt securities due to changes in market interest rates recognized as part of accumulated other comprehensive loss in the consolidated statements of financial condition and net income generated in the first quarter of 2025, partially offset by common stock dividends declared in the first quarter of 2025 totaling $29.6 million or $0.18 per common share, and $21.8 million in common stock repurchases. On April 24, 2025, the Corporation’s Board of Directors declared a quarterly cash dividend of $0.18 per common share. The dividend is payable on June 13, 2025 to shareholders of record at the close of business on May 29, 2025. The Corporation intends to continue to pay quarterly dividends on common stock. However, the Corporation’s common stock dividends, including the declaration, timing, and amount, remain subject to consideration and approval by the Corporation’s Board of Directors at the relevant times. On July 22, 2024, the Corporation announced that its Board of Directors approved a repurchase program, under which the Corporation may repurchase up to $250 million that could include repurchases of common stock or junior subordinated debentures, which it expects to execute during the remainder of 2025. Under this program, the Corporation repurchased approximately 1.2 million shares of common stock for a total cost of $21.8 million during the first quarter of 2025. In addition, the Corporation redeemed $50.6 million of junior subordinated debentures. As of March 31, 2025, the Corporation has remaining authorization of approximately $127.7 million. For more information, see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds,” and Note 11 - “Stockholders’ Equity”, of this Quarterly Report on Form 10-Q. From April 1, 2025 to May 5, 2025, the Corporation repurchased approximately 1.6 million shares of common stock for a total cost of approximately $27.7 million. Therefore, the Corporation has remaining authorization of approximately $100.0 million as of May 5, 2025. The tangible common equity ratio and tangible book value per common share are non-GAAP financial measures generally used by the financial community to evaluate capital adequacy. Tangible common equity is total common equity less goodwill and other intangible assets. Tangible assets are total assets less the previously mentioned intangible assets. See “Non-GAAP Financial Measures and Reconciliations” above for additional information. The following table is a reconciliation of the Corporation’s tangible common equity and tangible assets, non-GAAP financial measures, to total equity and total assets, respectively, as of the indicated dates: ### March 31, 2025 ### December 31, 2024 (In thousands, except ratios and per share information) Total common equity - GAAP 1,779,342 1,669,236 Goodwill (38,611) (38,611) Other intangible assets (5,715) (6,967) Tangible common equity - non-GAAP 1,735,016 1,623,658 Total assets - GAAP 19,106,983 19,292,921 Goodwill (38,611) (38,611) Other intangible assets (5,715) (6,967) Tangible assets - non -GAAP 19,062,657 19,247,343 Common shares outstanding 163,104 163,869 Tangible common equity ratio - non-GAAP 9.10% 8.44% Tangible book value per common share - non-GAAP 10.64 9.91 See Note 19 – “Regulatory Matters, Commitments and Contingencies” to the unaudited consolidated financial statements herein for the regulatory capital positions of the Corporation and FirstBank as of March 31, 2025 and December 31, 2024, respectively. The Puerto Rico Banking Law of 1933, as amended (the “Puerto Rico Banking Law”), requires that a minimum of 10% of FirstBank’s net income for the year be transferred to a legal surplus reserve until such surplus equals the total of paid-in-capital on common and preferred stock. Amounts transferred to the legal surplus reserve from retained earnings are not available for distribution to the Corporation without the prior consent of the Puerto Rico Commissioner of Financial Institutions. The Puerto Rico Banking Law provides that, when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over receipts must be charged against the undistributed profits of the bank, and the balance, if any, must be charged against the legal surplus reserve, as a reduction thereof. If the legal surplus reserve is not sufficient to cover such balance in whole or in part, the outstanding amount must be charged against the capital account and the Bank cannot pay dividends until it can replenish the legal surplus reserve to an amount of at least 20% of the original capital contributed. FirstBank’s legal surplus reserve, included as part of retained earnings in the Corporation’s consolidated statements of financial condition, amounted to $230.2 million as of each of March 31, 2025 and December 31, 2024. There were no transfers to the legal surplus reserve during the quarter ended March 31, 2025. ### Interest Rate Risk Management First BanCorp manages its asset/liability position to limit the effects of changes in interest rates on net interest income and to maintain stability of profitability under varying interest rate scenarios. The MIALCO oversees interest rate risk and monitors, among other things, current and expected conditions in global financial markets, competition and prevailing rates in the local deposit market, liquidity, loan originations pipeline, securities market values, recent or proposed changes to the investment portfolio, alternative funding sources and related costs, hedging and the possible purchase of derivatives such as swaps and caps, and any tax or regulatory issues which may be pertinent to these areas. The MIALCO approves funding decisions in light of the Corporation’s overall strategies and objectives. On at least a quarterly basis, the Corporation performs a consolidated net interest income simulation analysis to estimate the potential change in future earnings from projected changes in interest rates. These simulations are carried out over a one-to-five-year time horizon. The rate scenarios considered in these simulations reflect gradual upward or downward interest rate movements in the yield curve, for gradual (ramp) parallel shifts in the yield curve of 200 and 300 bps during a twelve-month period, or immediate upward or downward changes in interest rate movements of 200 bps, for interest rate shock scenarios. The Corporation carries out the simulations in two ways: (1) Using a static balance sheet, as the Corporation had on the simulation date, and (2) Using a dynamic balance sheet based on recent patterns and current strategies. The balance sheet is divided into groups of assets and liabilities by maturity or repricing structure and their corresponding interest yields and costs. As interest rates rise or fall, these simulations incorporate expected future lending rates, current and expected future funding sources and costs, the possible exercise of options, changes in prepayment rates, deposit decay and other factors, which may be important in projecting net interest income. The Corporation uses a simulation model to project future movements in the Corporation’s balance sheet and income statement. The starting point of the projections corresponds to the actual values on the balance sheet on the simulation date. These simulations are highly complex and are based on many assumptions that are intended to reflect the general behavior of the balance sheet components over the modeled periods. It is unlikely that actual events will match these assumptions in all cases. For this reason, the results of these forward-looking computations are only approximations of the sensitivity of net interest income to changes in market interest rates. Several benchmark and market rate curves were used in the modeling process, primarily, SOFR curve, Prime Rate, U.S. Treasury yield curve, FHLB rates, and brokered CDs rates. As of March 31, 2025, the Corporation forecasted the 12-month net interest income assuming March 31, 2025 interest rate curves