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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
 
20549
____________
FORM
10-Q
(Mark One)
[X]
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2024
or
[ ]
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 
EXCHANGE ACT OF 1934
 
For the transition period from ___________________ to ___________________
COMMISSION FILE NUMBER
001-14793
FIRST BANCORP
.
(EXACT NAME OF REGISTRANT AS SPECIFIED
 
IN ITS CHARTER)
Puerto Rico
 
66-0561882
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1519 Ponce de León Avenue
,
Stop 23
San Juan
,
Puerto Rico
 
(Address of principal executive offices)
00908
(Zip Code)
(
787
)
729-8200
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock ($0.10 par value per share)
FBP
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed
 
all reports required to be filed by Section 13 or 15(d) of the Securities
 
Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant
 
was required to file such reports), and (2) has been subject
 
to such filing requirements for the past 90
days.
 
Yes
☑
 
No
 
Indicate by check mark whether the registrant has submitted electronically
 
every Interactive Data File required to be submitted pursuant
 
to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for
 
such shorter period that the registrant was required
 
to submit such files).
 
Yes
☑
 
No
 
Indicate by check mark whether the registrant is a large accelerated
 
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company.
 
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in
 
Rule 12b-2 of
the Exchange Act.
 
Large accelerated filer
☑
 
Accelerated filer
☐
Non-accelerated filer
☐
 
Smaller reporting company
 
☐
Emerging growth company
 
☐
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to
 
use the extended transition period for complying with any
 
new or revised
financial accounting standards provided pursuant to Section 13(a)
 
of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company
 
(as defined in Rule 12b-2 of the Exchange Act).
 
Yes
☐
 
No
☑
 
Indicate the number of shares outstanding of each of the
 
issuer’s classes of common stock, as of the latest practicable date.
Common stock:
163,870,232
 
shares outstanding as of November 1, 2024.
2
FIRST BANCORP.
INDEX PAGE
PART
 
I. FINANCIAL INFORMATION
 
PAGE
Item 1.
Financial Statements:
Consolidated
 
Statements
 
of
 
Financial
 
Condition
 
(Unaudited)
 
as
 
of
 
September
 
30,
 
2024
 
and
December 31, 2023
 
Consolidated
 
Statements
 
of
 
Income
 
(Unaudited)
 
–
 
Quarters
 
and
 
Nine-Month
 
Periods
 
ended
September 30, 2024 and 2023
Consolidated
 
Statements
 
of
 
Comprehensive
 
Income
 
(Unaudited)
 
–
 
Quarters
 
and
 
Nine-Month
Periods ended September 30, 2024 and 2023
Consolidated
 
Statements
 
of
 
Cash
 
Flows
 
(Unaudited)
 
–
 
Nine-Month
 
Periods
 
ended
 
September
30, 2024 and 2023
 
Consolidated Statements
 
of Changes in
 
Stockholders’ Equity (Unaudited)
 
– Quarters and
 
Nine-
Month Periods ended September 30, 2024 and 2023
Notes to Consolidated Financial Statements (Unaudited)
 
Item 2.
Management’s Discussion and Analysis
 
of Financial Condition and Results of Operations
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
Item 4.
Controls and Procedures
PART
 
II. OTHER INFORMATION
Item 1.
Legal Proceedings
 
Item 1A.
Risk Factors
Item 2.
Item 5.
Unregistered Sales of Equity Securities and Use of Proceeds
Other Information
Item 6.
Exhibits
 
SIGNATURES
 
3
Forward-Looking Statements
This Quarterly
 
Report on
 
Form 10-Q
 
(this “Form
 
10-Q”) contains
 
forward-looking statements
 
within the
 
meaning of
 
Section 27A
of the Securities Act of 1933, as
 
amended (the “Securities Act”), and
 
Section 21E of the Securities Exchange
 
Act of 1934, as amended
(the “Exchange Act”),
 
which are subject to
 
the safe harbor created
 
by such sections. When
 
used in this Form
 
10-Q or future filings
 
by
First
 
BanCorp.
 
(the
 
“Corporation,”
 
“we,”
 
“us,”
 
or
 
“our”)
 
with
 
the
 
U.S.
 
Securities
 
and
 
Exchange
 
Commission
 
(the
 
“SEC”),
 
in
 
the
Corporation’s press
 
releases or in other public or
 
stockholder communications made by
 
the Corporation, or in oral statements
 
made on
behalf
 
of
 
the
 
Corporation
 
by,
 
or
 
with
 
the
 
approval
 
of,
 
an
 
authorized
 
executive
 
officer
 
of
 
the
 
Corporation,
 
the
 
words
 
or
 
phrases
“would,”
 
“intends,”
 
“will,”
 
“expect,”
 
“should,”
 
“plans,”
 
“forecast,”
 
“anticipate,”
 
“look
 
forward,”
 
“believes,”
 
and
 
other
 
terms
 
of
similar meaning or import, or the
 
negatives of these terms or variations
 
of them, in connection with
 
any discussion of future operating,
financial or other performance are meant to identify “forward-looking
 
statements.”
The Corporation cautions readers
 
not to place undue reliance on
 
any such “forward-looking statements,” which
 
speak only as of the
date made
 
or,
 
with respect
 
to such
 
forward-looking statements
 
contained in
 
this Form
 
10-Q, the
 
date hereof,
 
and advises
 
readers that
any such
 
forward-looking statements
 
are not
 
guarantees of
 
future performance
 
and involve
 
certain risks,
 
uncertainties, estimates,
 
and
assumptions
 
by us
 
that are
 
difficult
 
to predict
 
.
 
Various
 
factors, some
 
of which
 
are beyond
 
our
 
control,
 
could cause
 
actual results
 
to
differ materially from those expressed in, or implied
 
by, such forward-looking
 
statements.
 
 
Factors
 
that
 
could
 
cause
 
results
 
to
 
differ
 
materially
 
from
 
those
 
expressed
 
in,
 
or
 
implied
 
by,
 
the
 
Corporation’s
 
forward-looking
statements include, but are not
 
limited to, risks described or
 
referenced in Part I, Item 1A,
 
“Risk Factors,” in the Corporation’s
 
Annual
Report on Form 10-K for the fiscal year ended December 31, 2023 (the
 
“2023 Annual Report on Form 10-K”), Part II, Item 1A., “Risk
Factors,” in the Corporation’s Quarterly
 
Report on Form 10-Q for the quarter ended June 30, 2024, and the following:
●
the effect
 
of the current
 
global interest rate
 
environment (including
 
the potential for
 
ongoing reductions
 
in interest rates)
 
and
inflation
 
levels
 
on
 
the
 
level,
 
composition
 
and
 
performance
 
of
 
the
 
Corporation’s
 
assets
 
and
 
liabilities,
 
and
 
corresponding
effects
 
on
 
the
 
Corporation’s
 
net
 
interest
 
income,
 
net
 
interest
 
margin,
 
loan
 
originations,
 
deposit
 
attrition,
 
overall
 
results
 
of
operations, and liquidity position;
●
the effects
 
of changes in the interest rate environment, including any
 
adverse change in the Corporation’s
 
ability to attract and
retain
 
clients
 
and
 
gain
 
acceptance
 
from
 
current
 
and
 
prospective
 
customers
 
for
 
new
 
and
 
existing
 
products
 
and
 
services,
including those related to the offering of digital banking
 
and financial services;
●
volatility
 
in
 
the
 
financial
 
services
 
industry,
 
which
 
could
 
result
 
in,
 
among
 
other
 
things,
 
bank
 
deposit
 
runoffs,
 
liquidity
constraints, and increased regulatory requirements and costs;
●
the
 
effect
 
of
 
continued
 
changes
 
in
 
the
 
fiscal
 
and
 
monetary
 
policies
 
and
 
regulations
 
of
 
the
 
United
 
States
 
(“U.S.”)
 
federal
government,
 
the Puerto
 
Rico government
 
and other
 
governments, including
 
those determined
 
by the
 
Board of
 
Governors of
the Federal Reserve
 
System (the “Federal
 
Reserve Board”), the Federal
 
Reserve Bank of New
 
York
 
(the “FED”), the
 
Federal
Deposit
 
Insurance
 
Corporation
 
(the
 
“FDIC”),
 
government-sponsored
 
housing
 
agencies
 
and
 
regulators
 
in
 
Puerto
 
Rico,
 
the
U.S., and
 
the U.S.
 
Virgin
 
Islands (the
 
“USVI”) and
 
British Virgin
 
Islands (the
 
“BVI”), that
 
may affect
 
the future
 
results of
the Corporation;
●
uncertainty as
 
to the
 
ability of
 
the Corporation’s
 
banking subsidiary,
 
FirstBank Puerto
 
Rico (“FirstBank”
 
or the
 
“Bank”), to
retain its core
 
deposits and
 
generate sufficient
 
cash flow through
 
its wholesale funding
 
sources, such as
 
securities sold under
agreements
 
to
 
repurchase,
 
Federal
 
Home
 
Loan
 
Bank
 
(“FHLB”)
 
advances,
 
and
 
brokered
 
certificates
 
of
 
deposit
 
(“brokered
CDs”), which may require us to sell investment securities at a loss;
 
●
adverse changes
 
in general political
 
and economic
 
conditions in Puerto
 
Rico, the U.S.,
 
and the USVI
 
and the BVI,
 
including
in the interest rate environment,
 
unemployment rates, market liquidity,
 
housing absorption rates, real estate
 
markets, and U.S.
capital markets, which may affect
 
funding sources, loan portfolio performance
 
and credit quality,
 
market prices of investment
securities,
 
and
 
demand
 
for
 
the Corporation’s
 
products
 
and services,
 
and which
 
may
 
reduce
 
the
 
Corporation’s
 
revenues and
earnings and the value of the Corporation’s
 
assets;
●
the impact
 
of government
 
financial assistance
 
for hurricane
 
recovery and
 
other disaster
 
relief on
 
economic activity
 
in Puerto
Rico, and the timing and pace of disbursements of funds earmarked for
 
disaster relief;
●
the ability
 
of the
 
Corporation,
 
FirstBank,
 
and
 
third-party
 
service providers
 
to identify
 
and prevent
 
cyber-security
 
incidents,
such
 
as
 
data
 
security
 
breaches,
 
ransomware,
 
malware,
 
“denial
 
of
 
service”
 
attacks,
 
“hacking,”
 
identity
 
theft,
 
and
 
state-
sponsored
 
cyberthreats,
 
and
 
the
 
occurrence
 
of
 
and
 
response
 
to
 
any
 
incidents
 
that
 
occur,
 
which
 
may
 
result
 
in
 
misuse
 
or
misappropriation
 
of
 
confidential
 
or
 
proprietary
 
information,
 
disruption,
 
or
 
damage
 
to
 
our
 
systems
 
or
 
those
 
of
 
third-party
service providers on which we rely,
 
increased costs and losses and/or adverse effects
 
to our reputation;
4
●
general
 
competitive
 
factors
 
and
 
other
 
market
 
risks
 
as
 
well
 
as
 
the
 
implementation
 
of
 
existent
 
or
 
planned
 
strategic
 
growth
opportunities,
 
including
 
risks,
 
uncertainties,
 
and
 
other
 
factors
 
or
 
events
 
related
 
to
 
any
 
business
 
acquisitions,
 
dispositions,
strategic
 
partnerships,
 
strategic
 
operational
 
investments,
 
including
 
systems
 
conversions,
 
and
 
any
 
anticipated
 
efficiencies
 
or
other expected results related thereto;
●
uncertainty as
 
to the
 
implementation of
 
the debt
 
restructuring plan
 
of Puerto
 
Rico (“Plan
 
of Adjustment”
 
or “PoA”)
 
and the
fiscal
 
plan
 
for
 
Puerto
 
Rico
 
as certified
 
on
 
June 5,
 
2024
 
(the “2024
 
Fiscal Plan”)
 
by
 
the oversight
 
board
 
established
 
by the
Puerto Rico
 
Oversight,
 
Management, and
 
Economic Stability
 
Act (“PROMESA”),
 
or any
 
revisions to
 
it, on
 
our clients
 
and
loan portfolios, and any potential impact from future economic or political
 
developments and tax regulations in Puerto Rico;
 
●
the
 
impact
 
of
 
changes
 
in
 
accounting
 
standards,
 
or
 
determinations
 
and
 
assumptions
 
in
 
applying
 
those
 
standards,
 
and
 
of
forecasts of economic variables considered for the determination of
 
the allowance for credit losses (“ACL”);
●
the ability of FirstBank to realize the benefits of its net deferred tax assets;
●
the ability of FirstBank to generate sufficient cash flow to pay dividends
 
to the Corporation;
●
environmental, social, and governance matters, including our
 
climate-related initiatives and commitments;
●
the impacts of natural
 
or man-made disasters, widespread
 
health emergencies, geopolitical
 
conflicts (including sanctions, war
or armed conflict, such as
 
the ongoing conflict in Ukraine,
 
the conflict in the Middle
 
East, and the possible expansion
 
of such
conflicts in surrounding areas and
 
potential geopolitical consequences), terrorist
 
attacks, or other catastrophic external events,
including impacts
 
of such
 
events on
 
general economic
 
conditions and
 
on the
 
Corporation’s
 
assumptions regarding
 
forecasts
of economic variables;
●
the
 
risk
 
that
 
additional
 
portions
 
of
 
the
 
unrealized
 
losses in
 
the
 
Corporation’s
 
debt
 
securities portfolio
 
are
 
determined
 
to
 
be
credit-related, resulting
 
in additional
 
charges to
 
the provision
 
for credit
 
losses on
 
the Corporation’s
 
debt securities
 
portfolio,
and
 
the potential
 
for additional
 
credit losses
 
that could
 
emerge
 
from further
 
downgrades of
 
the U.S.’s
 
Long-Term
 
Foreign-
Currency Issuer Default Rating and negative ratings outlooks;
 
●
the
 
impacts
 
of
 
applicable
 
legislative,
 
tax,
 
or
 
regulatory
 
changes
 
or
 
changes
 
in
 
legislative,
 
tax,
 
or
 
regulatory
 
priorities,
potential
 
government
 
shutdowns, and
 
political impasses,
 
including
 
uncertainties
 
regarding
 
the U.S.
 
debt ceiling
 
and federal
budget,
 
as
 
well
 
as
 
the
 
change
 
in
 
administration
 
as
 
a
 
result
 
of
 
the
 
2024
 
U.S.
 
and
 
Puerto
 
Rico
 
general
 
elections,
 
on
 
the
Corporation’s financial
 
condition or performance;
●
the
 
risk
 
of
 
possible
 
failure
 
or
 
circumvention
 
of
 
the
 
Corporation’s
 
internal
 
controls
 
and
 
procedures
 
and
 
the
 
risk
 
that
 
the
Corporation’s risk management
 
policies may not be adequate;
●
the risk that the FDIC may
 
further increase the deposit insurance
 
premium and/or require further special
 
assessments, causing
an additional increase in the Corporation’s
 
non-interest expenses;
●
any need to recognize impairments on the Corporation’s
 
financial instruments, goodwill, and other intangible assets;
●
the risk
 
that the
 
impact
 
of the
 
occurrence
 
of any
 
of these
 
uncertainties on
 
the Corporation’s
 
capital would
 
preclude
 
further
growth of FirstBank and preclude the Corporation’s
 
Board of Directors (the “Board”) from declaring dividends; and
●
uncertainty as
 
to whether
 
FirstBank will
 
be able
 
to continue
 
to satisfy
 
its regulators
 
regarding,
 
among other
 
things, its
 
asset
quality,
 
liquidity
 
plans,
 
maintenance
 
of
 
capital
 
levels,
 
and
 
compliance
 
with
 
applicable
 
laws,
 
regulations
 
and
 
related
requirements.
 
The
 
Corporation
 
does
 
not
 
undertake
 
to,
 
and
 
specifically
 
disclaims
 
any
 
obligation
 
to
 
update
 
any
 
“forward-looking
 
statements”
 
to
reflect
 
occurrences
 
or
 
unanticipated
 
events
 
or
 
circumstances
 
after
 
the
 
date
 
of
 
such
 
statements,
 
except
 
as
 
required
 
by
 
the
 
federal
securities laws.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
September 30, 2024
December 31, 2023
(In thousands, except for share information)
ASSETS
Cash and due from banks
$
684,028
$
661,925
Money market investments:
Time deposits with other financial institutions
500
300
Other short-term investments
843
939
Total money market investments
1,343
1,239
Available-for-sale debt securities, at fair value (amortized cost of $
5,372,557
 
as of September 30, 2024 and
$
5,863,294
 
as of December 31, 2023; ACL of $
526
 
as of September 30, 2024 and $
511
 
as of December 31, 2023)
4,894,781
5,229,984
Held-to-maturity debt securities, at amortized cost, net of ACL
 
of $
1,119
 
as of September 30, 2024 and $
2,197
as of December 31, 2023 (fair value of $
316,854
 
as of September 30, 2024 and $
346,132
 
as of December 31, 2023)
322,023
351,981
Equity securities
52,432
49,675
Total investment securities
5,269,236
5,631,640
Loans, net of ACL of $
246,996
 
as of September 30, 2024 and $
261,843
 
as of December 31, 2023
12,199,028
11,923,640
Mortgage loans held for sale, at lower of cost or market
12,641
7,368
Total loans, net
12,211,669
11,931,008
Accrued interest receivable on loans and investments
67,112
77,716
Premises and equipment, net
136,401
142,016
Other real estate owned (“OREO”)
19,330
32,669
Deferred tax asset, net
137,484
150,127
Goodwill
38,611
38,611
Other intangible assets
8,260
13,383
Other assets
285,696
229,215
Total assets
$
18,859,170
$
18,909,549
LIABILITIES
Non-interest-bearing deposits
$
5,275,733
$
5,404,121
Interest-bearing deposits
11,071,657
11,151,864
Total deposits
16,347,390
16,555,985
Long-term advances from the FHLB
500,000
500,000
Other long-term borrowings
111,700
161,700
Accounts payable and other liabilities
199,195
194,255
Total liabilities
17,158,285
17,411,940
Commitments and contingencies (See Note 21)
(nil)
(nil)
STOCKHOLDERS’ EQUITY
Common stock, $
0.10
 
par value,
2,000,000,000
 
shares authorized;
223,663,116
 
shares issued;
163,875,810
shares outstanding as of September 30, 2024 and
169,302,812
 
as of December 31, 2023
22,366
22,366
Additional paid-in capital
962,973
965,707
Retained earnings, includes legal surplus reserve of $
199,576
 
as of each of September 30, 2024 and December 31, 2023
1,989,419
1,846,112
Treasury stock (at cost),
59,787,306
 
shares as of September 30, 2024 and
54,360,304
 
shares as of December 31, 2023
(790,252)
(697,406)
Accumulated other comprehensive loss, net of tax of $
8,581
 
as of each of September 30, 2024 and December 31,
 
2023
(483,621)
(639,170)
Total stockholders’ equity
1,700,885
1,497,609
Total liabilities and stockholders’ equity
$
18,859,170
$
18,909,549
The accompanying notes are an integral part of these statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands, except per share information)
Interest and dividend income:
 
Loans
$
243,720
$
227,930
$
720,776
$
656,632
 
Investment securities
22,173
24,519
69,553
77,887
 
Money market investments and interest-bearing cash accounts
8,782
10,956
25,096
23,486
 
Total interest and dividend income
274,675
263,405
815,425
758,005
Interest expense:
 
Deposits
63,704
54,298
190,400
125,787
 
Short-term securities sold under agreements to repurchase
-
359
-
2,756
 
Advances from the FHLB:
 
Short-term
-
-
-
4,776
 
Long-term
5,672
5,675
16,892
14,123
 
Other long-term borrowings
3,235
3,345
9,921
10,135
 
Total interest expense
72,611
63,677
217,213
157,577
 
Net interest income
202,064
199,728
598,212
600,428
Provision for credit losses - expense (benefit):
 
Loans and finance leases
16,470
10,643
41,317
47,669
 
Unfunded loan commitments
(1,041)
(128)
(1,177)
488
 
Debt securities
(184)
(6,119)
(1,123)
(6,029)
 
Provision for credit losses - expense
15,245
4,396
39,017
42,128
 
Net interest income after provision for credit losses
186,819
195,332
559,195
558,300
Non-interest income:
 
Service charges and fees on deposit accounts
9,684
9,552
29,071
28,380
 
Mortgage banking activities
3,199
2,821
9,500
8,493
 
Gain on early extinguishment of debt
-
-
-
1,605
 
Insurance commission income
3,003
2,790
11,296
10,384
 
Card and processing income
11,768
10,841
34,603
32,894
 
Other non-interest income
4,848
4,292
14,053
17,329
 
Total non-interest income
 
32,502
30,296
98,523
99,085
Non-interest expenses:
 
Employees’ compensation and benefits
59,081
56,535
176,043
167,271
 
Occupancy and equipment
22,424
21,781
65,656
64,064
 
Business promotion
4,116
4,759
12,317
12,901
 
Professional service fees
12,538
11,022
37,645
34,591
 
Taxes, other than income taxes
5,665
5,465
16,202
15,701
 
FDIC deposit insurance
2,164
2,143
7,582
6,419
 
Net gain on OREO operations
(1,339)
(2,153)
(6,400)
(6,133)
 
Credit and debit card processing expenses
7,095
6,779
20,453
18,637
 
Communications
2,170
2,219
6,528
6,427
 
Other non-interest expenses
9,021
8,088
26,514
24,945
 
Total non-interest expenses
122,935
116,638
362,540
344,823
Income before income taxes
96,386
108,990
295,178
312,562
Income tax expense
22,659
26,968
72,155
89,187
Net income
 
$
73,727
$
82,022
$
223,023
$
223,375
Net income attributable to common stockholders
 
$
73,727
$
82,022
$
223,023
$
223,375
Net income per common share:
 
Basic
$
0.45
$
0.47
$
1.35
$
1.25
 
Diluted
$
0.45
$
0.46
$
1.35
$
1.25
The accompanying notes are an integral part of these statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands)
Net income
 
$
73,727
$
82,022
$
223,023
$
223,375
Other comprehensive income (loss), net of tax:
Available-for-sale debt securities:
Net unrealized holding gains (losses) on debt securities
 
(1)
160,054
(78,976)
155,549
(46,585)
Other comprehensive income (loss) for the period
160,054
(78,976)
155,549
(46,585)
 
Total comprehensive income
$
233,781
$
3,046
$
378,572
$
176,790
(1)
Net unrealized holding
 
gains (losses) on
 
available-for-sale debt
 
securities have no
 
tax effect because
 
securities are either
 
tax-exempt, held by
 
an International Banking
 
Entity (“IBE”), or
 
have a full
 
deferred tax asset
valuation allowance.
The accompanying notes are an integral part of these statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine-Month Period Ended September 30,
2024
2023
(In thousands)
Cash flows from operating activities:
Net income
 
$
223,023
$
223,375
Adjustments to reconcile net income to net cash provided by operating
 
activities:
Depreciation and amortization
13,995
15,274
Amortization of intangible assets
5,123
5,889
Provision for credit losses
39,017
42,128
Deferred income tax expense
12,643
5,539
Stock-based compensation
6,789
5,898
Gain on early extinguishment of debt
-
(1,605)
Unrealized gain on derivative instruments
(232)
(464)
Net gain on disposals or sales, and impairments of premises and
 
equipment and other assets
(68)
(235)
Net gain on sales of loans and loans held-for-sale valuation adjustments
 
(2,864)
(1,422)
Net amortization of discounts, premiums, and deferred loan fees
 
and costs
449
839
Originations and purchases of loans held for sale
(116,430)
(125,886)
Sales and repayments of loans held for sale
113,176
126,800
Amortization of broker placement fees
554
216
Net amortization of premiums and discounts on investment securities
3,887
3,836
Decrease in accrued interest receivable
10,248
3,545
Increase in accrued interest payable
9,890
13,729
(Increase) decrease in other assets
(11,293)
6,077
Decrease in other liabilities
(558)
(39,810)
 
Net cash provided by operating activities
307,349
283,723
Cash flows from investing activities:
Net disbursements on loans held for investment
(365,298)
(485,198)
Proceeds from sales of loans held for investment
18,362
6,663
Proceeds from sales of repossessed assets
51,129
40,384
Purchases of available-for-sale debt securities
(44,063)
(5,458)
Proceeds from principal repayments and maturities of available-for-sale
 
debt securities
530,232
393,958
Proceeds from principal repayments of held-to-maturity debt securities
32,467
79,889
Additions to premises and equipment
(8,387)
(19,938)
Proceeds from sales of premises and equipment and other assets
1,317
578
Net (purchases) redemptions of other investment securities
(2,637)
6,520
Proceeds from the settlement of insurance claims - investing activities
670
133
 
Net cash provided by investing activities
213,792
17,531
Cash flows from financing activities:
Net (decrease) increase in deposits
(268,556)
275,825
Net repayments of short-term borrowings
-
(550,133)
Repayments of long-term borrowings
(48,500)
(19,795)
Proceeds from long-term borrowings
-
300,000
Repurchase of outstanding common stock
(102,369)
(126,918)
Dividends paid on common stock
(79,509)
(75,825)
 
Net cash used in financing activities
(498,934)
(196,846)
Net increase in cash and cash equivalents
22,207
104,408
Cash and cash equivalents at beginning of year
663,164
480,505
Cash and cash equivalents at end of period
$
685,371
$
584,913
Cash and cash equivalents include:
Cash and due from banks
$
684,028
$
583,913
Money market investments
1,343
1,000
$
685,371
$
584,913
The accompanying notes are an integral part of these statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9
FIRST BANCORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
 
EQUITY
(Unaudited)
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands, except per share information)
Common Stock
$
22,366
$
22,366
$
22,366
$
22,366
Additional Paid-In Capital:
 
Balance at beginning of period
961,254
962,229
965,707
970,722
 
Stock-based compensation expense
1,942
1,901
6,789
5,898
 
Common stock reissued under stock-based compensation plan
(274)
(351)
(9,621)
(13,490)
 
Restricted stock forfeited
51
12
98
661
 
Balance at end of period
962,973
963,791
962,973
963,791
Retained Earnings:
 
Balance at beginning of period
1,941,980
1,733,497
1,846,112
1,644,209
 
Impact of adoption of Accounting Standards Update (“ASU”) 2022-02
 
-
-
-
(1,357)
 
Net income
 
73,727
82,022
223,023
223,375
 
Dividends on common stock ($
0.16
 
per share and $
0.14
 
per share for the quarters ended
 
 
September 30, 2024 and 2023, respectively; $
0.48
 
per share and $
0.42
 
per share for the
 
nine-month periods ended September 30, 2024 and 2023, respectively)
(26,288)
(24,867)
(79,716)
(75,575)
 
Balance at end of period
1,989,419
1,790,652
1,989,419
1,790,652
Treasury Stock (at cost):
 
Balance at beginning of period
(790,465)
(547,706)
(697,406)
(506,979)
 
Common stock repurchases (See Note 13)
(10)
(75,011)
(102,369)
(128,228)
 
Common stock reissued under stock-based compensation plan
274
351
9,621
13,490
 
Restricted stock forfeited
(51)
(12)
(98)
(661)
 
Balance at end of period
(790,252)
(622,378)
(790,252)
(622,378)
Accumulated Other Comprehensive Loss, net
 
of tax:
 
Balance at beginning of period
(643,675)
(772,387)
(639,170)
(804,778)
 
Other comprehensive income (loss), net of tax
160,054
(78,976)
155,549
(46,585)
 
Balance at end of period
(483,621)
(851,363)
(483,621)
(851,363)
 
Total stockholders’ equity
$
1,700,885
$
1,303,068
$
1,700,885
$
1,303,068
The accompanying notes are an integral part of these statements.
10
FIRST BANCORP.
INDEX TO NOTES TO CONSOLIDATED
 
FINANCIAL STATEMENTS
PAGE
Note 1 –
Basis of Presentation and Significant Accounting Policies
 
Note 2 –
Debt Securities
Note 3 –
Loans Held for Investment
Note 4
–
Allowance for Credit Losses for Loans and Finance Leases
Note 5 –
Other Real Estate Owned (“OREO”)
Note 6 –
Goodwill and Other Intangibles
Note 7 –
Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets
Note 8 –
Deposits
Note 9 –
Advances from the Federal Home Loan Bank (“FHLB”)
Note 10 –
Other Long-Term Borrowings
Note 11 –
Earnings per Common Share
Note 12 –
Stock-Based Compensation
Note 13 –
Stockholders’ Equity
Note 14 –
Accumulated Other Comprehensive Loss
Note 15 –
Employee Benefit Plans
Note 16 –
Income Taxes
Note 17
–
Fair Value
Note 18
–
Revenue from Contracts with Customers
Note 19 –
Segment Information
Note 20 –
Supplemental Statement of Cash Flows Information
Note 21 –
Regulatory Matters, Commitments, and Contingencies
Note 22 –
First BanCorp. (Holding Company Only) Financial Information
11
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS
(Unaudited)
NOTE 1 – BASIS
 
OF PRESENTATION AND
 
SIGNIFICANT
 
ACCOUNTING
 
POLICIES
 
The Consolidated
 
Financial Statements
 
(unaudited) for
 
the quarter
 
and nine-month
 
period ended
 
September 30,
 
2024 (the
 
“unaudited
consolidated financial
 
statements”) of
 
First BanCorp.
 
(the “Corporation”)
 
have been
 
prepared in
 
conformity with
 
the accounting
 
policies
stated
 
in
 
the
 
Corporation’s
 
Audited
 
Consolidated
 
Financial
 
Statements
 
for
 
the
 
fiscal
 
year
 
ended
 
December
 
31,
 
2023
 
(the
 
“audited
consolidated financial
 
statements”) included
 
in the
 
2023 Annual
 
Report on
 
Form 10-K,
 
as updated
 
by the
 
information contained
 
in this
report.
 
Certain
 
information
 
and
 
note
 
disclosures
 
normally
 
included
 
in
 
the
 
financial
 
statements
 
prepared
 
in
 
accordance
 
with
 
generally
accepted accounting principles in the United States of America
 
(“GAAP”) have been condensed or omitted from these statements pursuant
to
 
the
 
rules
 
and
 
regulations
 
of
 
the
 
SEC
 
and,
 
accordingly,
 
these
 
financial
 
statements
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
the
 
audited
consolidated financial statements, which are included in the 2023 Annual Report on Form 10-K. All adjustments (consisting only of normal
recurring adjustments) that are, in the opinion of management,
 
necessary for a fair presentation of the statement of
 
financial position, results
of operations and cash flows
 
for the interim periods have
 
been reflected. All significant
 
intercompany accounts and transactions
 
have been
eliminated in consolidation. The Corporation evaluates subsequent events through
 
the date of filing with the SEC.
 
The results of operations for the quarter and nine-month period ended September 30, 2024 are not necessarily indicative of the results to
be expected
 
for the
 
entire
 
year.
Adoption of New Accounting Requirements
The Corporation was not impacted by the adoption
 
of the following Accounting Standards Updates (“ASUs”) during 2024:
●
ASU
 
2023-02,
 
“Investments
 
-
 
Equity
 
Method
 
and
 
Joint
 
Ventures
 
(Topic
 
323):
 
Accounting
 
for
 
Investments
 
in
 
Tax
 
Credit
Structures Using the Proportional Amortization Method”
●
ASU 2023-01, “Leases (Topic 842):
 
Common Control Arrangements”
●
ASU 2022-03,
 
“Fair Value
 
Measurements (Topic
 
820): Fair
 
Value Measurement
 
of Equity
 
Securities Subject
 
to Contractual
Sale Restrictions”
Recently Issued Accounting Standards Not Yet
 
Effective or Not Yet
 
Adopted
ASU
 
2024-03,
 
“Income
 
Statement
–
 
Reporting
 
Comprehensive
 
Income
–
Expense
 
Disaggregation
 
Disclosures
 
(Subtopic
 
220-40):
Disaggregation of Income Statement Expenses”
In November
 
2024, the
 
FASB issued
 
ASU 2024-03, which
 
requires disclosure
 
in the
 
notes to
 
financial statements
 
at each
 
interim and
annual
 
reporting
 
period,
 
of
 
specified
 
information
 
about
 
certain
 
costs
 
and
 
expenses
 
in
 
a
 
tabular
 
format,
 
including
 
but
 
not
 
limited
 
to,
employee compensation
 
and intangible
 
asset amortization;
 
the inclusion
 
of amounts
 
already required
 
under previous
 
GAAP in
 
the same
disclosure as
 
these disaggregation
 
requirements; and
 
a qualitative
 
description of
 
the amounts
 
remaining in
 
relevant expense
 
captions that
are not separately
 
disaggregated
 
quantitatively.
The
 
amendments
 
in
 
this
 
Update
 
should
 
be
 
applied
 
either
 
prospectively
 
to
 
financial
 
statements
 
issued
 
for
 
reporting
 
periods
 
after
 
the
effective date of
 
this Update or
 
retrospectively to any or
 
all prior periods
 
presented in the
 
financial statements and
 
are effective for annual
periods beginning after December 15, 2026, and interim periods beginning
 
after December 15, 2027.
 
ASU 2023-07,
 
“Segment
 
Reporting
 
(Topic 280): Improvements
 
to Reportable
 
Segment
 
Disclosure”
In November 2023, the FASB issued ASU 2023-07 to improve the disclosures about a public entity’s reportable segments.
 
Among other
things, the amendments
 
in this ASU
 
require disclosure on
 
an interim
 
and annual
 
basis of the
 
following: significant
 
segment expenses that
are regularly
 
provided to
 
the chief
 
operating decision
 
maker (“CODM”)
 
and included
 
within each
 
reported measure
 
of segment
 
profit or
loss;
 
and
 
an
 
amount
 
for
 
other
 
segment
 
items
 
(to
 
reconcile
 
segment
 
revenues
 
less
 
significant
 
expenses
 
to
 
the
 
reported
 
measure(s)
 
of
 
a
segment’s profit or loss)
 
by reportable segment and a
 
description of its composition. This ASU
 
also requires disclosure on an
 
annual basis
of the
 
title and
 
position of
 
the CODM
 
and an
 
explanation of
 
how the
 
CODM uses
 
the reported
 
measure(s) of
 
segment profit
 
or loss
 
in
assessing segment performance and deciding how to allocate resources.
 
In addition, this ASU requires interim disclosure
 
of segment-related
disclosures that
 
were previously
 
only required
 
on an
 
annual basis
 
and permits
 
disclosure of
 
multiple measures
 
of segment
 
profit or
 
loss,
provided that disclosure of the measure that is closest
 
to GAAP is also provided and certain other criteria
 
are met.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
12
The Corporation has carried out
 
the necessary data updates to be
 
able to include the above
 
information in its footnote disclosures
 
for all
periods presented. The Corporation does not expect adoption of the standard during
 
the fourth quarter of 2024 to have a material impact on
its consolidated financial statements.
The Corporation does not expect to be impacted by the following ASUs
 
issued during 2024 that are not yet effective
 
or have not yet been
adopted:
●
ASU 2024-02, “Codification Improvements – Amendments to
 
Remove References to the Concepts Statements”
●
ASU 2024-01, “Compensation – Stock Compensation (Topic 718):
 
Stock Application of Profits Interest and Similar Awards”
For
 
other
 
issued
 
accounting
 
standards
 
not
 
yet
 
effective
 
or
 
not
 
yet
 
adopted,
 
see
 
Note
 
1
 
–
 
“Nature
 
of
 
Business
 
and
 
Summary
 
of
Significant Accounting Policies”, to the audited consolidated financial
 
statements included in the 2023 Annual Report on Form 10-K.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
13
NOTE 2 – DEBT SECURITIES
Available-for-Sale
 
Debt Securities
The amortized
 
cost, gross
 
unrealized gains
 
and losses,
 
ACL, estimated
 
fair value,
 
and weighted-average
 
yield of
 
available-for-sale
debt securities by contractual maturities as of September 30, 2024 and
 
December 31, 2023 were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
Amortized cost
(1)
Gross Unrealized
ACL
Fair Value
(2)
Weighted-
Gains
Losses
average yield%
(Dollars in thousands)
U.S. Treasury securities:
 
Due within one year
$
100,140
$
-
$
1,528
$
-
$
98,612
0.74
U.S. government-sponsored entities' (“GSEs”) obligations:
 
Due within one year
954,478
-
15,323
-
939,155
0.83
 
After 1 to 5 years
1,281,265
51
65,467
-
1,215,849
0.85
 
After 10 years
8,155
10
4
-
8,161
5.21
Puerto Rico government obligation:
 
After 10 years
(3)
3,008
-
1,091
350
1,567
-
United States and Puerto Rico government obligations
2,347,046
61
83,413
350
2,263,344
0.85
Mortgage-backed securities (“MBS”):
 
Residential MBS:
 
Freddie Mac (“FHLMC”) certificates:
 
Due within one year
2
-
-
-
2
4.04
 
After 1 to 5 years
14,626
-
435
-
14,191
2.06
 
After 5 to 10 years
131,333
-
8,652
-
122,681
1.54
 
After 10 years
922,868
34
135,996
-
786,906
1.40
 
1,068,829
34
145,083
-
923,780
1.43
 
Ginnie Mae (“GNMA”) certificates:
 
 
Due within one year
1,493
-
13
-
1,480
2.77
 
After 1 to 5 years
9,137
-
396
-
8,741
0.70
 
After 5 to 10 years
60,779
7
3,846
-
56,940
1.91
 
 
After 10 years
155,215
428
17,212
-
138,431
2.75
226,624
435
21,467
-
205,592
2.44
 
Fannie Mae (“FNMA”) certificates:
 
After 1 to 5 years
24,395
-
698
-
23,697
2.12
 
 
After 5 to 10 years
258,732
-
15,835
-
242,897
1.74
 
After 10 years
961,208
160
128,052
-
833,316
1.35
 
1,244,335
160
144,585
-
1,099,910
1.45
 
Collateralized mortgage obligations (“CMOs”) issued
 
or guaranteed by the FHLMC, FNMA, and GNMA:
 
After 10 years
251,397
3
46,471
-
204,929
1.49
 
Private label:
 
After 5 to 10 years
2,528
-
727
7
1,794
7.39
 
After 10 years
3,817
-
1,121
169
2,527
6.60
6,345
-
1,848
176
4,321
6.92
Total Residential MBS
2,797,530
632
359,454
176
2,438,532
1.54
 
Commercial MBS:
 
After 1 to 5 years
34,010
9
1,879
-
32,140
2.69
 
After 5 to 10 years
13,241
-
1,464
-
11,777
2.02
 
After 10 years
179,730
492
32,234
-
147,988
2.06
Total Commercial MBS
226,981
501
35,577
-
191,905
2.15
Total MBS
3,024,511
1,133
395,031
176
2,630,437
1.58
Other:
 
Due within one year
500
-
-
-
500
2.34
 
After 1 to 5 years
500
-
-
-
500
2.34
1,000
-
-
-
1,000
2.34
Total available-for-sale debt securities
$
5,372,557
$
1,194
$
478,444
$
526
$
4,894,781
1.26
(1)
Excludes accrued
 
interest receivable
 
on available-for-sale
 
debt securities
 
that totaled
 
$
9.5
 
million as
 
of September
 
30, 2024
 
reported as
 
part of
 
accrued interest
 
receivable on
 
loans and
 
investment securities
 
in the
consolidated statements of financial condition, and excluded from the estimate of credit losses.
(2)
Includes $
475.1
 
million (amortized cost - $
532.2
 
million) that was pledged at the FHLB as collateral for borrowings and letters of credit as well as $
2.7
 
billion (amortized cost - $
3.0
 
billion) pledged as collateral for the
uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.
(3)
Consists of a residential
 
pass-through MBS issued by the
 
Puerto Rico Housing Finance Authority
 
(the “PRHFA”) that
 
is collateralized by certain
 
second mortgages originated under
 
a program launched by the
 
Puerto
Rico government in 2010 and is in nonaccrual status based on the delinquency status of the underlying second mortgage loans collateral.
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
14
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Amortized cost
(1)
Gross Unrealized
ACL
Fair value
(2)
Weighted-
Gains
Losses
average yield%
(Dollars in thousands)
U.S. Treasury securities:
 
Due within one year
$
80,314
$
-
$
2,144
$
-
$
78,170
0.66
 
After 1 to 5 years
60,239
-
3,016
-
57,223
0.75
U.S. GSEs’ obligations:
 
Due within one year
542,847
-
15,832
-
527,015
0.77
 
After 1 to 5 years
1,899,620
49
135,347
-
1,764,322
0.86
 
After 5 to 10 years
8,850
-
687
-
8,163
2.64
 
After 10 years
8,891
8
2
-
8,897
5.49
Puerto Rico government obligation:
 
After 10 years
(3)
3,156
-
1,346
395
1,415
-
United States and Puerto Rico government obligations
2,603,917
57
158,374
395
2,445,205
0.85
MBS:
 
Residential MBS:
 
FHLMC certificates:
 
After 1 to 5 years
19,561
-
868
-
18,693
2.06
 
After 5 to 10 years
153,308
-
12,721
-
140,587
1.55
 
After 10 years
991,060
15
161,197
-
829,878
1.41
1,163,929
15
174,786
-
989,158
1.44
 
GNMA certificates:
 
 
Due within one year
254
-
3
-
251
3.27
 
After 1 to 5 years
16,882
-
872
-
16,010
1.19
 
After 5 to 10 years
27,916
8
2,247
-
25,677
1.62
 
 
After 10 years
206,254
87
22,786
-
183,555
2.57
251,306
95
25,908
-
225,493
2.38
 
FNMA certificates:
 
After 1 to 5 years
32,489
-
1,423
-
31,066
2.11
 
 
After 5 to 10 years
293,492
-
23,146
-
270,346
1.70
 
After 10 years
1,047,298
83
156,344
-
891,037
1.37
 
1,373,279
83
180,913
-
1,192,449
1.46
CMOs issued or guaranteed by the FHLMC, FNMA,
 
 
and GNMA:
 
After 10 years
273,539
-
52,263
-
221,276
1.54
 
Private label:
 
After 10 years
7,086
-
2,185
116
4,785
7.66
Total Residential MBS
3,069,139
193
436,055
116
2,633,161
1.55
 
Commercial MBS:
 
After 1 to 5 years
45,022
-
6,898
-
38,124
2.17
 
 
After 5 to 10 years
22,386
-
2,685
-
19,701
2.16
 
After 10 years
122,830
-
29,037
-
93,793
1.36
Total Commercial MBS
190,238
-
38,620
-
151,618
1.64
Total MBS
3,259,377
193
474,675
116
2,784,779
1.55
Total available-for-sale debt securities
$
5,863,294
$
250
$
633,049
$
511
$
5,229,984
1.24
(1)
Excludes accrued
 
interest receivable
 
on available-for-sale
 
debt securities
 
that totaled
 
$
10.6
 
million as
 
of December
 
31, 2023
 
reported as
 
part of
 
accrued interest
 
receivable on
 
loans and
 
investment securities
 
in the
consolidated statements of financial condition, and excluded from the estimate of credit losses.
(2)
Includes $
477.9
 
million (amortized cost - $
527.2
 
million) that was pledged
 
at the FHLB as
 
collateral for borrowings and
 
letters of credit as well
 
as $
2.8
 
billion (amortized cost -
 
$
3.2
 
billion) pledged as collateral for
 
the
uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.
(3)
Consists of a residential pass-through MBS issued by the PRHFA
 
that is collateralized by certain second mortgages originated under a program
 
launched by the Puerto Rico government in 2010 and is in
 
nonaccrual status
based on the delinquency status of the underlying second mortgage loans collateral.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
15
During
 
the
 
first
 
nine
 
months
 
of
 
2024,
 
the
 
Corporation
 
purchased
 
approximately
 
$
44.1
 
million
 
of
 
Community
 
Reinvestment
 
Act
qualified investments, which were classified as available-for-sale debt securities,
 
and mainly consisted of commercial MBS.
 
Maturities
 
of
 
available-for-sale
 
debt
 
securities
 
are
 
based
 
on
 
the
 
period
 
of
 
final
 
contractual
 
maturity.
 
Expected
 
maturities
 
might
differ
 
from
 
contractual
 
maturities
 
because
 
they
 
may
 
be
 
subject
 
to
 
prepayments
 
and/or
 
call
 
options.
 
The
 
weighted-average
 
yield
 
on
available-for-sale
 
debt
 
securities
 
is
 
based
 
on
 
amortized
 
cost
 
and,
 
therefore,
 
does
 
not
 
give
 
effect
 
to
 
changes
 
in
 
fair
 
value.
 
The
 
net
unrealized loss
 
on available-for-sale
 
debt securities
 
is presented
 
as part
 
of accumulated
 
other comprehensive
 
loss in
 
the consolidated
statements of financial condition.
 
The
 
following
 
tables
 
present
 
the
 
fair
 
value
 
and
 
gross
 
unrealized
 
losses
 
of
 
the
 
Corporation’s
 
available-for-sale
 
debt
 
securities,
aggregated by
 
investment category
 
and length of
 
time that individual
 
securities have
 
been in a
 
continuous unrealized
 
loss position, as
of September 30, 2024 and December 31, 2023. The tables also include debt
 
securities for which an ACL was recorded.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2024
Less than 12 months
12 months or more
Total
Unrealized
Unrealized
Unrealized
Fair Value
 
Losses
Fair Value
 
Losses
Fair Value
 
Losses
(In thousands)
 
U.S. Treasury and U.S. GSEs’
 
obligations
$
1,828
$
4
$
2,247,894
$
82,318
$
2,249,722
$
82,322
 
Puerto Rico government obligation
-
-
1,567
1,091
(1)
1,567
1,091
 
MBS:
 
Residential MBS:
 
FHLMC
2
-
921,769
145,083
921,771
145,083
 
GNMA
69
1
180,162
21,466
180,231
21,467
 
FNMA
-
-
1,090,120
144,585
1,090,120
144,585
 
CMOs issued or guaranteed by the FHLMC,
 
FNMA, and GNMA
-
-
199,741
46,471
199,741
46,471
 
Private label
-
-
4,321
1,848
(1)
4,321
1,848
 
Commercial MBS
8,869
174
139,632
35,403
148,501
35,577
$
10,768
$
179
$
4,785,206
$
478,265
$
4,795,974
$
478,444
(1)
Unrealized losses do not include the credit loss component recorded
 
as part of the ACL. As of September 30, 2024, the
 
PRHFA bond and private label MBS
 
had an ACL of $
0.3
 
million
and $
0.2
 
million, respectively.
As of December 31, 2023
Less than 12 months
12 months or more
Total
Unrealized
Unrealized
Unrealized
Fair Value
 
Losses
Fair Value
 
Losses
Fair Value
 
Losses
(In thousands)
 
U.S. Treasury and U.S. GSEs’
 
obligations
$
2,544
$
2
$
2,428,784
$
157,026
$
2,431,328
$
157,028
 
Puerto Rico government obligation
-
-
1,415
1,346
(1)
1,415
1,346
 
MBS:
 
Residential MBS:
 
FHLMC
9
-
988,092
174,786
988,101
174,786
 
GNMA
12,257
100
202,390
25,808
214,647
25,908
 
FNMA
-
-
1,183,275
180,913
1,183,275
180,913
 
CMOs issued or guaranteed by the FHLMC,
 
FNMA, and GNMA
-
-
221,276
52,263
221,276
52,263
 
Private label
-
-
4,785
2,185
(1)
4,785
2,185
 
Commercial MBS
11,370
18
140,248
38,602
151,618
38,620
$
26,180
$
120
$
5,170,265
$
632,929
$
5,196,445
$
633,049
(1)
Unrealized losses do not include
 
the credit loss component recorded
 
as part of the ACL.
 
As of December 31, 2023,
 
the PRHFA bond
 
and private label MBS had
 
an ACL of $
0.4
 
million
and $
0.1
 
million, respectively.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
16
 
Assessment for Credit Losses
Debt securities
 
issued by
 
U.S. government
 
agencies,
 
U.S. GSEs,
 
and
 
the U.S.
 
Treasury,
 
including
 
notes and
 
MBS, accounted
 
for
substantially
 
all
 
of
 
the
 
total
 
available-for-sale
 
portfolio
 
as
 
of
 
September
 
30,
 
2024,
 
and
 
the
 
Corporation
 
expects
 
no
 
credit
 
losses
 
on
these securities, given
 
the explicit and
 
implicit guarantees
 
provided by
 
the U.S. federal
 
government. Because
 
the decline
 
in fair
 
value
is attributable to
 
changes in interest
 
rates, and not
 
credit quality,
 
and because,
 
as of September
 
30, 2024, the
 
Corporation did not
 
have
the intent to sell these U.S. government
 
and agencies debt securities and determined
 
that it was likely that it will not be
 
required to sell
these
 
securities
 
before
 
their
 
anticipated
 
recovery,
 
the
 
Corporation
 
does
 
not
 
consider
 
impairments
 
on
 
these
 
securities
 
to
 
be
 
credit
related. The Corporation’s
 
credit loss assessment was
 
concentrated mainly on
 
private label MBS and
 
on Puerto Rico government
 
debt
securities, for which credit losses are evaluated on a quarterly basis.
 
Private label MBS
 
held as part
 
of the Corporation’s
 
available for sale
 
portfolio consist of
 
trust certificates issued
 
by an unaffiliated
party
 
backed
 
by
 
fixed-rate,
 
single-family
 
residential
 
mortgage
 
loans
 
in
 
the
 
U.S.
 
mainland
 
with
 
original
 
FICO
 
scores
 
over
 
700
 
and
moderate
 
loan-to-value
 
ratios (under
80
%), as
 
well
 
as moderate
 
delinquency
 
levels.
 
The interest
 
rate
 
on
 
these
 
private label
 
MBS is
variable, tied
 
to 3-month
 
CME Term
 
Secured Overnight
 
Financing Rate
 
(“SOFR”) plus
 
a tenor
 
spread adjustment
 
of
0.26161
% and
the
 
original
 
spread
 
limited
 
to
 
the
 
weighted-average
 
coupon
 
of
 
the
 
underlying
 
collateral.
 
The
 
Corporation
 
determined
 
the
 
ACL
 
for
private
 
label
 
MBS
 
based
 
on
 
a
 
risk-adjusted
 
discounted
 
cash
 
flow
 
methodology
 
that
 
considers
 
the
 
structure
 
and
 
terms
 
of
 
the
instruments.
 
The
 
Corporation
 
utilized
 
probability
 
of default
 
(“PDs”)
 
and
 
loss-given
 
default
 
(“LGDs”)
 
that
 
considered,
 
among
 
other
things, historical
 
payment performance,
 
loan-to-value attributes,
 
and relevant
 
current and
 
forward-looking
 
macroeconomic variables,
such as
 
regional unemployment
 
rates and
 
the housing
 
price index.
 
Under this
 
approach, expected
 
cash flows
 
(interest and
 
principal)
were discounted
 
at the U.S.
 
Treasury yield
 
curve as of
 
the reporting
 
date. See
 
Note 17
 
– “Fair Value
 
”
 
for the significant
 
assumptions
used in the valuation of the private label MBS as of September 30, 2024 and December
 
31 2023.
For the residential
 
pass-through MBS issued
 
by the PRHFA
 
held as part of
 
the Corporation’s
 
available-for-sale portfolio
 
backed by
second
 
mortgage
 
residential
 
loans
 
in
 
Puerto
 
Rico,
 
the
 
ACL
 
was
 
determined
 
based
 
on
 
a
 
discounted
 
cash
 
flow
 
methodology
 
that
considered the structure and
 
terms of the debt security.
 
The expected cash flows were
 
discounted at the U.S. Treasury
 
yield curve plus
a spread as
 
of the reporting date
 
and compared to
 
the amortized cost. The
 
Corporation utilized PDs and
 
LGDs that considered,
 
among
other
 
things,
 
historical
 
payment
 
performance,
 
loan-to-value
 
attributes,
 
and
 
relevant
 
current
 
and
 
forward-looking
 
macroeconomic
variables, such as
 
regional unemployment
 
rates, the housing
 
price index,
 
and expected recovery
 
from the PRHFA
 
guarantee. PRHFA,
not the
 
Puerto Rico
 
government, provides
 
a guarantee
 
in the event
 
of default
 
and subsequent
 
foreclosure of
 
the properties
 
underlying
the
 
second
 
mortgage
 
loans.
 
In
 
the
 
event
 
that
 
the
 
second
 
mortgage
 
loans
 
default
 
and
 
the
 
collateral
 
is
 
insufficient
 
to
 
satisfy
 
the
outstanding
 
balance
 
of
 
this
 
residential
 
pass-through
 
MBS,
 
PRHFA’s
 
ability
 
to
 
honor
 
such
 
guarantee
 
will
 
depend
 
on,
 
among
 
other
factors,
 
its
 
financial
 
condition
 
at
 
the
 
time
 
such
 
obligation
 
becomes
 
due
 
and
 
payable.
 
Deterioration
 
of
 
the
 
Puerto
 
Rico
 
economy
 
or
fiscal health of the PRHFA
 
could impact the value of this security,
 
resulting in additional losses to the Corporation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
17
The following
 
tables present
 
a roll-forward
 
of the ACL
 
on available-for-sale
 
debt securities
 
by major
 
security type
 
for the quarters
and nine-month periods ended September 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended September 30,
2024
2023
Private label
MBS
Puerto Rico
 
Government
Obligation
Total
Private label
MBS
Puerto Rico
 
Government
Obligation
Total
(In thousands)
Beginning balance
$
163
$
386
$
549
$
83
$
350
$
433
Provision for credit losses – (benefit) expense
-
(36)
(36)
-
32
32
Net recoveries
13
-
13
-
-
-
 
ACL on available-for-sale debt securities
$
176
$
350
$
526
$
83
$
382
$
465
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30,
2024
2023
Private label
MBS
Puerto Rico
 
Government
Obligations
Total
Private label
MBS
Puerto Rico
 
Government
Obligations
Total
(In thousands)
Beginning balance
$
116
$
395
$
511
$
83
$
375
$
458
Provision for credit losses - (benefit) expense
-
(45)
(45)
-
7
7
Net recoveries
60
-
60
-
-
-
 
ACL on available-for-sale debt securities
$
176
$
350
$
526
$
83
$
382
$
465
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
18
Held-to-Maturity Debt Securities
The
 
amortized
 
cost,
 
gross
 
unrecognized
 
gains
 
and
 
losses,
 
estimated
 
fair
 
value,
 
ACL,
 
weighted-average
 
yield
 
and
 
contractual
maturities of held-to-maturity debt securities as of September 30, 2024
 
and December 31, 2023 were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
Amortized cost
(1) (2)
Gross Unrecognized
Fair value
Weighted-
Gains
Losses
ACL
average yield%
(Dollars in thousands)
Puerto Rico municipal bonds:
Due within one year
$
2,131
$
196
$
10
$
2,317
$
9
5.62
After 1 to 5 years
61,119
2,471
457
63,133
662
7.81
After 5 to 10 years
13,121
679
229
13,571
189
6.42
After 10 years
15,755
-
170
15,585
259
8.80
Total Puerto Rico municipal bonds
92,126
3,346
866
94,606
1,119
7.73
MBS:
 
Residential MBS:
FHLMC certificates:
After 5 to 10 years
13,084
-
250
12,834
-
3.03
After 10 years
17,281
-
448
16,833
-
4.31
30,365
-
698
29,667
-
3.76
GNMA certificates:
After 10 years
14,313
-
432
13,881
-
3.31
FNMA certificates:
After 10 years
62,754
-
1,545
61,209
-
4.18
CMOs issued or guaranteed by
 
FHLMC, FNMA, and GNMA:
After 10 years
26,420
-
914
25,506
-
3.49
Total Residential MBS
133,852
-
3,589
130,263
-
3.86
 
Commercial MBS:
After 1 to 5 years
9,306
-
124
9,182
-
3.48
After 10 years
87,858
-
5,055
82,803
-
3.15
Total Commercial MBS
97,164
-
5,179
91,985
-
3.18
Total MBS
231,016
-
8,768
222,248
-
3.57
Total held-to-maturity debt securities
$
323,142
$
3,346
$
9,634
$
316,854
$
1,119
4.76
(1)
Excludes accrued
 
interest receivable
 
on held-to-maturity
 
debt securities
 
that totaled
 
$
2.5
 
million as
 
of September
 
30, 2024
 
reported as
 
part of
 
accrued interest
 
receivable on
 
loans and
 
investment securities
 
in the
consolidated statements of financial condition, and excluded from the estimate of credit losses.
(2)
Includes $
199.1
 
million (fair value - $
194.3
 
million) that serves as collateral for the uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
19
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Amortized cost
(1) (2)
Gross Unrecognized
Fair value
Weighted-
Gains
Losses
ACL
average yield%
(Dollars in thousands)
Puerto Rico municipal bonds:
Due within one year
$
3,165
$
8
$
38
$
3,135
$
50
9.30
After 1 to 5 years
51,230
994
710
51,514
1,266
7.78
After 5 to 10 years
36,050
3,540
210
39,380
604
7.13
After 10 years
16,595
269
-
16,864
277
8.87
Total Puerto Rico municipal bonds
107,040
4,811
958
110,893
2,197
7.78
MBS:
 
Residential MBS:
FHLMC certificates:
After 5 to 10 years
16,469
-
556
15,913
-
3.03
After 10 years
18,324
-
714
17,610
-
4.32
34,793
-
1,270
33,523
-
3.71
GNMA certificates:
After 10 years
16,265
-
789
15,476
-
3.32
FNMA certificates:
After 10 years
67,271
-
2,486
64,785
-
4.18
CMOs issued or guaranteed by
 
FHLMC, FNMA, and GNMA:
After 10 years
28,139
-
1,274
26,865
-
3.49
Total Residential MBS
146,468
-
5,819
140,649
-
3.84
 
Commercial MBS:
After 1 to 5 years
9,444
-
297
9,147
-
3.48
After 10 years
91,226
-
5,783
85,443
-
3.15
Total Commercial MBS
100,670
-
6,080
94,590
-
3.18
Total MBS
247,138
-
11,899
235,239
-
3.57
Total held-to-maturity debt securities
$
354,178
$
4,811
$
12,857
$
346,132
$
2,197
4.84
(1)
Excludes accrued
 
interest receivable
 
on held-to-maturity
 
debt securities
 
that totaled
 
$
4.8
 
million as
 
of December
 
31, 2023
 
reported as
 
part of
 
accrued interest
 
receivable on
 
loans and
 
investment securities
 
in the
consolidated statements of financial condition, and excluded from the estimate of credit losses.
(2)
Includes $
126.6
 
million (fair value - $
125.9
 
million) that serves as collateral for the uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
20
The
 
following
 
tables
 
present
 
the
 
Corporation’s
 
held-to-maturity
 
debt
 
securities’
 
fair
 
value
 
and
 
gross
 
unrecognized
 
losses,
aggregated
 
by
 
category
 
and
 
length
 
of
 
time
 
that
 
individual
 
securities
 
had
 
been
 
in
 
a
 
continuous
 
unrecognized
 
loss
 
position,
 
as
 
of
September 30, 2024 and December 31, 2023, including debt securities for
 
which an ACL was recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2024
Less than 12 months
12 months or more
Total
Unrecognized
Unrecognized
Unrecognized
Fair Value
 
Losses
Fair Value
 
Losses
Fair Value
 
Losses
(In thousands)
 
Puerto Rico municipal bonds
$
-
$
-
$
43,997
$
866
$
43,997
$
866
 
MBS:
 
Residential MBS:
 
FHLMC certificates
-
-
29,667
698
29,667
698
 
GNMA certificates
-
-
13,881
432
13,881
432
 
FNMA certificates
-
-
61,209
1,545
61,209
1,545
 
CMOs issued or guaranteed by FHLMC,
 
FNMA, and GNMA
-
-
25,506
914
25,506
914
 
Commercial MBS
-
-
91,985
5,179
91,985
5,179
Total held-to-maturity debt securities
$
-
$
-
$
266,245
$
9,634
$
266,245
$
9,634
As of December 31, 2023
Less than 12 months
12 months or more
Total
Unrecognized
Unrecognized
Unrecognized
Fair Value
 
Losses
Fair Value
 
Losses
Fair Value
 
Losses
(In thousands)
 
Puerto Rico municipal bonds
$
-
$
-
$
34,682
$
958
$
34,682
$
958
 
MBS:
 
Residential MBS:
 
FHLMC certificates
-
-
33,523
1,270
33,523
1,270
 
GNMA certificates
-
-
15,476
789
15,476
789
 
FNMA certificates
-
-
64,785
2,486
64,785
2,486
 
CMOs issued or guaranteed by FHLMC,
 
FNMA, and GNMA
-
-
26,865
1,274
26,865
1,274
 
Commercial MBS
-
-
94,590
6,080
94,590
6,080
Total held-to-maturity debt securities
$
-
$
-
$
269,921
$
12,857
$
269,921
$
12,857
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
21
The
 
Corporation
 
classifies
 
the
 
held-to-maturity
 
debt
 
securities
 
portfolio
 
into
 
the
 
following
 
major
 
security
 
types:
 
MBS
 
issued
 
or
guaranteed by
 
GSEs and
 
underlying collateral
 
and Puerto
 
Rico municipal
 
bonds. The
 
Corporation does
 
not recognize
 
an ACL
 
for MBS
issued or guaranteed by GSEs since they are highly rated by major rating agencies and have a long history of no credit losses. In the case of
Puerto Rico municipal
 
bonds, the Corporation
 
determines the ACL
 
based on the product
 
of a cumulative
 
PD and LGD, and
 
the amortized
cost
 
basis
 
of
 
the
 
bonds
 
over
 
their
 
remaining
 
expected
 
life
 
as
 
described
 
in
 
Note
 
1
 
–
 
“Nature
 
of
 
Business
 
and
 
Summary
 
of
 
Significant
Accounting Policies,” to the audited financial statements included in the
 
2023 Annual Report on Form 10-K.
 
The Corporation
 
performs periodic
 
credit quality
 
reviews on
 
these issuers.
 
All of
 
the Puerto
 
Rico municipal
 
bonds were
 
current as
 
to
scheduled
 
contractual
 
payments
 
as
 
of
 
September
 
30,
 
2024.
 
The
 
ACL
 
of
 
Puerto
 
Rico
 
municipal
 
bonds
 
decreased
 
to
 
$
1.1
 
million
 
as
 
of
September 30, 2024, from $
2.2
 
million as of December 31, 2023, mostly related
 
to updated financial information of a bond
 
issuer received
during the first quarter of 2024.
 
The following tables present
 
the activity in the
 
ACL for held-to-maturity
 
debt securities by major
 
security type for the
 
quarters and
nine-month periods ended September 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Puerto Rico Municipal Bonds
Quarter Ended September 30,
2024
2023
(In thousands)
Beginning balance
$
1,267
$
8,401
Provision for credit losses – benefit
(148)
(6,151)
ACL on held-to-maturity debt securities
$
1,119
$
2,250
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Puerto Rico Municipal Bonds
Nine-Month Period Ended September 30,
2024
2023
(In thousands)
Beginning Balance
$
2,197
$
8,286
Provision for credit losses - benefit
(1,078)
(6,036)
ACL on held-to-maturity debt securities
$
1,119
$
2,250
 
Municipalities, which are
 
covered instrumentalities under
 
PROMESA, may be
 
affected by the
 
negative economic and
 
other effects
resulting from expense,
 
revenue, or cash
 
management measures taken by
 
the Puerto Rico government
 
to address its fiscal
 
situation, or
measures
 
included
 
in
 
its
 
fiscal
 
plan
 
or
 
fiscal
 
plans
 
of
 
other
 
government
 
entities.
 
Given
 
the
 
inherent
 
uncertainties
 
about
 
the
 
fiscal
situation
 
of the
 
Puerto Rico
 
central government
 
and the
 
measures taken,
 
or to
 
be taken,
 
by other
 
government
 
entities in
 
response
 
to
economic
 
and
 
fiscal
 
challenges,
 
the
 
Corporation
 
cannot
 
be
 
certain
 
whether
 
future
 
charges
 
to
 
the
 
ACL
 
on
 
these
 
securities
 
will
 
be
required.
 
From
 
time
 
to
 
time,
 
the
 
Corporation
 
has
 
held-to-maturity
 
securities
 
with
 
an
 
original
 
maturity
 
of
 
three
 
months
 
or
 
less
 
that
 
are
considered
 
cash
 
and
 
cash
 
equivalents
 
and
 
are
 
classified
 
as
 
money
 
market
 
investments
 
in
 
the
 
consolidated
 
statements
 
of
 
financial
condition. As of September 30, 2024 and December 31, 2023, the
 
Corporation had
no
 
outstanding held-to-maturity securities that were
classified as cash and cash equivalents.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit Quality Indicators:
The
 
held-to-maturity
 
debt
 
securities
 
portfolio
 
consisted
 
of
 
GSEs’
 
MBS,
 
for
 
which
 
the
 
Corporation
 
expects
 
no
 
credit
 
losses,
 
and
financing arrangements
 
with Puerto
 
Rico municipalities
 
issued in
 
bond form.
 
The Puerto
 
Rico municipal
 
bonds are
 
accounted for
 
as
securities
 
but
 
are
 
underwritten
 
as
 
loans
 
with
 
features
 
that
 
are
 
typically
 
found
 
in
 
commercial
 
loans.
 
Accordingly,
 
the
 
Corporation
monitors the
 
credit quality
 
of these
 
municipal bonds
 
through the
 
use of
 
internal credit-risk
 
ratings, which
 
are generally
 
updated on
 
a
quarterly
 
basis.
 
The
 
Corporation
 
considers
 
a
 
municipal
 
bond
 
as
 
a
 
criticized
 
asset
 
if
 
its
 
risk
 
rating
 
is
 
Special
 
Mention,
 
Substandard,
Doubtful, or Loss.
 
Puerto Rico municipal
 
bonds that do
 
not meet the
 
criteria for classification
 
as criticized assets
 
are considered
 
to be
Pass-rated
 
securities.
 
For
 
the
 
definitions
 
of
 
the
 
internal-credit
 
ratings,
 
see
 
Note
 
3
 
–
 
“Debt
 
Securities,”
 
to
 
the
 
audited
 
consolidated
financial statements included in the 2023 Annual Report on Form 10-K.
The
 
Corporation
 
periodically
 
reviews
 
its Puerto
 
Rico
 
municipal
 
bonds
 
to
 
evaluate
 
if
 
they are
 
properly
 
classified,
 
and to
 
measure
credit losses on
 
these securities. The
 
frequency of these
 
reviews will depend
 
on the amount
 
of the aggregate
 
outstanding debt, and
 
the
risk rating classification of the obligor.
The
 
Corporation
 
has
 
a
 
Loan
 
Review
 
Group
 
that
 
reports
 
directly
 
to
 
the
 
Corporation’s
 
Risk
 
Management
 
Committee
 
and
administratively
 
to
 
the
 
Chief
 
Risk
 
Officer.
 
The
 
Loan
 
Review
 
Group
 
performs
 
annual
 
comprehensive
 
credit
 
process
 
reviews
 
of
 
the
Bank’s
 
commercial
 
loan
 
portfolios,
 
including
 
the
 
above-mentioned
 
Puerto
 
Rico
 
municipal
 
bonds
 
accounted
 
for
 
as
 
held-to-maturity
debt
 
securities.
 
The objective
 
of
 
these
 
loan
 
reviews is
 
to
 
assess accuracy
 
of the
 
Bank’s
 
determination
 
and
 
maintenance
 
of
 
loan
 
risk
rating
 
and
 
its
 
adherence
 
to
 
lending
 
policies,
 
practices
 
and
 
procedures.
 
The
 
monitoring
 
performed
 
by
 
this
 
group
 
contributes
 
to
 
the
assessment
 
of
 
compliance
 
with
 
credit
 
policies
 
and
 
underwriting
 
standards,
 
the
 
determination
 
of
 
the
 
current
 
level
 
of
 
credit
 
risk,
 
the
evaluation of
 
the effectiveness
 
of the credit
 
management process,
 
and the identification
 
of any deficiency
 
that may arise
 
in the credit-
granting process. Based
 
on its findings, the
 
Loan Review Group recommends
 
corrective actions, if
 
necessary,
 
that help in maintaining
a sound credit process. The Loan Review Group reports the results of the credit
 
process reviews to the Risk Management Committee.
As of September 30, 2024 and December 31, 2023,
 
all Puerto Rico municipal bonds classified as held-to-maturity were
 
classified as
Pass.
 
No
 
held-to-maturity debt
 
securities were
 
on nonaccrual
 
status, 90 days
 
past due
 
and still accruing,
 
or past
 
due as
 
of September
 
30,
2024 and
 
December 31,
 
2023. A security
 
is considered
 
to be past
 
due once
 
it is 30
 
days contractually
 
past due under
 
the terms of
 
the
agreement.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
23
NOTE 3 – LOANS HELD FOR INVESTMENT
 
 
The
 
following table
 
provides information
 
about
 
the
 
loan
 
portfolio held
 
for
 
investment by
 
portfolio segment
 
and
 
disaggregated by
geographic locations
 
as of the indicated
 
dates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30,
As of December 31,
2024
2023
(In thousands)
Puerto Rico and Virgin Islands region:
Residential mortgage loans, mainly secured by first mortgages
$
2,327,678
$
2,356,006
Construction loans
175,353
115,401
Commercial mortgage loans
 
1,797,333
1,790,637
Commercial and Industrial (“C&I”) loans
2,243,630
2,249,408
Consumer loans
3,733,741
3,651,770
Loans held for investment
$
10,277,735
$
10,163,222
Florida region:
Residential mortgage loans, mainly secured by first mortgages
$
492,469
$
465,720
Construction loans
31,989
99,376
Commercial mortgage loans
 
674,547
526,446
C&I loans
961,683
924,824
Consumer loans
7,601
5,895
Loans held for investment
$
2,168,289
$
2,022,261
Total:
Residential mortgage loans, mainly secured by first mortgages
$
2,820,147
$
2,821,726
Construction loans
207,342
214,777
Commercial mortgage loans
 
2,471,880
2,317,083
C&I loans
(1)
3,205,313
3,174,232
Consumer loans
3,741,342
3,657,665
Loans held for investment
(2)
12,446,024
12,185,483
ACL on loans and finance leases
(246,996)
(261,843)
 
Loans held for investment, net
$
12,199,028
$
11,923,640
(1)
As of September 30, 2024 and
 
December 31, 2023, includes $
769.8
 
million and $
787.5
 
million, respectively, of commercial loans
 
that were secured by real estate
and for which the primary source of repayment at origination was
 
not dependent upon such real estate.
(2)
Includes accretable fair value net purchase discounts of $
24.5
 
million and $
24.7
 
million as of September 30, 2024 and December 31, 2023, respectively.
Various
 
loans
 
were
 
assigned
 
as
 
collateral
 
for
 
borrowings,
 
government
 
deposits,
 
time
 
deposits
 
accounts,
 
and
 
related
 
unused
commitments.
 
The carrying
 
value of
 
loans pledged
 
as collateral
 
amounted
 
to $
5.5
 
billion and
 
$
4.6
 
billion as
 
of September
 
30, 2024
and December
 
31, 2023,
 
respectively.
 
As of
 
each of
 
September 30,
 
2024 and
 
December 31,
 
2023, loans
 
pledged as
 
collateral include
$
1.8
 
billion,
 
that
 
were
 
pledged
 
at
 
the
 
FHLB
 
as
 
collateral
 
for
 
borrowings
 
and
 
letters
 
of
 
credit;
 
$
3.4
 
billion
 
pledged
 
as
 
collateral
 
to
secure borrowing
 
capacity at
 
the FED
 
Discount Window,
 
compared to
 
$
2.5
 
billion as
 
of December
 
31, 2023;
 
$
144.0
 
million pledged
to secure
 
as collateral
 
for the
 
uninsured
 
portion
 
of government
 
deposits,
 
compared
 
to $
166.9
 
million
 
as of
 
December 31,
 
2023; and
$
120.8
 
million pledged to secure time deposits accounts, compared to $
121.1
 
million as of December 31, 2023
.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
24
The Corporation’s
 
aging of
 
the loan
 
portfolio held
 
for investment,
 
as well
 
as information
 
about nonaccrual
 
loans with
 
no ACL,
 
by
portfolio classes as of September 30, 2024 and December 31, 2023 are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2024
Days Past Due and Accruing
Current
30-59
60-89
90+
(1) (2) (3)
Nonaccrual
(4)
Total loans held
for investment
Nonaccrual
Loans with no
ACL
(5)
(In thousands)
Residential mortgage loans, mainly secured by first mortgages:
 
FHA/VA government-guaranteed
 
loans
(1) (3) (6)
$
71,802
$
-
$
2,446
$
20,209
$
-
$
94,457
$
-
 
Conventional residential mortgage loans
(2) (6)
2,656,795
-
29,454
7,712
31,729
2,725,690
1,571
Commercial loans:
 
Construction loans
202,691
-
-
-
4,651
207,342
970
 
Commercial mortgage loans
(2) (6)
2,458,046
1,381
47
910
11,496
2,471,880
6,764
 
C&I loans
 
3,173,300
5,362
813
7,476
18,362
3,205,313
1,525
Consumer loans:
 
Auto loans
1,922,448
56,660
10,424
-
16,125
2,005,657
381
 
Finance leases
876,309
11,722
2,396
-
2,947
893,374
124
 
Personal loans
362,330
6,112
3,242
-
2,175
373,859
-
 
Credit cards
303,551
5,273
4,136
7,303
-
320,263
-
 
Other consumer loans
142,392
2,188
1,750
-
1,859
148,189
-
 
Total loans held for investment
$
12,169,664
$
88,698
$
54,708
$
43,610
$
89,344
$
12,446,024
$
11,335
 
(1)
It is the Corporation’s policy to report
 
delinquent Federal Housing Authority (“FHA”)/U.S. Department of Veterans
 
Affairs (“VA”)
 
government-guaranteed residential mortgage loans as past-due loans 90 days and still
accruing as
 
opposed to
 
nonaccrual loans.
 
The Corporation
 
continues accruing
 
interest on
 
these loans
 
until they
 
have passed
 
the 15-month
 
delinquency mark,
 
taking into
 
consideration the
 
FHA interest
 
curtailment
process. These balances include $
9.0
 
million of residential mortgage loans guaranteed by the FHA that were over 15 months delinquent as of September 30, 2024.
(2)
Includes purchased credit
 
deteriorated (“PCD”) loans
 
previously accounted for
 
under ASC Subtopic
 
310-30 for
 
which the Corporation
 
made the
 
accounting policy election
 
of maintaining pools
 
of loans as
 
“units of
account” both at the time of
 
adoption of the current expected credit loss (“CECL”)
 
methodology on January 1, 2020 and
 
on an ongoing basis for credit
 
loss measurement. These loans will continue to
 
be excluded from
nonaccrual loan statistics as long as the
 
Corporation can reasonably estimate the timing and
 
amount of cash flows expected to
 
be collected on the loan pools.
 