remain constant. Then, net interest income was estimated under rising and falling rates scenarios. For the rising rate scenario, a gradual (ramp) and immediate (shock) parallel upward shift of the yield curve is assumed during the first twelve months (the “+300 ramp”, “+200 ramp” and “+200 shock” scenarios). Conversely, for the falling rate scenario, a gradual (ramp) and immediate (shock) parallel downward shift of the yield curve is assumed during the first twelve months (the “-300 ramp”, “-200 ramp” and “-200 shock” scenarios). The SOFR curve for March 31, 2025, as compared with December 31, 2024, reflects a decrease of 9 bps on average in the short- term sector of the curve, or between one to twelve months; a decrease of 39 bps in the medium-term sector of the curve, or between 2 to 5 years; and a decrease of 29 bps in the long-term sector of the curve, or over 5-year maturities. A similar change in market rates was observed in the Constant Maturity Treasury yield curve with a decrease of 5 bps on average in the short-term sector of the curve, a decrease of 39 bps in the medium-term sector of the curve, and a decrease of 26 bps in the long-term sector of the curve. The following table presents the results of the static simulations as of March 31, 2025 and December 31, 2024. Consistent with prior years, these exclude non-cash changes in the fair value of derivatives: ### Net Interest Income Risk ### (% Change Projected for the next 12 months) ### March 31, 2025 ### December 31, 2024 Gradual Change in Interest Rates: \+ 300 bps ramp 3.53 3.05 \+ 200 bps ramp 2.37 2.04 \- 300 bps ramp -5.15 -4.79 \- 200 bps ramp -3.38 -3.15 Immediate Change in Interest Rates: \+ 200 bps shock 4.63 3.51 \- 200 bps shock -7.98 -7.17 The Corporation continues to manage its balance sheet structure to control and limit the overall interest rate risk by managing its asset composition while maintaining a sound liquidity position. See “Risk Management – Liquidity Risk Management” above for liquidity ratios. As of March 31, 2025 and December 31, 2024, the net interest income simulations show that the Corporation continues to have an asset sensitive position for the next twelve months under a static balance sheet simulation. Under gradual rising and falling rate scenarios, the net interest income simulation shows an increase in interest rate sensitivity, when compared with December 31, 2024, due to a higher sensitivity in the assets side driven by a higher interest-bearing cash position and earlier scheduled maturities of U.S. agencies debentures coupled with a lower sensitivity in the liabilities side due to a lower balance of variable-rate junior subordinated debentures and a decrease in the level of scheduled maturities of FHLB advances over the next twelve months. Under the static simulation, the Corporation assumes that maturing instruments are replaced with similar instruments at the repricing rate upon maturity. The Corporation’s results may vary significantly from the ones presented above under alternative balance sheet compositions, such as a dynamic balance sheet scenario which, for example, would assume that cash flows from the investment securities portfolio and loan repayments could be redeployed into higher yielding alternatives. ### Credit Risk Management First BanCorp. is subject to credit risk mainly with respect to its portfolio of loans receivable and off-balance-sheet instruments, principally loan commitments. Loans receivable represents loans that First BanCorp. holds for investment and, therefore, First BanCorp. is at risk for the term of the loan. Loan commitments represent commitments to extend credit, subject to specific conditions, for specific amounts and maturities. These commitments may expose the Corporation to credit risk and are subject to the same review and approval process as for loans made by the Bank. See “Risk Management – Liquidity Risk” above for further details. The Corporation manages its credit risk through its credit policy, underwriting, monitoring of loan concentrations and related credit quality, counterparty credit risk, economic and market conditions, and legislative or regulatory mandates. The Corporation also performs independent loan review and quality control procedures, statistical analysis, comprehensive financial analysis, established management committees, and employs proactive collection and loss mitigation efforts. Furthermore, personnel performing structured loan workout functions are responsible for mitigating defaults and minimizing losses upon default within each region and for each business segment. In the case of the C&I, commercial mortgage and construction loan portfolios, the Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO. In addition to the management of the resolution process for problem loans, the SAG oversees collection efforts for all loans to prevent migration to the nonaccrual and/or adversely classified status. The SAG utilizes relationship officers, collection specialists and attorneys. The Corporation may also have risk of default in the securities portfolio. The securities held by the Corporation are principally fixed-rate U.S. agencies MBS and U.S. Treasury and agencies securities. Thus, a substantial portion of these instruments is backed by mortgages, a guarantee of a U.S. GSE or the full faith and credit of the U.S. government. Management, consisting of the Corporation’s Chief Risk Officer, Commercial Credit Risk Officer, Retail Credit Risk Officer, Chief Credit Officer, and other senior executives, has the primary responsibility for setting strategies to achieve the Corporation’s credit risk goals and objectives. Management has documented these goals and objectives in the Corporation’s Credit Policy. ### Allowance for Credit Losses and Non-Performing Assets #### Allowance for Credit Losses for Loans and Finance Leases The ACL for loans and finance leases represents the estimate of the level of reserves appropriate to absorb expected credit losses over the estimated life of the loans. The amount of the allowance is determined using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience is a significant input for the estimation of expected credit losses, as well as adjustments to historical loss information made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term. Additionally, the Corporation’s assessment involves evaluating key factors, which include credit and macroeconomic indicators, such as changes in unemployment rates, property values, and other relevant factors to account for current and forecasted market conditions that are likely to cause estimated credit losses over the life of the loans to differ from historical credit losses. Such factors are subject to regular review and may change to reflect updated performance trends and expectations. The process includes judgments and quantitative elements that may be subject to significant change. Further, the Corporation periodically considers the need for qualitative reserves to the ACL. Qualitative adjustments may be related to and include, but are not limited to, factors such as the following: (i) management’s assessment of economic forecasts used in the model and how those forecasts align with management’s overall evaluation of current and expected economic conditions; (ii) organization specific risks such as credit concentrations, collateral specific risks, nature and size of the portfolio and external factors that may ultimately impact credit quality ; and (iii) other limitations associated with factors such as changes in underwriting and loan resolution strategies, among others. The ACL for loans and finance leases is reviewed at least on a quarterly basis as part of the Corporation’s continued evaluation of its asset quality. The Corporation generally applies probability weights to the baseline and alternative downside economic scenarios to estimate the ACL with the baseline scenario carrying the highest weight. The scenarios that are chosen each quarter and the weighting given to each scenario for the different loan portfolio categories depend on a variety of factors including recent economic events, leading national and regional economic indicators, and industry trends. As of March 31, 2025 and December 31, 2024, the Corporation applied 100% probability to the baseline scenario for the commercial mortgage and construction loan portfolios since certain macroeconomic variables associated with commercial real estate property performance and the CRE price index, particularly in the Puerto Rico region, are expected to continue to perform in a more favorable manner than the alternative downside economic scenario. The economic scenarios used in the ACL determination contained assumptions related to economic uncertainties associated with geopolitical instability, the CRE price index, unemployment rate, inflation levels, and expected future interest rate adjustments in the Federal Reserve Board’s funds rate. As of March 31, 2025, the Corporation’s ACL model considered the following assumptions for key economic variables in the probability-weighted economic scenarios: CRE price index at the national level with an average projected appreciation of 0.27% and 1.03% for the remainder of 2025 and for the year 2026, respectively, compared to an average projected contraction of 0.74% for the remainder of 2025 and an average projected appreciation of 4.42% for the year 2026 as of December 31, 2024. Regional Home Price Index forecast in Puerto Rico (purchase only prices) shows an improvement of 11.91 % and 11.75% for the remainder of 2025 and for the year 2026, respectively, when compared to the same periods as of December 31, 2024. For the Florida region, the Home Price Index forecast is projected to remain relatively flat for the remainder of 2025 and for the year 2026, respectively, when compared to the same periods as of December 31, 2024. Average regional unemployment rate in Puerto Rico is forecasted at 6.16% for the remainder of 2025 and 6.42% for the year 2026, compared to 6.35% for the remainder of 2025 and 6.21% for the year 2026 as of December 31, 2024. For the Florida region and the U.S. mainland, average unemployment rate is forecasted at 4.33% and 4.83%, respectively, for the remainder of 2025, and 4.54% and 4.99%, respectively, for the year 2026, compared to 4.56% and 5.07%, respectively, for the remainder of 2025, and 4.15% and 4.60%, respectively, for the year 2026, as of December 31, 2024. Annualized change in GDP in the U.S. mainland of 1.57% for the remainder of 2025 and 1.24% for the year 2026, compared to 1.22% for the remainder of 2025 and 1.91% for the year 2026, as of December 31, 2024. It is difficult to estimate how potential changes in one factor or input might affect the overall ACL because management considers a wide variety of factors and inputs in estimating the ACL. Changes in the factors and inputs considered may not occur at the same rate and may not be consistent across all geographies or product types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in others. However, to demonstrate the sensitivity of credit loss estimates to macroeconomic forecasts as of March 31, 2025, management compared the modeled estimates under the probability- weighted economic scenarios against a more adverse scenario. Such scenario incorporates an additional adverse scenario and decreases the weight applied to the baseline scenario. Under this more adverse scenario, as an example, average unemployment rate for the Puerto Rico region increases to 6.55% for the remainder of 2025, compared to 6.16% for the same period on the probability- weighted economic scenario projections. To demonstrate the sensitivity to key economic parameters used in the calculation of the ACL at March 31, 2025, management calculated the difference between the quantitative ACL and this more adverse scenario. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in the ACL of approximately $49 million at March 31, 2025\. This analysis relates only to the modeled credit loss estimates and is not intended to estimate changes in the overall ACL as it does not reflect any potential changes in other adjustments to the qualitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these estimates based on current circumstances and conditions. Recognizing that forecasts of macroeconomic conditions are inherently uncertain, particularly in light of recent economic conditions and challenges, which continue to evolve, management believes that its process to consider the available information and associated risks and uncertainties is appropriately governed and that its estimates of expected credit losses were reasonable and appropriate for the period ended March 31, 2025. As of March 31, 2025, the ACL for loans and finance leases was $247.3 million, an increase of $3.4 million, from $243.9 million as of December 31, 2024. The ACL for the first quarter of 2025 includes an increase of $2.7 million in qualitative adjustments due to the uncertainty in the economic environment. The increase was mainly related to the ACL for commercial and construction loans, which increased by $4.7 million, mainly due to the impact of renewals of lines of credit, updated financial information of certain commercial borrowers, and a deterioration in the economic outlook of the forecasted CRE price index. Also, the ACL for residential mortgage loans increased by $0.9 million mainly due to newly originated loans that carry a higher loss rate, partially offset by improvements in macroeconomic variables, such as the unemployment rate and the Housing Price Index. Meanwhile, the ACL for consumer loans decreased by $2.2 million, driven by improvements in macroeconomic variables, mainly in the projection of the unemployment rate. The ratio of the ACL for loans and finance leases to total loans held for investment increased to 1.95% as of March 31, 2025, compared to 1.91% as of December 31, 2024. An explanation for the change for each portfolio follows: The ACL to total loans ratio for the residential mortgage loan portfolio increased from 1.44% as of December 31, 2024 to 1.47% as of March 31, 2025, mainly due to the aforementioned increase in newly originated loans that carry a higher loss rate, partially offset by the aforementioned improvements in macroeconomic variables. The ACL to total loans ratio for the construction loan portfolio decreased from 1.67% as of December 31, 2024 to 1.46% as of March 31, 2025, mainly due to the conversion of certain loans to the commercial mortgage loan portfolio that carried a higher loss rate. The ACL to total loans ratio for the commercial mortgage loan portfolio increased from 0.87% as of December 31, 2024 to 0.97% as of March 31, 2025, driven by the aforementioned deterioration in the forecasted CRE price index. The ACL to total loans ratio for the C&I loan portfolio increased from 0.98% as of December 31, 2024 to 1.09% as of March 31, 2025, driven by the aforementioned updates in financial information of certain commercial borrowers and the impact of renewals of lines of credit. The ACL to total loans ratio for the consumer loan portfolio decreased from 3.83% as of December 31, 2024 to 3.78% as of March 31, 2025, mainly due to the aforementioned improvements in macroeconomic variables. The ratio of the total ACL for loans and finance leases to nonaccrual loans held for investment was 251.13% as of March 31, 2025, compared to 278.90% as of December 31, 2024, driven by the inflow to nonaccrual status of a $12.6 million commercial mortgage loan in the Florida region, which did not trigger any additional ACL based on the collateral value. See “Results of Operations - Provision for Credit Losses” above and Note 4 – “Allowance for Credit Losses for Loans and Finance Leases” above for additional information. ### Quarter Ended March 31, ### 2025 ### 2024 (Dollars in thousands) ACL