The portion of such loans contractually past
 
due 90 days or
more, amounting to $
6.5
 
million as of September 30, 2024 ($
5.6
 
million conventional residential mortgage loans and $
0.9
 
million commercial mortgage loans), is presented in the loans past due 90 days or more and still
accruing category in the table above.
(3)
Include rebooked loans, which
 
were previously pooled into GNMA
 
securities, amounting to $
6.6
 
million as of September
 
30, 2024. Under the GNMA
 
program, the Corporation has
 
the option but not
 
the obligation to
repurchase loans
 
that meet
 
GNMA’s
 
specified delinquency
 
criteria. For
 
accounting purposes,
 
these loans
 
subject to
 
the repurchase
 
option are
 
required to
 
be reflected
 
on the
 
financial statements
 
with an
 
offsetting
liability.
(4)
Nonaccrual loans in the Florida region amounted to $
9.3
 
million as of September 30, 2024 primarily residential mortgage loans.
(5)
There were
no
 
nonaccrual loans with no ACL in the Florida region as of September 30, 2024.
(6)
According to
 
the Corporation’s
 
delinquency policy and
 
consistent with the
 
instructions for the
 
preparation of the
 
Consolidated Financial
 
Statements for Bank
 
Holding Companies (FR
 
Y-9C)
 
required by
 
the Federal
Reserve Board, residential mortgage,
 
commercial mortgage, and construction
 
loans are considered past
 
due when the borrower
 
is in arrears on
 
two or more monthly
 
payments. FHA/VA
 
government-guaranteed loans,
conventional residential mortgage loans, and commercial mortgage loans past due
 
30-59 days, but less than two payments in arrears, as of
 
September 30, 2024 amounted to $
8.7
 
million, $
60.6
 
million, and $
2.1
 
million,
respectively.
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
25
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2023
Days Past Due and Accruing
Current
30-59
60-89
90+
(1) (2) (3)
Nonaccrual
(4)
Total loans held
for investment
Nonaccrual
Loans with no
ACL
(5)
(In thousands)
Residential mortgage loans, mainly secured by first mortgages:
 
FHA/VA government-guaranteed
 
loans
(1) (3) (6)
$
68,332
$
-
$
2,592
$
29,312
$
-
$
100,236
$
-
 
Conventional residential mortgage loans
(2) (6)
2,644,344
-
33,878
11,029
32,239
2,721,490
1,742
Commercial loans:
 
Construction loans
210,911
-
-
2,297
1,569
214,777
972
 
Commercial mortgage loans
(2) (6)
2,303,753
17
-
1,108
12,205
2,317,083
2,536
 
C&I loans
 
3,148,254
1,130
1,143
8,455
15,250
3,174,232
1,687
Consumer loans:
 
Auto loans
1,846,652
60,283
13,753
-
15,568
1,936,256
4
 
Finance leases
837,881
13,786
1,861
-
3,287
856,815
12
 
Personal loans
370,746
5,873
2,815
-
1,841
381,275
-
 
Credit cards
313,360
5,012
3,589
7,251
-
329,212
-
 
Other consumer loans
147,278
3,084
1,997
-
1,748
154,107
-
 
Total loans held for investment
$
11,891,511
$
89,185
$
61,628
$
59,452
$
83,707
$
12,185,483
$
6,953
 
(1)
It is
 
the Corporation’s
 
policy to
 
report delinquent
 
FHA/VA
 
government-guaranteed residential
 
mortgage loans
 
as past-due
 
loans 90
 
days and
 
still accruing
 
as opposed
 
to nonaccrual
 
loans. The
 
Corporation continues
accruing interest on these loans until they
 
have passed the 15-month delinquency mark,
 
taking into consideration the FHA interest
 
curtailment process. These balances include $
15.4
 
million of residential mortgage loans
guaranteed by the FHA that were over 15 months delinquent as of December 31, 2023.
(2)
Includes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans as “units of account” both
 
at the time of adoption of
CECL on January 1, 2020 and on an
 
ongoing basis for credit loss measurement. These loans will
 
continue to be excluded from nonaccrual loan statistics as long
 
as the Corporation can reasonably estimate the timing
 
and
amount of
 
cash flows
 
expected to
 
be collected
 
on the
 
loan pools.
 
The portion
 
of such
 
loans contractually
 
past due
 
90 days
 
or more,
 
amounting to
 
$
8.3
 
million as
 
of December
 
31, 2023
 
($
7.4
 
million conventional
residential mortgage loans, and $
0.9
 
million commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above.
(3)
Include rebooked loans,
 
which were previously
 
pooled into GNMA
 
securities, amounting to
 
$
7.9
 
million as of
 
December 31, 2023.
 
Under the GNMA
 
program, the Corporation
 
has the option
 
but not the
 
obligation to
repurchase loans that meet GNMA’s
 
specified delinquency criteria. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability.
(4)
Nonaccrual loans in the Florida region amounted to $
8.0
 
million as of December 31, 2023, primarily nonaccrual residential mortgage loans and C&I loans.
(5)
There were
no
 
nonaccrual loans with no ACL in the Florida region as of December 31, 2023.
(6)
According to
 
the Corporation’s
 
delinquency policy
 
and consistent
 
with the
 
instructions for
 
the preparation
 
of the
 
Consolidated Financial
 
Statements for
 
Bank Holding
 
Companies (FR
 
Y-9C)
 
required by
 
the Federal
Reserve Board, residential
 
mortgage, commercial mortgage,
 
and construction loans
 
are considered past
 
due when the
 
borrower is in
 
arrears on two
 
or more monthly
 
payments. FHA/VA
 
government-guaranteed loans,
conventional residential mortgage loans,
 
and commercial mortgage loans
 
past due 30-59 days,
 
but less than two payments
 
in arrears, as of
 
December 31, 2023 amounted to
 
$
8.2
 
million, $
69.9
 
million, and $
1.1
 
million,
respectively.
When
 
a
 
loan
 
is placed
 
in
 
nonaccrual
 
status,
 
any
 
accrued
 
but uncollected
 
interest
 
income
 
is reversed
 
and
 
charged
 
against interest
income
 
and the
 
amortization of
 
any net
 
deferred fees
 
is suspended.
 
The amount
 
of accrued
 
interest reversed
 
against interest
 
income
totaled $
0.8
 
million and $
2.3
 
million for the quarter
 
and nine-month period ended
 
September 30, 2024, respectively,
 
compared to $
0.9
million and $
2.0
 
million for the same periods
 
in 2023, respectively.
 
For the quarter and
 
nine-month period ended September
 
30, 2024,
the cash
 
interest income
 
recognized
 
on nonaccrual
 
loans amounted
 
to $
0.5
 
million
 
and $
1.4
 
million,
 
respectively,
 
compared
 
to $
0.4
million and $
1.4
 
million for the same periods in 2023, respectively.
As of
 
September 30,
 
2024, the
 
recorded investment
 
on residential
 
mortgage loans
 
collateralized by
 
residential real
 
estate property
that
 
were
 
in
 
the
 
process
 
of
 
foreclosure
 
amounted
 
to
 
$
32.1
 
million,
 
including
 
$
12.3
 
million
 
of
 
FHA/VA
 
government-guaranteed
mortgage
 
loans,
 
and
 
$
4.5
 
million
 
of
 
PCD
 
loans
 
acquired
 
prior
 
to
 
the
 
adoption,
 
on
 
January
 
1,
 
2020,
 
of
 
CECL.
 
The
 
Corporation
commences
 
the
 
foreclosure
 
process
 
on
 
residential
 
real
 
estate
 
loans
 
when
 
a
 
borrower
 
becomes
120
 
days
 
delinquent.
 
Foreclosure
procedures
 
and
 
timelines
 
vary
 
depending
 
on
 
whether
 
the
 
property
 
is
 
located
 
in
 
a
 
judicial
 
or
 
non-judicial
 
state.
 
Occasionally,
foreclosures may be delayed due to, among other reasons, mandatory
 
mediations, bankruptcy,
 
court delays, and title issues.
Credit Quality Indicators:
The Corporation
 
categorizes loans
 
into risk
 
categories based
 
on relevant
 
information
 
about the
 
ability of
 
the borrowers
 
to service
their debt
 
such as
 
current financial
 
information, historical
 
payment experience,
 
credit documentation,
 
public information,
 
and current
economic
 
trends,
 
among
 
other
 
factors.
 
The
 
Corporation
 
analyzes
 
non-homogeneous
 
loans,
 
such
 
as commercial
 
mortgage,
 
C&I,
 
and
construction loans individually
 
to classify the loans’ credit
 
risk. The Corporation
 
periodically reviews its commercial
 
and construction
loans
 
to
 
evaluate
 
if
 
they
 
are
 
properly
 
classified.
 
The
 
frequency
 
of
 
these
 
reviews
 
will
 
depend
 
on
 
the
 
amount
 
of
 
the
 
aggregate
outstanding
 
debt,
 
and
 
the
 
risk
 
rating
 
classification
 
of
 
the
 
obligor.
 
In
 
addition,
 
during
 
the
 
renewal
 
and
 
annual
 
review
 
process
 
of
applicable credit facilities,
 
the Corporation evaluates
 
the corresponding loan
 
grades. The Corporation
 
uses the same definition
 
for risk
ratings as those
 
described for Puerto
 
Rico municipal bonds
 
accounted for
 
as held-to-maturity debt
 
securities, as discussed
 
in Note 3
 
–
“Debt Securities,” to the audited consolidated financial statements
 
included in the 2023 Annual Report on Form 10-K.
For residential mortgage and consumer loans, the Corporation evaluates
 
credit quality based on its interest accrual status.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
26
Based on
 
the most
 
recent analysis
 
performed, the
 
amortized cost
 
of commercial
 
and construction
 
loans by portfolio
 
classes and
 
by
origination year
 
based on
 
the internal
 
credit-risk category
 
as of
 
September 30,
 
2024, the
 
gross charge
 
-offs for
 
the nine-month
 
period
ended September
 
30, 2024
 
by portfolio
 
classes and
 
by origination
 
year,
 
and the
 
amortized cost
 
of commercial
 
and construction
 
loans
by portfolio classes based on the internal credit-risk category as of December
 
31, 2023, were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30,2024
As of
December 31,
2023
Puerto Rico and Virgin Islands Regions
Term Loans
Amortized Cost Basis by Origination Year
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
CONSTRUCTION
 
Risk Ratings:
 
Pass
$
22,083
$
94,800
$
40,799
$
7,553
$
-
$
2,406
$
-
$
167,641
$
113,170
 
Criticized:
 
Special Mention
-
-
-
-
-
-
-
-
-
 
Substandard
-
3,061
3,224
-
-
1,427
-
7,712
2,231
 
Doubtful
-
-
-
-
-
-
-
-
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total construction loans
$
22,083
$
97,861
$
44,023
$
7,553
$
-
$
3,833
$
-
$
175,353
$
115,401
 
Charge-offs on construction loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
COMMERCIAL MORTGAGE
 
Risk Ratings:
 
Pass
$
129,145
$
170,328
$
393,259
$
145,268
$
314,723
$
463,702
$
5,359
$
1,621,784
$
1,618,404
 
Criticized:
 
Special Mention
-
3,744
4,232
-
30,168
110,684
-
148,828
146,626
 
Substandard
137
-
-
-
-
26,584
-
26,721
25,607
 
Doubtful
-
-
-
-
-
-
-
-
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total commercial mortgage loans
$
129,282
$
174,072
$
397,491
$
145,268
$
344,891
$
600,970
$
5,359
$
1,797,333
$
1,790,637
 
Charge-offs on commercial mortgage loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
C&I
 
Risk Ratings:
 
Pass
$
184,460
$
397,957
$
281,462
$
127,753
$
144,452
$
307,136
$
716,028
$
2,159,248
$
2,173,939
 
Criticized:
 
Special Mention
-
2,340
-
10,005
-
416
29,378
42,139
40,376
 
Substandard
192
-
-
14,443
-
18,990
8,074
41,699
35,093
 
Doubtful
-
-
-
-
-
-
544
544
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total C&I loans
$
184,652
$
400,297
$
281,462
$
152,201
$
144,452
$
326,542
$
754,024
$
2,243,630
$
2,249,408
 
Charge-offs on C&I loans
$
-
$
106
$
304
$
-
$
-
$
1,190
$
234
$
1,834
(1) Excludes accrued interest receivable.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
27
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30,2024
As of
December 31,
2023
Term Loans
Florida Region
Amortized Cost Basis by Origination Year
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
CONSTRUCTION
 
Risk Ratings:
 
Pass
$
5,197
$
8,742
$
-
$
-
$
-
$
-
$
18,050
$
31,989
$
99,376
 
Criticized:
 
Special Mention
-
-
-
-
-
-
-
-
-
 
Substandard
-
-
-
-
-
-
-
-
-
 
Doubtful
-
-
-
-
-
-
-
-
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total construction loans
$
5,197
$
8,742
$
-
$
-
$
-
$
-
$
18,050
$
31,989
$
99,376
 
Charge-offs on construction loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
COMMERCIAL MORTGAGE
 
Risk Ratings:
 
Pass
$
61,492
$
28,790
$
229,182
$
105,293
$
38,885
$
173,516
$
24,154
$
661,312
$
525,453
 
Criticized:
 
Special Mention
-
-
12,242
-
-
-
-
12,242
-
 
Substandard
-
-
-
-
993
-
-
993
993
 
Doubtful
-
-
-
-
-
-
-
-
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total commercial mortgage loans
$
61,492
$
28,790
$
241,424
$
105,293
$
39,878
$
173,516
$
24,154
$
674,547
$
526,446
 
Charge-offs on commercial mortgage loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
C&I
 
Risk Ratings:
 
Pass
$
168,497
$
162,047
$
214,344
$
162,951
$
24,772
$
100,414
$
117,427
$
950,452
$
879,195
 
Criticized:
 
Special Mention
-
-
-
-
-
11,231
-
11,231
42,046
 
Substandard
-
-
-
-
-
-
-
-
3,583
 
Doubtful
-
-
-
-
-
-
-
-
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total C&I loans
$
168,497
$
162,047
$
214,344
$
162,951
$
24,772
$
111,645
$
117,427
$
961,683
$
924,824
 
Charge-offs on C&I loans
$
-
$
-
$
-
$
-
$
-
$
48
$
259
$
307
(1) Excludes accrued interest receivable.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30,2024
As of
December 31,
2023
Term Loans
Total
Amortized Cost Basis by Origination Year
 
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
CONSTRUCTION
 
Risk Ratings:
 
Pass
$
27,280
$
103,542
$
40,799
$
7,553
$
-
$
2,406
$
18,050
$
199,630
$
212,546
 
Criticized:
 
Special Mention
-
-
-
-
-
-
-
-
-
 
Substandard
-
3,061
3,224
-
-
1,427
-
7,712
2,231
 
Doubtful
-
-
-
-
-
-
-
-
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total construction loans
$
27,280
$
106,603
$
44,023
$
7,553
$
-
$
3,833
$
18,050
$
207,342
$
214,777
 
Charge-offs on construction loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
COMMERCIAL MORTGAGE
 
Risk Ratings:
 
Pass
$
190,637
$
199,118
$
622,441
$
250,561
$
353,608
$
637,218
$
29,513
$
2,283,096
$
2,143,857
 
Criticized:
 
Special Mention
-
3,744
16,474
-
30,168
110,684
-
161,070
146,626
 
Substandard
137
-
-
-
993
26,584
-
27,714
26,600
 
Doubtful
-
-
-
-
-
-
-
-
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total commercial mortgage loans
$
190,774
$
202,862
$
638,915
$
250,561
$
384,769
$
774,486
$
29,513
$
2,471,880
$
2,317,083
 
Charge-offs on commercial mortgage loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
C&I
 
Risk Ratings:
 
Pass
$
352,957
$
560,004
$
495,806
$
290,704
$
169,224
$
407,550
$
833,455
$
3,109,700
$
3,053,134
 
Criticized:
 
Special Mention
-
2,340
-
10,005
-
11,647
29,378
53,370
82,422
 
Substandard
192
-
-
14,443
-
18,990
8,074
41,699
38,676
 
Doubtful
-
-
-
-
-
-
544
544
-
 
Loss
-
-
-
-
-
-
-
-
-
 
Total C&I loans
$
353,149
$
562,344
$
495,806
$
315,152
$
169,224
$
438,187
$
871,451
$
3,205,313
$
3,174,232
 
Charge-offs on C&I loans
$
-
$
106
$
304
$
-
$
-
$
1,238
$
493
$
2,141
(1) Excludes accrued interest receivable.
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
29
The following
 
tables present the
 
amortized cost of
 
residential mortgage
 
loans by portfolio
 
classes and by
 
origination year
 
based on
accrual
 
status as
 
of
 
September
 
30,
 
2024,
 
the
 
gross charge
 
-offs
 
for
 
the
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024 by
 
origination
year, and the amortized cost of residential mortgage
 
loans by portfolio classes based on accrual status as of December 31, 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30,2024
As of
December 31,
2023
Term Loans
Amortized Cost Basis by Origination Year
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Puerto Rico and Virgin Islands Regions:
FHA/VA government-guaranteed loans
Accrual Status:
Performing
$
-
$
765
$
781
$
1,278
$
782
$
90,167
$
-
$
93,773
$
99,293
Non-Performing
-
-
-
-
-
-
-
-
-
Total FHA/VA
 
government-guaranteed loans
$
-
$
765
$
781
$
1,278
$
782
$
90,167
$
-
$
93,773
$
99,293
Conventional residential mortgage loans
Accrual Status:
Performing
$
132,452
$
167,864
$
155,169
$
64,099
$
27,667
$
1,664,173
$
-
$
2,211,424
$
2,231,701
Non-Performing
-
-
68
-
-
22,413
-
22,481
25,012
Total conventional residential mortgage loans
$
132,452
$
167,864
$
155,237
$
64,099
$
27,667
$
1,686,586
$
-
$
2,233,905
$
2,256,713
Total
Accrual Status:
Performing
$
132,452
$
168,629
$
155,950
$
65,377
$
28,449
$
1,754,340
$
-
$
2,305,197
$
2,330,994
Non-Performing
-
-
68
-
-
22,413
-
22,481
25,012
Total residential mortgage loans
 
$
132,452
$
168,629
$
156,018
$
65,377
$
28,449
$
1,776,753
$
-
$
2,327,678
$
2,356,006
Charge-offs on residential mortgage loans
$
-
$
2
$
-
$
-
$
9
$
1,417
$
-
$
1,428
(1)
Excludes accrued interest receivable.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30,2024
As of
December 31,
2023
Term Loans
Amortized Cost Basis by Origination Year
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Florida Region:
FHA/VA government-guaranteed loans
Accrual Status:
Performing
$
-
$
-
$
-
$
-
$
-
$
684
$
-
$
684
$
943
Non-Performing
-
-
-
-
-
-
-
-
-
Total FHA/VA
 
government-guaranteed loans
$
-
$
-
$
-
$
-
$
-
$
684
$
-
$
684
$
943
Conventional residential mortgage loans
Accrual Status:
Performing
$
65,909
$
86,443
$
73,629
$
41,979
$
27,327
$
187,250
$
-
$
482,537
$
457,550
Non-Performing
-
-
1,056
-
-
8,192
-
9,248
7,227
Total conventional residential mortgage loans
$
65,909
$
86,443
$
74,685
$
41,979
$
27,327
$
195,442
$
-
$
491,785
$
464,777
Total
Accrual Status:
Performing
$
65,909
$
86,443
$
73,629
$
41,979
$
27,327
$
187,934
$
-
$
483,221
$
458,493
Non-Performing
-
-
1,056
-
-
8,192
-
9,248
7,227
Total residential mortgage loans
$
65,909
$
86,443
$
74,685
$
41,979
$
27,327
$
196,126
$
-
$
492,469
$
465,720
Charge-offs on residential mortgage loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
(1)
Excludes accrued interest receivable.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30,2024
As of
December 31,
2023
Term Loans
Amortized Cost Basis by Origination Year
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Total:
FHA/VA government-guaranteed loans
Accrual Status:
Performing
$
-
$
765
$
781
$
1,278
$
782
$
90,851
$
-
$
94,457
$
100,236
Non-Performing
-
-
-
-
-
-
-
-
-
Total FHA/VA
 
government-guaranteed loans
$
-
$
765
$
781
$
1,278
$
782
$
90,851
$
-
$
94,457
$
100,236
Conventional residential mortgage loans
Accrual Status:
Performing
$
198,361
$
254,307
$
228,798
$
106,078
$
54,994
$
1,851,423
$
-
$
2,693,961
$
2,689,251
Non-Performing
-
-
1,124
-
-
30,605
-
31,729
32,239
Total conventional residential mortgage loans
$
198,361
$
254,307
$
229,922
$
106,078
$
54,994
$
1,882,028
$
-
$
2,725,690
$
2,721,490
Total
Accrual Status:
Performing
$
198,361
$
255,072
$
229,579
$
107,356
$
55,776
$
1,942,274
$
-
$
2,788,418
$
2,789,487
Non-Performing
-
-
1,124
-
-
30,605
-
31,729
32,239
Total residential mortgage loans
$
198,361
$
255,072
$
230,703
$
107,356
$
55,776
$
1,972,879
$
-
$
2,820,147
$
2,821,726
Charge-offs on residential mortgage loans
$
-
$
2
$
-
$
-
$
9
$
1,417
$
-
$
1,428
(1)
Excludes accrued interest receivable.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
31
The
 
following
 
tables present
 
the
 
amortized
 
cost
 
of
 
consumer
 
loans
 
by
 
portfolio
 
classes
 
and
 
by
 
origination
 
year
 
based on
 
accrual
status as
 
of September
 
30, 2024,
 
the gross
 
charge-offs
 
for the
 
nine-month period
 
ended September
 
30, 2024
 
by portfolio
 
classes and
by origination year, and the amortized
 
cost of consumer loans by portfolio classes based on accrual status as of December 31,2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2024
As of
December 31,
2023
Term Loans
Amortized Cost Basis by Origination Year
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Puerto Rico and Virgin Islands Regions:
Auto loans
Accrual Status:
Performing
$
481,347
$
537,007
$
432,448
$
297,257
$
130,203
$
110,964
$
-
$
1,989,226
$
1,919,583
Non-Performing
766
4,071
3,528
3,114
1,409
3,234
-
16,122
15,556
Total auto loans
$
482,113
$
541,078
$
435,976
$
300,371
$
131,612
$
114,198
$
-
$
2,005,348
$
1,935,139
Charge-offs on auto loans
$
660
$
7,573
$
7,602
$
4,243
$
1,364
$
2,756
$
-
$
24,198
Finance leases
Accrual Status:
Performing
$
196,167
$
278,082
$
208,244
$
122,051
$
49,384
$
36,499
$
-
$
890,427
$
853,528
Non-Performing
-
633
876
610
194
634
-
2,947
3,287
Total finance leases
$
196,167
$
278,715
$
209,120
$
122,661
$
49,578
$
37,133
$
-
$
893,374
$
856,815
Charge-offs on finance leases
$
44
$
1,926
$
2,609
$
1,205
$
281
$
928
$
-
$
6,993
Personal loans
Accrual Status:
Performing
$
107,544
$
128,563
$
82,226
$
20,363
$
9,998
$
21,049
$
-
$
369,743
$
379,161
Non-Performing
108
822
846
165
76
158
-
2,175
1,841
Total personal loans
$
107,652
$
129,385
$
83,072
$
20,528
$
10,074
$
21,207
$
-
$
371,918
$
381,002
Charge-offs on personal loans
$
249
$
5,712
$
7,503
$
1,683
$
540
$
1,527
$
-
$
17,214
Credit cards
Accrual Status:
Performing
$
-
$
-
$
-
$
-
$
-
$
-
$
320,263
$
320,263
$
329,212
Non-Performing
-
-
-
-
-
-
-
-
-
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
320,263
$
320,263
$
329,212
Charge-offs on credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
18,593
$
18,593
Other consumer loans
Accrual Status:
Performing
$
53,663
$
44,603
$
19,600
$
5,892
$
4,017
$
4,502
$
8,735
$
141,012
$
147,913
Non-Performing
267
773
332
70
19
220
145
1,826
1,689
Total other consumer loans
$
53,930
$
45,376
$
19,932
$
5,962
$
4,036
$
4,722
$
8,880
$
142,838
$
149,602
Charge-offs on other consumer loans
$
685
$
7,496
$
3,870
$
950
$
234
$
435
$
486
$
14,156
Total
Accrual Status:
Performing
$
838,721
$
988,255
$
742,518
$
445,563
$
193,602
$
173,014
$
328,998
$
3,710,671
$
3,629,397
Non-Performing
1,141
6,299
5,582
3,959
1,698
4,246
145
23,070
22,373
Total consumer loans
 
$
839,862
$
994,554
$
748,100
$
449,522
$
195,300
$
177,260
$
329,143
$
3,733,741
$
3,651,770
Charge-offs on total consumer loans
$
1,638
$
22,707
$
21,584
$
8,081
$
2,419
$
5,646
$
19,079
$
81,154
(1)
Excludes accrued interest receivable.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
32
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2024
As of
December 31,
2023
Term Loans
Amortized Cost Basis by Origination Year
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Florida Region:
Auto loans
Accrual Status:
Performing
$
-
$
-
$
-
$
-
$
-
$
306
$
-
$
306
$
1,105
Non-Performing
-
-
-
-
-
3
-
3
12
Total auto loans
$
-
$
-
$
-
$
-
$
-
$
309
$
-
$
309
$
1,117
Charge-offs on auto loans
$
-
$
-
$
-
$
-
$
-
$
75
$
-
$
75
Finance leases
Accrual Status:
Performing
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Non-Performing
-
-
-
-
-
-
-
-
-
Total finance leases
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Charge-offs on finance leases
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Personal loans
Accrual Status:
Performing
$
1,823
$
47
$
-
$
71
$
-
$
-
$
-
$
1,941
$
273
Non-Performing
-
-
-
-
-
-
-
-
-
Total personal loans
$
1,823
$
47
$
-
$
71
$
-
$
-
$
-
$
1,941
$
273
Charge-offs on personal loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Credit cards
Accrual Status:
Performing
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Non-Performing
-
-
-
-
-
-
-
-
-
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Charge-offs on credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Other consumer loans
Accrual Status:
Performing
$
897
$
53
$
-
$
217
$
317
$
1,994
$
1,840
$
5,318
$
4,446
Non-Performing
-
-
-
-
-
17
16
33
59
Total other consumer loans
$
897
$
53
$
-
$
217
$
317
$
2,011
$
1,856
$
5,351
$
4,505
Charge-offs on other consumer loans
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Total
Accrual Status:
Performing
$
2,720
$
100
$
-
$
288
$
317
$
2,300
$
1,840
$
7,565
$
5,824
Non-Performing
-
-
-
-
-
20
16
36
71
Total consumer loans
$
2,720
$
100
$
-
$
288
$
317
$
2,320
$
1,856
$
7,601
$
5,895
Charge-offs on total consumer loans
$
-
$
-
$
-
$
-
$
-
$
75
$
-
$
75
(1)
Excludes accrued interest receivable.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
33
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2024
As of
December 31,
2023
Term Loans
Amortized Cost Basis by Origination Year
(1)
2024
2023
2022
2021
2020
Prior
Revolving
Loans
Amortized
Cost Basis
Total
Total
(In thousands)
Total:
Auto loans
Accrual Status:
Performing
$
481,347
$
537,007
$
432,448
$
297,257
$
130,203
$
111,270
$
-
$
1,989,532
$
1,920,688
Non-Performing
766
4,071
3,528
3,114
1,409
3,237
-
16,125
15,568
Total auto loans
$
482,113
$
541,078
$
435,976
$
300,371
$
131,612
$
114,507
$
-
$
2,005,657
$
1,936,256
Charge-offs on auto loans
$
660
$
7,573
$
7,602
$
4,243
$
1,364
$
2,831
$
-
$
24,273
Finance leases
Accrual Status:
Performing
$
196,167
$
278,082
$
208,244
$
122,051
$
49,384
$
36,499
$
-
$
890,427
$
853,528
Non-Performing
-
633
876
610
194
634
-
2,947
3,287
Total finance leases
$
196,167
$
278,715
$
209,120
$
122,661
$
49,578
$
37,133
$
-
$
893,374
$
856,815
Charge-offs on finance leases
$
44
$
1,926
$
2,609
$
1,205
$
281
$
928
$
-
$
6,993
Personal loans
Accrual Status:
Performing
$
109,367
$
128,610
$
82,226
$
20,434
$
9,998
$
21,049
$
-
$
371,684
$
379,434
Non-Performing
108
822
846
165
76
158
-
2,175
1,841
Total personal loans
$
109,475
$
129,432
$
83,072
$
20,599
$
10,074
$
21,207
$
-
$
373,859
$
381,275
Charge-offs on personal loans
$
249
$
5,712
$
7,503
$
1,683
$
540
$
1,527
$
-
$
17,214
Credit cards
Accrual Status:
Performing
$
-
$
-
$
-
$
-
$
-
$
-
$
320,263
$
320,263
$
329,212
Non-Performing
-
-
-
-
-
-
-
-
-
Total credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
320,263
$
320,263
$
329,212
Charge-offs on credit cards
$
-
$
-
$
-
$
-
$
-
$
-
$
18,593
$
18,593
Other consumer loans
Accrual Status:
Performing
$
54,560
$
44,656
$
19,600
$
6,109
$
4,334
$
6,496
$
10,575
$
146,330
$
152,359
Non-Performing
267
773
332
70
19
237
161
1,859
1,748
Total other consumer loans
$
54,827
$
45,429
$
19,932
$
6,179
$
4,353
$
6,733
$
10,736
$
148,189
$
154,107
Charge-offs on other consumer loans
$
685
$
7,496
$
3,870
$
950
$
234
$
435
$
486
$
14,156
Total
Accrual Status:
Performing
$
841,441
$
988,355
$
742,518
$
445,851
$
193,919
$
175,314
$
330,838
$
3,718,236
$
3,635,221
Non-Performing
1,141
6,299
5,582
3,959
1,698
4,266
161
23,106
22,444
Total consumer loans
$
842,582
$
994,654
$
748,100
$
449,810
$
195,617
$
179,580
$
330,999
$
3,741,342
$
3,657,665
Charge-offs on total consumer loans
$
1,638
$
22,707
$
21,584
$
8,081
$
2,419
$
5,721
$
19,079
$
81,229
(1)
Excludes accrued interest receivable.
As of September 30, 2024 and December 31, 2023, the balance of revolving
 
loans converted to term loans was
no
t material.
Accrued interest
 
receivable on loans
 
totaled $
55.1
 
million as of
 
September 30, 2024
 
($
62.3
 
million as of
 
December 31, 2023),
 
was
reported as part
 
of accrued interest receivable
 
on loans and
 
investment securities in
 
the consolidated statements
 
of financial condition,
and is excluded from the estimate of credit losses.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
34
The
 
following
 
tables
 
present
 
information
 
about
 
collateral
 
dependent
 
loans
 
that
 
were
 
individually
 
evaluated
 
for
 
purposes
 
of
determining the ACL as of September 30, 2024 and December
 
31, 2023
:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of September 30, 2024
Collateral Dependent Loans -
With Allowance
Collateral Dependent
Loans - With No
Related Allowance
Collateral Dependent Loans - Total
Amortized Cost
 
Related
Allowance
Amortized Cost
Amortized Cost
 
Related
Allowance
(In thousands)
Residential mortgage loans:
Conventional residential mortgage loans
$
23,450
$
1,040
$
-
$
23,450
$
1,040
Commercial loans:
Construction loans
3,224
230
956
4,180
230
Commercial mortgage loans
5,019
133
42,347
47,366
133
C&I loans
 
13,348
1,330
6,527
19,875
1,330
Consumer loans:
Personal loans
28
1
-
28
1
Other consumer loans
123
9
-
123
9
$
45,192
$
2,743
$
49,830
$
95,022
$
2,743
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2023
Collateral Dependent Loans -
With Allowance
Collateral Dependent
Loans - With No
Related Allowance
Collateral Dependent Loans - Total
Amortized Cost
 
Related
Allowance
Amortized Cost
 
Amortized Cost
 
Related
Allowance
(In thousands)
Residential mortgage loans:
Conventional residential mortgage loans
$
25,355
$
1,732
$
-
$
25,355
$
1,732
Commercial loans:
Construction loans
-
-
956
956
-
Commercial mortgage loans
4,454
135
40,683
45,137
135
C&I loans
 
9,390
1,563
6,780
16,170
1,563
Consumer loans:
Personal loans
28
1
-
28
1
Other consumer loans
123
12
-
123
12
$
39,350
$
3,443
$
48,419
$
87,769
$
3,443
The
 
underlying
 
collateral
 
for
 
residential
 
mortgage
 
and
 
consumer
 
collateral
 
dependent
 
loans consisted
 
of
 
single-family
 
residential
properties,
 
and for
 
commercial and
 
construction loans
 
consisted primarily
 
of office
 
buildings, multifamily
 
residential properties,
 
and
retail establishments. The weighted-average
 
loan-to-value coverage for collateral
 
dependent loans as of September
 
30, 2024 was
72
%,
compared
 
to
65
%
 
as
 
of
 
December
 
31,
 
2023,
 
mainly
 
related
 
to
 
the
 
inflow
 
to
 
nonaccrual
 
status
 
of
 
a
 
$
16.5
 
million
 
commercial
relationship
 
in the
 
Puerto Rico
 
region in
 
the food
 
retail industry,
 
with a
 
loan-to-value
 
over
100
%, classified
 
as collateral
 
dependent,
partially offset
 
by the sale
 
of an $
8.2
 
million nonaccrual
 
C&I loan in
 
the Puerto Rico
 
region, which resulted
 
in a $
1.2
 
million charge-
off that had been previously reserved.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
35
Purchases and Sales of Loans
In
 
the
 
ordinary
 
course
 
of
 
business,
 
the
 
Corporation
 
enters
 
into
 
securitization
 
transactions
 
and
 
whole
 
loan
 
sales
 
with
 
GNMA
 
and
GSEs, such as FNMA and
 
FHLMC. During the first
 
nine months of 2024,
 
loans pooled into GNMA MBS
 
amounted to approximately
$
87.4
 
million, compared
 
to $
102.9
 
million, for the
 
first nine months
 
of 2023, for
 
which the Corporation
 
recognized a net
 
gain on sale
of
 
$
3.7
 
million
 
and
 
$
2.2
 
million,
 
respectively.
 
Also,
 
during
 
the
 
first
 
nine
 
months
 
of
 
2024
 
and
 
2023,
 
the
 
Corporation
 
sold
approximately
 
$
25.8
 
million
 
and
 
$
28.6
 
million,
 
respectively,
 
of
 
performing
 
residential
 
mortgage
 
loans
 
to
 
GSEs,
 
for
 
which
 
the
Corporation
 
recognized a
 
net gain
 
on sale
 
of $
0.6
 
million and
 
$
0.7
 
million, respectively.
 
The Corporation’s
 
continuing involvement
with
 
the
 
loans
 
that
 
it
 
sells
 
consists
 
primarily
 
of
 
servicing
 
the
 
loans.
 
In
 
addition,
 
the
 
Corporation
 
agrees
 
to
 
repurchase
 
loans
 
if
 
it
breaches any of
 
the representations and
 
warranties included in
 
the sale agreement.
 
These representations and
 
warranties are consistent
with the
 
GSEs’ selling
 
and servicing
 
guidelines (
i.e.
, ensuring
 
that the
 
mortgage was
 
properly underwritten
 
according to
 
established
guidelines).
For loans
 
pooled into
 
GNMA MBS,
 
the Corporation,
 
as servicer,
 
holds an
 
option to
 
repurchase individual
 
delinquent loans
 
issued
on or after
 
January 1, 2003,
 
when certain delinquency
 
criteria are met. This
 
option gives the
 
Corporation the unilateral
 
ability,
 
but not
the obligation, to
 
repurchase the delinquent
 
loans at par without
 
prior authorization from
 
GNMA. Since the
 
Corporation is considered
to
 
have
 
regained
 
effective
 
control
 
over
 
the
 
loans,
 
it
 
is
 
required
 
to
 
recognize
 
the
 
loans
 
and
 
a
 
corresponding
 
repurchase
 
liability
regardless of its
 
intent to repurchase
 
the loans. As
 
of September
 
30, 2024 and
 
December 31, 2023,
 
rebooked GNMA delinquent
 
loans
that were included in the residential mortgage loan portfolio amounted
 
to $
6.6
 
million and $
7.9
 
million, respectively.
During
 
the
 
first
 
nine
 
months
 
of
 
2024
 
and
 
2023,
 
the
 
Corporation
 
repurchased,
 
pursuant
 
to
 
the
 
aforementioned
 
repurchase
 
option,
$
1.7
 
million and $
2.5
 
million, respectively,
 
of loans previously pooled
 
into GNMA MBS. The
 
principal balance of these
 
loans is fully
guaranteed,
 
and the
 
risk of
 
loss related
 
to the
 
repurchased loans
 
is generally
 
limited to
 
the difference
 
between the
 
delinquent interest
payment advanced
 
to GNMA, which
 
is computed at
 
the loan’s
 
interest rate,
 
and the interest
 
payments reimbursed
 
by FHA, which
 
are
computed
 
at a
 
pre-determined
 
debenture
 
rate.
 
Repurchases
 
of GNMA
 
loans allow
 
the
 
Corporation,
 
among
 
other
 
things, to
 
maintain
acceptable
 
delinquency
 
rates
 
on
 
outstanding
 
GNMA
 
pools
 
and
 
remain
 
as
 
a
 
seller
 
and
 
servicer
 
in
 
good
 
standing
 
with
 
GNMA.
Historically, losses
 
on these repurchases of
 
GNMA delinquent loans have
 
been immaterial and no provision has
 
been made at the time
of sale.
Loan sales to FNMA and FHLMC are without recourse in relation
 
to the future performance of the loans.
 
The Corporation’s risk of
loss
 
with
 
respect
 
to
 
these
 
loans
 
is
 
also
 
minimal
 
as
 
these
 
repurchased
 
loans
 
are
 
generally
 
performing
 
loans
 
with
 
documentation
deficiencies.
During
 
the
 
first
 
nine
 
months
 
of
 
2024,
 
the
 
Corporation
 
purchased
 
commercial
 
loan
 
participations
 
in
 
the
 
Florida
 
region
 
totaling
$
178.2
 
million, which
 
consisted of
 
approximately $
164.5
 
million in
 
the C&I
 
portfolio and
 
$
13.7
 
million in
 
the commercial
 
mortgage
portfolio, compared
 
to C&I loan
 
participations purchased
 
in the Florida
 
region totaling $
61.3
 
million during the
 
same period of
 
2023.
In addition,
 
during
 
the first
 
nine months
 
of 2024,
 
the Corporation
 
purchased
 
commercial mortgage
 
loan participations
 
in the
 
Puerto
Rico region totaling $
38.9
 
million.
During
 
the first
 
nine months
 
of
 
2024,
 
the Corporation
 
recognized
 
a $
10.0
 
million
 
recovery
 
associated
 
with the
 
bulk
 
sale of
 
fully
charged-off
 
consumer
 
loans.
 