for loans and finance leases, beginning of year 243,942 261,843 Provision for credit losses - expense (benefit): Residential mortgage 1,004 (464) Construction (421) 571 Commercial mortgage 1,656 (10) C&I 3,353 (3,160) Consumer and finance leases 19,245 15,980 Total provision for credit losses - expense 24,837 12,917 Charge-offs: Residential mortgage (235) (516) C&I (77) (532) Consumer and finance leases (27,898) (28,291) Total charge offs (28,210) (29,339) Recoveries: Residential mortgage 217 272 Construction 14 10 Commercial mortgage 40 40 C&I 154 5,119 Consumer and finance leases (1) 6,275 12,730 Total recoveries 6,700 18,171 Net charge-offs (21,510) (11,168) ACL for loans and finance leases, end of period 247,269 263,592 ACL for loans and finance leases to period-end total loans held for investment 1.95% 2.14% Net charge-offs to average loans outstanding during the period (2) 0.68% 0.37% Provision for credit losses - expense for loans and finance leases to net charge-offs during the period 1.15x 1.16x (1) For the quarters ended March 31, 2025 and 2024, includes recoveries totaling $2.4 million and $9.5 million, respectively, associated with the bulk sales of fully charged-off consumer loans and finance leases. (2) The recoveries associated with the aforementioned bulk sales reduced the ratio of total net charge-offs to related average loans by 8 bps and 31 bps for the first quarter of 2025 and 2024, respectively. The following tables set forth information concerning the composition of the Corporation's loan portfolio and related ACL by loan category, and the percentage of loan balances in each category to the total of such loans as of the indicated dates: ### As of March 31, 2025 ### Residential ### Mortgage ### Loans ### Commercial ### Mortgage ### Loans ### C&I Loans ### Consumer and ### Finance ### Leases ### Construction ### Loans (Dollars in thousands) ### Total Total loans held for investment: Amortized cost of loans 2,837,846 234,441 2,501,689 3,359,868 3,741,554 12,675,398 Percent of loans in each category to total loans 22 2 20 27 29 100 Allowance for credit losses 41,640 3,417 24,143 36,464 141,605 247,269 Allowance for credit losses to amortized cost 1.47 1.46 0.97 1.09 3.78 1.95 ### As of December 31, 2024 ### Residential ### Mortgage ### Loans ### Commercial ### Mortgage ### Loans ### C&I Loans ### Consumer and ### Finance Leases ### Construction ### Loans (Dollars in thousands) ### Total Total loans held for investment: Amortized cost of loans 2,828,431 228,396 2,565,984 3,366,038 3,757,707 12,746,556 Percent of loans in each category to total loans 22 2 20 26 30 100 Allowance for credit losses 40,654 3,824 22,447 33,034 143,983 243,942 Allowance for credit losses to amortized cost 1.44 1.67 0.87 0.98 3.83 1.91 #### Allowance for Credit Losses for Unfunded Loan Commitments The Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk as a result of a contractual obligation to extend credit, such as pursuant to unfunded loan commitments and standby letters of credit for commercial and construction loans, unless the obligation is unconditionally cancellable by the Corporation. The ACL for off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The ACL for off -balance sheet credit exposures amounted to $3.1 million as of each of March 31, 2025 and December 31, 2024. #### Allowance for Credit Losses for Debt Securities As of March 31, 2025, the ACL for debt securities was $1.4 million, of which $0.9 million was related to Puerto Rico municipal bonds classified as held-to-maturity, compared to $1.3 million and $0.8 million, respectively, as of December 31, 2024. ### Nonaccrual Loans and Non-Performing Assets Total non-performing assets consist of nonaccrual loans (generally loans held for investment or loans held for sale for which the recognition of interest income was discontinued when the loan became 90 days past due or earlier if the full and timely collection of interest or principal is uncertain), foreclosed real estate and other repossessed properties, and non-performing investment securities, if any. When a loan is placed in nonaccrual status, any interest previously recognized and not collected is reversed and charged against interest income. Cash payments received are recognized when collected in accordance with the contractual terms of the loans. The principal portion of the payment is used to reduce the principal balance of the loan, whereas the interest portion is recognized on a cash basis (when collected). However, when management believes that the ultimate collectability of principal is in doubt, the interest portion is applied to the outstanding principal. The risk exposure of this portfolio is diversified as to individual borrowers and industries, among other factors. In addition, a large portion is secured with real estate collateral. #### Nonaccrual Loans Policy #### Residential Real Estate Loans - The Corporation generally classifies real estate loans in nonaccrual status when it has not received interest and principal for a period of 90 days or more. #### Commercial and Construction Loans - The Corporation classifies commercial loans (including commercial real estate and construction loans) in nonaccrual status when it has not received interest and principal for a period of 90 days or more or when it does not expect to collect all of the principal or interest due to deterioration in the financial condition of the borrower. #### Finance Leases - The Corporation classifies finance leases in nonaccrual status when it has not received interest and principal for a period of 90 days or more. #### Consumer Loans - The Corporation classifies consumer loans in nonaccrual status when it has not received interest and principal for a period of 90 days or more. Credit card loans continue to accrue finance charges and fees until charged-off at 180 days delinquent. #### Purchased Credit Deteriorated Loans (“PCD”) - For PCD loans, the nonaccrual status is determined in the same manner as for other loans, except for PCD loans that prior to the adoption of CECL were classified as purchased credit impaired (“PCI”) loans under ASC Subtopic 310-30, “Receivables – Loan and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC Subtopic 310- 30”). The Corporation elected to treat each pool as a single asset and applied a prospective transition approach, freezing the effective interest rate of the pools as of January 1, 2020. Regulatory guidance allows the Corporation to determine nonaccrual status at the pool level and continue accruing interest if the timing and amount of cash flows expected to be collected can be reasonably estimated and the asset was not primarily acquired for collateral ownership. Thus, the Corporation continues to exclude these pools of PCD loans from nonaccrual loan statistics. #### Loans Past-Due 90 Days and Still Accruing - These are accruing loans that are contractually delinquent 90 days or more. These past-due loans are either current as to interest but delinquent as to the payment of principal ( #### i.e. , well secured and in process of collection) or are insured or guaranteed under applicable FHA, VA, or other government-guaranteed programs for residential mortgage loans. Furthermore, as required by instructions in regulatory reports, loans past due 90 days and still accruing include loans previously pooled into GNMA securities for which the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria ( #### e.g. , borrowers fail to make any payment for three consecutive months). For accounting purposes, these GNMA loans subject to the repurchase option are required to be reflected in the financial statements with an offsetting liability. In addition, loans past due 90 days and still accruing include PCD loans, as mentioned above, and credit cards that continue accruing interest until charged-off at 180 days. ### Other Real Estate Owned OREO acquired in settlement of loans is carried at fair value less estimated costs to sell the real estate acquired. Appraisals are obtained periodically, generally on an annual basis. ### Other Repossessed Property The other repossessed property category generally includes repossessed automobiles acquired in settlement of loans. Repossessed automobiles are recorded at the lower of cost or estimated fair value. ### Other Non-Performing Assets This category consists of a residential pass-through MBS issued by the PRHFA placed in non-performing status in the second quarter of 2021 based on the delinquency status of the underlying second mortgage loans. The following table shows non-performing assets by geographic segment as of the indicated dates: ### March 31, 2025 ### December 31, 2024 (In thousands) ### Puerto Rico: Nonaccrual loans held for investment: Residential mortgage 15,081 16,854 Construction 396 403 Commercial mortgage 2,583 2,716 C&I 19,672 19,595 Consumer and finance leases 22,460 22,538 Total nonaccrual loans held for investment 60,192 62,106 OREO 12,265 13,691 Other repossessed property 13,309 11,637 Other assets 1,599 1,620 Total non-performing assets 87,365 89,054 Past due loans 90 days and still accruing 34,056 39,307 ### Virgin Islands: Nonaccrual loans held for investment: Residential mortgage 6,820 6,555 Construction 960 962 Commercial mortgage 8,075 8,135 C&I 672 919 Consumer 335 205 Total nonaccrual loans held for investment 16,862 16,776 OREO 3,615 3,615 Other repossessed property 127 219 Total non-performing assets 20,604 20,610 Past due loans 90 days and still accruing 3,061 3,083 ### United States: Nonaccrual loans held for investment: Residential mortgage 8,892 8,540 Commercial mortgage 12,497 Consumer 18 45 Total nonaccrual loans held for investment 21,407 8,585 Other repossessed property 8 3 Total non-performing assets 21,415 8,588 ### Total Nonaccrual loans held for investment: Residential mortgage 30,793 31,949 Construction 1,356 1,365 Commercial mortgage 23,155 10,851 C&I 20,344 20,514 Consumer and finance leases 22,813 22,788 Total nonaccrual loans held for investment 98,461 87,467 OREO 15,880 17,306 Other repossessed property 13,444 11,859 Other assets (1) 1,599 1,620 Total non-performing assets 129,384 118,252 Past due loans 90 days and still accruing (2) (3) (4) 37,117 42,390 Non-performing assets to total assets 0.68% 0.61% Nonaccrual loans held for investment to total loans held for investment 0.78% 0.69% ACL for loans and finance leases 247,269 243,942 ACL for loans and finance leases to total nonaccrual loans held for investment 251.13% 278.90% ACL for loans and finance leases to total nonaccrual loans held for investment, excluding residential real estate loans 365.41% 439.39% (1) Residential pass-through MBS issued by the PRHFA held as part of the available-for-sale debt securities portfolio. (2) Includes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation made the accounting policy election to treat each pool as a single asset, both at the time of adoption of CECL on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans will continue to be excluded from nonaccrual loan statistics as long as the Corporation can reasonably estimate the timing and amount of cash flows expected to be collected on the loan pools. The portion of such loans contractually past due 90 days or more amounted to $5.7 million and $6.2 million as of March 31, 2025 and December 31, 2024, respectively. (3) Includes FHA/VA government-guaranteed residential mortgage as loans past due 90 days and still accruing as opposed to nonaccrual loans. The Corporation continues accruing interest on these loans until they have passed the 15 months delinquency mark, taking into consideration the FHA interest curtailment process. These balances include $6.8 million and $8.0 million of FHA government guaranteed residential mortgage loans that were over 15 months delinquent as of March 31, 2025 and December 31, 2024, respectively. (4) These includes rebooked loans, which were previously pooled into GNMA securities, amounting to $6.4 million and $5.7 million as of March 31, 2025 and December 31, 2024, respectively. Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria. For accounting purposes, the loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability. Total non-performing assets increased by $11.1 million to $129.4 million as of March 31, 2025, compared to $118.3 million as of December 31, 2024. The increase in non-performing assets was driven by a $12.1 million increase in nonaccrual commercial and construction loans, mainly due to the aforementioned inflow to nonaccrual status of a $12.6 million commercial mortgage loan in the Florida region in the hospitality industry during the first quarter of 2025 and a $1.5 million increase in other repossessed property, consisting of repossessed automobiles, partially offset by a $1.4 million decrease in the OREO portfolio balance, mainly attributable to the sale of residential properties in the Puerto Rico region, and a $1.1 million decrease in nonaccrual residential mortgage loans. The following tables present the activity of commercial and construction nonaccrual loans held for investment for the indicated periods: ### Construction ### Commercial ### Mortgage ### C&I ### Total (In thousands) ### Quarter Ended March 31, 2025 Beginning balance 1,365 10,851 20,514 32,730 Plus: Additions to nonaccrual 12,982 856 13,838 Less: Loans returned to accrual status (349) (165) (514) Nonaccrual loans transferred to OREO (54) (203) (257) Nonaccrual loans charge-offs (47) (47) Loan collections (9) (275) (611) (895) Ending balance 1,356 23,155 20,344 44,855 ### Construction ### Commercial ### Mortgage ### C&I ### Total (In thousands) ### Quarter Ended March 31, 2024 Beginning balance 1,569 12,205 15,250 29,024 Plus: Additions to nonaccrual 11,041 11,041 Less: Nonaccrual loans transferred to OREO (48) (48) Nonaccrual loans charge-offs (459) (459) Loan collections (23) (229) (765) (1,017) Ending balance 1,498 11,976 25,067 38,541 The following table presents the activity of residential nonaccrual loans held for investment for the indicated periods: ### Quarter Ended March 31, ### 2025 ### 2024 (In thousands) Beginning balance 31,949 32,239 Plus: Additions to nonaccrual 4,585 4,596 Less: Loans returned to accrual status (3,699) (2,833) Nonaccrual loans transferred to OREO (647) (404) Nonaccrual loans charge-offs (36) (125) Loan collections (1,359) (788) Ending balance 30,793 32,685 The amount of nonaccrual consumer loans, including finance leases, amounted to $22.8 million as of March 31, 2025, relatively flat when compared to December 31, 2024. The inflows of nonaccrual consumer loans during the quarter ended March 31, 2025 amounted to $24.9 million, compared to inflows of $31.2 million for the same period in 2024. As of March 31, 2025, approximately $37.3 million, or 38%, of the loans placed in nonaccrual status, mainly commercial and residential mortgage loans, were current, or had delinquencies of less than 90 days in their interest payments. Collections on nonaccrual loans are being recorded on a cash basis through earnings, or on a cost-recovery basis, as conditions warrant. During the quarter ended March 31, 2025, interest income of approximately $0.4 million related to nonaccrual loans with a carrying value of $41.8 million as of March 31, 2025, mainly nonaccrual commercial and construction loans, was applied against the related principal balances under the cost-recovery method. Total loans in early delinquency ( #### i.e. , 30-89 days past due loans, as defined in regulatory reporting instructions) amounted to $131.2 million as of March 31, 2025, a decrease of $21.8 million, compared to $153.0 million as of December 31, 2024, mainly due to a $19.5 million decrease in consumer loans, mainly in the auto loans portfolio, and a $3.9 million decrease in residential mortgage loans, partially offset by a $1.6 million increase in commercial and construction