There
 
were
no
 
significant
 
sales
 
of
 
loans
 
during
 
the
 
first
 
nine
 
months
 
of
 
2023,
 
other
 
than
 
the
 
sales
 
of
conforming
 
residential
 
mortgage loans
 
mentioned
 
above. In
 
addition, during
 
the first
 
nine months
 
of 2024,
 
the Corporation
 
sold the
aforementioned $
8.2
 
million nonaccrual C&I loan in the Puerto Rico region, net of a $
1.2
 
million charge-off.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
36
 
 
 
Loan Portfolio Concentration
The Corporation’s
 
primary
 
lending area
 
is Puerto
 
Rico. The
 
Corporation’s
 
banking subsidiary,
 
FirstBank, also
 
lends in
 
the USVI
and the BVI markets and
 
in the United States (principally
 
in the state of Florida).
 
Of the total gross loans held
 
for investment portfolio
of $
12.4
 
billion as of
 
September 30, 2024,
 
credit risk concentration
 
was approximately
80
% in Puerto
 
Rico,
17
% in the
 
U.S., and
3
%
in the USVI and the BVI.
As of
 
September
 
30,
 
2024,
 
the Corporation
 
had $
213.9
 
million outstanding
 
in loans
 
extended
 
to the
 
Puerto
 
Rico government,
 
its
municipalities
 
and
 
public
 
corporations,
 
compared
 
to
 
$
187.7
 
million
 
as
 
of
 
December
 
31,
 
2023.
 
As
 
of
 
September
 
30,
 
2024,
approximately
 
$
132.2
 
million consisted
 
of loans
 
extended
 
to municipalities
 
in Puerto
 
Rico that
 
are general
 
obligations supported
 
by
assigned
 
property
 
tax
 
revenues,
 
and
 
$
22.2
 
million
 
of
 
loans
 
which
 
are
 
supported
 
by
 
one
 
or
 
more
 
specific
 
sources
 
of
 
municipal
revenues. The
 
vast
 
majority
 
of
 
revenues
 
of
 
the
 
municipalities
 
included
 
in
 
the
 
Corporation’s
 
loan
 
portfolio
 
are
 
independent
 
of
budgetary subsidies provided by the Puerto Rico central
 
government. These municipalities are required
 
by law to levy special property
taxes in such amounts as are required to satisfy the
 
payment of all of their respective general obligation
 
bonds and notes. In addition to
loans extended
 
to municipalities,
 
the Corporation’s
 
exposure to
 
the Puerto
 
Rico government
 
as of
 
September 30,
 
2024 included
 
$
8.8
million in
 
loans granted to
 
an affiliate of
 
the Puerto Rico
 
Electric Power Authority
 
(“PREPA”)
 
and $
50.7
 
million in loans
 
to agencies
or public corporations of the Puerto Rico government.
In
 
addition,
 
as
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
$
73.5
 
million
 
in
 
exposure
 
to
 
residential
 
mortgage
 
loans
 
that
 
are
guaranteed by the
 
PRHFA, a
 
government instrumentality
 
that has been designated
 
as a covered
 
entity under PROMESA,
 
compared to
$
77.7
 
million
 
as
 
of
 
December
 
31,
 
2023.
 
Residential
 
mortgage
 
loans
 
guaranteed
 
by
 
the
 
PRHFA
 
are
 
secured
 
by
 
the
 
underlying
properties and the guarantees serve to cover shortfalls in collateral in the event
 
of a borrower default.
The
 
Corporation
 
also
 
has
 
credit
 
exposure
 
to
 
USVI
 
government
 
entities.
 
As
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
$
48.4
million in
 
loans to
 
USVI government
 
public corporations,
 
compared to
 
$
90.5
 
million as
 
of December
 
31, 2023.
 
As of September
 
30,
2024, all loans were currently performing and up to date on principal
 
and interest payments.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
37
Loss Mitigation Program for Borrowers Experiencing
 
Financial Difficulty
The Corporation provides assistance to
 
its customers through a loss mitigation
 
program. Depending upon the
 
nature of a borrower’s
financial
 
condition,
 
restructurings
 
or
 
loan
 
modifications
 
through
 
this
 
program
 
are
 
provided,
 
as
 
well
 
as
 
other
 
restructurings
 
of
individual
 
C&I,
 
commercial
 
mortgage,
 
construction,
 
and
 
residential
 
mortgage
 
loans.
 
The
 
Corporation
 
may
 
also
 
modify
 
contractual
terms to comply with regulations regarding the treatment of certain bankruptcy
 
filings and discharge situations.
The
 
loan
 
modifications
 
granted
 
to
 
borrowers
 
experiencing
 
financial
 
difficulty
 
that
 
are
 
associated
 
with
 
payment
 
delays
 
typically
include the following:
-
Forbearance plans –
 
Payments of either interest
 
and/or principal are
 
deferred for a pre-established
 
period of time, generally
 
not
exceeding
 
six
 
months
 
in
 
any
 
given
 
year.
 
The
 
deferred
 
interest
 
and/or
 
principal
 
is
 
repaid
 
as
 
either
 
a
 
lump
 
sum
 
payment
 
at
maturity date or by extending the loan’s
 
maturity date by the number of forbearance months granted.
 
-
Payment
 
plans
 
–
 
Borrowers
 
are
 
allowed
 
to
 
pay
 
the
 
regular
 
monthly
 
payment
 
plus
 
the
 
pre-established
 
delinquent
 
amounts
during a period generally not exceeding
 
six months.
 
At the end of the payment plan, the
 
borrower is required to resume making
its regularly scheduled loan payments.
-
Trial modifications
 
– These types of loan
 
modifications are granted for
 
residential mortgage loans. Borrower
 
s
 
continue making
reduced monthly payments during
 
the trial period, which is
 
generally of up to six
 
months. The reduced payments
 
that are made
by the
 
borrower during
 
the trial
 
period will
 
result in
 
a payment
 
delay with
 
respect to
 
the original
 
contractual terms
 
of the
 
loan
since
 
the
 
loan
 
has
 
not
 
yet
 
been
 
contractually
 
modified.
 
After
 
successful
 
completion
 
of
 
the
 
trial
 
period,
 
the
 
mortgage
 
loan
 
is
contractually modified.
Modifications
 
in
 
the
 
form
 
of
 
a
 
reduction
 
in
 
interest
 
rate,
 
term
 
extension,
 
an
 
other-than-insignificant
 
payment
 
delay,
 
or
 
any
combination
 
of
 
these
 
types
 
of
 
loan
 
modifications
 
that
 
have
 
occurred
 
in
 
the
 
current
 
reporting
 
period
 
for
 
a
 
borrower
 
experiencing
financial
 
difficulty
 
are
 
disclosed
 
in
 
the
 
tables
 
below.
 
Many
 
factors
 
are
 
considered
 
when
 
evaluating
 
whether
 
there
 
is
 
an
 
other-than-
insignificant
 
payment
 
delay,
 
such as
 
the significance
 
of the
 
restructured
 
payment
 
amount relative
 
to the
 
unpaid
 
principal balance
 
or
collateral value of the loan or the relative significance of the delay to
 
the original loan terms.
The
 
below
 
disclosures
 
relate
 
to
 
loan
 
modifications
 
granted
 
to
 
borrowers
 
experiencing
 
financial
 
difficulty
 
in
 
which
 
there
 
was
 
a
change
 
in
 
the
 
timing
 
and/or
 
amount
 
of
 
contractual
 
cash
 
flows
 
in
 
the
 
form
 
of
 
any
 
of
 
the
 
aforementioned
 
types
 
of
 
modifications,
including
 
restructurings
 
that
 
resulted
 
in
 
a
 
more-than-insignificant
 
payment
 
delay.
 
These
 
disclosures
 
exclude
 
$
0.5
 
million
 
and
 
$
3.7
million in restructured residential
 
mortgage loans that are
 
government-guaranteed (e.g.,
 
FHA/VA
 
loans) and were modified
 
during the
quarter and
 
nine-month period
 
ended September
 
30, 2024,
 
respectively,
 
compared to
 
$
0.9
 
million and
 
$
3.2
 
million, respectively,
 
for
the comparable periods in 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
38
The
 
following
 
tables
 
present
 
the
 
amortized
 
cost
 
basis
 
as
 
of
 
September
 
30,
 
2024
 
and
 
2023
 
of
 
loans
 
modified
 
to
 
borrowers
experiencing financial difficulty
 
during the quarters
 
and nine-month periods
 
ended September 30,
 
2024 and 2023,
 
by portfolio classes
and type
 
of modification
 
granted, and
 
the percentage
 
of these
 
modified
 
loans relative
 
to the
 
total period-end
 
amortized cost
 
basis of
receivables in the portfolio class:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended September 30, 2024
Payment Delay Only
Forbearance
Payment Plan
Trial
Modification
Interest Rate
Reduction
Term
Extension
Combination
of Interest
Rate
Reduction and
Term
Extension
Other
Total
Percentage of
Total by
Portfolio
Classes
(In thousands)
Conventional residential mortgage loans
$
-
$
-
$
87
$
-
$
-
$
-
$
-
$
87
0.00%
Construction loans
-
-
-
-
122
-
-
122
0.06%
Commercial mortgage loans
-
-
-
-
-
-
-
-
-
C&I loans
-
-
-
14
335
4,058
22
(1)
4,429
0.14%
Consumer loans:
Auto loans
-
-
-
-
41
37
959
(1)
1,037
0.05%
Personal loans
-
-
-
-
-
40
-
40
0.01%
Credit cards
-
-
-
929
(2)
-
-
-
929
0.29%
Other consumer loans
-
-
-
-
77
48
-
125
0.08%
 
Total modifications
$
-
$
-
$
87
$
943
$
575
$
4,183
$
981
$
6,769
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended September 30, 2023
Payment Delay Only
Forbearance
Payment Plan
Trial
Modification
Interest Rate
Reduction
Term
Extension
Combination
of Interest
Rate
Reduction and
Term
Extension
Other
Total
Percentage of
Total by
Portfolio
Classes
(In thousands)
Conventional residential mortgage loans
$
-
$
-
$
401
$
-
$
-
$
-
$
-
$
401
0.01%
Construction loans
-
-
-
-
-
-
-
-
-
Commercial mortgage loans
-
-
-
-
2,225
-
-
2,225
0.10%
C&I loans
-
-
-
192
-
-
-
192
0.01%
Consumer loans:
Auto loans
-
-
-
-
74
59
608
(1)
741
0.04%
Personal loans
-
-
-
-
67
87
-
154
0.04%
Credit cards
-
-
-
368
(2)
-
-
-
368
0.11%
Other consumer loans
-
-
-
-
54
4
4
(1)
62
0.04%
 
Total modifications
$
-
$
-
$
401
$
560
$
2,420
$
150
$
612
$
4,143
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
39
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30, 2024
Payment Delay Only
Forbearance
Payment Plan
Trial
Modification
Interest Rate
Reduction
Term
Extension
Combination
of Interest
Rate
Reduction and
Term
Extension
Other
Total
Percentage of
Total by
Portfolio
Classes
(In thousands)
Conventional residential mortgage loans
$
-
$
-
$
766
$
-
$
157
$
58
$
-
$
981
0.04%
Construction loans
-
-
-
-
122
-
-
122
0.06%
Commercial mortgage loans
-
-
-
-
115,703
-
-
115,703
4.68%
C&I loans
-
-
-
26
335
4,058
22
(1)
4,441
0.14%
Consumer loans:
Auto loans
-
-
-
-
319
192
2,512
(1)
3,023
0.15%
Personal loans
-
-
-
-
13
127
-
140
0.04%
Credit cards
-
-
-
1,935
(2)
-
-
-
1,935
0.60%
Other consumer loans
-
-
-
-
335
185
32
(1)
552
0.37%
 
Total modifications
$
-
$
-
$
766
$
1,961
$
116,984
$
4,620
$
2,566
$
126,897
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30, 2023
Payment Delay Only
Forbearance
Payment Plan
Trial
Modification
Interest Rate
Reduction
Term
Extension
Combination
of Interest
Rate
Reduction and
Term
Extension
Other
Total
Percentage of
Total by
Portfolio
Classes
(In thousands)
Conventional residential mortgage loans
$
-
$
-
$
610
$
-
$
687
$
239
$
-
$
1,536
0.05%
Construction loans
-
-
-
-
-
-
-
-
-
Commercial mortgage loans
-
-
-
-
2,225
30,170
-
32,395
1.40%
C&I loans
-
-
-
192
185
-
-
377
0.01%
Consumer loans:
Auto loans
-
-
-
-
234
153
1,511
(1)
1,898
0.10%
Personal loans
-
-
-
-
132
165
-
297
0.08%
Credit cards
-
-
-
1,033
(2)
-
-
-
1,033
0.32%
Other consumer loans
-
-
-
-
311
90
28
(1)
429
0.28%
 
Total modifications
$
-
$
-
$
610
$
1,225
$
3,774
$
30,817
$
1,539
$
37,965
(1)
Modification consists of court mandated reduction to 0% interest rate for remaining loan term to borrowers in bankruptcy proceedings unless dismissal occurs.
(2)
Modification consists of reduction in interest rate and revocation of revolving line privileges.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
40
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The
 
following
 
tables
 
present
 
by
 
portfolio
 
classes
 
the
 
financial
 
effects
 
of
 
the
 
modifications
 
granted
 
to
 
borrowers
 
experiencing
financial difficulty,
 
other than
 
those associated
 
to payment
 
delay,
 
during the
 
quarters and
 
nine-month
 
periods ended
 
September 30,
2024
 
and
 
2023.
 
The
 
financial
 
effects
 
of
 
the
 
modifications
 
associated
 
to
 
payment
 
delay
 
were
 
discussed
 
above
 
and,
 
as
 
such,
 
were
excluded from the tables below:
Quarter Ended September 30, 2024
Combination of Interest Rate Reduction and Term
Extension
Weighted-Average
Interest Rate Reduction
(%)
Weighted-Average Term
Extension (in months)
Weighted-Average
Interest Rate Reduction
(%)
Weighted-Average Term
Extension (in months)
(In thousands)
Conventional residential mortgage loans
-
%
-
-
%
-
Construction loans
-
%
208
-
%
-
Commercial mortgage loans
-
%
-
-
%
-
C&I loans
14.50
%
178
3.00
%
22
Consumer loans:
Auto loans
-
%
24
3.04
%
26
Personal loans
-
%
-
3.51
%
10
Credit cards
17.48
%
-
-
%
-
Other consumer loans
-
%
26
2.30
%
21
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended September 30, 2023
Combination of Interest Rate Reduction and Term
Extension
Weighted-Average
Interest Rate Reduction
(%)
Weighted-Average Term
Extension (in months)
Weighted-Average
Interest Rate Reduction
(%)
Weighted-Average Term
Extension (in months)
(In thousands)
Conventional residential mortgage loans
-
%
-
-
%
-
Construction loans
-
%
-
-
%
-
Commercial mortgage loans
-
%
13
-
%
-
C&I loans
0.45
%
-
-
%
-
Consumer loans:
Auto loans
-
%
31
2.27
%
25
Personal loans
-
%
35
3.61
%
41
Credit cards
16.67
%
-
-
%
-
Other consumer loans
-
%
22
2.00
%
10
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
41
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30, 2024
Combination of Interest Rate Reduction and Term
Extension
Weighted-Average
Interest Rate Reduction
(%)
Weighted-Average Term
Extension (in months)
Weighted-Average
Interest Rate Reduction
(%)
Weighted-Average Term
Extension (in months)
(In thousands)
Conventional residential mortgage loans
-
%
69
1.80
%
106
Construction loans
-
%
208
-
%
-
Commercial mortgage loans
-
%
96
-
%
-
C&I loans
13.82
%
178
3.00
%
22
Consumer loans:
Auto loans
-
%
27
2.62
%
29
Personal loans
-
%
25
3.09
%
16
Credit cards
17.21
%
-
-
%
-
Other consumer loans
-
%
25
3.04
%
18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30, 2023
Combination of Interest Rate Reduction and Term
Extension
Weighted-Average
Interest Rate Reduction
(%)
Weighted-Average Term
Extension (in months)
Weighted-Average
Interest Rate Reduction
(%)
Weighted-Average Term
Extension (in months)
(In thousands)
Conventional residential mortgage loans
-
%
105
2.95
%
105
Construction loans
-
%
-
-
%
-
Commercial mortgage loans
-
%
13
0.25
%
64
C&I loans
0.45
%
72
-
%
-
Consumer loans:
Auto loans
-
%
27
3.10
%
28
Personal loans
-
%
35
4.29
%
33
Credit cards
16.27
%
-
-
%
-
Other consumer loans
-
%
26
1.74
%
23
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
42
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The
 
following
 
tables
 
present
 
by
 
portfolio
 
classes
 
the
 
performance
 
of
 
loans
 
modified
 
during
 
the
 
last
 
twelve
 
months
 
ended
September
 
30,
 
2024
 
and
 
during
 
the
 
nine-month
 
period
 
ended
 
September
 
30,
 
2023
 
that
 
were
 
granted
 
to
 
borrowers
 
experiencing
financial difficulty:
Last Twelve Months Ended September 30, 2024
30-59
60-89
90+
Total
Delinquency
Current
Total
(In thousands)
Conventional residential mortgage loans
$
-
$
-
$
-
$
-
$
1,611
$
1,611
Construction loans
-
-
-
-
122
122
Commercial mortgage loans
-
-
-
-
115,703
115,703
C&I loans
-
-
-
-
4,441
4,441
Consumer loans:
Auto loans
86
156
82
324
3,751
4,075
Personal loans
-
-
-
-
205
205
Credit cards
172
46
13
231
2,163
2,394
Other consumer loans
32
37
22
91
461
552
 
Total modifications
$
290
$
239
$
117
$
646
$
128,457
$
129,103
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30, 2023
30-59
60-89
90+
Total
Delinquency
Current
Total
(In thousands)
Conventional residential mortgage loans
$
71
$
-
$
-
$
71
$
1,465
$
1,536
Construction loans
-
-
-
-
-
-
Commercial mortgage loans
-
-
-
-
32,395
32,395
C&I loans
-
-
-
-
377
377
Consumer loans:
Auto loans
22
-
-
22
1,876
1,898
Personal loans
15
-
-
15
282
297
Credit cards
149
35
-
184
849
1,033
Other consumer loans
34
17
15
66
363
429
 
Total modifications
$
291
$
52
$
15
$
358
$
37,607
$
37,965
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
43
NOTE 4 – ALLOWANCE
 
FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following tables present the activity in the ACL on loans and finance leases by portfolio
 
segment for the indicated periods:
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Quarter Ended September 30, 2024
(In thousands)
ACL:
Beginning balance
$
46,051
$
5,646
$
30,078
$
34,448
$
138,309
$
254,532
Provision for credit losses - (benefit) expense
(5,476)
(1,659)
(5,914)
1,138
28,381
16,470
Charge-offs
 
(421)
-
-
(1,350)
(27,274)
(29,045)
Recoveries
497
11
41
210
4,280
5,039
Ending balance
$
40,651
$
3,998
$
24,205
$
34,446
$
143,696
$
246,996
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Quarter Ended September 30, 2023
(In thousands)
ACL:
Beginning balance
$
60,514
$
4,804
$
42,427
$
28,014
$
131,299
$
267,058
Provision for credit losses - (benefit) expense
(3,349)
(642)
(1,344)
1,931
14,047
10,643
Charge-offs
 
(499)
(4)
(1)
(9)
(19,746)
(20,259)
Recoveries
534
1,463
75
161
3,940
6,173
Ending balance
$
57,200
$
5,621
$
41,157
$
30,097
$
129,540
$
263,615
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Nine-Month Period Ended September 30, 2024
(In thousands)
ACL:
Beginning balance
$
57,397
$
5,605
$
32,631
$
33,190
$
133,020
$
261,843
Provision for credit losses - (benefit) expense
(16,533)
(1,642)
(8,900)
(2,890)
71,282
41,317
Charge-offs
 
(1,428)
-
-
(2,141)
(81,229)
(84,798)
Recoveries
1,215
35
474
6,287
20,623
(1)
28,634
Ending balance
$
40,651
$
3,998
$
24,205
$
34,446
$
143,696
$
246,996
(1)
 
Includes recoveries totaling $
10
.0 million associated with the bulk sale of fully charged-off consumer loans and finance leases.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential Mortgage
Loans
Construction
Loans
Commercial
Mortgage
C&I
 
Loans
Consumer Loans
Total
Nine-Month Period Ended September 30, 2023
(In thousands)
ACL:
Beginning balance
$
62,760
$
2,308
$
35,064
$
32,906
$
127,426
$
260,464
Impact of adoption of ASU 2022-02
(1)
2,056
-
-
7
53
2,116
Provision for credit losses - (benefit) expense
(6,776)
1,420
5,901
3,278
43,846
47,669
Charge-offs
 
(2,628)
(42)
(107)
(6,477)
(53,006)
(62,260)
Recoveries
1,788
1,935
299
383
11,221
15,626
Ending balance
$
57,200
$
5,621
$
41,157
$
30,097
$
129,540
$
263,615
(1)
Recognized as
 
a result
 
of the
 
adoption of
 
ASU 2022-02,
 
for which
 
the Corporation
 
elected to
 
discontinue the
 
use of
 
a discounted
 
cash flow
 
methodology for
 
restructured accruing
 
loans, which
 
had a
 
corresponding
decrease, net of applicable taxes, in beginning retained earnings as of January 1, 2023.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
44
The
 
Corporation
 
estimates
 
the
 
ACL
 
following
 
the
 
methodologies
 
described
 
in
 
Note
 
1
 
–
 
“Nature
 
of
 
Business
 
and
 
Summary
 
of
Significant Accounting
 
Policies” to
 
the audited
 
consolidated financial
 
statements included
 
in the
 
2023 Annual
 
Report on
 
Form 10-K,
as updated by the information contained in this report, for each portfolio segment
 
.
The Corporation
 
generally applies
 
probability weights
 
to the
 
baseline and
 
alternative downside
 
economic scenarios
 
to estimate
 
the
ACL with
 
the
 
baseline
 
scenario
 
carrying
 
the highest
 
weight.
 
The
 
scenarios
 
that are
 
chosen each
 
quarter
 
and
 
the
 
weighting
 
given
 
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 September
 
30, 2024
 
and December
 
31, 2023,
 
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 commercial
 
real estate
 
(“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.
At least every other
 
year, the
 
Corporation reviews the
 
credit models used
 
in determining the
 
ACL. Such exercise
 
consists primarily
in
 
updating
 
the
 
model
 
with
 
recent
 
historical
 
losses
 
and
 
determining
 
if
 
other
 
changes
 
are
 
required
 
for
 
purposes
 
of
 
estimating
 
credit
losses. During the
 
first nine months
 
of 2024,
 
the Corporation completed
 
the aforementioned review
 
for the residential
 
mortgage, auto
loan,
 
and finance
 
lease
 
portfolios,
 
primarily
 
for
 
the Puerto
 
Rico
 
region.
 
The residential
 
mortgage
 
loan
 
portfolio,
 
which
 
has
 
recently
experienced a
 
historically low level
 
of credit
 
losses, as a
 
result of
 
high collateral
 
values in the
 
Puerto Rico region,
 
resulted in
 
a lower
required reserve level.
 
For the auto loan
 
and finance lease
 
portfolios, historical loss
 
trends were updated
 
and resulted in an
 
increase in
the required reserve levels as the loss experience in such portfolios have been trending
 
higher towards historical loss experience.
As
 
of
 
September
 
30,
 
2024,
 
the
 
ACL
 
for
 
loans
 
and
 
finance
 
leases
 
was
 
$
247.0
 
million,
 
a
 
decrease
 
of
 
$
14.8
 
million,
 
from
 
$
261.8
million as
 
of December
 
31, 2023.
 
The ACL
 
for residential
 
mortgage loans
 
decreased by
 
$
16.7
 
million, driven
 
by the
 
aforementioned
updated historical loss experience
 
used for determining the ACL estimate resulting
 
in a downward revision of
 
estimated loss severities
and
 
improvements
 
in
 
the
 
long-term
 
projections
 
of
 
the
 
unemployment
 
rate
 
in
 
the
 
Puerto
 
Rico
 
region,
 
partially
 
offset
 
by
 
newly
originated loans. The ACL for commercial
 
and construction loans decreased by
 
$
8.8
 
million, mainly due to reserve releases
 
associated
with the
 
improved financial
 
condition of
 
certain borrowers
 
and an
 
improvement on
 
the economic
 
outlook of
 
certain macroeconomic
variables,
 
particularly
 
variables
 
associated
 
with
 
commercial
 
real
 
estate
 
property
 
performance
 
and
 
the
 
forecasted
 
CRE
 
price
 
index,
partially offset by increased volume.
 
Meanwhile, the
 
ACL for
 
consumer loans
 
increased by
 
$
10.7
 
million driven
 
by higher
 
charge-off
 
levels and
 
loan portfolio
 
growth,
mainly in auto loans.
Net charge-offs
 
were $
24.0
 
million and $
56.2
 
million for the third
 
quarter and first
 
nine months of
 
2024, respectively,
 
compared to
$
14.1
 
million and
 
$
46.6
 
million, respectively,
 
for the
 
same periods
 
in 2023.
 
The $
9.9
 
million increase
 
in net
 
charge-offs for
 
the third
quarter of
 
2024 was
 
driven by
 
an increase
 
in consumer
 
loans and
 
finance leases
 
charge-offs
 
across all
 
major portfolio
 
classes, a
 
$
1.4
million recovery recorded on a
 
construction loan in the
 
Puerto Rico region during the
 
third quarter of 2023,
 
and a $
1.2
 
million charge-
off recorded
 
on the sale
 
of a nonaccrual
 
C&I loan in
 
the Puerto
 
Rico region
 
in the third
 
quarter of
 
2024. The
 
$
9.5
 
million increase
 
in
net
 
charge-offs
 
for
 
the
 
first
 
nine
 
months
 
of
 
2024
 
was
 
driven
 
by
 
the
 
aforementioned
 
increase
 
in
 
consumer
 
loans
 
and
 
finance
 
leases
charge-offs,
 
partially offset
 
by the
 
effect during
 
the first
 
nine months
 
of 2024
 
of both
 
the $
10.0
 
million recovery
 
associated with
 
the
bulk sale of
 
fully charged-off
 
consumer loans and
 
finance leases and a
 
$
5.0
 
million recovery associated
 
with a C&I loan
 
in the Puerto
Rico region,
 
and a
 
$
6.2
 
million charge-off
 
recorded on
 
a C&I
 
participated
 
loan in
 
the Florida
 
region during
 
the first
 
nine months
 
of
2023.
 
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
45
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The tables below
 
present the ACL
 
related to loans
 
and finance leases
 
and the carrying
 
values of loans
 
by portfolio segment
 
as of
September 30, 2024 and December 31, 2023:
As of September 30, 2024
Residential Mortgage
Loans
Construction
Loans
Commercial Mortgage
Loans
C&I
 
Loans
Consumer Loans
Total
(Dollars in thousands)
Total loans held for investment:
 
Amortized cost of loans
$
2,820,147
$
207,342
$
2,471,880
$
3,205,313
$
3,741,342
$
12,446,024
 
Allowance for credit losses
40,651
3,998
24,205
34,446
143,696
246,996
 
Allowance for credit losses to
 
amortized cost
1.44
%
1.93
%
0.98
%
1.07
%
3.84
%
1.98
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2023
Residential Mortgage
Loans
Construction
Loans
Commercial Mortgage
Loans
C&I
 
Loans
Consumer Loans
Total
(Dollars in thousands)
Total loans held for investment:
 
Amortized cost of loans
$
2,821,726
$
214,777
$
2,317,083
$
3,174,232
$
3,657,665
$
12,185,483
 
Allowance for credit losses
57,397
5,605
32,631
33,190
133,020
261,843
 
Allowance for credit losses to
 
amortized cost
2.03
%
2.61
%
1.41
%
1.05
%
3.64
%
2.15
%
In
 
addition,
 
the
 
Corporation
 
estimates
 
expected
 
credit
 
losses
 
over
 
the
 
contractual
 
period
 
in
 
which
 
the
 
Corporation
 
is
 
exposed
 
to
credit
 
risk
 
via
 
a
 
contractual
 
obligation
 
to
 
extend
 
credit,
 
such
 
as
 
unfunded
 
loan
 
commitments
 
and
 
standby
 
letters
 
of
 
credit
 
for
commercial
 
and
 
construction
 
loans,
 
unless
 
the
 
obligation
 
is
 
unconditionally
 
cancellable
 
by
 
the
 
Corporation.
 
See
 
Note
 
21
 
–
“Regulatory Matters, Commitments
 
and Contingencies” for
 
information on off
 
-balance sheet exposures
 
as of September 30,
 
2024 and
December 31,
 
2023. The
 
Corporation estimates
 
the ACL
 
for these
 
off-balance
 
sheet exposures
 
following the
 
methodology described
in
 
Note
 
1 –
 
“Nature
 
of Business
 
and
 
Summary
 
of Significant
 
Accounting
 
Policies”
 
to
 
the audited
 
consolidated
 
financial statements
included
 
in
 
the
 
2023
 
Annual
 
Report
 
on
 
Form
 
10-K.
 
As
 
of
 
September
 
30,
 
2024,
 
the
 
ACL
 
for
 
off-balance
 
sheet
 
credit
 
exposures
amounted
 
to $
3.5
 
million,
 
compared
 
to $
4.6
 
million
 
as of
 
December
 
31,
 
2023.
 
The decrease
 
was
 
driven
 
by an
 
improvement
 
on the
economic outlook of certain macroeconomic variables, particularly in
 
variables associated with the CRE price index.
The following
 
table presents
 
the activity
 
in the
 
ACL for
 
unfunded loan
 
commitments and
 
standby letters
 
of credit
 
for the
 
quarters
and nine-month periods ended September 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
Nine-Month Period Ended
September 30,
September 30,
2024
2023
2024
2023
(In thousands)
Beginning balance
$
4,502
$
4,889
$
4,638
$
4,273
Provision for credit losses - (benefit) expense
 
(1,041)
(128)
(1,177)
488
Ending balance
$
3,461
$
4,761
$
3,461
$
4,761
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
46
NOTE 5
–
OTHER REAL ESTATE
 
OWNED (“OREO”)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table presents the OREO inventory as of the indicated dates:
September 30, 2024
December 31, 2023
(In thousands)
OREO balances, carrying value:
Residential
(1)
$
14,451
$
20,261
Construction
1,125
1,601
Commercial
 
(2)
3,754
10,807
Total
$
19,330
$
32,669
(1)
Excludes $
7.2
 
million and $
16.6
 
million as of September 30, 2024 and December 31, 2023,
 
respectively, of foreclosures that
 
met the conditions of ASC Subtopic 310-40 “Reclassification
of Residential Real Estate Collateralized Consumer
 
Mortgage Loans upon Foreclosure,” and
 
are presented as a receivable as part
 
of other assets in the consolidated statements
 
of financial
condition.
(2)
Decrease was mainly associated with the sale of a $
5.3
 
million commercial real estate OREO property in Puerto Rico during the
 
first nine months of 2024 at a gain of $
2.3
 
million.
See Note 17 – “Fair
 
Value”
 
for information on subsequent
 
measurement adjustments recorded
 
on OREO properties reported
 
as part
of
 
“Net
 
gain
 
on
 
OREO
 
operations”
 
in
 
the
 
consolidated
 
statements
 
of
 
income
 
during
 
the
 
quarters
 
and
 
nine-month
 
periods
 
ended
September 30, 2024 and 2023.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
47
NOTE 6 – GOODWILL AND OTHER INTANGIBLES
 
 
Goodwill
Goodwill
 
as
 
of
 
each
 
of
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023
 
amounted
 
to
 
$
38.6
 
million.
The Corporation’s policy is to
assess goodwill and other intangibles for impairment on an annual basis during the fourth quarter of each year, and more frequently if
events or circumstances lead management to believe that the values of goodwill or other intangibles may be impaired. During the
fourth quarter of 2023, management performed a qualitative analysis of the carrying amount of each relevant reporting units’ goodwill
and concluded that it is more-likely-than-not that the fair value of the reporting units exceeded their carrying value. This assessment
involved identifying the inputs and assumptions that most affect fair value, including evaluating significant and relevant events
impacting each reporting entity, and evaluating such factors to determine if a positive assertion can be made that it is more-likely-
than-not that the fair value of the reporting units exceeded their carrying amount. As of December 31, 2023, the Corporation
concluded that it is more-likely-than-not that the fair value of the reporting units exceeded their carrying value. The Corporation
determined that there have been no significant events since the last annual assessment that could indicate potential goodwill
impairment on reporting units for which the goodwill is allocated. As a result, no impairment charges for goodwill were recorded
during the first nine months of 2024.
 
There were
no
 
changes in
 
the carrying
 
amount of
 
goodwill during
 
the quarters
 
and nine-month
 
periods ended
 
September 30,
 
2024
and 2023.
Other Intangible Assets
The
 
following
 
table
 
presents
 
the
 
gross
 
amount
 
and
 
accumulated
 
amortization
 
of
 
the
 
Corporation’s
 
intangible
 
assets
 
subject
 
to
amortization as of the indicated dates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
As of
September 30, 2024
December 31, 2023
(Dollars in thousands)
Core deposit intangible:
Gross amount
$
87,544
$
87,544
Accumulated amortization
(79,284)
(74,161)
Net carrying amount
$
8,260
$
13,383
Remaining amortization period (in years)
5.3
6.0
 
 
 
 
 
 
 
 
 
During the
 
quarter and
 
nine-month periods
 
ended September
 
30, 2024,
 
the Corporation
 
recognized $
1.4
 
million and
 
$
5.1
 
million,
respectively,
 
in amortization
 
expense
 
on its
 
other intangibles
 
subject to
 
amortization,
 
compared to
 
$
1.9
 
million
 
and $
5.9
 
million for
the same periods in 2023, respectively
The Corporation amortizes core deposit intangibles based on the projected useful lives of the related deposits. Core deposit
intangibles are analyzed annually for impairment, or sooner if events and circumstances indicate possible impairment. Factors that
may suggest impairment include customer attrition and run-off. Management is unaware of any events and/or circumstances that
would indicate a possible impairment to the core deposit intangibles as of September 30, 2024.
The
 
estimated
 
aggregate
 
annual
 
amortization
 
expense
 
related
 
to
 
core
 
deposit
 
intangibles
 
for
 
future
 
periods
 
was
 
as
 
follows
 
as
 
of
September 30, 2024
:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
Remaining 2024
$
1,293
2025
3,509
2026
872
2027
872
2028
872
2029 and after
842
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
48
NOTE 7 – NON-CONSOLIDATED
 
VARIABLE
 
INTEREST ENTITIES (“VIEs”) AND SERVICING
 
ASSETS
The Corporation
 
transfers residential
 
mortgage loans
 
in sale
 
or securitization
 
transactions in
 
which it
 
has continuing
 
involvement,
including
 
servicing
 
responsibilities
 
and
 
guarantee
 
arrangements.
 
All
 
such
 
transfers
 
have
 
been
 
accounted
 
for
 
as
 
sales
 
as
 
required
 
by
applicable accounting guidance.
When
 
evaluating
 
the
 
need
 
to
 
consolidate
 
counterparties
 
to
 
which
 
the
 
Corporation
 
has
 
transferred
 
assets,
 
or
 
with
 
which
 
the
Corporation has
 
entered into
 
other transactions,
 
the Corporation
 
first determines
 
if the
 
counterparty is
 
an entity
 
for which
 
a variable
interest
 
exists.
 
If
 
no
 
scope
 
exception
 
is
 
applicable
 
and
 
a
 
variable
 
interest
 
exists,
 
the
 
Corporation
 
then
 
evaluates
 
whether
 
it
 
is
 
the
primary beneficiary of the VIE and whether the entity should be consolidated
 
or not.
Below is a summary of transactions with VIEs for which the Corporation has retained
 
some level of continuing involvement:
Trust-Preferred
 
Securities (“TruPS”)
In April 2004,
 
FBP Statutory Trust
 
I, a financing
 
trust that is wholly
 
owned by the
 
Corporation, sold to
 
institutional investors $
100
million of its
 
variable-rate TruPS.
 
FBP Statutory Trust
 
I used the
 
proceeds of the
 
issuance, together with
 
the proceeds of
 
the purchase
by
 
the
 
Corporation
 
of
 
$
3.1
 
million
 
of
 
FBP
 
Statutory
 
Trust
 
I
 
variable-rate
 
common
 
securities, to
 
purchase
 
$
103.1
 
million
 
aggregate
principal
 
amount
 
of
 
the
 
Corporation’s
 
Junior
 
Subordinated
 
Deferrable
 
Debentures.
 
In
 
September
 
2004,
 
FBP
 
Statutory
 
Trust
 
II,
 
a
financing
 
trust that
 
is wholly
 
owned
 
by the
 
Corporation,
 
sold to
 
institutional
 
investors
 
$
125
 
million
 
of its
 
variable-rate
 
TruPS.
 
FBP
Statutory Trust
 
II used
 
the proceeds of
 
the issuance,
 
together with
 
the proceeds of
 
the purchase by
 
the Corporation
 
of $
3.9
 
million of
FBP Statutory
 
Trust
 
II variable-rate
 
common securities,
 
to purchase
 
$
128.9
 
million aggregate
 
principal amount
 
of the
 
Corporation’s
Junior
 
Subordinated
 
Deferrable
 
Debentures.
 
The
 
debentures,
 
net
 
of
 
related
 
issuance
 
costs,
 
are
 
presented
 
in
 
the
 
Corporation’s
consolidated statements of
 
financial condition as other
 
long-term borrowings. These
 
TruPS are variable-rate
 
instruments indexed to
3-
month CME Term SOFR
 
plus a
 
tenor spread
 
adjustment of
0.26161
% and the
 
original spread
 
of
2.75
% for the
 
FBP Statutory
 
Trust I
and
2.50
% for
 
the FBP
 
Statutory Trust
 
II.
The Junior Subordinated Deferrable Debentures mature on June 17, 2034, and September
20, 2034, respectively; however, under certain circumstances, the maturity of Junior Subordinated Deferrable Debentures may be
shortened (such shortening would result in a mandatory redemption of the variable-rate TruPS).
 
In September
 
2024,
 
the Corporation
 
redeemed $
50.0
 
million,
 
or
42
%, of
 
outstanding
 
TruPS
 
issued by
 
FBP Statutory
 
Trust
 
II (or
$
48.5
 
million after excluding
 
the Corporation’s
 
interest in the Trust
 
of approximately $
1.5
 
million) at a contractual
 
call price of
100
%
as
 
part
 
of
 
the
 
2024
 
repurchase
 
program,
 
as
 
further
 
explained
 
in
 
Note
 
13
 
–
 
“Stockholders’
 
Equity”
 
to
 
the
 
unaudited
 
consolidated
financial
 
statements
 
herein.
 
As
 
of
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023,
 
these
 
Junior
 
Subordinated
 
Deferrable
 
Debentures
amounted
 
to
 
$
111.7
 
million
 
and
 
$
161.7
 
million,
 
respectively.
 
The
 
Corporation
 
expects
 
to
 
execute
 
the
 
redemption
 
of
 
the
 
remaining
junior subordinated debentures through the end of the fourth quarter of
 
2025.
Under the indentures of these instruments,
 
the Corporation has the right, from
 
time to time, and without causing
 
an event of default,
to defer
 
payments of
 
interest on
 
the Junior
 
Subordinated Deferrable
 
Debentures by
 
extending the
 
interest payment
 
period at
 
any time
and from time to
 
time during the term
 
of the subordinated debentures
 
for up to twenty
 
consecutive quarterly periods.
 
As of September
30, 2024, the Corporation was current on all interest payments due on its subordinated
 
debt.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
49
Private Label MBS
During
 
2004
 
and
 
2005,
 
an unaffiliated
 
party,
 
referred
 
to in
 
this subsection
 
as the
 
seller,
 
established
 
a
 
series of
 
statutory
 
trusts
 
to
effect
 
the
 
securitization
 
of
 
mortgage
 
loans
 
and
 
the
 
sale
 
of
 
trust
 
certificates
 
(“private
 
label
 
MBS”).
 
The
 
seller
 
initially
 
provided
 
the
servicing for
 
a fee, which
 
is senior to
 
the obligations to
 
pay private label
 
MBS holders. The
 
seller then entered
 
into a sales
 
agreement
through
 
which
 
it sold
 
and
 
issued
 
the
 
private
 
label
 
MBS in
 
favor
 
of
 
the
 
Corporation’s
 
banking
 
subsidiary,
 
FirstBank.
 
Currently,
 
the
Bank is
 
the sole
 
owner of
 
these private
 
label MBS;
 
the servicing
 
of the
 
underlying
 
residential mortgages
 
that generate
 
the principal
and interest
 
cash flows is
 
performed by
 
another third
 
party,
 
which receives
 
a servicing
 
fee. These
 
private label
 
MBS are variable
 
-rate
securities indexed
 
to
3-month CME Term SOFR
 
plus a
 
tenor
 
spread
 
adjustment
 
of
0.26161
% and
 
the original
 
spread
 
limited to
 
the
weighted-average
 
coupon
 
of
 
the
 
underlying
 
collateral.
 
The
 
principal
 
payments
 
from
 
the
 
underlying
 
loans
 
are
 
remitted
 
to
 
a
 
paying
agent
 
(servicer),
 
who
 
then
 
remits
 
interest
 
to
 
the
 
Bank.
 
Interest
 
income
 
is
 
shared
 
to
 
a
 
certain
 
extent
 
with
 
the
 
FDIC,
 
which
 
has
 
an
interest only strip (“IO”) tied to the
 
cash flows of the underlying loans
 
and is entitled to receive the excess
 
of the interest income less a
servicing
 
fee
 
over
 
the
 
variable
 
rate
 
income
 
that
 
the
 
Bank
 
earns
 
on
 
the
 
securities.
 
The
 
FDIC
 
became
 
the
 
owner
 
of
 
the
 
IO
 
upon
 
its
intervention of the seller,
 
a failed financial institution.
 
No recourse agreement exists, and
 
the Bank, as the sole
 
holder of the securities,
absorbs all risks
 
from losses
 
on non-accruing
 
loans and repossessed
 
collateral. As
 
of September
 
30, 2024, the
 
amortized cost and
 
fair
value
 
of these
 
private
 
label MBS
 
amounted
 
to $
6.3
 
million and
 
$
4.3
 
million, respectively,
 
with a
 
weighted-average
 
yield of
6.92
%,
which is included as part of
 
the Corporation’s available
 
-for-sale debt securities portfolio, compared
 
to an amortized cost and fair
 
value
of $
7.1
 
million and $
4.8
 
million, respectively,
 
with a weighted average yield
 
of
7.66
% as of December 31, 2023.
 
As described in Note
2 – “Debt Securities,” the ACL on these private label MBS amounted to
 
$
0.2
 
million as of September 30, 2024.
Servicing Assets, or Mortgage Servicing Rights (“MSRs”)
The
 
Corporation
 
typically
 
transfers
 
first
 
lien
 
residential
 
mortgage
 
loans in
 
conjunction
 
with
 
GNMA
 
securitization
 
transactions
 
in
which the
 
loans are
 
exchanged for
 
cash or
 
securities that
 
are readily
 
redeemed for
 
cash proceeds
 
and servicing
 
rights. The
 
securities
issued
 
through
 
these
 
transactions
 
are
 
guaranteed
 
by
 
GNMA
 
and,
 
under
 
seller/servicer
 
agreements,
 
the
 
Corporation
 
is
 
required
 
to
service
 
the
 
loans
 
in
 
accordance
 
with
 
the
 
issuers’
 
servicing
 
guidelines
 
and
 
standards.
 
As
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
serviced
 
loans securitized
 
through
 
GNMA with
 
a principal
 
balance
 
of $
2.1
 
billion.
 
Also, certain
 
conventional
 
conforming
 
loans are
sold to FNMA or FHLMC
 
with servicing retained. The
 
Corporation recognizes as separate
 
assets the rights to service
 
loans for others,
whether those servicing
 
assets are originated or
 
purchased. MSRs are included
 
as part of other
 
assets in the consolidated
 
statements of
financial condition.
The changes in MSRs are shown below for the indicated periods:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands)
Balance at beginning of period
$
25,952
$
28,034
$
26,941
$
29,037
Capitalization of servicing assets
525
601
1,632
1,839
Amortization
(1,060)
(1,035)
(3,135)
(3,265)
Temporary impairment
 
recoveries
-
7
-
12
Other
(1)
(14)
(6)
(35)
(22)
Balance at end of period
$
25,403
$
27,601
$
25,403
$
27,601
(1)
Mainly represents adjustments related to the repurchase
 
of loans serviced for others.
Impairment
 
charges
 
are
 
recognized
 
through
 
a
 
valuation
 
allowance
 
for
 
each
 
individual
 
stratum
 
of
 
servicing
 
assets.
 
The
 
valuation
allowance
 
is adjusted
 
to reflect
 
the amount,
 
if any,
 
by which
 
the cost
 
basis of
 
the servicing
 
asset for
 
a given
 
stratum of
 
loans being
serviced exceeds its fair value. Any fair value in excess of the cost basis of the servicing
 
asset for a given stratum is not recognized.
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
50
Changes in the impairment allowance were as follows for the indicated periods:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands)
Balance at beginning of period
$
-
$
7
$
-
$
12
Temporary impairment
 
recoveries
-
(7)
-
(12)
 
Balance at end of period
$
-
$
-
$
-
$
-
The components
 
of net servicing
 
income, included as
 
part of mortgage
 
banking activities in
 
the consolidated statements
 
of income,
are shown below for the indicated periods:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended September 30,
 
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands)
Servicing fees
$
2,588
$
2,606
$
7,766
$
7,984
Late charges and prepayment penalties
158
137
528
547
Other
(1)
(14)
(6)
(35)
(22)
 
Servicing income, gross
2,732
2,737
8,259
8,509
Amortization and impairment of servicing assets
(1,060)
(1,028)
(3,135)
(3,253)
 
Servicing income, net
$
1,672
$
1,709
$
5,124
$
5,256
(1)
 
Mainly represents adjustments related to the repurchase of loans serviced
 
for others.
The Corporation’s
 
MSRs are subject
 
to prepayment
 
and interest rate
 
risks. Key economic
 
assumptions used
 
in determining
 
the fair
value at the time of sale of the related mortgages for the indicated periods
 
ranged as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average
Maximum
Minimum
Nine-Month Period Ended September 30, 2024
Constant prepayment rate:
 
 
Government-guaranteed mortgage loans
6.8
%
17.1
%
3.2
%
 
Conventional conforming mortgage loans
6.9
%
20.6
%
2.1
%
 
Conventional non-conforming mortgage loans
6.0
%
7.6
%
3.0
%
Discount rate:
 
Government-guaranteed mortgage loans
11.5
%
11.5
%
11.5
%
 
Conventional conforming mortgage loans
9.5
%
9.5
%
9.5
%
 
Conventional non-conforming mortgage loans
11.5
%
12.5
%
11.0
%
Nine-Month Period Ended September 30, 2023
Constant prepayment rate:
 
 
Government-guaranteed mortgage loans
6.6
%
11.6
%
4.8
%
 
Conventional conforming mortgage loans
7.4
%
16.0
%
3.8
%
 
Conventional non-conforming mortgage loans
5.9
%
9.0
%
2.1
%
Discount rate:
 
Government-guaranteed mortgage loans
11.5
%
11.5
%
11.5
%
 
Conventional conforming mortgage loans
9.5
%
9.5
%
9.5
%
 
Conventional non-conforming mortgage loans
13.0
%
14.0
%
11.5
%
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
51
The weighted
 
averages of the
 
key economic
 
assumptions that the
 
Corporation used
 
in its valuation
 
model and the
 
sensitivity of the
current
 
fair
 
value
 
to
 
immediate
10
%
 
and
20
%
 
adverse
 
changes
 
in
 
those
 
assumptions
 
for
 
mortgage
 
loans
 
were
 
as
 
follows
 
as
 
of
 
the
indicated dates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2024
December 31, 2023
(In thousands)
Carrying amount of servicing assets
$
25,403
$
26,941
Fair value
$
42,416
$
45,244
Weighted-average
 
expected life (in years)
7.71
7.79
Constant prepayment rate (weighted-average annual
 
rate)
6.25
%
6.27
%
 
Decrease in fair value due to 10% adverse change
$
847
$
886
 
Decrease in fair value due to 20% adverse change
$
1,656
$
1,731
Discount rate (weighted-average annual rate)
10.71
%
10.68
%
 
Decrease in fair value due to 10% adverse change
$
1,784
$
1,927
 
Decrease in fair value due to 20% adverse change
$
3,437
$
3,712
These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10%
variation in assumptions generally cannot be extrapolated because the relationship between the change in assumption and the change
in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the MSR is
calculated without changing any other assumption. In reality, changes in one factor may result in changes in another (for example,
increases in market interest rates may result in lower prepayments), which may magnify or counteract the sensitivities
.
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
52
NOTE 8 – DEPOSITS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table summarizes deposit balances as of the indicated dates:
September 30, 2024
December 31, 2023
(In thousands)
Type of account:
Non-interest-bearing deposit accounts
$
5,275,733
$
5,404,121
Interest-bearing checking accounts
3,909,255
3,937,945
Interest-bearing saving accounts
3,575,093
3,596,855
Time deposits
3,067,261
2,833,730
Brokered certificates of deposits (“CDs”)
520,048
783,334
 
Total
$
16,347,390
$
16,555,985
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following
 
table presents
 
the remaining
 
contractual maturities
 
of time
 
deposits, including
 
brokered
 
CDs, as
 
of September
 
30,
2024:
Total
 
(In thousands)
Three months or less
$
1,089,421
Over three months to six months
774,943
Over six months to one year
902,524
Over one year to two years
 
526,478
Over two years to three years
 
82,095
Over three years to four years
 
119,118
Over four years to five years
 
70,914
Over five years
21,816
 
Total
$
3,587,309
Total
 
Puerto
 
Rico
 
and
 
U.S.
 
time
 
deposits
 
with
 
balances
 
of
 
more
 
than
 
$250,000
 
amounted
 
to
 
$
1.6
 
billion
 
and
 
$
1.4
 
billion
 
as
 
of
September 30, 2024
 
and December 31,
 
2023, respectively.
 
This amount does
 
not include brokered
 
CDs that are generally
 
participated
out by
 
brokers in
 
shares of
 
less than the
 
FDIC insurance
 
limit. As
 
of each
 
September 30,
 
2024 and
 
December 31,
 
2023, unamortized
broker
 
placement
 
fees
 
amounted
 
to
 
$
1.0
 
million,
 
which
 
are amortized
 
over
 
the
 
contractual
 
maturity
 
of
 
the
 
brokered
 
CDs
 
under
 
the
interest method.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
53
NOTE 9 – ADVANCES
 
FROM THE FEDERAL HOME LOAN BANK (“FHLB”)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following is a summary of the advances from the FHLB as of the indicated dates:
September 30, 2024
December 31, 2023
(In thousands)
Long-term
Fixed
-rate advances from the FHLB
(1)
$
500,000
$
500,000
(1)
Weighted-average interest rate of
4.45
% as of each of September 30, 2024 and December 31, 2023,
 
respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advances from the FHLB mature as follows as of the indicated date:
September 30, 2024
(In thousands)
Over three months to six months
$
180,000
Over six months to one year
30,000
Over one year to two years
90,000
Over three years to four years
200,000
 
Total
(1)
$
500,000
(1) Average remaining term to maturity of
1.73
 
years.
NOTE 10 – OTHER LONG-TERM BORROWINGS
Junior Subordinated Debentures
Junior subordinated debentures, as of the indicated dates, consisted of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2024
December 31, 2023
Long-term floating rate junior subordinated debentures (FBP Statutory Trust I)
(1)
$
43,143
$
43,143
Long-term floating rate junior subordinated debentures (FBP Statutory Trust II)
(2)
68,557
118,557
$
111,700
$
161,700
(1)
Amount represents
 
junior subordinated
 
interest-bearing
 
debentures
 
due in
 
2034 with
 
a floating
 
interest rate
 
of
2.75
% over
3-month CME Term SOFR
 
plus a
0.26161
% tenor
 
spread
adjustment as of September 30, 2024 and December 31,
 
2023 (
7.95
% as of September 30, 2024 and
8.39
% as of December 31, 2023).
(2)
Amount represents
 
junior subordinated
 
interest-bearing
 
debentures
 
due in
 
2034 with
 
a floating
 
interest rate
 
of
2.50
% over
3-month CME Term SOFR
 
plus a
0.26161
% tenor
 
spread
adjustment as of September 30, 2024 and December 31, 2023
 
(
7.58
% as of September 30, 2024 and
8.13
% as of December 31, 2023).
See Note
 
7 –
 
“Non-Consolidated Variable
 
Interest Entities
 
(“VIEs”) and
 
Servicing Assets”
 
and Note
 
13 –
 
“Stockholders’ Equity”
to the
 
unaudited consolidated
 
financial statements
 
herein
for additional
 
information on
 
junior subordinated
 
debentures, including
 
the
$
50.0
 
million redemption of outstanding TruPS issued by
 
FBP Statutory Trust II.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
54
NOTE 11 – EARNINGS PER COMMON
.
SHARE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The calculations of earnings per
 
common share for the quarters
 
and nine-month periods ended
 
September 30, 2024 and 2023
 
are as
follows:
Quarter Ended
Nine-Month Period Ended
September 30,
September 30,
2024
2023
2024
2023
(In thousands, except per share information)
Net income attributable to common stockholders
$
73,727
$
82,022
$
223,023
$
223,375
Weighted-Average
 
Shares:
 
Average common
 
shares outstanding
163,059
176,358
165,041
178,486
 
Average potential
 
dilutive common shares
 
813
604
689
658
 
Average common
 
shares outstanding - assuming dilution
163,872
176,962
165,730
179,144
Earnings per common share:
Basic
 
$
0.45
$
0.47
$
1.35
$
1.25
Diluted
 
$
0.45
$
0.46
$
1.35
$
1.25
Earnings
 
per
 
common
 
share
 
is
 
computed
 
by
 
dividing
 
net
 
income
 
attributable
 
to
 
common
 
stockholders
 
by
 
the
 
weighted-average
number
 
of
 
common
 
shares
 
issued
 
and
 
outstanding.
 
Basic
 
weighted-average
 
common
 
shares
 
outstanding
 
exclude
 
unvested shares
 
of
restricted stock that do not contain non-forfeitable dividend rights
 
.
Potential dilutive
 
common
 
shares consist
 
of unvested
 
shares of
 
restricted
 
stock
 
and
 
performance
 
units (if
 
any
 
of the
 
performance
conditions
 
are
 
met
 
as
 
of
 
the
 
end
 
of
 
the
 
reporting
 
period)
 
that
 
do
 
not
 
contain
 
non-forfeitable
 
dividend
 
or
 
dividend
 
equivalent
 
rights
using the
 
treasury stock
 
method. This
 
method assumes
 
that proceeds
 
equal to
 
the amount
 
of compensation
 
cost attributable
 
to future
services
 
is
 
used
 
to
 
repurchase
 
shares
 
on
 
the
 
open
 
market
 
at
 
the
 
average
 
market
 
price
 
for
 
the
 
period.
 
The
 
difference
 
between
 
the
number
 
of
 
potential
 
dilutive
 
shares
 
issued
 
and
 
the
 
shares
 
purchased
 
is
 
added
 
as
 
incremental
 
shares
 
to
 
the
 
actual
 
number
 
of
 
shares
outstanding
 
to
 
compute
 
diluted
 
earnings
 
per
 
share.
 
Unvested
 
shares
 
of
 
restricted
 
stock
 
outstanding
 
during
 
the
 
period
 
that
 
result
 
in
lower potentially
 
dilutive shares issued
 
than shares purchased
 
under the
 
treasury stock method
 
are not included
 
in the computation
 
of
dilutive
 
earnings
 
per
 
share
 
since
 
their
 
inclusion
 
would
 
have an
 
antidilutive
 
effect
 
on
 
earnings
 
per
 
share.
 
There
 
were
no
 
antidilutive
shares of common stock during the quarters and nine-month periods
 
ended September 30, 2024 and 2023.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
55
NOTE 12 – STOCK-BASED
.
COMPENSATION
 
The First Bancorp
 
Omnibus Incentive
 
Plan (the “Omnibus
 
Plan”), which is
 
effective until
 
May 24, 2026,
 
provides for equity-based
and non-equity-based
 
compensation incentives
 
(the “awards”).
 
The Omnibus
 
Plan authorizes
 
the issuance
 
of up
 
to
14,169,807
 
shares
of common
 
stock, subject
 
to adjustments
 
for
 
stock splits,
 
reorganizations
 
and other
 
similar events.
 
As of
 
September 30,
 
2024, there
were
2,581,774
 
authorized
 
shares
 
of
 
common
 
stock
 
available
 
for
 
issuance
 
under
 
the
 
Omnibus
 
Plan.
 
The
 
Corporation’s
 
Board
 
of
Directors,
 
based on
 
the recommendation
 
of the
 
Compensation and
 
Benefits Committee
 
of the
 
Board, has
 
the power
 
and authority
 
to
determine
 
those
 
eligible
 
to
 
receive
 
awards
 
and
 
to
 
establish
 
the
 
terms
 
and
 
conditions
 
of
 
any
 
awards,
 
subject
 
to
 
various
 
limits
 
and
vesting restrictions that apply to individual and aggregate awards.
Restricted Stock
Under the
 
Omnibus Plan,
 
the Corporation
 
may grant
 
restricted stock
 
to plan
 
participants, subject
 
to forfeiture
 
upon the
 
occurrence
of certain
 
events until
 
the dates
 
specified in
 
the participant’s
 
award agreement.
 
While the
 
restricted stock
 
is subject
 
to forfeiture
 
and
does
 
not
 
contain
 
non-forfeitable
 
dividend
 
rights,
 
participants
 
may
 
exercise
 
full
 
voting
 
rights
 
with
 
respect
 
to
 
the
 
shares
 
of
 
restricted
stock
 
granted
 
to
 
them.
 
The
 
fair
 
value
 
of
 
the
 
shares
 
of
 
restricted
 
stock
 
granted
 
was
 
based
 
on
 
the
 
market
 
price
 
of
 
the
 
Corporation’s
common
 
stock on
 
the date
 
of the
 
respective grant.
 
The shares
 
of restricted
 
stocks granted
 
to employees
 
are subject
 
to the
 
following
vesting period:
 
fifty percent
 
(
50
%) of
 
those shares
 
vest on
 
the two-year
 
anniversary of
 
the grant
 
date and
 
the remaining
50
% vest
 
on
the three-year
 
anniversary of
 
the grant
 
date. The
 
shares of
 
restricted stock
 
granted to
 
directors are
 
generally subject
 
to vesting
 
on the
one-year anniversary of the grant date.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The
 
following
 
table
 
summarizes
 
the
 
restricted
 
stock
 
activity
 
under
 
the
 
Omnibus
 
Plan
 
during
 
the
 
nine-month
 
periods
 
ended
September 30, 2024 and 2023:
Nine-Month Period Ended September 30,
2024
2023
Number of
Weighted-
Number of
Weighted-
shares of
Average
shares of
Average
restricted
Grant Date
restricted
Grant Date
stock
 
Fair Value
stock
 
Fair Value
Unvested shares outstanding at beginning of year
889,642
$
12.30
938,491
$
9.14
Granted
(1)
413,516
17.49
519,794
12.06
Forfeited
(7,156)
13.69
(58,454)
11.31
Vested
(276,558)
12.36
(503,460)
6.27
Unvested shares outstanding at end of period
1,019,444
$
14.38
896,371
$
12.32
(1)
For the
 
nine-month period
 
ended September
 
30, 2024,
 
includes
16,448
 
shares of
 
restricted stock
 
awarded to
 
independent directors
 
and
397,068
 
shares of
 
restricted stock
 
awarded to
employees, of which
84,122
 
shares were granted to retirement-eligible employees
 
and thus charged to earnings as of the grant date.
 
For the nine-month period ended September 30, 2023,
includes
25,786
 
shares
 
of
 
restricted
 
stock
 
awarded
 
to
 
independent
 
directors
 
and
494,008
 
shares
 
of
 
restricted
 
stock
 
awarded
 
to
 
employees,
 
of which
33,718
 
shares
 
were
 
granted
 
to
retirement-eligible employees and thus charged to earnings
 
as of the grant date.
For
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
 
recognized
 
$
1.3
 
million
 
and
 
$
5.0
 
million,
respectively,
 
of stock-based
 
compensation expense
 
related to
 
restricted stock
 
awards, compared
 
to $
1.3
 
million and
 
$
4.3
 
million for
the
 
same
 
periods
 
in
 
2023.
 
As
 
of
 
September
 
30,
 
2024,
 
there
 
was
 
$
6.0
 
million
 
of
 
total
 
unrecognized
 
compensation
 
cost
 
related
 
to
unvested shares of restricted stock that the Corporation expects to recognize
 
over a weighted-average period of
1.6
 
years.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
56
Performance Units
Under the Omnibus Plan, the Corporation may award
 
performance units to participants, with each unit representing
 
the value of one
share
 
of
 
the
 
Corporation’s
 
common
 
stock.
These awards, which are granted to executives, do not contain non-forfeitable rights to
dividend equivalent amounts and can only be settled in shares of the Corporation’s common stock.
 
Performance units granted during the nine-month periods ended September 30, 2024 and 2023 vest on the third anniversary of the
effective date of the award based on actual achievement of two performance metrics weighted equally: relative total shareholder return
(“Relative TSR”), compared to companies that comprise the KBW Nasdaq Regional Banking Index, and the achievement of a tangible
book value per share (“TBVPS”) goal, which is measured based upon the growth in the tangible book value during the performance
cycle, adjusted for certain allowable non-recurring transactions. The participant may earn 50% of their target opportunity for threshold
level performance and up to 150% of their target opportunity for maximum level performance, based on the individual achievement of
each performance goal during a three-year performance cycle. Amounts between threshold, target and maximum performance will
vest in a proportional amount.
The
 
following
 
table
 
summarizes
 
the
 
performance
 
units
 
activity
 
under
 
the
 
Omnibus
 
Plan
 
during
 
the
 
nine-month
 
periods
 
ended
September 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30,
2024
2023
Number
 
Weighted-
Number
 
Weighted-
of
Average
of
Average
Performance
Grant Date
Performance
Grant Date
Units
Fair Value
Units
Fair Value
Performance units at beginning of year
534,261
$
12.25
791,923
$
7.36
Additions
(1)
165,487
18.39
216,876
12.24
Vested
(2)
(150,716)
11.26
(474,538)
4.08
Performance units at end of period
549,032
$
14.37
534,261
$
12.25
(1)
Units granted
 
during the
 
nine-month periods
 
ended September
 
30, 2024
 
and 2023
 
are based on
 
the achievement
 
of the Relative
 
TSR and TBVPS
 
performance goals
 
during a three-year
performance cycle beginning January 1, 2024 and January
 
1, 2023, respectively, and ending on
 
December 31, 2026 and December 31, 2025, respectively.
(2)
Units vested during the nine-month periods ended September 30,
 
2024 and 2023 are related to performance units granted
 
in 2021 and 2020, respectively,
 
that met the pre-established target
and were settled with shares of common stock reissued from treasury shares.
The fair value of the performance units awarded during
 
the nine-month periods ended September 30, 2024 and 2023,
 
that was based
on the TBVPS goal component, was
 
calculated based on the market price of the
 
Corporation’s common
 
stock on the respective date of
the
 
grant
 
and
 
assuming
 
attainment
 
of
 
100%
 
of
 
target
 
opportunity.
 
As
 
of
 
September
 
30,
 
2024,
 
there
 
have
 
been
 
no
 
changes
 
in
management’s
 
assessment of the probability
 
that the pre-established
 
TBVPS goal will be
 
achieved; as such,
 
no cumulative adjustment
to compensation
 
expense has
 
been recognized.
 
The fair
 
value of
 
the performance
 
units awarded,
 
that was
 
based on
 
the Relative
 
TSR
component, was
 
calculated using
 
a Monte Carlo
 
simulation. Since
 
the Relative
 
TSR component
 
is considered
 
a market condition,
 
the
fair value of the portion of the award based on Relative TSR is not revised subsequent to
 
grant date based on actual performance.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
57
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following
 
table summarizes
 
the valuation
 
assumptions used
 
to calculate
 
the fair
 
value of
 
the Relative
 
TSR component
 
of the
performance units granted under the Omnibus Plan during the nine-month
 
periods ended September 30, 2024 and 2023:
Nine-Month Period Ended September 30,
2024
2023
Risk-free interest rate
(1)
4.41
%
3.98
%
Correlation coefficient
73.80
77.16
Expected dividend yield
(2)
-
-
Expected volatility
(3)
34.65
41.37
Expected life (in years)
2.78
2.79
(1)
Based on the yield on zero-coupon U.S. Treasury
 
Separate Trading of Registered Interest and
 
Principal of Securities as of the grant date for a period equal to the simulation
 
term.
(2)
Assumes that dividends are reinvested at each ex-dividend date.
(3)
Calculated based on the historical volatility of the Corporation's
 
stock price with a look-back period equal to the simulation
 
term using daily stock prices.
For
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
 
recognized
 
$
0.7
 
million
 
and
 
$
1.8
 
million,
respectively,
 
of
 
stock-based
 
compensation
 
expense
 
related
 
to
 
performance
 
units,
 
compared
 
to
 
$
0.6
 
million
 
and
 
$
1.6
 
million
 
for
 
the
same periods
 
in 2023.
 
As of September
 
30, 2024,
 
there was $
4.2
 
million of
 
total unrecognized
 
compensation cost
 
related to unvested
performance units that the Corporation expects to recognize over a weighted-average
 
period of
2.0
 
years.
Shares withheld
During the
 
first nine months
 
of 2024,
 
the Corporation
 
withheld
137,206
 
shares (first nine
 
months of
 
2023 –
288,613
 
shares) of the
restricted
 
stock
 
and
 
performance
 
units
 
that vested
 
during
 
such
 
period to
 
cover
 
the participants’
 
payroll
 
and
 
income
 
tax withholding
liabilities;
 
these
 
shares
 
are
 
held
 
as
 
treasury
 
shares.
 
The
 
Corporation
 
paid
 
in
 
cash
 
any
 
fractional
 
share
 
of
 
salary
 
stock
 
to
 
which
 
an
officer
 
was entitled.
 
In
 
the consolidated
 
financial
 
statements,
 
the
 
Corporation
 
presents
 
shares
 
withheld
 
for
 
tax purposes
 
as common
stock repurchases.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
58
NOTE 13 –
 
STOCKHOLDERS’
 
EQUITY
Repurchase Programs
On
 
July
 
24,
 
2023,
 
the
 
Corporation
 
announced
 
that
 
its Board
 
approved
 
a stock
 
repurchase
 
program,
 
under
 
which
 
the Corporation
may
 
repurchase
 
up
 
to
 
$
225
 
million
 
of
 
its
 
outstanding
 
common
 
stock.
 
Under
 
this
 
program,
 
the
 
Corporation
 
repurchased
5,846,872
shares of common stock during the first nine months of 2024 through
 
open market transactions at an average price of $
17.10
 
for a total
cost
 
of
 
approximately
 
$
100.0
 
million.
 
As
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
has
 
remaining
 
authorization
 
to
 
repurchase
approximately $
50.0
 
million of common stock under this stock repurchase program.
 
Furthermore,
 
on
 
July 22,
 
2024,
 
the Corporation
 
announced
 
that
 
its Board
 
of
 
Directors
 
approved
 
a
 
new repurchase
 
program
 
(“the
2024
 
repurchase
 
program”),
 
under
 
which
 
the
 
Corporation
 
may
 
repurchase
 
up
 
to
 
an
 
additional
 
$
250
 
million
 
that
 
could
 
include
repurchases of
 
common stock
 
or junior
 
subordinated debentures,
 
which it
 
expects to
 
execute through
 
the end
 
of the
 
fourth quarter
 
of
2025. As
 
of September
 
30, 2024,
 
the Corporation
 
has remaining
 
authorization to
 
repurchase approximately
 
$
200.0
 
million, under
 
the
2024
 
repurchase
 
program,
 
after
 
the
 
$
50.0
 
million
 
redemption
 
of
 
junior
 
subordinated
 
debentures
 
in
 
September
 
2024,
 
as
 
further
explained in Note 7 - “Non-Consolidated Variable
 
Interest Entities (“VIEs”) and Servicing Assets.”
Repurchases
 
under
 
these
 
programs
 
may
 
be
 
executed
 
through
 
open
 
market
 
purchases,
 
accelerated
 
share
 
repurchases,
 
privately
negotiated
 
transactions
 
or
 
plans,
 
including
 
plans
 
complying
 
with
 
Rule
 
10b5-1
 
under
 
the
 
Exchange
 
Act,
 
redemption
 
of
 
junior
subordinated debentures
 
(in the case
 
of the 2024
 
repurchase program),
 
and will be
 
conducted in
 
accordance with
 
applicable legal
 
and
regulatory
 
requirements.
 
The
 
Corporation’s
 
repurchase
 
programs
 
are
 
subject
 
to
 
various
 
factors,
 
including
 
the
 
Corporation’s
 
capital
position,
 
liquidity,
 
financial
 
performance
 
and
 
alternative
 
uses
 
of
 
capital,
 
stock
 
trading
 
price,
 
and
 
general
 
market
 
conditions.
 
The
Corporation’s repurchase
 
programs
 
do not obligate it to
 
acquire any specific number
 
of shares and do not have
 
an expiration date. The
repurchase programs
 
may be
 
modified, suspended,
 
or terminated
 
at any
 
time at
 
the Corporation’s
 
discretion. Any
 
repurchased shares
of common
 
stock are
 
expected to
 
be held
 
as treasury
 
shares. The
 
Corporation’s
 
holding company
 
has no
 
operations and
 
depends on
dividends,
 
distributions
 
and
 
other
 
payments
 
from
 
its
 
subsidiaries
 
to
 
fund
 
dividend
 
payments,
 
stock
 
repurchases,
 
and
 
to
 
fund
 
all
payments on its obligations, including debt obligations.
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The
 
following
 
table
 
shows
 
the
 
change
 
in
 
shares
 
of
 
common
 
stock
 
outstanding
 
for
 
the
 
quarters
 
and
 
nine-month
 
periods
 
ended
September 30, 2024 and 2023:
Total
 
Number of Shares
Quarter Ended
Nine-Month Period Ended
September 30,
September 30,
2024
2023
2024
2023
Common stock outstanding, beginning balance
163,865,453
179,756,622
169,302,812
182,709,059
Common stock repurchased
(1)
(898)
(5,393,236)
(5,984,078)
(9,258,611)
Common stock reissued under stock-based compensation plan
14,947
23,903
564,232
994,332
Restricted stock forfeited
(3,692)
(963)
(7,156)
(58,454)
Common stock outstanding, ending balance
163,875,810
174,386,326
163,875,810
174,386,326
(1)
For the
 
quarter and
 
nine-month period
 
ended September
 
30, 2024
 
includes
898
 
and
137,206
 
shares, respectively
 
of common
 
stock surrendered
 
to cover
 
plan participants'
 
payroll and
income taxes.
 
For the
 
quarter and
 
nine-month
 
period ended
 
September 30,
 
2023 includes
778
 
and
288,613
 
shares of
 
common stock
 
surrendered to
 
cover plan
 
participants'
 
payroll and
income taxes.
For
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024,
 
total
 
cash
 
dividends
 
declared
 
on
 
shares
 
of
 
common
 
stock
amounted to
 
$
26.3
 
million ($
0.16
 
per share)
 
and $
79.7
 
million ($
0.48
 
per share),
 
respectively,
 
compared to
 
$
24.9
 
million ($
0.14
 
per
share) and $
75.6
 
million ($
0.42
 
per share), respectively,
 
for the same
 
periods of 2023.
 
On
October 30, 2024
, the Corporation’s
 
Board
of
 
Directors
 
declared
 
a
 
quarterly
 
cash
 
dividend
 
of
 
$
0.16
 
per
 
common
 
share.
 
The
 
dividend
 
is
 
payable
 
on
December 13, 2024
 
to
shareholders of record
 
at the close of business
 
on
November 29, 2024
. 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 Directors at the relevant times.
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
59
Preferred Stock
The Corporation
 
has
50,000,000
 
authorized shares of
 
preferred stock with
 
a par value
 
of $
1.00
, subject to
 
certain terms. This
 
stock
may
 
be
 
issued
 
in
 
series
 
and
 
the
 
shares
 
of
 
each
 
series
 
have
 
such
 
rights
 
and
 
preferences
 
as
 
are
 
fixed
 
by
 
the
 
Corporation’s
 
Board
 
of
Directors
 
when
 
authorizing
 
the
 
issuance
 
of
 
that
 
particular
 
series
 
and
 
are
 
redeemable
 
at
 
the
 
Corporation’s
 
option.
No
 
shares
 
of
preferred stock were outstanding as of September 30, 2024 and December 31,
 
2023.
Treasury Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The
 
following
 
table
 
shows
 
the
 
change
 
in
 
shares
 
of
 
treasury
 
stock
 
for
 
the
 
quarters
 
and
 
nine-month
 
periods
 
ended
 
September
 
30,
2024 and 2023:
Total
 
Number of Shares
Quarter Ended
Nine-Month Period Ended
September 30,
September 30,
2024
2023
2024
2023
Treasury stock, beginning balance
59,797,663
43,906,494
54,360,304
40,954,057
Common stock repurchased
898
5,393,236
5,984,078
9,258,611
Common stock reissued under stock-based compensation plan
(14,947)
(23,903)
(564,232)
(994,332)
Restricted stock forfeited
3,692
963
7,156
58,454
Treasury stock, ending balance
59,787,306
49,276,790
59,787,306
49,276,790
FirstBank Statutory Reserve (Legal Surplus)
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
 
$
199.6
 
million
 
as
 
of
 
each
 
of
September 30, 2024 and December 31, 2023. There were
no
 
transfers to the legal surplus reserve during the first nine months of
 
2024.
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
60
NOTE 14 – ACCUMULATED
 
OTHER COMPREHENSIVE LOSS
 
The following
 
table presents
 
the changes
 
in accumulated
 
other comprehensive
 
loss for
 
the quarters
 
and nine-month
 
periods ended
September 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in Accumulated Other Comprehensive
 
Loss by Component
(1)
Quarter ended September 30,
Nine-Month Period Ended September
 
30,
2024
2023
2024
2023
(In thousands)
Net unrealized holding losses on available-for-sale
 
debt securities:
Beginning balance
$
(645,057)
$
(773,581)
$
(640,552)
$
(805,972)
 
Other comprehensive income (loss)
(2)
160,054
(78,976)
155,549
(46,585)
Ending balance
$
(485,003)
$
(852,557)
$
(485,003)
$
(852,557)
Adjustment of pension and postretirement
 
benefit plans:
Beginning balance
$
1,382
$
1,194
$
1,382
$
1,194
 
Other comprehensive income (loss)
-
-
-
-
Ending balance
$
1,382
$
1,194
$
1,382
$
1,194
(1)
All amounts presented are net of tax.
(2)
Net unrealized holding losses on available-for-sale debt securities have no tax effect because securities are either tax-exempt, held by an IBE, or have a full deferred tax asset valuation allowance.
NOTE 15 – EMPLOYEE BENEFIT PLANS
The Corporation
 
maintains two frozen
 
qualified noncontributory
 
defined benefit pension
 
plans (the “Pension
 
Plans”), and
 
a related
complementary
 
post-retirement
 
benefit
 
plan
 
(the
 
“Postretirement
 
Benefit
 
Plan”)
 
covering
 
medical
 
benefits
 
and
 
life
 
insurance
 
after
retirement
 
that
 
it
 
obtained
 
in
 
the
 
Banco
 
Santander
 
Puerto
 
Rico
 
(“BSPR”)
 
acquisition
 
on
 
September
 
1,
 
2020.
 