loans. The OREO portfolio, which is part of non -performing assets, amounted to $15.9 million as of March 31, 2025 and $17.3 million as of December 31, 2024. The following tables show the composition of the OREO portfolio as of March 31, 2025 and December 31, 2024, as well as the activity of the OREO portfolio by geographic area during the quarter ended March 31, 2025: ### OREO Composition by Region ### As of March 31, 2025 (In thousands) ### Puerto Rico ### Virgin Islands ### Florida ### Consolidated Residential 10,742 805 11,547 Construction 451 451 Commercial 1,072 2,810 3,882 12,265 3,615 15,880 ### As of December 31, 2024 (In thousands) ### Puerto Rico ### Virgin Islands ### Florida ### Consolidated Residential 12,092 805 12,897 Construction 522 522 Commercial 1,077 2,810 3,887 13,691 3,615 17,306 ### OREO Activity by Region ### Quarter Ended March 31, 2025 (In thousands) ### Puerto Rico ### Virgin Islands ### Florida ### Consolidated Beginning Balance 13,691 3,615 17,306 Additions 1,455 1,455 Sales (2,603) (2,603) Subsequent measurement adjustments (140) (140) Other adjustments (138) (138) Ending Balance 12,265 3,615 15,880 #### Net Charge-offs and Total Credit Losses Net charge-offs totaled $21.4 million for the first quarter of 2025, or an annualized 0.68% of average loans, compared to $11.2 million, or an annualized 0.37% of average loans, for the first quarter of 2024. Net charge-offs for the first quarter of 2025 and 2024 include $2.4 million and $9.5 million, respectively, in recover ies associated with the bulk sales of fully charged-off consumer loans and finance leases during such periods, which reduced by 8 bps and 31 bps, respectively, the ratio of total net charge-offs to average loans. Consumer loans and finance leases net charge-offs for the first quarter of 2025 were $21.5 million, or an annualized 2.31% of related average loans, compared to net charge-offs of $15.6 million, or an annualized 1.69% of related average loans, for the first quarter of 2024. The increase in net charge-offs was mostly associated with lower recoveries from the aforementioned bulk sales of fully charged-off consumer loans and finance leases, which reduced the ratio of consumer net charge -offs to average loans ratio for the first quarters of 2025 and 2024 by 25 bps and 104 bps, respectively. C&I loans net recoveries for the first quarter of 2025 were $0.1 million, or an annualized 0.01% of related average loans, compared to net recoveries of $4.6 million, or an annualized 0.58% of related average loans, for the first quarter of 2024. The net recoveries for the first quarter of 2024 included a $5.0 million recovery associated with a C&I loan in the Puerto Rico region. The following table presents net charge-offs (recoveries) to average loans held-in-portfolio for the indicated periods: ### Quarter Ended March 31, ### 2025 ### 2024 Residential mortgage 0.00 0.03 Construction (0.02) (0.02) Commercial mortgage (0.01) (0.01) C&I (0.01) (0.58) Consumer and finance leases (1) 2.31 1.69 Total loans (1) 0.68 0.37 (1) The net charge-offs for the quarters ended March 31, 2025 and 2024 included $2.4 million and $9.5 million, respectively, in recoveries associated with the bulk sales of fully charged -off consumer loans and finance leases. The aforementioned recoveries reduced the ratios of consumer loans and finance leases and total net charge-offs to related average loans for the quarter ended March 31, 2025 by 25 bps and 8 bps, respectively, and by 104 bps and 31 bps, respectively, for the quarter ended March 31, 2024. The following table presents net charge-offs (recoveries) to average loans held in various portfolios by geographic segment for the indicated periods: ### Quarter Ended March 31, ### 2025 ### 2024 ### PUERTO RICO: Residential mortgage 0.00 0.05 C&I (0.02) (0.91) Consumer and finance leases (1) 2.34 1.66 Total loans (1) 0.87 0.42 ### VIRGIN ISLANDS: Commercial mortgage (0.20) (0.22) C&I 0.06 (0.00) Consumer and finance leases 0.95 3.73 Total loans 0.14 0.57 ### FLORIDA: Residential mortgage (0.01) (0.00) Construction (0.13) (0.05) C&I (0.00) 0.11 Consumer and finance leases (0.17) 0.55 Total loans (0.01) 0.05 (1) The recoveries associated with the aforementioned bulk sales of fully charged-offs consumer loans and finance leases reduced the ratios of consumer loans and finance leases and total net charge-offs to related average loans for the quarter ended March 31, 2025 by 25 bps and 9 bps, respectively, and by 106 bps and 40 bps, respectively, for the quarter ended March 31, 2024. The following table presents information about the OREO inventory and related gains and losses for the indicated periods: ### Quarter Ended March 31, ### 2025 ### 2024 (Dollars in thousands) ### OREO OREO balances, carrying value: Residential 11,547 16,706 Construction 451 1,681 Commercial 3,882 10,477 Total 15,880 28,864 OREO activity (number of properties): Beginning property inventory 181 277 Properties acquired 13 16 Properties disposed (33) (46) Ending property inventory 161 247 Average holding period (in days) Residential 522 526 Construction 1,641 2,399 Commercial 3,820 1,579 Total average holding period (in days) 1,360 1,017 OREO operations (gain) loss: Market adjustments and (gains) losses on sale: Residential (1,199) (1,826) Construction (48) (9) Commercial (12) 19 Total net gain (1,259) (1,816) Other OREO operations expenses 130 364 ### Net Gain on OREO operations (1,129) (1,452) ### Operational Risk The Corporation faces ongoing and emerging risk and regulatory pressure related to the activities that surround the delivery of banking and financial products. Coupled with external influences, such as market conditions, security risks, and legal risks, the potential for operational and reputational loss has increased. To mitigate and control operational risk, the Corporation has developed, and continues to enhance, specific internal controls, policies and procedures that are designed to identify and manage operational risk at appropriate levels throughout the organization. The purpose of these mechanisms is to provide reasonable assurance that the Corporation’s business operations are functioning within the policies and limits established by management. The Corporation classifies operational risk into two major categories: business-specific and corporate-wide affecting all business lines. For business specific risks, Enterprise Risk Management works with the various business units to ensure consistency in policies, processes and assessments. With respect to corporate-wide risks, such as information security, business recovery, and legal and compliance, the Corporation has specialized groups, such as the Legal Department, Information Security, Corporate Compliance, Operations and Enterprise Risk Management. These groups assist the lines of business in the development and implementation of risk management practices specific to the needs of the business groups. ### Legal and Compliance Risk Legal and compliance risk includes the risk of noncompliance with applicable legal and regulatory requirements, the risk of adverse legal judgments against the Corporation, and the risk that a counterparty’s performance obligations will be unenforceable. The Corporation is subject to extensive regulation in the different jurisdictions in which it conducts its business, and this regulatory scrutiny has been significantly increasing over the years. The Corporation has established, and continues to enhance, procedures that are designed to ensure compliance with all applicable statutory, regulatory and any other legal requirements. The Corporation has a Compliance Director who reports to the Chief Risk Officer and is responsible for the oversight of regulatory compliance and implementation of an enterprise-wide compliance risk assessment process. The Compliance division has officer roles in each major business area with direct reporting responsibilities to the