One
 
defined
 
benefit
pension
 
plan covers
 
substantially all
 
of BSPR’s
 
former
 
employees who
 
were active
 
before January
 
1, 2007,
 
while
 
the other
 
defined
benefit pension plan covers personnel of an institution previously acquired
 
by BSPR. Benefits are based on salary and years of service.
The accrual of benefits under the Pension Plans is frozen to all participants.
The following table presents the components of net periodic (benefit) cost for
 
the indicated periods:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Affected Line Item
in the Consolidated
Quarter Ended September 30,
Nine-Month Period Ended September 30,
Statements of Income
2024
2023
2024
2023
(In thousands)
Net periodic (benefit) cost, pension plans:
Interest cost
Other expenses
$
900
$
950
$
2,702
$
2,850
Expected return on plan assets
Other expenses
(1,017)
(886)
(3,053)
(2,657)
Net periodic (benefit) cost, pension plans
(117)
64
(351)
193
Net periodic cost, postretirement plan
Other expenses
17
7
49
19
Net periodic (benefit) cost
 
$
(100)
$
71
$
(302)
$
212
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
61
NOTE 16 –
 
INCOME TAXES
 
The Corporation is subject to Puerto Rico income tax on
 
its income from all sources. Under the Puerto Rico Internal
 
Revenue Code,
as amended (the “PR Tax
 
Code”), the Corporation and its subsidiaries are treated as
 
separate taxable entities and are not entitled to file
consolidated tax returns. However,
 
certain subsidiaries that are
 
organized as limited liability
 
companies with a partnership
 
election are
treated as
 
pass-through entities
 
for Puerto
 
Rico tax
 
purposes. Furthermore,
 
the Corporation
 
conducts business
 
through certain
 
entities
that
 
have
 
special
 
tax
 
treatments,
 
including
 
doing
 
business
 
through
 
an
 
IBE
 
unit
 
of
 
the
 
Bank
 
and
 
through
 
FirstBank
 
Overseas
Corporation,
 
each
 
of
 
which
 
are
 
generally
 
exempt
 
from
 
Puerto
 
Rico
 
income
 
taxation
 
under
 
the
 
International
 
Banking
 
Entity
 
Act
 
of
Puerto Rico
 
(“IBE Act”),
 
and through
 
a wholly-owned
 
subsidiary that
 
engages in
 
certain Puerto
 
Rico qualified
 
investing and
 
lending
activities that have certain tax advantages under Act 60 of 2019.
For
 
the
 
third
 
quarter
 
and
 
first nine
 
months
 
of 2024,
 
the
 
Corporation
 
recorded
 
an
 
income tax
 
expense
 
of $
22.7
 
million
 
and
 
$
72.2
million, respectively,
 
compared to $
27.0
 
million and $
89.2
 
million, respectively,
 
for the same periods of 2023. The decrease in income
tax expense
 
for the
 
third quarter
 
of 2024
 
was mainly
 
due to
 
lower pre-tax
 
income and,
 
to a
 
lesser extent,
 
a lower
 
estimated effective
tax rate due
 
to increased business
 
activities with preferential
 
tax treatment under
 
the PR Tax
 
Code and a
 
$
0.4
 
million tax contingency
accrual release
 
in connection with
 
the expiration
 
of the statute
 
of limitation on
 
some uncertain tax
 
positions. Meanwhile,
 
the decrease
in income
 
tax expense
 
for the first
 
nine months
 
of 2024
 
was driven
 
by a lower
 
estimated effective
 
tax rate due
 
to the
 
aforementioned
increased
 
business
 
activities
 
with
 
preferential
 
tax
 
treatment
 
and,
 
to
 
a
 
lesser
 
extent,
 
lower
 
pre-tax
 
income.
 
The
 
Corporation
 
has
maintained
 
an
 
effective
 
tax
 
rate
 
lower
 
than
 
the
 
Puerto
 
Rico
 
maximum
 
statutory
 
rate
 
of
37.5
%.
 
The
 
Corporation’s
 
estimated
 
annual
effective tax
 
rate, excluding
 
entities with pre-tax
 
losses from which
 
a tax benefit
 
cannot be recognized
 
and discrete items,
 
was
23.7
%
for the first nine months of 2024, compared to
28.2
% for the same period in 2023.
Income
 
tax
 
expense
 
also
 
includes
 
USVI
 
income
 
taxes,
 
as
 
well
 
as
 
applicable
 
U.S.
 
federal
 
and
 
state
 
taxes.
 
As
 
a
 
Puerto
 
Rico
corporation, FirstBank
 
is treated as
 
a foreign corporation
 
for U.S. and
 
USVI income tax
 
purposes and is
 
generally subject to
 
U.S. and
USVI income
 
tax only
 
on its
 
income from
 
sources within
 
the U.S.
 
and USVI
 
or income
 
effectively
 
connected with
 
the conduct
 
of a
trade or business in those jurisdictions.
 
Such tax paid in the U.S. and USVI
 
is also creditable against the Corporation’s
 
Puerto Rico tax
liability,
 
subject
 
to
 
certain
 
conditions
 
and
 
limitations.
 
For
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024,
 
FirstBank
incurred
 
current
 
income
 
tax
 
expense
 
of
 
approximately
 
$
2.8
 
million
 
and
 
$
7.7
 
million,
 
respectively,
 
related
 
to
 
its
 
U.S.
 
operations,
compared to $
2.8
 
million and $
6.8
 
million, respectively, for the comparable
 
periods in 2023.
As of
 
September 30,
 
2024, the
 
Corporation had
 
a net
 
deferred tax
 
asset of
 
$
137.5
 
million, net
 
of a
 
valuation allowance
 
of $
121.6
million against
 
the deferred
 
tax asset,
 
compared to
 
a net
 
deferred tax
 
asset of
 
$
150.1
 
million, net
 
of a
 
valuation allowance
 
of $
139.2
million, as of
 
December 31, 2023.
 
The net deferred
 
tax asset of
 
the Corporation’s
 
banking subsidiary,
 
FirstBank, amounted
 
to $
137.5
million
 
as
 
of
 
September
 
30,
 
2024,
 
net
 
of
 
a
 
valuation
 
allowance
 
of
 
$
93.4
 
million,
 
compared
 
to
 
a
 
net
 
deferred
 
tax
 
asset
 
of
 
$
150.1
million,
 
net
 
of
 
a
 
valuation
 
allowance
 
of
 
$
111.4
 
million,
 
as
 
of
 
December
 
31,
 
2023.
 
The
 
decrease
 
in
 
the
 
net
 
deferred
 
tax
 
asset
 
was
mainly related
 
to the usage
 
of alternative minimum
 
tax credits and
 
the decrease in
 
the ACL. Meanwhile,
 
the decrease in
 
the valuation
allowance was related
 
primarily to changes
 
in the market
 
value of available-for
 
-sale debt securities
 
which resulted
 
in an equal
 
change
in
 
the
 
net
 
deferred
 
tax
 
asset
 
without
 
impacting
 
earnings.
 
The
 
Corporation
 
maintains
 
a
 
full
 
valuation
 
allowance
 
for
 
its
 
deferred
 
tax
assets associated with capital loss carryforwards, NOL carryforwards
 
and unrealized losses of available-for-sale debt securities.
See Note 22
 
– “Income Taxes,”
 
to the audited
 
consolidated financial statements
 
included in the
 
2023 Annual Report
 
on Form 10-K
for information
 
on the
 
tax treatment
 
of net
 
operating loss
 
(“NOL”) carryforwards
 
and dividend
 
received deduction
 
under the
 
PR Tax
Code and the limitation under Section 382 of the U.S. Internal Revenue
 
Code.
 
The Corporation
 
accounts for
 
uncertain tax
 
positions under
 
the provisions
 
of ASC
 
Topic
 
740, “Income
 
Taxes.”
 
The Corporation’s
policy is
 
to report
 
interest and
 
penalties related
 
to unrecognized
 
tax positions
 
in income
 
tax expense.
 
As of
 
September 30,
 
2024, the
Corporation
 
had
 
$
0.4
 
million
 
in
 
uncertain
 
tax
 
positions
 
acquired
 
from
 
BSPR,
 
which
 
includes
 
$
0.1
 
million
 
of
 
accrued
 
interest
 
and
penalties,
 
which,
 
if
 
recognized,
 
would
 
decrease
 
the
 
effective
 
income
 
tax
 
rate
 
in
 
future
 
periods.
The
 
amount
 
of
 
unrecognized
 
tax
benefits may increase or
 
decrease in the future
 
for various reasons, including
 
adding amounts for current
 
tax year positions, expiration
of
 
open
 
income
 
tax
 
returns
 
due
 
to
 
the
 
statute
 
of
 
limitations,
 
changes
 
in
 
management’s
 
judgment
 
about
 
the
 
level
 
of
 
uncertainty,
 
the
status
 
of
 
examinations,
 
litigation
 
and
 
legislative
 
activity,
 
and
 
the
 
addition
 
or
 
elimination
 
of
 
uncertain
 
tax
 
positions.
 
The
 
statute
 
of
limitations under
 
the PR Tax
 
Code is four
 
years after
 
a tax return
 
is due or
 
filed, whichever is
 
later; the statute
 
of limitations
 
for U.S.
and USVI
 
income tax
 
purposes is
 
three years
 
after a
 
tax return
 
is due
 
or filed,
 
whichever is
 
later.
 
The completion
 
of an
 
audit by
 
the
taxing
 
authorities
 
or
 
the
 
expiration
 
of
 
the
 
statute
 
of
 
limitations
 
for
 
a
 
given
 
audit
 
period
 
could
 
result
 
in
 
an
 
adjustment
 
to
 
the
Corporation’s
 
liability for income
 
taxes. Any such
 
adjustment could be
 
material to the
 
results of operations
 
for any given
 
quarterly or
annual period based,
 
in part, upon the results
 
of operations for the
 
given period. For U.S. and
 
USVI income tax purposes,
 
all tax years
subsequent
 
to
 
2020
 
remain
 
open
 
to
 
examination.
 
For
 
Puerto
 
Rico
 
tax
 
purposes,
 
all
 
tax
 
years
 
subsequent
 
to
 
2018
 
remain
 
open
 
to
examination.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
62
NOTE 17 –
 
FAIR VALUE
Fair Value
 
Measurement
 
ASC Topic
 
820, “Fair Value
 
Measurement,” defines
 
fair value as the
 
exchange price that
 
would be received
 
for an asset or
 
paid to
transfer
 
a
 
liability
 
(an
 
exit
 
price)
 
in
 
the
 
principal
 
or
 
most
 
advantageous
 
market
 
for
 
the
 
asset
 
or
 
liability
 
in
 
an
 
orderly
 
transaction
between market
 
participants on
 
the measurement
 
date. This
 
guidance also
 
establishes a
 
fair value
 
hierarchy for
 
classifying assets
 
and
liabilities, which is based on
 
whether the inputs to
 
the valuation techniques used
 
to measure fair value are
 
observable or unobservable.
One of three levels of inputs may be used to measure fair value:
 
Level 1
 
Valuations
 
of
 
Level
 
1
 
assets
 
and
 
liabilities
 
are
 
obtained
 
from
 
readily-available
 
pricing
 
sources
 
for
 
market
transactions involving identical assets or liabilities in active markets.
 
Level 2
 
Va
luations of
 
Level 2 assets
 
and liabilities
 
are based on
 
observable inputs
 
other than Level
 
1 prices, such
 
as quoted
prices for similar assets or liabilities, or other inputs that are
 
observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities.
 
Level 3
 
Va
luations of Level 3 assets and
 
liabilities are based on unobservable
 
inputs that are supported by
 
little or no market
activity and
 
are significant to
 
the fair value
 
of the
 
assets or liabilities.
 
Level 3 assets
 
and liabilities include
 
financial
instruments
 
whose value
 
is determined
 
by using
 
pricing models
 
for
 
which
 
the determination
 
of fair
 
value
 
requires
significant management judgment as to the estimation.
 
See Note 25 – “Fair Value,”
 
to the audited consolidated financial
 
statements included in the 2023
 
Annual Report on Form 10-K
 
for
a description of the valuation methodologies used to measure financial instruments
 
at fair value on a recurring basis.
 
There
 
were
 
no
 
transfers
 
of
 
assets
 
and
 
liabilities
 
measured
 
at
 
fair
 
value
 
between
 
Level
 
1
 
and
 
Level
 
2
 
measurements
 
during
 
the
quarters and nine-month periods ended September 30, 2024 and
 
2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets and
 
liabilities measured
 
at fair value
 
on a
 
recurring basis
 
are summarized
 
below as
 
of September
 
30, 2024
 
and December
 
31,
2023:
As of September 30, 2024
As of December 31, 2023
Fair Value Measurements Using
 
Fair Value Measurements Using
 
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
(In thousands)
Assets:
Debt securities available for sale:
U.S. Treasury securities
$
98,612
$
-
$
-
$
98,612
$
135,393
$
-
$
-
$
135,393
Noncallable U.S. agencies debt securities
-
700,299
-
700,299
-
433,437
-
433,437
Callable U.S. agencies debt securities
-
1,462,866
-
1,462,866
-
1,874,960
-
1,874,960
MBS
-
2,626,116
4,321
(1)
2,630,437
-
2,779,994
4,785
(1)
2,784,779
Puerto Rico government obligation
-
-
1,567
1,567
-
-
1,415
1,415
Other investments
-
-
1,000
1,000
-
-
-
-
Equity securities
5,012
-
-
5,012
4,893
-
-
4,893
Derivative assets
-
322
-
322
-
341
-
341
Liabilities:
Derivative liabilities
-
392
-
392
-
317
-
317
(1) Related to private label MBS.
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
63
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The table
 
below presents
 
a reconciliation
 
of the
 
beginning and
 
ending balances
 
of all
 
assets measured
 
at fair
 
value on
 
a recurring
basis using significant unobservable inputs (Level 3) for the quarters
 
and nine-month periods ended September 30, 2024 and 2023:
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
Level 3 Instruments Only
 
 
Securities Available
for Sale
(1)
Securities Available
for Sale
(1)
Securities Available
for Sale
(1)
Securities Available
for Sale
(1)
(In thousands)
Beginning balance
$
7,099
$
7,357
$
6,200
$
8,495
 
Total gains (losses):
 
Included in other comprehensive income (loss) (unrealized)
178
(722)
592
(903)
 
Included in earnings (unrealized)
(2)
36
(32)
45
(7)
 
Purchases
-
-
1,000
-
 
Principal repayments and amortization
(3)
(425)
(237)
(949)
(1,219)
Ending balance
$
6,888
$
6,366
$
6,888
$
6,366
___________________
(1)
Amounts mostly related to private label MBS.
(2)
Changes in unrealized gains (losses) included in earnings were
 
recognized within provision for credit losses – expense
 
and relate to assets still held as of the reporting date.
(3)
For the nine-month period ended September 30, 2023 includes
 
a $
0.5
 
million repayment of a matured debt security.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The
 
tables
 
below
 
present
 
quantitative
 
information
 
for
 
significant
 
assets
 
measured
 
at
 
fair
 
value
 
on
 
a
 
recurring
 
basis
 
using
significant unobservable inputs (Level 3) as of September 30, 2024 and December
 
31, 2023:
September 30, 2024
Fair Value
Valuation Technique
Unobservable Input
Range
Weighted
Average
Minimum
 
Maximum
(Dollars in thousands)
Available-for-sale
 
debt securities:
 
Private label MBS
$
4,321
Discounted cash flows
Discount rate
15.7%
15.7%
15.7%
Prepayment rate
0.0%
4.6%
3.0%
Projected cumulative loss rate
1.1%
4.6%
3.8%
 
Puerto Rico government obligation
$
1,567
Discounted cash flows
Discount rate
12.1%
12.1%
12.1%
Projected cumulative loss rate
23.8%
23.8%
23.8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
Fair Value
Valuation Technique
Unobservable Input
Range
Weighted
Average
Minimum
 
Maximum
(Dollars in thousands)
Available-for-sale
 
debt securities:
 
Private label MBS
$
4,785
Discounted cash flows
Discount rate
16.1%
16.1%
16.1%
Prepayment rate
0.0%
6.9%
3.7%
Projected cumulative loss rate
0.1%
10.9%
4.2%
 
Puerto Rico government obligation
$
1,415
Discounted cash flows
Discount rate
14.1%
14.1%
14.1%
Projected cumulative loss rate
25.8%
25.8%
25.8%
 
 
Information about Sensitivity to Changes in Significant Unobservable Inputs
Private label
 
MBS: The
 
significant unobservable
 
inputs in
 
the valuation
 
include probability
 
of default,
 
the loss
 
severity
 
assumption,
and prepayment
 
rates. Shifts
 
in those
 
inputs would
 
result in different
 
fair value
 
measurements. Increases
 
in the probability
 
of default,
loss
 
severity
 
assumptions,
 
and
 
prepayment
 
rates
 
in
 
isolation
 
would
 
generally
 
result
 
in
 
an
 
adverse
 
effect
 
on
 
the
 
fair
 
value
 
of
 
the
instruments. The Corporation modeled meaningful and possible
 
shifts of each input to assess the effect on the fair value estimation.
Puerto Rico Government Obligation:
 
The significant unobservable input used in the
 
fair value measurement is the assumed loss rate of
the
 
underlying
 
residential
 
mortgage
 
loans
 
that
 
collateralize
 
a
 
pass-through
 
MBS
 
guaranteed
 
by
 
the
 
PRHFA.
 
A
 
significant
 
increase
(decrease) in
 
the assumed
 
rate would
 
lead to
 
a (lower)
 
higher fair
 
value estimate.
 
See Note
 
2 –
 
“Debt Securities”
 
for information
 
on
the methodology used to calculate the fair value of these debt securities.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
64
Additionally, fair value
 
is used on a non-recurring basis to evaluate certain assets in accordance with GAAP.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
 
recorded
 
losses
 
or
 
valuation
 
adjustments
 
for
assets recognized at fair value on a non-recurring basis and still held at September
 
30, 2024, as shown in the following table:
Carrying value as of September 30, 2024
Related to losses
 
recorded for the
Quarter Ended
September 30, 2024
Related to losses
 
recorded for the
Nine-Month Period Ended
September 30, 2024
Losses recorded for the
Quarter Ended
September 30, 2024
Losses recorded for the
Nine-Month Period Ended
September 30, 2024
(In thousands)
Level 3:
Loans receivable
(1)
$
5,910
$
22,204
$
(386)
$
(1,441)
OREO
(2)
752
1,437
(33)
(108)
(1)
Consists mainly of
 
collateral dependent commercial
 
and construction
 
loans. The
 
Corporation generally measured
 
losses based
 
on the fair
 
value of the
 
collateral. The
 
Corporation derived
the fair values from
 
external appraisals that
 
took into consideration prices
 
in observed transactions
 
involving similar assets
 
in similar locations but
 
adjusted for specific characteristics
 
and
assumptions of the collateral (e.g., absorption rates), which are
 
not market observable. The haircuts applied on appraisals were
 
of
4
% for the nine-month period ended September 30, 2024.
(2)
The Corporation
 
derived the
 
fair values
 
from appraisals
 
that took
 
into consideration
 
prices in
 
observed transactions
 
involving similar
 
assets in
 
similar locations
 
but adjusted
 
for specific
characteristics and assumptions of
 
the properties (e.g., absorption
 
rates and net operating income
 
of income producing properties),
 
which are not market observable.
 
Losses were related to
market valuation adjustments after the transfer of the loans
 
to the OREO portfolio. The haircuts applied ranged from
2
% to
44
% for the quarter and nine-month period ended September
 
30,
2024.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2023,
 
the
 
Corporation
 
recorded
 
losses
 
or
 
valuation
 
adjustments
 
for
assets recognized at fair value on a non-recurring basis and still held at September
 
30, 2023, as shown in the following table:
Carrying value as of September 30, 2023
Related to (losses) gains
 
recorded for the
 
Quarter Ended
 
September 30, 2023
Related to losses
 
recorded for the
Nine-Month Period Ended
 
September 30, 2023
(Losses) gains recorded for the
 
Quarter Ended
 
September 30, 2023
Losses recorded for the
Nine-Month Period Ended
September 30, 2023
(In thousands)
Level 3:
Loans receivable
(1)
$
16,655
$
24,933
$
(2,495)
$
(9,234)
OREO
(2)
1,085
2,124
(169)
(205)
Level 2:
Loans held for sale
(3)
$
8,961
$
8,961
$
16
$
(57)
(1)
Consists mainly of
 
collateral dependent commercial
 
and construction
 
loans. The
 
Corporation generally measured
 
losses based
 
on the fair
 
value of the
 
collateral. The
 
Corporation derived
the fair values from
 
external appraisals that
 
took into consideration prices
 
in observed transactions
 
involving similar assets
 
in similar locations but
 
adjusted for specific characteristics
 
and
assumptions
 
of
 
the
 
collateral
 
(e.g.,
 
absorption
 
rates),
 
which
 
are
 
not
 
market
 
observable.
 
The
 
haircuts
 
applied
 
on
 
appraisals
 
ranged
 
from
1
%
 
to
22
%
 
for
 
the
 
nine-month
 
period
 
ended
September 30, 2023.
(2)
The Corporation
 
derived the
 
fair values
 
from appraisals
 
that took
 
into consideration
 
prices in
 
observed transactions
 
involving similar
 
assets in
 
similar locations
 
but adjusted
 
for specific
characteristics and assumptions of
 
the properties (e.g., absorption
 
rates and net operating income
 
of income producing properties),
 
which are not market observable.
 
Losses were related to
market valuation adjustments after the transfer of the loans
 
to the OREO portfolio. The haircuts applied ranged from
2
% to
27
% for the quarter and nine-month period ended September
 
30,
2023.
(3)
The Corporation derived the fair value of these loans based
 
on published secondary market prices of MBS with similar characteristics.
 
See Note 25 –
 
“Fair Value,”
 
to the audited
 
consolidated financial statements
 
included in the
 
2023 Annual Report
 
on Form 10-K
 
for
qualitative
 
information
 
regarding
 
the
 
fair
 
value
 
measurements
 
for
 
Level
 
3
 
financial
 
instruments
 
measured
 
at
 
fair
 
value
 
on
 
a
nonrecurring basis.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
65
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The
 
following
 
tables
 
present
 
the
 
carrying
 
value,
 
estimated
 
fair
 
value
 
and
 
estimated
 
fair
 
value
 
level
 
of
 
the
 
hierarchy
 
of
 
financial
instruments as of September 30, 2024 and December 31, 2023:
Total Carrying Amount
in Statement of
Financial Condition as
of September 30, 2024
Fair Value Estimate as
 
of
September 30, 2024
Level 1
Level 2
Level 3
(In thousands)
Assets:
Cash and due from banks and money market investments (amortized
 
cost)
$
685,371
$
685,371
$
685,371
$
-
$
-
Available-for-sale debt
 
securities (fair value)
4,894,781
4,894,781
98,612
4,789,281
6,888
Held-to-maturity debt securities:
 
Held-to-maturity debt securities (amortized cost)
323,142
 
Less: ACL on held-to-maturity debt securities
(1,119)
 
Held-to-maturity debt securities, net of ACL
$
322,023
316,854
-
222,248
94,606
Equity securities (amortized cost)
47,420
47,420
-
47,420
(1)
-
Other equity securities (fair value)
5,012
5,012
5,012
-
-
Loans held for sale (lower of cost or market)
12,641
12,729
-
12,729
-
Loans held for investment:
 
Loans held for investment (amortized cost)
12,446,024
 
Less: ACL for loans and finance leases
(246,996)
 
Loans held for investment, net of ACL
$
12,199,028
12,100,106
-
-
12,100,106
MSRs (amortized cost)
25,403
42,416
-
-
42,416
Derivative assets (fair value)
 
(2)
322
322
-
322
-
Liabilities:
Deposits (amortized cost)
$
16,347,390
$
16,358,466
$
-
$
16,358,466
$
-
Long-term advances from the FHLB (amortized cost)
500,000
503,960
-
503,960
-
Other long-term borrowings (amortized cost)
111,700
113,088
-
-
113,088
Derivative liabilities (fair value)
 
(2)
392
392
-
392
-
(1) Includes FHLB stock with a carrying value of $
34.0
 
million, which is considered restricted.
(2) Includes interest rate swap agreements, interest rate caps, forward contracts, interest rate lock commitments, and forward loan sales commitments.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
66
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Carrying Amount
in Statement of
Financial Condition as
of December 31, 2023
Fair Value Estimate as
 
of
December 31, 2023
Level 1
Level 2
Level 3
(In thousands)
Assets:
Cash and due from banks and money market investments (amortized
 
cost)
$
663,164
$
663,164
$
663,164
$
-
$
-
Available-for-sale debt
 
securities (fair value)
5,229,984
5,229,984
135,393
5,088,391
6,200
Held-to-maturity debt securities:
 
Held-to-maturity debt securities (amortized cost)
354,178
 
Less: ACL on held-to-maturity debt securities
(2,197)
 
Held-to-maturity debt securities, net of ACL
$
351,981
346,132
-
235,239
110,893
Equity securities (amortized cost)
44,782
44,782
-
44,782
(1)
-
Other equity securities (fair value)
4,893
4,893
4,893
-
-
Loans held for sale (lower of cost or market)
7,368
7,476
-
7,476
-
Loans held for investment:
 
 
Loans held for investment (amortized cost)
12,185,483
 
Less: ACL for loans and finance leases
(261,843)
 
Loans held for investment, net of ACL
$
11,923,640
11,762,855
-
-
11,762,855
MSRs (amortized cost)
26,941
45,244
-
-
45,244
Derivative assets (fair value)
(2)
341
341
-
341
-
Liabilities:
Deposits (amortized cost)
$
16,555,985
$
16,565,435
$
-
$
16,565,435
$
-
Long-term advances from the FHLB (amortized cost)
500,000
500,522
-
500,522
-
Other long-term borrowings (amortized cost)
161,700
159,999
-
-
159,999
Derivative liabilities (fair value)
(2)
317
317
-
317
-
(1) Includes FHLB stock with a carrying value of $
34.6
 
million, which is considered restricted.
(2) Includes interest rate swap agreements, interest rate caps, forward contracts and interest rate lock commitments.
The short-term nature
 
of certain assets and
 
liabilities result in their
 
carrying value approximating
 
fair value. These include
 
cash and
cash
 
due
 
from
 
banks
 
and
 
other
 
short-term
 
assets,
 
such
 
as
 
FHLB
 
stock.
 
Certain
 
assets,
 
the
 
most
 
significant
 
being
 
premises
 
and
equipment,
 
goodwill
 
and
 
other
 
intangible
 
assets, are
 
not
 
considered
 
financial
 
instruments
 
and
 
are
 
not
 
included
 
above. Accordingly,
this
 
fair
 
value
 
information
 
is not
 
intended
 
to, and
 
does not,
 
represent
 
the Corporation’s
 
underlying
 
value.
 
Many of
 
these assets
 
and
liabilities that
 
are subject
 
to the
 
disclosure requirements
 
are not
 
actively traded,
 
requiring management
 
to estimate
 
fair values.
 
These
estimates
 
necessarily
 
involve
 
the
 
use
 
of
 
assumptions
 
and
 
judgment
 
about
 
a
 
wide
 
variety
 
of
 
factors,
 
including
 
but
 
not
 
limited
 
to,
relevancy of market prices of comparable instruments, expected future
 
cash flows, and appropriate discount rates.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
67
NOTE 18 – REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue Recognition
 
In accordance with
 
ASC Topic
 
606, “Revenue from
 
Contracts with Customers” (“ASC
 
Topic
 
606”), revenues are
 
recognized when
control
 
of
 
promised
 
goods
 
or
 
services
 
is
 
transferred
 
to
 
customers
 
and
 
in
 
an
 
amount
 
that
 
reflects
 
the
 
consideration
 
to
 
which
 
the
Corporation expects to be
 
entitled in exchange for those
 
goods or services. At contract
 
inception, once the contract is
 
determined to be
within the
 
scope of
 
ASC Topic
 
606, the
 
Corporation assesses
 
the goods
 
or services
 
that are
 
promised within
 
each contract,
 
identifies
the
 
respective
 
performance
 
obligations,
 
and
 
assesses
 
whether
 
each
 
promised
 
good
 
or
 
service
 
is
 
distinct.
 
The
 
Corporation
 
then
recognizes
 
as revenue
 
the amount
 
of the
 
transaction price
 
that is
 
allocated to
 
the respective
 
performance obligation
 
when (or
 
as) the
performance obligation is satisfied.
Disaggregation of Revenue
 
The
 
following
 
tables
 
summarize
 
the
 
Corporation’s
 
revenue,
 
which
 
includes
 
net
 
interest
 
income
 
on
 
financial
 
instruments
 
that
 
is
outside of
 
ASC Topic
 
606 and
 
non-interest income,
 
disaggregated by
 
type of service
 
and business
 
segment for
 
the quarters
 
and nine-
month periods ended September 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended September 30, 2024
Mortgage
Banking
Consumer
(Retail)
Banking
Commercial
and Corporate
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Net interest income (loss)
(1)
$
13,590
$
146,585
$
19,932
$
(1,634)
$
19,007
$
4,584
$
202,064
Service charges and fees on deposit accounts
-
5,226
3,556
-
149
753
9,684
Insurance commission income
-
2,824
-
-
75
104
3,003
Card and processing income
-
10,851
10
-
10
897
11,768
Other service charges and fees
55
979
842
-
698
157
2,731
Not in scope of ASC Topic
 
606
 
(1)
3,353
1,334
306
238
19
66
5,316
 
Total non-interest income
3,408
21,214
4,714
238
951
1,977
32,502
Total Revenue (Loss)
$
16,998
$
167,799
$
24,646
$
(1,396)
$
19,958
$
6,561
$
234,566
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended September 30, 2023
Mortgage
Banking
Consumer
(Retail)
Banking
Commercial
and Corporate
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Net interest income (loss)
(1)
$
18,279
$
147,066
$
13,212
$
(4,055)
$
19,749
$
5,477
$
199,728
Service charges and fees on deposit accounts
-
5,286
3,406
-
155
705
9,552
Insurance commission income
-
2,596
-
-
68
126
2,790
Card and processing income
-
9,982
24
-
23
812
10,841
Other service charges and fees
50
1,262
853
-
615
163
2,943
Not in scope of ASC Topic
 
606
(1)
2,971
1,044
185
(3)
(14)
(13)
4,170
 
Total non-interest income
 
(loss)
3,021
20,170
4,468
(3)
847
1,793
30,296
Total Revenue (Loss)
$
21,300
$
167,236
$
17,680
$
(4,058)
$
20,596
$
7,270
$
230,024
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
68
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30, 2024
Mortgage
Banking
Consumer
(Retail)
Banking
Commercial and
Corporate
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Net interest income loss
(1)
$
43,745
$
446,801
$
49,787
$
(13,017)
$
56,139
$
14,757
$
598,212
Service charges and fees on deposit accounts
-
15,761
10,584
-
452
2,274
29,071
Insurance commission income
-
10,621
-
-
161
514
11,296
Card and processing income
-
31,561
52
-
119
2,871
34,603
Other service charges and fees
154
2,995
2,736
-
1,932
451
8,268
Not in scope of ASC Topic
 
606
 
(1)
9,934
4,145
659
419
22
106
15,285
 
Total non-interest income
10,088
65,083
14,031
419
2,686
6,216
98,523
Total Revenue (Loss)
$
53,833
$
511,884
$
63,818
$
(12,598)
$
58,825
$
20,973
$
696,735
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30, 2023
Mortgage
Banking
Consumer
(Retail)
Banking
Commercial and
Corporate
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Net interest income (loss)
(1)
$
61,427
$
427,407
$
41,085
$
(7,502)
$
60,369
$
17,642
$
600,428
Service charges and fees on deposit accounts
-
15,859
9,886
-
492
2,143
28,380
Insurance commission income
-
9,700
-
-
175
509
10,384
Card and processing income
-
30,035
74
-
103
2,682
32,894
Other service charges and fees
244
3,922
2,801
-
1,858
714
9,539
Not in scope of ASC Topic
 
606
 
(1)
8,913
2,909
4,027
1,837
221
(19)
17,888
 
Total non-interest income
9,157
62,425
16,788
1,837
2,849
6,029
99,085
Total Revenue (Loss)
$
70,584
$
489,832
$
57,873
$
(5,665)
$
63,218
$
23,671
$
699,513
(1)
Most of the Corporation’s
 
revenue is not within the scope of
 
ASC Topic 606.
 
The guidance explicitly excludes net interest income
 
from financial assets and liabilities, as
 
well as other non-interest income
 
from loans,
leases, investment securities and derivative financial instruments.
 
For the nine-month period ended September 30, 2024, revenue
 
not within the scope of ASC Topic
 
606 includes $
1.5
 
million in insurance proceeds, of
which $
0.8
 
million was received in
 
the third quarter
 
related to a
 
2020 outstanding insurance claim.
 
For the nine-month
 
period ended September 30,
 
2023, revenue not within
 
the scope of ASC
 
Topic 606
 
includes a
$
3.6
 
million gain recognized from a legal settlement and a $
1.6
 
million gain on the repurchase of $
21.4
 
million in junior subordinated debentures.
For the
 
quarters and
 
nine-month periods
 
ended September
 
30, 2024
 
and 2023,
 
most of
 
the Corporation’s
 
revenue within
 
the scope
of ASC Topic 606 was related
 
to performance obligations satisfied at a point in time.
See
 
Note
 
26
 
–
 
“Revenue
 
from
 
Contracts
 
with
 
Customers,”
 
to
 
the
 
audited
 
consolidated
 
financial
 
statements
 
included
 
in
 
the
 
2023
Annual Report on Form 10-K for a discussion of major revenue streams under
 
the scope of ASC Topic 606.
 
Contract Balances
As
 
of
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023,
 
there
 
were
no
 
contract
 
assets
 
recorded
 
on
 
the
 
Corporation’s
 
consolidated
financial statements. Moreover, the
 
balances of contract liabilities as of such dates were not significant.
Other
 
The Corporation
 
also did
 
not have
 
any material contract
 
acquisition costs
 
and did
 
not make
 
any significant
 
judgments or
 
estimates
in recognizing revenue for financial reporting purposes.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
69
NOTE 19 – SEGMENT INFORMATION
Based
 
upon
 
the
 
Corporation’s
 
organizational
 
structure
 
and
 
the
 
information
 
provided
 
to
 
the
 
Chief
 
Executive
 
Officer
 
and
management, the
 
operating segments
 
are based
 
primarily on
 
the Corporation’s
 
lines of
 
business for
 
its operations
 
in Puerto
 
Rico, the
Corporation’s
 
principal
 
market,
 
and
 
by
 
geographic
 
areas
 
for
 
its
 
operations
 
outside
 
of
 
Puerto
 
Rico.
 
As
 
of
 
September
 
30,
 
2024,
 
the
Corporation
 
had
six
 
reportable
 
segments:
 
Mortgage
 
Banking;
 
Consumer
 
(Retail)
 
Banking;
 
Commercial
 
and
 
Corporate
 
Banking;
Treasury and
 
Investments; United States
 
Operations; and Virgin
 
Islands Operations. Management
 
determined the reportable
 
segments
based
 
on
 
the
 
internal
 
structure
 
used
 
to
 
evaluate
 
performance
 
and
 
to
 
assess
 
where
 
to
 
allocate
 
resources.
 
Other
 
factors,
 
such
 
as
 
the
Corporation’s
 
organizational
 
chart,
 
nature
 
of
 
the
 
products,
 
distribution
 
channels,
 
and
 
the
 
economic
 
characteristics
 
of
 
the
 
products,
were also considered in the determination of the reportable segments.
The
 
Mortgage
 
Banking
 
segment
 
consists
 
of
 
the
 
origination,
 
sale,
 
and
 
servicing
 
of
 
a
 
variety
 
of
 
residential
 
mortgage
 
loans.
 
The
Mortgage
 
Banking
 
segment
 
also
 
acquires
 
and
 
sells
 
mortgages
 
in
 
the
 
secondary
 
markets.
 
The
 
Consumer
 
(Retail)
 
Banking
 
segment
consists
 
of
 
the Corporation’s
 
consumer
 
lending
 
and deposit
 
-taking
 
activities
 
conducted
 
mainly
 
through
 
its branch
 
network
 
and loan
centers. The Commercial and
 
Corporate Banking segment
 
consists of the Corporation’s
 
lending and other services
 
for large customers
represented
 
by
 
specialized
 
and
 
middle-market
 
clients
 
and
 
the
 
government
 
sector.
 
The
 
Commercial
 
and
 
Corporate
 
Banking
 
segment
offers commercial
 
loans, including commercial
 
real estate and construction
 
loans, and floor plan
 
financings, as well as
 
other products,
such
 
as
 
cash
 
management
 
and
 
business
 
management
 
services.
 
The
 
Treasury
 
and
 
Investments
 
segment
 
is
 
responsible
 
for
 
the
Corporation’s
 
investment
 
portfolio
 
and
 
treasury
 
functions
 
that
 
are
 
executed
 
to
 
manage
 
and
 
enhance
 
liquidity.
 
This
 
segment
 
lends
funds
 
to
 
the
 
Commercial
 
and
 
Corporate
 
Banking,
 
the
 
Mortgage
 
Banking,
 
the
 
Consumer
 
(Retail)
 
Banking,
 
and
 
the
 
United
 
States
Operations
 
segments
 
to
 
finance their
 
lending
 
activities
 
and
 
borrows
 
from
 
those segments.
 
The
 
Consumer
 
(Retail)
 
Banking
 
segment
also lends funds
 
to other
 
segments. The interest
 
rates charged
 
or credited by
 
the Treasury
 
and Investments
 
and the Consumer
 
(Retail)
Banking
 
segments
 
are
 
allocated
 
based
 
on
 
market
 
rates.
 
The
 
difference
 
between
 
the
 
allocated
 
interest
 
income
 
or
 
expense
 
and
 
the
Corporation’s
 
actual net
 
interest income
 
from
 
centralized management
 
of funding
 
costs is
 
reported
 
in the
 
Treasury
 
and Investments
segment.
 
The
 
United
 
States
 
Operations
 
segment
 
consists
 
of
 
all
 
banking
 
activities
 
conducted
 
by
 
FirstBank
 
in
 
the
 
United
 
States
mainland,
 
including
 
commercial
 
and
 
consumer
 
banking
 
services.
 
The
 
Virgin
 
Islands
 
Operations
 
segment
 
consists
 
of
 
all
 
banking
activities conducted by the Corporation in the USVI and the BVI, including
 
commercial and consumer banking services.
 
The
 
accounting
 
policies
 
of
 
the
 
segments
 
are
 
the
 
same
 
as
 
those
 
referred
 
to
 
in
 
Note
 
1
 
–
 
“Nature
 
of
 
Business
 
and
 
Summary
 
of
Significant Accounting Policies,” to the audited consolidated financial
 
statements included in the 2023 Annual Report on Form 10-K.
The
 
Corporation
 
evaluates
 
the
 
performance
 
of
 
the
 
segments
 
based
 
on
 
net
 
interest
 
income,
 
the
 
provision
 
for
 
credit
 
losses,
 
non-
interest
 
income
 
and
 
direct
 
non-interest
 
expenses.
 
The
 
segments
 
are
 
also
 
evaluated
 
based
 
on
 
the
 
average
 
volume
 
of
 
their
 
interest-
earning assets less the ACL.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
70
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following tables present information about the reportable segments for
 
the indicated periods:
Mortgage
Banking
Consumer
(Retail) Banking
Commercial and
Corporate
Banking
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Quarter ended September 30, 2024:
Interest income
$
31,997
$
96,478
$
74,065
$
28,099
$
37,049
$
6,987
$
274,675
Net (charge) credit for transfer of funds
(18,407)
93,854
(54,133)
(18,687)
(2,627)
-
-
Interest expense
-
(43,747)
-
(11,046)
(15,415)
(2,403)
(72,611)
Net interest income (loss)
13,590
146,585
19,932
(1,634)
19,007
4,584
202,064
Provision for credit losses - (benefit) expense
(4,982)
28,003
(6,524)
(36)
(1,010)
(206)
15,245
Non-interest income
 
3,408
21,214
4,714
238
951
1,977
32,502
Direct non-interest expenses
5,983
44,984
10,659
1,039
9,242
7,005
78,912
 
Segment income (loss)
$
15,997
$
94,812
$
20,511
$
(2,399)
$
11,726
$
(238)
$
140,409
Average earning assets
$
2,128,619
$
3,516,590
$
4,041,142
$
5,790,707
$
2,172,677
$
386,687
$
18,036,422
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage
Banking
Consumer
(Retail) Banking
Commercial and
Corporate
Banking
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Quarter ended September 30, 2023:
Interest income
$
31,208
$
90,976
$
68,138
$
32,146
$
33,560
$
7,377
$
263,405
Net (charge) credit for transfer of funds
(12,929)
96,836
(54,926)
(27,817)
(1,164)
-
-
Interest expense
-
(40,746)
-
(8,384)
(12,647)
(1,900)
(63,677)
Net interest income (loss)
18,279
147,066
13,212
(4,055)
19,749
5,477
199,728
Provision for credit losses - (benefit) expense
 
(3,288)
13,707
(7,235)
32
873
307
4,396
Non-interest income (loss)
3,021
20,170
4,468
(3)
847
1,793
30,296
Direct non-interest expenses
5,201
43,431
9,658
958
8,535
6,647
74,430
 
Segment income (loss)
$
19,387
$
110,098
$
15,257
$
(5,048)
$
11,188
$
316
$
151,198
Average earning assets
$
2,127,641
$
3,336,158
$
3,769,370
$
6,382,276
$
2,041,662
$
406,499
$
18,063,606
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage
Banking
Consumer
(Retail) Banking
Commercial and
Corporate
Banking
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Nine-Month Period Ended September 30, 2024
Interest income
$
94,886
$
286,412
$
219,091
$
85,069
$
108,227
$
21,740
$
815,425
Net (charge) credit for transfer of funds
(51,141)
289,577
(169,304)
(61,979)
(7,153)
-
-
Interest expense
-
(129,188)
-
(36,107)
(44,935)
(6,983)
(217,213)
Net interest income (loss)
43,745
446,801
49,787
(13,017)
56,139
14,757
598,212
Provision for credit losses - (benefit) expense
(15,036)
69,497
(10,610)
(45)
(4,452)
(337)
39,017
Non-interest income
10,088
65,083
14,031
419
2,686
6,216
98,523
Direct non-interest expenses
18,988
132,317
29,353
3,094
27,444
20,618
231,814
 
Segment income (loss)
$
49,881
$
310,070
$
45,075
$
(15,647)
$
35,833
$
692
$
425,904
Average earnings assets
$
2,123,814
$
3,492,399
$
4,036,197
$
5,844,335
$
2,126,742
$
406,248
$
18,029,735
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage
Banking
Consumer
(Retail) Banking
Commercial and
Corporate
Banking
Treasury and
Investments
United States
Operations
Virgin Islands
Operations
Total
(In thousands)
Nine-Month Period Ended September 30, 2023
Interest income
$
94,720
$
261,139
$
195,837
$
89,140
$
96,772
$
20,397
$
758,005
Net (charge) credit for transfer of funds
(33,293)
260,715
(154,752)
(70,095)
(2,575)
-
-
Interest expense
-
(94,447)
-
(26,547)
(33,828)
(2,755)
(157,577)
Net interest income (loss)
61,427
427,407
41,085
(7,502)
60,369
17,642
600,428
Provision for credit losses - (benefit) expense
(7,623)
42,600
(2,096)
7
9,545
(305)
42,128
Non-interest income
9,157
62,425
16,788
1,837
2,849
6,029
99,085
Direct non-interest expenses
15,821
126,872
28,363
2,828
25,341
20,203
219,428
 
Segment income (loss)
$
62,386
$
320,360
$
31,606
$
(8,500)
$
28,332
$
3,773
$
437,957
Average earnings assets
$
2,147,521
$
3,251,286
$
3,751,359
$
6,321,540
$
2,049,281
$
381,655
$
17,902,642
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
71
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table presents a reconciliation of the reportable segment financial information to the consolidated totals for the indicated periods:
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands)
Net income:
 
Total income for segments
 
$
140,409
$
151,198
$
425,904
$
437,957
Other operating expenses
 
(1)
44,023
42,208
130,726
125,395
Income before income taxes
96,386
108,990
295,178
312,562
Income tax expense
22,659
26,968
72,155
89,187
 
Total consolidated net income
$
73,727
$
82,022
$
223,023
$
223,375
Average assets:
Total average earning assets for segments
 
$
18,036,422
$
18,063,606
$
18,029,735
$
17,902,642
Average non-earning assets
 
846,952
832,374
845,662
845,837
 
Total consolidated average assets
$
18,883,374
$
18,895,980
$
18,875,397
$
18,748,479
(1)
Expenses pertaining
 
to corporate
 
administrative functions
 
that support
 
the operating
 
segment, but
 
are not
 
specifically attributable
 
to or
 
managed by
 
any segment,
 
are not
 
included in
 
the
reported financial
 
results of
 
the operating
 
segments. The
 
unallocated corporate
 
expenses include
 
certain general
 
and administrative
 
expenses and
 
related depreciation
 
and amortization
expenses.
NOTE 20 – SUPPLEMENTAL
 
STATEMENT
 
OF CASH FLOWS INFORMATION
 
Supplemental statement of cash flows information is as follows for the
 
indicated periods:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine-Month Period Ended September 30, 2024
2024
2023
(In thousands)
Cash paid for:
 
Interest
 
$
206,895
$
143,792
 
Income tax
 
68,322
88,258
 
Operating cash flow from operating leases
12,994
12,939
Non-cash investing and financing activities:
 
Additions to OREO
7,635
14,951
 
Additions to auto and other repossessed assets
45,266
48,245
 
Capitalization of servicing assets
1,632
1,839
 
Loan securitizations
85,893
100,735
 
Loans held for investment transferred to held for sale
118
3,255
 
Loans held for sale transferred to held for investment
-
3,265
 
Right-of-use assets obtained in exchange for operating lease liabilities,
 
net of lease terminations
8,943
3,042
 
Payable related to unsettled common stock repurchases
-
1,310
 
Redemption of investment in FBP Statutory Trust II
1,500
662
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
72
NOTE 21 – REGULATORY
 
MATTERS, COMMITMENTS
 
AND CONTINGENCIES
Regulatory Matters
The
 
Corporation
 
and
 
FirstBank
 
are
 
each
 
subject
 
to
 
various
 
regulatory
 
capital
 
requirements
 
imposed
 
by
 
the
 
U.S.
 
federal
 
banking
agencies. Failure
 
to meet
 
minimum capital
 
requirements can
 
result in
 
certain mandatory
 
and possibly
 
additional discretionary
 
actions
by regulators
 
that, if
 
undertaken, could
 
have a
 
direct material
 
adverse effect
 
on the
 
Corporation’s
 
financial statements
 
and
 
activities.
Under
 
capital
 
adequacy
 
guidelines
 
and
 
the
 
regulatory
 
framework
 
for
 
prompt
 
corrective
 
action,
 
the
 
Corporation
 
must
 
meet
 
specific
capital
 
guidelines
 
that
 
involve
 
quantitative
 
measures
 
of
 
the Corporation’s
 
and
 
FirstBank’s
 
assets,
 
liabilities,
 
and
 
certain
 
off-balance
sheet items
 
as calculated
 
under regulatory
 
accounting practices.
 
The Corporation’s
 
capital amounts
 
and classification
 
are also
 
subject
to qualitative judgments and
 
adjustment by the regulators with respect
 
to minimum capital requirements, components,
 
risk weightings,
and
 
other
 
factors.
 
As
 
of
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023,
 
the
 
Corporation
 
and
 
FirstBank
 
exceeded
 
the
 
minimum
regulatory capital ratios
 
for capital adequacy purposes
 
and FirstBank exceeded the
 
minimum regulatory capital
 
ratios to be considered
a
 
well-capitalized
 
institution
 
under
 
the regulatory
 
framework
 
for
 
prompt
 
corrective
 
action.
 
As of
 
September
 
30,
 
2024,
 
management
does not believe that any condition has changed or event has occurred that would
 
have changed the institution’s status.
The Corporation and FirstBank
 
compute risk-weighted assets
 
using the standardized
 
approach required by the
 
U.S. Basel III capital
rules (“Basel III rules”).
The
 
Basel
 
III
 
rules
 
require
 
the
 
Corporation
 
to
 
maintain
 
an
 
additional
 
capital
 
conservation
 
buffer
 
of
2.5
%
 
on
 
certain
 
regulatory
capital
 
ratios
 
to
 
avoid
 
limitations
 
on
 
both
 
(i)
 
capital
 
distributions
 
(
e.g.
,
 
repurchases
 
of
 
capital
 
instruments,
 
dividends
 
and
 
interest
payments on capital instruments) and (ii) discretionary bonus payments
 
to executive officers and heads of major business lines.
As part
 
of its
 
response to
 
the impact
 
of COVID-19,
 
on March
 
31, 2020,
 
the federal
 
banking agencies
 
issued an
 
interim final
 
rule
that
 
provided
 
the
 
option
 
to
 
temporarily
 
delay
 
the
 
effects
 
of
 
CECL
 
on
 
regulatory
 
capital
 
for
 
two
 
years,
 
followed
 
by
 
a
 
three-year
transition
 
period.
 
The
 
interim
 
final
 
rule
 
provides
 
that,
 
at
 
the
 
election
 
of
 
a
 
qualified
 
banking
 
organization,
 
the
 
day
 
one
 
impact
 
to
retained earnings plus
25
% of the change in
 
the ACL (as defined
 
in the final rule) from
 
January 1, 2020 to
 
December 31, 2021 will
 
be
delayed
 
for
 
two
 
years
 
and
 
phased-in
 
at
25
%
 
per
 
year
 
beginning
 
on
 
January
 
1,
 
2022
 
over
 
a
 
three-year
 
period,
 
resulting
 
in
 
a
 
total
transition period of
 
five years. Accordingly,
 
as of September
 
30, 2024, the
 
capital measures of
 
the Corporation and
 
the Bank included
$
48.6
 
million associated
 
with the
 
CECL day
 
one impact
 
to retained
 
earnings plus
25
% of
 
the increase
 
in the
 
ACL (as
 
defined in
 
the
interim
 
final
 
rule)
 
from
 
January
 
1,
 
2020
 
to
 
December
 
31,
 
2021,
 
and
 
$
16.2
 
million
 
remains
 
excluded
 
to
 
be
 
phased-in
 
on
 
January
 
1,
2025.
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
73
The regulatory
 
capital position of
 
the Corporation and
 
FirstBank as of
 
September 30,
 
2024 and December
 
31, 2023, which
 
reflects
the delay in the full effect of CECL on regulatory capital, were
 
as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory Requirements
Actual
For Capital Adequacy Purposes
To be Well
 
-Capitalized
Thresholds
 
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars in thousands)
As of September 30, 2024
Total Capital (to Risk-Weighted
 
Assets)
 
First BanCorp.
$
2,399,483
18.25
%
$
1,051,684
8.0
%
N/A
N/A
 
FirstBank
$
2,367,463
18.01
%
$
1,051,456
8.0
%
$
1,314,320
10.0
%
CET1 Capital (to Risk-Weighted Assets)
 
First BanCorp.
$
2,126,527
16.18
%
$
591,572
4.5
%
N/A
N/A
 
FirstBank
$
2,102,892
16.00
%
$
591,444
4.5
%
$
854,308
6.5
%
Tier I Capital (to Risk-Weighted
 
Assets)
 
First BanCorp.
$
2,126,527
16.18
%
$
788,763
6.0
%
N/A
N/A
 
FirstBank
$
2,202,892
16.76
%
$
788,592
6.0
%
$
1,051,456
8.0
%
Leverage ratio
 
First BanCorp.
$
2,126,527
10.96
%
$
775,896
4.0
%
N/A
N/A
 
FirstBank
$
2,202,892
11.36
%
$
775,647
4.0
%
$
969,558
5.0
%
As of December 31, 2023
Total Capital (to Risk-Weighted
 
Assets)
 
First BanCorp.
$
2,403,319
18.57
%
$
1,035,589
8.0
%
N/A
N/A
 
FirstBank
$
2,376,003
18.36
%
$
1,035,406
8.0
%
$
1,294,257
10.0
%
CET1 Capital (to Risk-Weighted Assets)
 
First BanCorp.
$
2,084,432
16.10
%
$
528,519
4.5
%
N/A
N/A
%
 
FirstBank
$
2,113,995
16.33
%
$
582,416
4.5
%
$
841,267
6.5
%
Tier I Capital (to Risk-Weighted
 
Assets)
 
First BanCorp.
$
2,084,432
16.10
%
$
776,692
6.0
%
N/A
N/A
 
FirstBank
$
2,213,995
17.11
%
$
776,554
6.0
%
$
1,035,406
8.0
%
Leverage ratio
 
First BanCorp.
$
2,084,432
10.78
%
$
773,615
4.0
%
N/A
N/A
 
FirstBank
$
2,213,995
11.45
%
$
773,345
4.0
%
$
966,682
5.0
%
Commitments
 
The Corporation enters
 
into financial instruments
 
with off-balance sheet
 
risk in the normal
 
course of business to
 
meet the financing
needs
 
of
 
its
 
customers.
 
These
 
financial
 
instruments
 
may
 
include
 
commitments
 
to
 
extend
 
credit
 
and
 
standby
 
letters
 
of
 
credit.
Commitments to extend credit are agreements
 
to lend to a customer as long
 
as there is no violation of any conditions
 
established in the
contract. Commitments
 
generally have fixed
 
expiration dates or
 
other termination clauses.
 
Since certain commitments
 
are expected
 
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.
 
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.
 
As
of September
 
30, 2024,
 
commitments to
 
extend credit
 
amounted to
 
approximately $
2.1
 
billion, of
 
which $
0.8
 
billion relates
 
to retail
credit card loans.
 
In addition, commercial
 
and financial standby
 
letters of credit
 
as of September
 
30, 2024 amounted
 
to approximately
$
67.5
 
million.
Contingencies
As of
 
September 30,
 
2024, First
 
BanCorp. and
 
its subsidiaries
 
were defendants
 
in various
 
legal proceedings,
 
claims and
 
other loss
contingencies
 
arising
 
in
 
the
 
ordinary
 
course
 
of
 
business.
 
On
 
at
 
least
 
a
 
quarterly
 
basis,
 
the
 
Corporation
 
assesses
 
its
 
liabilities
 
and
contingencies in connection
 
with threatened and
 
outstanding legal proceedings,
 
claims and other
 
loss contingencies utilizing
 
the latest
information
 
available. For
 
legal proceedings,
 
claims and
 
other loss
 
contingencies where
 
it is
 
both probable
 
that the
 
Corporation
 
will
incur
 
a
 
loss
 
and
 
the
 
amount
 
can
 
be
 
reasonably
 
estimated,
 
the
 
Corporation
 
establishes
 
an
 
accrual
 
for
 
the
 
loss.
 
Once
 
established,
 
the
accrual
 
is
 
adjusted
 
as
 
appropriate
 
to
 
reflect
 
any
 
relevant
 
developments.
 
For
 
legal
 
proceedings,
 
claims
 
and
 
other
 
loss
 
contingencies
where a loss is not probable or the amount of the loss cannot be estimated, no accrual
 
is established.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
74
Any estimate
 
involves significant
 
judgment, given
 
the varying
 
stages of
 
the proceedings
 
(including the
 
fact that
 
some of
 
them are
currently in
 
preliminary stages),
 
the existence
 
in some
 
of the
 
current proceedings
 
of multiple
 
defendants whose
 
share of
 
liability has
yet
 
to
 
be
 
determined,
 
the
 
numerous
 
unresolved
 
issues
 
in
 
the
 
proceedings,
 
and
 
the
 
inherent
 
uncertainty
 
of
 
the
 
various
 
potential
outcomes of such
 
proceedings. Accordingly,
 
the Corporation’s
 
estimate will change
 
from time to time,
 
and actual losses
 
may be more
or less than the current estimate.
While
 
the
 
final
 
outcome
 
of
 
legal
 
proceedings,
 
claims,
 
and
 
other
 
loss
 
contingencies
 
is
 
inherently
 
uncertain,
 
based
 
on
 
information
currently
 
available,
 
management
 
believes
 
that
 
the
 
final
 
disposition
 
of
 
the
 
Corporation’s
 
legal
 
proceedings,
 
claims
 
and
 
other
 
loss
contingencies,
 
to
 
the
 
extent
 
not
 
previously
 
provided
 
for,
 
will
 
not
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
the
 
Corporation’s
 
consolidated
financial position as a whole.
If management believes that, based on available information,
 
it is at least reasonably possible that a material loss (or material
 
loss in
excess
 
of
 
any
 
accrual)
 
will
 
be
 
incurred
 
in
 
connection
 
with
 
any
 
legal
 
contingencies,
 
the
 
Corporation
 
discloses
 
an
 
estimate
 
of
 
the
possible loss or
 
range of loss,
 
either individually or
 
in the aggregate,
 
as appropriate, if
 
such an estimate can
 
be made, or
 
discloses that
an estimate cannot be made. Based on the Corporation’s
 
assessment as of September 30, 2024, no such disclosures were necessary.
In 2023,
 
the FDIC
 
issued a
 
final rule
 
to impose
 
a special
 
assessment to
 
recover
 
certain estimated
 
losses to
 
the
 
Deposit Insurance
Fund (“DIF”)
 
arising from
 
the closures
 
of Silicon
 
Valley
 
Bank and
 
Signature Bank.
 
The estimated
 
losses will
 
be recovered
 
through
quarterly
 
special assessments
 
collected from
 
certain insured
 
depository
 
institutions, including
 
the Bank,
 
and collection
 
began
 
during
the
 
quarter
 
ended
 
June
 
30,
 
2024.
 
In
 
connection
 
with
 
updates
 
made
 
by
 
the
 
FDIC
 
to
 
the
 
initial
 
estimated
 
losses
 
to
 
the
 
DIF,
 
the
Corporation recorded
 
charges of
 
$
1.1
 
million during
 
the nine-month
 
period ended September
 
30, 2024
 
in the consolidated
 
statements
of income
 
as part
 
of “FDIC
 
deposit insurance”
 
expenses. As
 
of September
 
30, 2024,
 
the Corporation’s
 
total estimated
 
FDIC special
assessment
 
amounted
 
to
 
$
7.4
 
million,
 
of
 
which
 
$
1.6
 
million
 
has
 
been
 
paid.
 
The
 
Corporation
 
continues
 
to
 
monitor
 
the
 
FDIC’s
estimated loss to the DIF,
 
which could affect the amount of its accrued liability.
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
75
NOTE 22 – FIRST BANCORP.
 
(HOLDING COMPANY
 
ONLY) FINANCIAL
 
INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following condensed
 
financial information presents
 
the financial position
 
of First BanCorp.
 
at the holding
 
company level only
as
 
of
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023,
 
and
 
the
 
results
 
of
 
its
 
operations
 
for
 
the
 
quarters
 
and
 
nine-month
 
periods
 
ended
September 30, 2024 and 2023:
Statements of Financial Condition
As of September 30,
As of December 31,
2024
2023
(In thousands)
Assets
Cash and due from banks
$
11,384
$
11,452
Other investment securities
1,275
825
Investment in First Bank Puerto Rico, at equity
1,777,250
1,627,172
Investment in First Bank Insurance Agency,
 
at equity
23,425
18,376
Investment in FBP Statutory Trust I
1,289
1,289
Investment in FBP Statutory Trust II
(1)
2,061
3,561
Dividends receivable
9
713
Other assets
649
476
Total assets
$
1,817,342
$
1,663,864
Liabilities and Stockholders’ Equity
Liabilities:
Long-term borrowings
(1)
$
111,700
$
161,700
Accounts payable and other liabilities
4,757
4,555
Total liabilities
116,457
166,255
Stockholders’ equity
1,700,885
1,497,609
Total liabilities and stockholders’
 
equity
$
1,817,342
$
1,663,864
(1)
In September 2024, the Corporation
 
redeemed $
50.0
 
million, or
42
%, of outstanding TruPS
 
issued by FBP Statutory Trust
 
II (or $
48.5
 
million after excluding the Corporation’s
 
interest in
the Trust
 
of approximately
 
$
1.5
 
million), as
 
part of
 
the 2024
 
repurchase program,
 
as further
 
explained in
 
Note 7
 
- “Non-Consolidated
 
Variable
 
Interest Entities
 
(“VIEs”) and
 
Servicing
Assets” and Note 13 - “Stockholders' Equity.”
 
 
 
 
 
 
 
 
FIRST BANCORP.
NOTES TO CONSOLIDATED
 
FINANCIAL
 
STATEMENTS – (Continued)
76
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Income
 
Quarter Ended
 
Nine-Month Period Ended
September 30,
September 30,
2024
2023
2024
2023
(In thousands)
Income
 
 
Interest income on money market investments
 
$
49
$
77
$
199
$
187
 
Dividend income from banking subsidiaries
78,704
82,178
240,853
239,980
 
Dividend income from nonbanking subsidiaries
-
-
-
12,000
 
Gain on early extinguishment of debt
-
-
-
1,605
 
Other income
97
101
298
304
 
Total income
78,850
82,356
241,350
254,076
Expense
 
Interest expense on long-term borrowings
3,235
3,345
9,921
10,135
 
Other non-interest expenses
398
452
1,300
1,324
 
Total expense
3,633
3,797
11,221
11,459
Income before income taxes and equity in undistributed
 
earnings of subsidiaries
75,217
78,559
230,129
242,617
Income tax expense
-
-
1
1
Equity in undistributed earnings of subsidiaries
 
(distributions in excess of earnings)
(1,490)
3,463
(7,105)
(19,241)
Net income
$
73,727
$
82,022
$
223,023
$
223,375
Other comprehensive income (loss), net of tax
160,054
(78,976)
155,549
(46,585)
Comprehensive income
$
233,781
$
3,046
$
378,572
$
176,790
 
 
77
ITEM
 
2.
 
MANAGEMENT’S
 
DISCUSSION
 
AND
 
ANALYSIS
 
OF
 
FINANCIAL
 
CONDITION
 
AND
 
RESULTS
 
OF
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,
 
2023 (the
 
“2023 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
In light
 
of the
 
progress on
 
inflation and
 
a slower
 
than expected
 
growth in
 
the labor
 
market during
 
August 2024,
 
on September
 
18,
2024 and November 11,
 
2024, the Federal Reserve (the
 
“FED”) decided to lower the target
 
range for the federal funds rate by
 
50 basis
points (“bps”)
 
and 25
 
bps, respectively.
 
Nevertheless,
 
recent
 
indicators
 
suggest that
 
the U.S.
 
economy
 
has continued
 
to expand
 
at a
solid
 
pace.
 
Nonfarm
 
payrolls for
 
the month
 
of September
 
2024
 
added 254,000
 
jobs
 
and
 
the unemployment
 
rate
 
fell
 
to 4.1%.
 
Gross
Domestic
 
Product
 
(“GDP”)
 
rose
 
at
 
a
 
seasonally
 
adjusted
 
annual
 
rate
 
of
 
2.8%
 
in
 
the
 
third
 
quarter
 
of
 
2024,
 
slightly
 
below
 
estimates
which were expecting a 3% growth.
The
 
Corporation
 
maintained
 
positive
 
credit
 
performance
 
and
 
stable
 
deposit
 
trends
 
and
 
made
 
good
 
progress
 
on
 
its
 
capital
deployment strategy.
 
The U.S. and Puerto
 
Rico economy remain on
 
solid footing driven by
 
positive labor market trends
 
and increased
business activity.
 
This environment
 
continues to
 
support credit
 
demand and
 
has enabled
 
the Corporation
 
to have
 
its strongest
 
quarter
of commercial
 
loan originations
 
for the
 
year thus
 
far.
 
The Corporation
 
remains focused
 
on expanding
 
existing relationships,
 
building
loan pipeline, and adopting new platforms to enable future growth for the
 
remainder of 2024 and for 2025.
The market expectations are for the FED to continue lowering rates and
 
the federal funds rate is expected to be at 4.4% at the end of
this year and
 
at 3.4% at
 
the end of
 
2025. The Corporation
 
expects the net
 
interest margin
 
to remain flat
 
for the fourth
 
quarter of
 
2024
but
 
to
 
improve
 
for
 
2025.
 
The
 
Corporation
 
expects
 
the
 
downward
 
repricing
 
of
 
the
 
commercial
 
variable-rate
 
portfolio
 
to
 
be
compensated by
 
the repricing
 
of the
 
cash flows
 
from the
 
lower yielding
 
investment portfolio,
 
the redeployment
 
of cash
 
inflows from
repayments of investment
 
securities into loans or
 
higher yielding securities,
 
and the repricing
 
of deposits. In
 
addition, the replacement
of
 
higher
 
cost
 
of
 
funding
 
such
 
as
 
brokered
 
certificates
 
of
 
deposit
 
(“CDs”)
 
and
 
junior
 
subordinated
 
debentures
 
with
 
lower
 
cost
 
of
funding is expected to improve the net interest margin as well.
Repurchase of Trust
 
-Preferred Securities
 
(“TruPS”)
In September
 
2024,
 
the Corporation
 
redeemed $50.0
 
million,
 
or 42%,
 
of outstanding
 
TruPS
 
issued by
 
FBP Statutory
 
Trust
 
II (or
$48.5 million after excluding the Corporation’s
 
interest in the Trust of approximately $1.5 million)
 
at a contractual call price of 100%.
The
 
redemption
 
was
 
part
 
of
 
the
 
repurchase
 
program
 
approved
 
in
 
the
 
third
 
quarter
 
of
 
2024
 
under
 
which
 
the
 
Corporation
 
may
repurchase up to
 
$250 million of
 
common stock or
 
junior subordinated
 
debentures, which it
 
expects to execute
 
through the end
 
of the
fourth
 
quarter
 
of 2025.
 
As of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
has
 
remaining
 
authorization
 
of approximately
 
$250.0
 
million
 
in
combination with the remaining availability under the 2023 stock repurchase
 
program.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
78
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
 
2023
 
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
 
2023
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.
For
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
net
 
income
 
of
 
$73.7
 
million
 
($0.45
 
per
diluted
 
common
 
share)
 
and
 
$223.0
 
million
 
($1.35
 
per
 
diluted
 
common
 
share),
 
respectively,
 
compared
 
to
 
$82.0
 
million
 
($0.46
 
per
diluted common share)
 
and $223.4 million
 
($1.25 per diluted common
 
share), respectively,
 
for the comparable
 
periods in 2023.
 
Other
relevant selected financial indicators for the periods presented are included
 
below:
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
Key Performance Indicator:
(1)
Return on Average
 
Assets
(2)
1.55
%
1.72
%
1.57
%
1.59
%
Return on Average
 
Common Equity
(3)
18.31
20.70
19.52
19.00
Efficiency Ratio
(4)
52.41
50.71
52.03
49.29
(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.
 
79
The
 
key
 
drivers
 
of
 
the
 
Corporation’s
 
GAAP
 
financial
 
results
 
for
 
the
 
quarter
 
ended
 
September
 
30,
 
2024,
 
compared
 
to
 
the
 
third
quarter of 2023, include the following:
●
Net
 
interest
 
income
 
for
 
the
 
quarter
 
ended
 
September
 
30,
 
2024
 
increased
 
by
 
$2.4
 
million
 
to
 
$202.1
 
million,
 
compared
 
to
$199.7 million
 
for the
 
third quarter
 
of 2023,
 
driven
 
by higher
 
interest income
 
on loans
 
as a
 
result of
 
a change
 
in asset
 
mix
resulting from
 
the deployment
 
of cash
 
flows from
 
lower-yielding
 
investment securities
 
to fund
 
loan growth,
 
partially offset
by
 
an
 
increase
 
in
 
interest
 
expense
 
due
 
to
 
higher
 
rates
 
paid
 
on
 
interest-bearing
 
deposits
 
given
 
the
 
higher
 
interest
 
rate
environment and change in deposit mix. 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
September 30,
 
2024 was $15.2
 
million, compared
 
to $4.4 million
 
for the third
 
quarter of 2023
 
.
 
The increase in
 
the provision
expense
 
was driven
 
by
 
a
 
$14.4
 
million
 
increase
 
in
 
the provision
 
for
 
the
 
consumer
 
loan
 
and
 
finance
 
lease
 
portfolios
 
due to
higher charge-off levels.
Net charge-offs
 
totaled $24.0 million
 
for the quarter
 
ended September
 
30, 2024, or
 
0.78% of average
 
loans on an
 
annualized
basis, compared
 
to $14.1 million,
 
or an annualized
 
0.48% of average
 
loans, for the
 
third quarter of
 
2023. The increase
 
in net
charge-offs was mainly
 
due to an increase in consumer
 
loans and finance leases net charge
 
-offs. 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 September 30, 2024 increased by $2.2
 
million, reflecting, among other things, $0.8
million
 
in
 
insurance
 
proceeds
 
received
 
in
 
the
 
third
 
quarter
 
of
 
2024
 
and
 
an
 
increase
 
in
 
revenues
 
from
 
mortgage
 
banking
activities mainly due to a $0.8
 
million increase in the net
 
realized gain on sales of residential
 
mortgage loans in the secondary
market.
●
Non-interest
 
expenses
 
for
 
the
 
quarter
 
ended
 
September
 
30,
 
2024
 
increased
 
by
 
$6.3
 
million
 
to
 
$122.9
 
million,
 
reflecting,
among other things,
 
a $2.5 million increase
 
in employees’ compensation
 
and benefits expenses driven
 
by annual salary
 
merit
increases,
 
a $1.5 million increase in professional
 
services fees driven by information
 
technology infrastructure enhancements,
a
 
$1.8
 
million
 
increase
 
in
 
charges
 
for
 
operational
 
and
 
fraud
 
losses,
 
and
 
a
 
$0.8
 
million
 
decrease
 
in
 
net
 
gains
 
on
 
other
 
real
estate owned (“OREO”) operations.
 
See “Results of Operations – Non-Interest Expenses” below for additional
 
information.
 
●
Income tax expense decreased to $22.7 million for the third quarter
 
of 2024, compared to $27.0 million for the same period in
2023,
 
driven
 
by
 
lower
 
pre-tax
 
income
 
and
 
a
 
lower
 
estimated
 
effective
 
tax
 
rate
 
due
 
to
 
increased
 
business
 
activities
 
with
preferential tax treatment
 
under the PR Tax
 
Code. 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 nine
 
months of
2024,
 
compared
 
to 28.2%
 
for
 
the
 
same period
 
of 2023.
 
See
 
“Income
 
Taxes”
 
below
 
and Note
 
16 –
 
“Income
 
Taxes,”
 
to
 
the
unaudited consolidated financial statements herein for additional information.
 
●
As
 
of
 
September
 
30,
 
2024,
 
total
 
assets
 
were
 
approximately
 
$18.9
 
billion,
 
a
 
decrease
 
of
 
$50.4
 
million
 
from
 
December
 
31,
2023,
 
primarily related to repayments
 
of investment securities,
 
partially offset by
 
an increase in total
 
loans and cash and
 
cash
equivalents.
●
As of
 
September 30,
 
2024,
 
total liabilities
 
were $17.2
 
billion, a
 
decrease of
 
$253.6 million
 
from December
 
31, 2023,
 
which
includes
 
an
 
increase
 
in
 
core
 
deposits,
 
which
 
was
 
more
 
than
 
offset
 
by
 
a
 
decrease
 
in
 
brokered
 
CDs
 
and
 
the
 
redemption
 
of
outstanding
 
TruPS
 
issued
 
by
 
FBP
 
Statutory
 
Trust
 
II.
 
See
 
“Risk
 
Management
 
–
 
Liquidity
 
Risk”
 
below
 
for
 
additional
information about the Corporation’s
 
funding sources and strategy.
●
The Bank’s
 
primary sources of funding
 
are consumer and commercial
 
core deposits, which exclude
 
government deposits and
brokered
 
CDs.
 
As
 
of
 
September
 
30,
 
2024,
 
these
 
core
 
deposits,
 
amounting
 
to
 
$12.7
 
billion,
 
funded
 
67.18%
 
of
 
total
 
assets.
Excluding
 
fully collateralized
 
government
 
deposits, estimated
 
uninsured deposits
 
amounted
 
to $4.6
 
billion as
 
of September
30, 2024. In
 
addition to approximately
 
$1.8 billion in
 
cash and free
 
high-quality liquid
 
assets, the Bank
 
maintains borrowing
capacity at the
 
FHLB and
 
the FED’s
 
Discount Window.
 
As of September
 
30, 2024, the
 
Corporation had
 
approximately $2.6
billion
 
available
 
for
 
funding
 
under
 
the
 
FED’s
 
Discount
 
Window
 
and
 
$964.7
 
million
 
available
 
for
 
additional
 
borrowing
capacity on FHLB lines of
 
credit based on collateral
 
pledged at these entities. In
 
the aggregate, as of
 
September 30, 2024, the
Corporation had
 
$6.1 billion,
 
or 131%
 
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.
 
80
●
As of
 
September 30,
 
2024, the
 
Corporation’s
 
total stockholders’
 
equity was
 
$1.7 billion,
 
an increase
 
of $203.3
 
million from
December 31,
 
2023. The
 
increase was
 
driven by
 
net income
 
generated in
 
the first
 
nine months
 
of 2024
 
and a $155.5
 
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,
 
partially
 
offset
 
by
 
$100.0
 
million
 
in
 
common
 
stock
 
repurchases
 
under
 
the
2023 stock repurchase
 
program and common
 
stock dividends declared
 
in the first nine
 
months of 2024 totaling
 
$79.7 million
or $0.48
 
per common
 
share. The
 
Corporation’s
 
CET1 capital,
 
tier 1
 
capital,
 
total capital,
 
and
 
leverage ratios
 
were 16.18%,
16.18%, 18.25%, and
 
10.96%, respectively,
 
as of September
 
30, 2024, compared
 
to CET1 capital, tier
 
1 capital, total
 
capital,
and
 
leverage
 
ratios
 
of
 
16.10%,
 
16.10%,
 
18.57%,
 
and
 
10.78%,
 
respectively,
 
as
 
of
 
December
 
31,
 
2023.
 
See
 
“Risk
Management – Capital” below for additional information.
●
Total
 
loan
 
production,
 
including
 
purchases,
 
refinancings,
 
renewals,
 
and
 
draws
 
from
 
existing
 
revolving
 
and
 
non-revolving
commitments, increased
 
by $4.8
 
million to
 
$1.3 billion
 
for the
 
quarter ended
 
September 30,
 
2024, as
 
compared to
 
the third
quarter of
 
2023, driven
 
by a
 
higher volume
 
of commercial
 
and construction
 
loan originations.
 
See “Results
 
of Operations
 
–
Loan Production”
 
below for additional information.
●
Total
 
non-performing assets
 
were $119.1
 
million as
 
of September
 
30, 2024,
 
a decrease
 
of $6.8
 
million, from
 
December 31,
2023,
 
driven by a
 
$13.3 million decrease
 
in the OREO
 
portfolio balance
 
in the Puerto
 
Rico region, mainly
 
attributable to the
sale of a $5.3 million commercial real estate OREO property
 
and sales of residential OREO properties. This variance
 
is net of
a $5.6
 
million increase in
 
total nonaccrual loans
 
held for investment
 
mainly due
 
to the inflow
 
of a $16.5
 
million commercial
relationship
 
in
 
the
 
food
 
retail industry
 
in
 
the
 
Puerto
 
Rico
 
region,
 
partially
 
offset
 
by
 
the
 
sale of
 
an
 
$8.2
 
million
 
nonaccrual
C&I loan
 
in the
 
Puerto Rico
 
region, that
 
resulted in
 
a $1.2
 
million charge
 
-off
 
that had
 
been previously
 
reserved.
 