Corporate Compliance Group. ### Concentration Risk The Corporation conducts its operations in a geographically concentrated area, as its main market is Puerto Rico. Of the total gross loan portfolio held for investment of $12.7 billion as of March 31, 2025, the Corporation had credit risk of approximately 78% in the Puerto Rico region, 18% in the United States region, and 4% in the Virgin Islands region. ### Update on the Puerto Rico Fiscal and Economic Situation A significant portion of the Corporation’s business activities and credit exposure is concentrated in the Commonwealth of Puerto Rico, which has experienced economic and fiscal distress over the last decade. See “Risk Management – Exposure to Puerto Rico Government” below. Since declaring bankruptcy and benefitting from the enactment of the federal Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”) in 2016, the Government of Puerto Rico has made progress on fiscal matters primarily by restructuring a large portion of its outstanding public debt and identifying funding sources for its underfunded pension system. #### Economic Indicators In March 2025, the Puerto Rico Planning Board (“PRPB”) published its annual analysis of the Puerto Rico’s economy for fiscal year 2024, as well as a revised short-term forecast for fiscal years 2025 and 2026. According to the PRPB’s preliminary estimates, Puerto Rico’s real gross national product (“GNP”) grew by 2.1% in fiscal year 2024, marking the fourth consecutive year of positive economic growth. The main drivers for growth during fiscal year 2024 were personal consumption expenditures and fixed investments in both construction and machinery and equipment. These positive variances were partially offset by a reduction in inventories. For fiscal years 2025 and 2026, the PRPB’s baseline projections contemplate real GNP growth of 1.1% and 0.5%, respectively. There are other indicators that gauge economic activity and are published with greater frequency, for example, the Economic Development Bank for Puerto Rico’s Economic Activity Index (“EDB-EAI”). Although not a direct measure of Puerto Rico’s real GNP, the EDB-EAI is correlated to Puerto Rico’s real GNP. For November 2024, estimates showed that the EDB-EAI stood at 126.4, down 1.1% on a year-over-year basis. Over the 12-month period ended November 30, 2024, the EDB-EAI averaged 126.1, 0.4% below the comparable figure a year earlier. Labor market trends remain positive. Data published by the Bureau of Labor Statistics showed that non-farm payrolls in March 2025 in Puerto Rico increased by 0.6% when compared to March 2024, primarily driven by payrolls in the private sector as these increased by 1.1% from the comparable figure a year earlier. Key industries driving private-sector payroll growth include Construction with a year-over-year increase of 5.3% and Leisure & Hospitality with a positive variance of 1.8%. The unemployment rate remained stable at 5.5% in March 2025. #### Fiscal Plan On June 5, 2024, the PROMESA oversight board certified the 2024 Fiscal Plan for Puerto Rico. The Fiscal Plan intends to serve as a roadmap to promote economic growth and achieve long-term fiscal stability. See “Risk Management – Update on the Puerto Rico Fiscal and Economic Situation” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” in the 2024 Annual Report on Form 10-K for additional information. #### Debt Restructuring Over 80% of Puerto Rico’s outstanding debt has been restructured to date. On March 15, 2022, the Plan of Adjustment of the central government’s debt became effective through the exchange of more than $33 billion of existing bonds and other claims into approximately $7 billion of new bonds, saving Puerto Rico more than $50 billion in debt payments to creditors. Also, the restructurings of the Puerto Rico Sales Tax Financing Corporation (“COFINA”), the Highways and Transportation Authority (“HTA”), and the Puerto Rico Aqueducts and Sewers Authority (“PRASA”) are expected to yield savings of approximately $17.5 billion, $3.0 billion, and $400 million, respectively, in future debt service payments. The main restructuring pending is that of the Puerto Rico Electric Power Authority (“PREPA”). All PREPA plan confirmation and bond-related litigation is currently stayed with no appointed date for resumption, except for certain matters detailed in a Court order dated March 20, 2025, including permitting the PROMESA oversight board to file an amended proposed plan of adjustment. The PROMESA oversight board filed the fifth amended plan of adjustment on March 28, 2025, reflecting the projections and findings of the new PREPA fiscal plan. The amended plan would reduce PREPA’s debt almost 80%, to the equivalent of $2.6 billion in cash or bonds, excluding pension liabilities. It also incorporates several amendments to the previous structure, including a Rate Reduction Fund to support PREPA’s pensions, and the elimination of the Legacy Charge contemplated in the previous versions of the plan of adjustment to repay the significantly reduced debt. #### Other Developments Notable progress continues to be made as part of the ongoing efforts of prioritizing the restoration, improvement, and modernization of Puerto Rico’s infrastructure, particularly in the aftermath of Hurricane Maria in 2017. During the 12-month period ended February 28, 2025, over $3.8 billion in disaster relief funds were disbursed through the Federal Emergency Management Agency (“FEMA”) Public Assistance program and the HUD Community Development Block Grant (“CDBG”) program, a 14% increase when compared to the same period in 2024. These funds will continue to play a key role in supporting Puerto Rico’s economic stability and are expected to have a positive impact on the Island’s infrastructure. For example, approximately 86% of the projects that FEMA has obligated to address damage caused by Hurricane Maria have resources to reinforce their infrastructure, among other hazard mitigation measures, that will prepare these facilities for future weather events. As of April 14, 2025, over 3,900 projects had already been completed under FEMA’s Public Assistance Permanent Work programs while over 20,300 projects were active across different stages of execution for a total cost of $12.2 billion, equivalent to approximately 33% of the agency’s $37.1 billion obligation, according to the Central Office for Recovery, Reconstruction and Resiliency (“COR3”). ### Exposure to Puerto Rico Government As of March 31, 2025, the Corporation had $288.1 million of direct exposure to the Puerto Rico government, its municipalities and public corporations, compared to $288.6 million as of December 31, 2024. As of March 31, 2025, approximately $196.0 million of the exposure consisted of loans and obligations of municipalities in Puerto Rico that are supported by assigned property tax revenues and for which, in most cases, the good faith, credit and unlimited taxing power of the applicable municipality have been pledged to their repayment, and $50.9 million consisted of loans and obligations which are supported by one or more specific sources of municipal revenues. The Corporation’s exposure to Puerto Rico municipalities consisted primarily of senior priority loans and obligations concentrated in five of the largest municipalities in Puerto Rico. The municipalities are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and notes. In addition to municipalities, the total direct exposure also included $8.8 million in a loan extended to an affiliate of PREPA, $29.5 million in loans to public corporations of the Puerto Rico government, and obligations of the Puerto Rico government, specifically a residential pass- through MBS issued by the PRHFA, at an amortized cost of $2.9 million as part of its available-for-sale debt securities portfolio (fair value of $1.6 million as of March 31, 2025). The following table details the Corporation’s total direct exposure to Puerto Rico government obligations according to their maturities: ### As of March 31, 2025 ### Investment ### Portfolio ### (Amortized cost) ### Loans ### Total ### Exposure (In thousands) Puerto Rico Housing Finance Authority: After 10 years 2,899 2,899 ### Total Puerto Rico Housing Finance Authority 2,899 2,899 Public corporation of the Puerto Rico government: After 1 to 5 years 8,641 8,641 After 5 to 10 years 20,842 20,842 Total public corporation of the Puerto Rico government 29,483 29,483 Affiliate of the Puerto Rico Electric Power Authority: After 1 to 5 years 8,753 8,753 Total Puerto Rico government affiliate 8,753 8,753 ### Total Puerto Rico public corporations and government affiliate 38,236 38,236 Municipalities: Due within one year 2,297 26,349 28,646 After 1 to 5 years 62,792 39,220 102,012 After 5 to 10 years 11,678 88,825 100,503 After 10 years 15,755 15,755 ### Total Municipalities 92,522 154,394 246,916 ### Total Direct Government Exposure ### 95,421 ### 192,630 ### 288,051 Also, as of March 31, 2025, the outstanding balance of construction loans funded through conduit financing structures to support the federal programs of LIHTC combined with CDBG-DR funding amounted to $62.6 million, compared to $59.2 million as of December 31, 2024. The main objective of these programs is to spur development in new or rehabilitated and affordable rental housing. PRHFA, as program subrecipient and conduct issuer, issues tax-exempt obligations which are acquired by private financial institutions and are required to co-underwrite with PRHFA a mirror construction loan agreement for the specific project loan to which the Corporation will serve as ultimate lender but where the PRHFA will be the lender of record. In addition, as of March 31, 2025, the Corporation had $71.5 million in exposure to residential mortgage loans that are guaranteed by the PRHFA, a governmental instrumentality that has been designated as a covered entity under PROMESA (December 31, 2024 – $72.5 million). Residential mortgage loans guaranteed by the PRHFA are secured by the underlying properties and the guarantees serve to cover shortfalls in collateral in the event of a borrower default. The Puerto Rico government guarantees up to $75 million of the principal for all loans under the mortgage loan insurance program. According to the most recently released audited financial statements of the PRHFA, as of June 30, 2023, the PRHFA’s mortgage loans insurance program covered loans in an aggregate amount of approximately $388 million. The regulations adopted by the PRHFA require the establishment of adequate reserves to guarantee the solvency of the mortgage loans insurance program. As of June 30, 2023, the most recent date as of which information is available, the PRHFA had a liability of approximately $1.3 million as an estimate of the losses inherent in the portfolio. As of March 31, 2025 and December 31, 2024, the Corporation had $2.9 billion and $3.1 billion, respectively, of public sector deposits in Puerto Rico. Approximately 19% of the public sector deposits as of March 31, 2025 were from municipalities and municipal agencies in Puerto Rico and 81% were from public corporations, the Puerto Rico central government and agencies, and U.S. federal government agencies in Puerto Rico. ### Exposure to USVI Government The Corporation has operations in the USVI and has credit exposure to USVI government entities. For many years, the USVI has been experiencing several fiscal and economic challenges that have deteriorated the overall financial and economic conditions in the area. On June 17, 2024, the United States Bureau of Economic Analysis (the “BEA”) released its estimates of GDP for 2022. According to the BEA, the USVI’s real GDP decreased 1.3% in 2022 after increasing 3.7% in 2021. The decrease in real GDP reflected declines in exports, private fixed investment, government spending, and personal consumption expenditures. These negative variances were partly offset by an increase in inventory investment, while imports, a subtraction item in the calculation of GDP, decreased. Over the past three years, the USVI has been recovering from the adverse impact caused by COVID-19 and has continued to make progress on its rebuilding efforts related to Hurricanes Irma and Maria, which occurred in September 2017. According to data published by FEMA, there were over $26 billion in obligated disaster recovery funds for the USVI as of February 28, 2025, up $12 billion (or 89%) from the comparable figure a year earlier. During the 12-month period ended February 28, 2025, over $724 million were disbursed in the territory, representing a year-over-year increase of 65%. Finally, PROMESA does not apply to the USVI and, as such, there is currently no federal legislation permitting the restructuring of the debts of the USVI and its public corporations and instrumentalities. To the extent that the fiscal condition of the USVI government deteriorates again, the U.S. Congress or the government of the USVI may enact legislation allowing for the restructuring of the financial obligations of the USVI government entities or imposing a stay on creditor remedies, including by making PROMESA applicable to the USVI. As of March 31, 2025 and December 31, 2024, the Corporation had $116.0 million and $100.4 million, respectively, in loans to USVI public corporations, of which $83.6 million and $68.2 million, respectively, were fully collateralized by cash balances held at the Bank. As of March 31, 2025, all loans were currently performing and up to date on principal and interest payments. ## Market risk As filed, 270 characters. For information regarding market risk to which the Corporation is exposed, see the information contained in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management” in this Quarterly Report on Form 10-Q. ## Controls and procedures As filed, 1,676 characters. ### Disclosure Controls and Procedures First BanCorp.’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of First BanCorp.’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective as of March 31, 2025 and provide reasonable assurance that the information required to be disclosed by the Corporation in reports that the Corporation files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and reported to the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. ### Internal Control over Financial Reporting There were no changes to the Corporation’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting. ### PART II - OTHER INFORMATION In accordance with the instructions to Part II of Form 10-Q, the other specified items in this part have been omitted because they are not applicable, or the information has been previously reported. ## Risk factors As filed, 1,078 characters. The Corporation’s business, operating results and/or the market price of our common stock may be significantly affected by a number of factors. A detailed discussion of certain risk factors that could affect the Corporation’s future operations, financial condition or results for future periods is set forth in Part I, Item 1A, “Risk Factors,” in the 2024 Annual Report on Form 10-K. These risk factors, and others, could cause actual results to differ materially from historical results or the results contemplated by the forward-looking statements contained in this report. Also, refer to the discussion in “Forward-Looking Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Quarterly Report on Form 10-Q for additional information that may supplement or update the discussion of risk factors in the 2024 Annual Report on Form 10-K. There have been no material changes from those risk factors previously disclosed in Part I, Item 1A., “Risk Factors,” in the 2024 Annual Report on Form 10-K. Filed May 9, 2025. Source: SEC EDGAR, the filing index for accession 0001057706-25-000005. Last ingested by Listed: Nov 6, 2026, 13:17 ET. No prices; not investment advice.