See “Risk
Management – Nonaccrual Loans and Non-Performing Assets” below for
 
additional information.
●
Adversely
 
classified
 
commercial
 
and
 
construction
 
loans
 
increased
 
by
 
$10.2
 
million
 
to
 
$77.7
 
million
 
as
 
of
 
September
 
30,
2024,
 
compared
 
to
 
December
 
31,
 
2023,
 
also
 
driven
 
by
 
the
 
aforementioned
 
inflow
 
to
 
nonaccrual
 
status
 
of
 
a
 
$16.5
 
million
commercial
 
relationship
 
in
 
the
 
Puerto
 
Rico
 
region
 
and
 
the
 
downgrade
 
of
 
a
 
$5.1
 
million
 
commercial
 
mortgage
 
loan
 
in
 
the
Puerto Rico region
 
,
 
partially offset
 
by the aforementioned
 
sale and charge
 
-off of
 
an $8.2 million
 
nonaccrual C&I
 
loan in the
Puerto Rico region.
 
81
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
 
intangibles. Similarly,
 
tangible
 
assets are
 
total assets
 
less goodwill
 
and
 
other
 
intangibles.
 
Tangible
 
common
equity ratio is tangible common
 
equity divided by tangible assets. Tangible
 
book value per common share is
 
tangible assets 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
82
Adjusted Net Income,
 
Adjusted Non-Interest 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,
 
non-interest
 
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
 
quarters ended
 
September 30, 2024
 
and 2023 did
 
not include any
 
significant Special
 
Items. The financial
results for the nine-month periods ended September 30, 2024
 
and 2023 included the following Special Items:
Nine-Month Period Ended September 30, 2024
-
Charges of $1.1 million ($0.7 million after-tax,
 
calculated based on the statutory tax rate of 37.5%) were recorded in the nine-
month
 
period
 
ended
 
September
 
30,
 
2024,
 
respectively,
 
to
 
increase
 
the
 
initial
 
estimated
 
FDIC
 
special
 
assessment
 
resulting
from the FDIC’s
 
updates related to
 
the loss estimate
 
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
aforementioned
 
charges
 
increased
 
the
 
estimated
 
FDIC
 
special
 
assessment
 
to
 
a
 
total
 
of
 
$7.4
 
million,
 
which
 
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
 
special
 
assessment
 
is
 
reflected
 
in
 
the
 
consolidated
 
statements
 
of
 
income
 
as
 
part
 
of
 
“FDIC
 
deposit
 
insurance”
expenses.
Nine-Month Period Ended September 30, 2023
-
A
 
$3.6
 
million
 
($2.3
 
million
 
after-tax,
 
calculated
 
based
 
on
 
the
 
statutory
 
tax
 
rate
 
of
 
37.5%)
 
gain
 
recognized
 
from
 
a
 
legal
settlement reflected in the consolidated statements of income as part of
 
“other non-interest income.”
-
A
 
$1.6
 
million
 
gain
 
on
 
the
 
repurchase
 
of
 
$21.4
 
million
 
in
 
junior
 
subordinated
 
debentures
 
reflected
 
in
 
the
 
consolidated
statements
 
of
 
income
 
as
 
“Gain
 
on
 
early
 
extinguishment
 
of
 
debt.”
 
The
 
junior
 
subordinated
 
debentures
 
are
 
reflected
 
in
 
the
consolidated statements
 
of financial condition
 
as “Other long-term
 
borrowings.” The
 
purchase price
 
equated to
 
92.5% of the
$21.4
 
million
 
par
 
value
 
of
 
the
 
trust
 
preferred
 
securities.
 
The
 
7.5%
 
discount
 
resulted
 
in
 
the
 
gain
 
of
 
$1.6
 
million.
 
The gain,
realized at the holding company level, had no effect on
 
the income tax expense in 2023.
Adjusted Net Income
 
– The following
 
table reconciles for
 
the nine-month periods
 
ended September 30,
 
2024 and 2023, net
 
income
to adjusted net income, a non-GAAP financial measure that excludes the
 
Special Items identified above.
Nine-Month Period Ended September 30,
2024
2023
(In thousands)
Net income, as reported (GAAP)
$
223,023
$
223,375
Adjustments:
 
FDIC special assessment expense
1,099
-
Gain recognized from a legal settlement
-
(3,600)
Gain on early extinguishment of debt
-
(1,605)
Income tax impact of adjustments
(1)
(412)
1,350
Adjusted net income (Non-GAAP)
$
223,710
$
219,520
(1)
See “Adjusted Net Income, Adjusted Non-Interest Income,
 
and Adjusted Non-Interest Expenses” above for the individual
 
tax impact related to the above adjustments, which were
 
based on
the Puerto Rico statutory tax rate of 37.5%, as applicable.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83
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 in
 
nonaccrual loans,
 
can fluctuate
 
from period
 
to period.
 
Net interest
 
income for
 
the quarter
 
and
nine-month
 
period ended
 
September 30,
 
2024 was
 
$202.1 million
 
and $598.2
 
million, respectively,
 
compared to
 
$199.7 million
 
and
$600.4 million for
 
the comparable periods
 
in 2023, respectively.
 
On a tax-equivalent
 
basis and excluding
 
the changes in the
 
fair value
of derivative instruments, net interest income for the quarter and
 
nine-month period ended September 30, 2024 was $206.6 million
 
and
$612.4 million, respectively,
 
compared to $204.4 million and $617.0 million for the comparable periods in 2023,
 
respectively.
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 September 30,
2024
2023
2024
2023
2024
2023
(Dollars in thousands)
Interest-earning assets:
Money market and other short-term investments
$
645,398
$
807,883
$
8,782
$
10,956
5.40
%
5.38
%
Government obligations
(2)
2,520,133
2,817,646
8,458
9,415
1.33
%
1.33
%
MBS
3,290,547
3,650,737
13,830
15,677
1.67
%
1.70
%
FHLB stock
33,985
34,666
804
768
9.39
%
8.79
%
Other investments
19,726
14,294
73
61
1.47
%
1.69
%
Total investments
(3)
6,509,789
7,325,226
31,947
36,877
1.95
%
2.00
%
Residential mortgage loans
2,816,343
2,800,675
41,505
39,640
5.85
%
5.62
%
Construction loans
195,001
183,507
4,417
4,937
8.99
%
10.67
%
C&I and commercial mortgage loans
5,616,658
5,261,849
102,768
93,711
7.26
%
7.07
%
Finance leases
885,807
808,480
17,290
15,802
7.74
%
7.75
%
Consumer loans
2,840,870
2,728,945
81,281
77,125
11.35
%
11.21
%
Total loans
(4)(5)
12,354,679
11,783,456
247,261
231,215
7.94
%
7.78
%
 
Total interest-earning assets
$
18,864,468
$
19,108,682
$
279,208
$
268,092
5.87
%
5.57
%
Interest-bearing liabilities:
Time deposits
$
3,057,918
$
2,708,297
$
27,768
$
19,852
3.60
%
2.91
%
Brokered CDs
600,319
318,831
7,656
3,830
5.06
%
4.77
%
Other interest-bearing deposits
7,429,163
7,956,856
28,280
30,616
1.51
%
1.53
%
Securities sold under agreements to repurchase
-
26,254
-
359
-
%
5.43
%
Advances from the FHLB
500,000
500,000
5,672
5,675
4.50
%
4.50
%
Other borrowings
155,722
161,700
3,235
3,345
8.24
%
8.21
%
Total interest-bearing liabilities
$
11,743,122
$
11,671,938
$
72,611
$
63,677
2.45
%
2.16
%
Net interest income on a tax-equivalent basis and excluding
valuations - non-GAAP
$
206,597
$
204,415
Interest rate spread
3.42
%
3.41
%
Net interest margin
4.34
%
4.24
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
84
Part I
Average volume
Interest income
(1)
 
/ expense
Average rate
(1)
Nine-Month Period Ended September 30,
2024
2023
2024
2023
2024
2023
(Dollars in thousands)
Interest-earning assets:
Money market and other short-term investments
$
615,679
$
611,308
$
25,096
$
23,486
5.43
%
5.14
%
Government obligations
(2)
2,607,706
2,878,603
26,458
31,153
1.35
%
1.45
%
MBS
3,366,866
3,756,654
43,407
52,160
1.72
%
1.86
%
FHLB stock
34,217
37,234
2,476
1,969
9.64
%
7.07
%
Other investments
17,978
13,729
383
258
2.84
%
2.51
%
Total investments
(3)
6,642,446
7,297,528
97,820
109,026
1.96
%
2.00
%
Residential mortgage loans
2,811,447
2,814,667
122,664
119,298
5.81
%
5.67
%
Construction loans
219,601
159,914
13,909
10,516
8.44
%
8.79
%
C&I and commercial mortgage loans
5,550,259
5,207,216
302,761
268,886
7.27
%
6.90
%
Finance leases
874,508
771,366
51,672
44,325
7.87
%
7.68
%
Consumer loans
2,822,909
2,679,261
240,809
222,531
11.36
%
11.10
%
Total loans
(4)(5)
12,278,724
11,632,424
731,815
665,556
7.94
%
7.65
%
 
Total interest-earning assets
$
18,921,170
$
18,929,952
$
829,635
$
774,582
5.84
%
5.47
%
Interest-bearing liabilities:
Time deposits
$
2,984,413
$
2,522,061
$
78,766
$
46,301
3.52
%
2.45
%
Brokered CDs
675,226
273,586
25,926
9,178
5.11
%
4.49
%
Other interest-bearing deposits
7,497,046
7,674,759
85,708
70,308
1.52
%
1.22
%
Securities sold under agreements to repurchase
-
72,648
-
2,756
-
%
5.07
%
Advances from the FHLB
500,000
553,993
16,892
18,899
4.50
%
4.56
%
Other borrowings
159,693
174,307
9,921
10,135
8.28
%
7.77
%
Total interest-bearing liabilities
$
11,816,378
$
11,271,354
$
217,213
$
157,577
2.45
%
1.87
%
Net interest income on a tax-equivalent basis and excluding
valuations - non-GAAP
$
612,422
$
617,005
Interest rate spread
3.39
%
3.60
%
Net interest margin
4.31
%
4.36
%
(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 $3.2
 
million and
 
$2.9 million
 
for the
 
quarters ended
 
September 30,
 
2024 and
 
2023, respectively,
 
and $9.5
 
million and
 
$8.9 million
 
for the
 
nine-month
periods ended September 30, 2024 and 2023, respectively,
 
of income from prepayment penalties and late fees related to
 
the Corporation’s loan portfolio.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
85
Part II
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024 Compared to 2023
2024 Compared to 2023
Variance due to:
Variance due to:
Volume
Rate
Total
Volume
Rate
Total
(In thousands)
Interest income on interest-earning assets:
Money market and other short-term investments
$
(2,207)
$
33
$
(2,174)
$
170
$
1,440
$
1,610
Government obligations
(996)
39
(957)
(2,822)
(1,873)
(4,695)
MBS
(1,520)
(327)
(1,847)
(5,185)
(3,568)
(8,753)
FHLB stock
(16)
52
36
(189)
696
507
Other investments
22
(10)
12
87
38
125
Total investments
(4,717)
(213)
(4,930)
(7,939)
(3,267)
(11,206)
Residential mortgage loans
223
1,642
1,865
(138)
3,504
3,366
Construction loans
285
(805)
(520)
3,853
(460)
3,393
C&I and commercial mortgage loans
6,442
2,615
9,057
18,261
15,614
33,875
Finance leases
1,511
(23)
1,488
6,053
1,294
7,347
Consumer loans
3,193
963
4,156
12,138
6,140
18,278
Total loans
11,654
4,392
16,046
40,167
26,092
66,259
Total interest income
$
6,937
$
4,179
$
11,116
$
32,228
$
22,825
$
55,053
Interest expense on interest-bearing liabilities:
Time deposits
$
2,778
$
5,138
$
7,916
$
9,605
$
22,860
$
32,465
Brokered CDs
3,576
250
3,826
15,205
1,543
16,748
Other interest-bearing deposits
(2,011)
(325)
(2,336)
(1,829)
17,229
15,400
Securities sold under agreements to repurchase
(359)
-
(359)
(2,756)
-
(2,756)
Advances from the FHLB
-
(3)
(3)
(1,821)
(186)
(2,007)
Other borrowings
(125)
15
(110)
(879)
665
(214)
Total interest expense
3,859
5,075
8,934
17,525
42,111
59,636
Change in net interest income
$
3,078
$
(896)
$
2,182
$
14,703
$
(19,286)
$
(4,583)
Portions of the Corporation’s
 
interest-earning assets, mostly investments
 
in obligations of some U.S.
 
government agencies and U.S.
government-sponsored
 
entities (“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
 
16
 
–
 
“Income
 
Taxes”
 
to
 
the
 
unaudited
 
consolidated
 
financial
 
statements
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
86
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
Nine-Month Period Ended
September 30,
September 30,
2024
2023
2024
2023
(Dollars in thousands)
Interest income - GAAP
$
274,675
$
263,405
$
815,425
$
758,005
Unrealized loss (gain) on derivative instruments
5
(3)
3
-
Interest income excluding valuations - non-GAAP
274,680
263,402
815,428
758,005
Tax-equivalent adjustment
4,528
4,690
14,207
16,577
Interest income on a tax-equivalent basis
 
and excluding valuations - non-GAAP
$
279,208
$
268,092
$
829,635
$
774,582
Interest expense - GAAP
$
72,611
$
63,677
$
217,213
$
157,577
Net interest income - GAAP
$
202,064
$
199,728
$
598,212
$
600,428
Net interest income excluding valuations - non-GAAP
$
202,069
$
199,725
$
598,215
$
600,428
Net interest income on a tax-equivalent basis
 
and excluding valuations - non-GAAP
$
206,597
$
204,415
$
612,422
$
617,005
Average Balances
 
Loans and leases
$
12,354,679
$
11,783,456
$
12,278,724
$
11,632,424
Total securities, other short-term investments and interest-bearing
 
cash balances
6,509,789
7,325,226
6,642,446
7,297,528
Average Interest-Earning Assets
$
18,864,468
$
19,108,682
$
18,921,170
$
18,929,952
Average Interest-Bearing Liabilities
$
11,743,122
$
11,671,938
$
11,816,378
$
11,271,354
Average Assets
(1)
$
18,883,374
$
18,895,980
$
18,875,397
$
18,748,479
Average Non-Interest-Bearing Deposits
$
5,341,589
$
5,621,233
$
5,333,838
$
5,861,680
Average Yield/Rate
Average yield on interest-earning assets - GAAP
5.78%
5.47%
5.74%
5.35%
Average rate on interest-bearing liabilities - GAAP
2.45%
2.16%
2.45%
1.87%
Net interest spread - GAAP
3.33%
3.31%
3.29%
3.48%
Net interest margin - GAAP
4.25%
4.15%
4.21%
4.24%
Average yield on interest-earning assets excluding valuations
 
- non-GAAP
5.78%
5.47%
5.74%
5.35%
Average rate on interest-bearing liabilities
2.45%
2.16%
2.45%
1.87%
Net interest spread excluding valuations
 
- non-GAAP
3.33%
3.31%
3.29%
3.48%
Net interest margin excluding valuations - non-GAAP
4.25%
4.15%
4.21%
4.24%
Average yield on interest-earning assets on a tax-equivalent
 
basis and excluding
valuations - non-GAAP
5.87%
5.57%
5.84%
5.47%
Average rate on interest-bearing liabilities
2.45%
2.16%
2.45%
1.87%
Net interest spread on a tax-equivalent basis
 
and excluding valuations - non-GAAP
3.42%
3.41%
3.39%
3.60%
Net interest margin on a tax-equivalent basis and excluding
 
valuations - non-GAAP
4.34%
4.24%
4.31%
4.36%
(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.
 
87
Net
 
interest
 
income
 
amounted
 
to
 
$202.1
 
million
 
for
 
the
 
quarter
 
ended
 
September
 
30,
 
2024,
 
an
 
increase
 
of
 
$2.4
 
million,
 
when
compared to $199.7 million for the same period in 2023. The $2.4
 
million increase in net interest income was primarily due to:
●
A $15.8 million increase in interest income on loans,
 
including:
-
An
 
$8.3
 
million
 
increase
 
in
 
interest
 
income
 
on
 
commercial
 
and
 
construction
 
loans,
 
driven
 
by
 
a
 
$6.6
 
million
 
increase
associated
 
with
 
a
 
$366.3
 
million
 
increase
 
in
 
the
 
average
 
balance,
 
and
 
a
 
$2.9
 
million
 
increase
 
related
 
to
 
the
 
effect
 
of
higher market interest
 
rates on the upward
 
repricing of variable-rate
 
loans and on new
 
loan originations. These
 
variances
were partially
 
offset by
 
interest income of
 
$1.2 million
 
recognized in
 
the third quarter
 
of 2023
 
due to the
 
collection of a
previously charged-off construction loan in the
 
Puerto Rico region.
As
 
of
 
September
 
30,
 
2024,
 
the
 
interest
 
rate
 
on
 
approximately
 
54%
 
of
 
the
 
Corporation’s
 
commercial
 
and
 
construction
loans was tied
 
to variable
 
rates, with 33%
 
based upon
 
SOFR of 3
 
months or
 
less, 12% based
 
upon the
 
Prime rate index,
and 9% based on other indexes.
-
A
 
$5.6
 
million
 
increase
 
in
 
interest
 
income
 
on
 
consumer
 
loans
 
and
 
finance
 
leases,
 
primarily
 
associated
 
with
 
a
 
$189.3
million increase in the average balance of this portfolio, mainly auto
 
loans and finance leases.
Partially offset by:
●
An $8.9 million increase in interest expense on interest-bearing liabilities, including
 
:
-
A $7.9 million
 
increase in interest expense
 
on time deposits,
 
excluding brokered CDs,
 
of which $5.1
 
million was related
to higher rates on renewals, associated with the overall higher interest rate
 
environment,
 
and $2.8 million was driven by a
$349.6 million
 
increase in the
 
average balance. The
 
average cost of
 
time deposits in
 
the third quarter
 
of 2024, excluding
brokered CDs, increased 69 bps to 3.60% when compared to the same period
 
in 2023.
-
A $3.8 million increase in interest expense on brokered CDs, driven by
 
a $281.5 million increase in the average balance.
Partially offset by:
-
A $2.3 million decrease
 
in interest expense on interest-bearing
 
checking and saving accounts,
 
driven by a $527.7
 
million
decrease in the average balance.
 
●
A $4.5
 
million
 
decrease
 
in interest
 
income
 
from
 
total investments,
 
consisting
 
of
 
a $2.4
 
million
 
decrease
 
in interest
 
income
from debt securities,
 
mainly associated with
 
a $657.7 million
 
decrease in the
 
average balance,
 
and a $2.1
 
million decrease in
interest income from interest-bearing cash balances,
 
primarily cash balances deposited at the FED, driven
 
by a $162.5 million
decrease in the average balance.
Net interest
 
margin
 
for the
 
third quarter
 
of 2024
 
was 4.25%,
 
compared to
 
4.15% for
 
the same
 
period in
 
2023. The
 
increase in
 
the
net interest
 
margin was
 
driven by
 
a change
 
in asset
 
mix resulting
 
from the
 
deployment of
 
cash flows
 
from lower-yielding
 
investment
securities to
 
fund loan
 
growth as well
 
as the
 
effect of
 
the higher
 
interest rate
 
environment on
 
commercial and
 
consumer loans
 
yields.
These variances were
 
partially offset by
 
the higher cost of
 
funds associated with
 
the higher interest
 
rate environment combined
 
with a
change in deposit mix reflecting a continued migration from non-interest-bearing and other
 
low-cost deposits to higher-cost deposits.
 
 
 
 
88
Net interest
 
income amounted
 
to $598.2
 
million for
 
the nine-month
 
period ended
 
September 30,
 
2024, a
 
decrease of
 
$2.2 million,
when compared to $600.4 million for same period in 2023. The $2.2 million
 
decrease in net interest income was primarily due to:
●
A $59.6 million increase in interest expense on interest-bearing liabilities, consisting
 
of:
-
A
 
$32.5
 
million
 
increase
 
in
 
interest
 
expense
 
on
 
time
 
deposits,
 
excluding
 
brokered
 
CDs,
 
of
 
which
 
$22.9
 
million
 
was
related
 
to higher
 
rates in
 
the first
 
nine
 
months of
 
2024 on
 
new issuances
 
and renewals
 
,
 
also associated
 
with the
 
higher
interest rate environment
 
,
 
and $9.6 million
 
was driven
 
by a $462.4
 
million increase
 
in the average
 
balance. The
 
average
cost of time deposits for the first nine months of 2024,
 
excluding brokered CDs, increased 107 bps to 3.52% as compared
to 2.45% for the same period in 2023.
-
A
 
$16.7
 
million
 
increase
 
in
 
interest
 
expense
 
on
 
brokered
 
CDs,
 
driven
 
by
 
a
 
$401.6
 
million
 
increase
 
in
 
the
 
average
balance.
-
A $15.4 million
 
increase in interest expense
 
on interest-bearing checking
 
and saving accounts,
 
also related to
 
the overall
higher interest
 
rate environment. The
 
average cost of
 
interest-bearing checking
 
and saving accounts
 
increased by
 
30 bps
to
 
1.52%
 
for
 
the
 
first
 
nine
 
months
 
of
 
2024
 
as
 
compared
 
to
 
1.22%
 
for
 
the
 
same
 
period
 
in
 
2023,
 
mostly
 
driven
 
by
government
 
deposits
 
in
 
the
 
Puerto
 
Rico
 
region.
 
Excluding
 
government
 
deposits,
 
the
 
average
 
cost
 
of
 
interest-bearing
checking and
 
savings accounts
 
for the
 
first nine
 
months of
 
2024 was
 
0.75%, compared
 
to 0.69%
 
for the
 
same period
 
in
2023.
Partially offset by:
-
A
 
$5.0
 
million
 
decrease
 
in
 
interest
 
expense
 
on
 
borrowings,
 
mainly
 
due
 
to
 
a
 
$2.8
 
million
 
decrease
 
on
 
short-term
repurchase agreements
 
since they were
 
not used as
 
a funding source
 
in the first
 
nine months of
 
2024, and a
 
$2.0 million
decrease on advances from the FHLB, mainly associated with a $54.0
 
million decrease in the average balance.
●
A
 
$6.7
 
million
 
decrease
 
in
 
interest
 
income
 
from
 
total
 
investments,
 
mainly
 
due
 
to
 
a
 
$9.0
 
million
 
net
 
decrease
 
in
 
interest
income
 
from
 
debt securities,
 
mainly
 
associated with
 
a $660.7
 
million
 
decrease
 
in the
 
average
 
balance,
 
partially
 
offset
 
by a
$1.6
 
million
 
increase
 
in
 
interest
 
income
 
from
 
interest-bearing
 
cash
 
balances,
 
which
 
consisted
 
primarily
 
of
 
cash
 
balances
deposited at the FED, due to the effect of higher market interest rates.
Partially offset by:
●
A $64.1
 
million increase in interest income on loans,
 
including:
-
A $35.1
 
million
 
increase
 
in
 
interest income
 
on
 
commercial
 
and
 
construction
 
loans,
 
driven
 
by
 
a
 
$23.1
 
million
 
increase
associated
 
with
 
a
 
$402.7
 
million
 
increase
 
in
 
the
 
average
 
balance,
 
and
 
a
 
$12.0
 
million
 
increase
 
related
 
to
 
the
 
effect
 
of
higher market interest rates on the upward repricing of variable-rate
 
loans and on new loan originations.
-
A
 
$25.6
 
million
 
increase
 
in
 
interest
 
income
 
on
 
consumer
 
loans
 
and
 
finance
 
leases,
 
primarily
 
due
 
to
 
a
 
$246.8
 
million
increase in the average balance of this portfolio, mainly auto loans and finance
 
leases.
Net
 
interest
 
margin
 
for
 
the nine-month
 
period
 
ended
 
September
 
30,
 
2024
 
was 4.21%,
 
compared
 
to 4.24%
 
for
 
the same
 
period
 
in
2023.
 
The
 
decrease
 
in
 
the
 
net
 
interest
 
margin
 
was
 
driven
 
by
 
the
 
higher
 
cost
 
of
 
funds
 
associated
 
with
 
the
 
higher
 
interest
 
rate
environment
 
combined
 
with
 
a
 
change
 
in
 
deposit
 
mix
 
reflecting
 
a
 
continued
 
migration
 
from
 
non-interest-bearing
 
and other
 
low-cost
deposits to higher-cost
 
deposits,
 
as well as the
 
increase in balance
 
of brokered CDs.
 
These variances were
 
partially offset by
 
a change
in asset mix resulting
 
from the deployment
 
of cash flows from
 
lower-yielding investment securities
 
to fund loan growth
 
as well as the
effect of the higher interest rate environment on commercial and
 
consumer loans yields.
 
89
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
 
$16.5
 
million
 
for
 
the
 
third
 
quarter
 
of
 
2024,
 
compared
 
to
 
$10.6
million for the third quarter of 2023.
 
The variances by major portfolio category were as follows:
●
Provision for
 
credit losses
 
for the
 
consumer
 
loan and
 
finance lease
 
portfolios
 
was an
 
expense of
 
$28.4 million
 
for the
 
third
quarter of 2024, compared to an expense of $14.0 million for the third
 
quarter of 2023. The increase in provision expense was
driven by higher charge-off levels in these
 
portfolios.
●
Provision for
 
credit losses
 
for the
 
commercial and
 
construction loan
 
portfolios
 
was a net
 
benefit of
 
$6.4 million
 
for the third
quarter of
 
2024, compared
 
to a
 
net benefit
 
of $0.1
 
million for
 
the third
 
quarter of
 
2023. The
 
net benefit
 
recorded during
 
the
third
 
quarter
 
of
 
2024
 
was
 
associated
 
with
 
the
 
improved
 
financial
 
condition
 
of certain
 
borrowers
 
and,
 
to
 
a
 
lesser extent,
 
an
improvement on the economic outlook of certain macroeconomic
 
variables, particularly variables associated with commercial
real estate property performance and the forecasted commercial real
 
estate (“CRE”) price index.
 
●
Provision for credit
 
losses for the residential
 
mortgage loan portfolio
 
was a net benefit
 
of $5.5 million for
 
the third quarter of
2024, compared to a net
 
benefit of $3.3 million for the
 
third quarter of 2023. The net benefit
 
recorded during the third quarter
of 2024 was driven
 
by a higher benefit
 
associated with updated
 
macroeconomic variables, mainly
 
in the long-term projection
of the unemployment rate in the Puerto Rico region.
 
The provision
 
for credit losses
 
for loans
 
and finance leases
 
was $41.3
 
million for the
 
first nine months
 
of 2024, compared
 
to $47.7
million for the same period of 2023. The variances by major portfolio
 
category were as follows:
●
Provision for
 
credit losses for
 
the commercial
 
and construction
 
loan portfolios was
 
a net benefit
 
of $13.4 million
 
for the first
nine months of
 
2024, compared
 
to an expense
 
of $10.6 million
 
for the same
 
period of 2023.
 
The net benefit
 
recorded during
the first nine months of 2024 was driven by the
 
aforementioned improved financial condition of certain
 
borrowers, a recovery
of $5.0 million associated
 
with a C&I loan
 
in the Puerto Rico
 
region, and $1.2 million
 
in recoveries of two
 
commercial loans
in the
 
Florida region,
 
partially offset
 
by increased
 
volume. Meanwhile,
 
the expense
 
recorded during
 
the first
 
nine months
 
of
2023 was mainly due
 
to a deterioration in the
 
forecasted CRE price index,
 
a $6.2 million charge
 
associated with a nonaccrual
participated
 
C&I
 
loan
 
in
 
the Florida
 
region
 
associated
 
with
 
the
 
power
 
generation
 
industry,
 
the aforementioned
 
incremental
reserve associated
 
with the
 
inflow to
 
nonaccrual status
 
of a
 
$9.5 million
 
C&I loan
 
in the
 
Puerto Rico
 
region and,
 
to a
 
lesser
extent, portfolio growth.
●
Provision
 
for
 
credit
 
losses
 
for
 
the
 
residential
 
mortgage
 
loan
 
portfolio
 
was
 
a
 
net
 
benefit
 
of
 
$16.6
 
million
 
for
 
the
 
first
 
nine
months of
 
2024, compared
 
to a net
 
benefit of
 
$6.8 million
 
for the
 
same period
 
of 2023.
 
The increase
 
in net
 
benefit recorded
during the first
 
nine months of 2024
 
was driven by updated
 
historical loss experience
 
used for determining
 
the ACL estimate
resulting in a
 
downward revision of
 
estimated loss severities
 
and lower required
 
reserve levels as further
 
explained in Note
 
3
–
 
“Loans
 
Held
 
for
 
Investment”
 
to
 
the
 
unaudited
 
consolidated
 
financial
 
statements
 
herein,
 
and
 
the
 
aforementioned
 
updated
macroeconomic variables, partially offset by newly originated
 
loans.
●
Provision
 
for
 
credit losses
 
for
 
the consumer
 
loan
 
and
 
finance lease
 
portfolios
 
was an
 
expense
 
of $71.3
 
million
 
for
 
the first
nine
 
months
 
of
 
2024,
 
compared
 
to
 
an
 
expense
 
of
 
$43.9
 
million
 
for
 
the
 
same
 
period
 
of
 
2023.
 
The
 
increase
 
in
 
provision
expense
 
was driven
 
by
 
higher charge
 
-off
 
levels in
 
these
 
portfolios
 
and
 
increases
 
in
 
portfolio
 
volumes,
 
partially
 
offset
 
by
 
a
$10.0 million recovery associated with the bulk sale of fully charged
 
-off loans recorded during the first nine months of 2024.
 
 
90
 
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
third
 
quarter
 
and
 
the
 
first
 
nine
 
months
 
of
 
2024
 
was
 
a
 
net
 
benefit
 
of
 
$1.0
 
million
 
and
 
$1.1
 
million,
 
respectively,
 
compared
 
to
 
a
 
net
benefit of $0.1
 
million and an expense
 
of $0.5 million,
 
for the same periods
 
in 2023, respectively.
 
The net benefit
 
recorded during the
third
 
quarter
 
and
 
first
 
nine
 
months
 
of
 
2024
 
was
 
driven
 
by
 
an
 
improvement
 
on
 
the
 
economic
 
outlook
 
of
 
certain
 
macroeconomic
variables, particularly in variables associated with the CRE price
 
index.
 
Provision for credit losses for
 
held-to-maturity and available-for-sale debt securities
The provision for credit losses
 
for held-to-maturity debt securities was
 
a net benefit of $0.1 million
 
and a net benefit of $1.1
 
million
for
 
the
 
third
 
quarter
 
and
 
first
 
nine
 
months
 
of
 
2024,
 
respectively,
 
compared
 
to
 
a
 
net
 
benefit
 
of
 
$6.2
 
million
 
and
 
$6.0
 
million,
respectively,
 
for the same
 
periods in 2023.
 
The net benefit
 
recorded during
 
the third quarter
 
and first nine
 
months of 2023
 
was driven
by the refinancing
 
of a $46.5 million
 
municipal bond into
 
a shorter-term commercial
 
loan structure and,
 
to a lesser extent,
 
a reduction
in qualitative reserves driven by updated financial information of certain
 
bond issuers received during the third quarter of 2023.
The
 
provision
 
for
 
credit
 
losses for
 
available-for-sale
 
debt
 
securities for
 
the third
 
quarter
 
and
 
first
 
nine
 
months
 
of 2024
 
was a
 
net
benefit
 
of $36
 
thousand
 
and a
 
net benefit
 
of $45
 
thousand, respectively,
 
compared to
 
an expense
 
of $32
 
thousand
 
and $7
 
thousand,
respectively, for the
 
same periods in 2023.
 
 
91
Non-Interest Income
Non-interest
 
income
 
amounted
 
to
 
$32.5
 
million
 
for
 
the
 
third
 
quarter
 
of
 
2024,
 
compared
 
to
 
$30.3
 
million
 
for
 
the
 
same
 
period
 
in
2023.
 
The $2.2 million increase in non-interest income was primarily due to:
●
A $0.9 million increase in card and processing income,
 
mainly in merchant-related fees and interchange income
 
due to higher
transactional volumes.
●
A
 
$0.6
 
million
 
increase
 
in
 
other
 
non-interest
 
income,
 
driven
 
by
 
$0.8
 
million
 
in
 
insurance
 
proceeds
 
received
 
in
 
the
 
third
quarter of 2024 related to a 2020 outstanding insurance claim.
●
A $0.4
 
million
 
increase
 
in revenues
 
from mortgage
 
banking activities,
 
driven
 
by a
 
$0.8 million
 
increase
 
in the
 
net realized
gain on
 
sales of
 
residential mortgage
 
loans in
 
the secondary
 
market
 
due to
 
higher margins,
 
partially offset
 
by a
 
$0.3 million
decrease
 
in
 
the
 
fair
 
value
 
of
 
to-be-announced
 
(“TBA”)
 
forward
 
contracts.
 
During
 
the
 
third
 
quarters
 
of 2024
 
and
 
2023,
 
net
realized gains of $1.7 million and
 
$0.9 million, respectively,
 
were recognized as a result of GNMA
 
securitization transactions
and whole loan sales to U.S. GSEs amounting to $38.2 million and $42.3
 
million, respectively.
Non-interest
 
income for
 
the nine-month
 
period ended
 
September 30,
 
2024 amounted
 
to $98.5
 
million, compared
 
to $99.1
 
million
for the same period
 
in 2023. Non-interest income
 
for the nine-month period
 
ended September 30, 2023
 
included the following Special
Items: the
 
$3.6 million
 
gain recognized
 
from a
 
legal settlement,
 
included as
 
part of
 
“other non-interest
 
income,” and
 
the $1.6
 
million
gain
 
on
 
the
 
repurchase
 
of
 
$21.4
 
million
 
in
 
junior
 
subordinated
 
debentures,
 
reported
 
as
 
“gain
 
on
 
early
 
extinguishment
 
of
 
debt.”
 
See
“Non-GAAP Financial
 
Measures and
 
Reconciliations” above
 
for additional
 
information. On
 
a non-GAAP
 
basis, excluding
 
the effect
of these Special Items, adjusted non-interest income increased by $4.6
 
million primarily due to:
●
A
 
$1.7
 
million
 
increase
 
in
 
card
 
and
 
processing
 
income,
 
mainly
 
in
 
merchant-related
 
fees
 
and
 
interchange
 
income
 
due
 
to
higher transactional volumes.
●
A $1.0 million
 
increase in revenues
 
from mortgage banking
 
activities, driven by
 
a $1.4 million increase
 
in the net
 
realized
gain on sales
 
of residential mortgage
 
loans in the secondary
 
market due to
 
higher margins. During
 
the first nine months
 
of
2024
 
and
 
2023,
 
net
 
realized gains
 
of $4.3
 
million
 
and
 
$2.9
 
million,
 
respectively,
 
were recognized
 
as a
 
result of
 
GNMA
securitization
 
transactions
 
and
 
whole
 
loan
 
sales
 
to
 
U.S.
 
GSEs
 
amounting
 
to
 
$113.2
 
million
 
and
 
$131.5
 
million,
respectively.
●
A $0.9 million increase in insurance commission income,
 
mainly related to higher contingent commissions.
●
The
 
aforementioned
 
$0.8
 
million
 
in
 
insurance
 
proceeds
 
received
 
in
 
the
 
third
 
quarter
 
of 2024,
 
included
 
as
 
part of
 
“other
non-interest income.”
 
 
92
Non-Interest Expenses
Non-interest
 
expenses for
 
the quarter
 
ended September
 
30, 2024
 
amounted to
 
$122.9 million,
 
compared to
 
$116.6
 
million for
 
the
same period in 2023.
 
The efficiency ratio
 
for the third quarter of
 
2024 was 52.41%, compared
 
to 50.71% for the
 
third quarter of 2023.
The $6.3 million increase was primarily due to:
●
A $2.5 million increase in employees’ compensation and benefits expenses,
 
driven by annual salary merit increases.
●
A
 
$1.5
 
million
 
increase
 
in
 
professional
 
service
 
fees,
 
due
 
to
 
increases
 
of
 
$1.0
 
million
 
in
 
consulting
 
fees
 
driven
 
by
information technology infrastructure enhancements and $0.5 million
 
in outsourced technology service fees.
●
A $0.9 million increase in other
 
non-interest expenses, mainly due to
 
a $1.8 million increase in charges
 
for operational and
fraud
 
losses,
 
partially
 
offset
 
by
 
decreases
 
of
 
$0.4
 
million
 
in
 
amortization
 
of
 
intangible
 
assets (mainly
 
from
 
core
 
deposit
intangible
 
assets
 
related
 
to
 
savings
 
accounts
 
from
 
the
 
Banco
 
Santander
 
Puerto
 
Rico
 
acquisition,
 
which
 
were
 
fully
amortized in 2024), $0.3 million in insurance fees, and $0.2 million
 
in net periodic cost of pension plans.
●
A $0.8 million decrease
 
in net gains on OREO
 
operations, driven by
 
a decrease in net realized
 
gains on sales of residential
OREO properties in the Puerto Rico region.
Non-interest
 
expenses
 
for
 
the
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024
 
amounted
 
to
 
$362.5
 
million,
 
compared
 
to
 
$344.8
million for
 
the same
 
period in
 
2023. The
 
efficiency ratio
 
for the
 
first nine
 
months of
 
2024 was
 
52.03%, compared
 
to 49.29%
 
for the
first
 
nine
 
months
 
of
 
2023.
 
Non-interest
 
expenses
 
for
 
the
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024
 
include
 
the
 
$1.1
 
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
 
$16.6
million primarily due to:
●
An $8.8
 
million increase
 
in employees’
 
compensation and
 
benefits expenses,
 
driven by
 
annual salary
 
merit increases
 
and
increases
 
in
 
stock-based
 
compensation
 
expense,
 
matching
 
contributions
 
to
 
the
 
employees’
 
retirement
 
plan
 
and
 
medical
insurance premium costs.
●
A
 
$3.1
 
million
 
increase
 
in
 
professional
 
service
 
fees,
 
mainly
 
due
 
to
 
a
 
$2.4
 
million
 
increase
 
in
 
consulting
 
fees
 
driven
 
by
information technology infrastructure enhancements.
●
A $1.8 million increase in credit and debit card processing fees, driven
 
by higher transactional volumes.
●
A
 
$1.6
 
million
 
increase
 
in
 
occupancy
 
and
 
equipment
 
expenses,
 
mainly
 
related
 
to
 
an
 
increase
 
in
 
maintenance
 
charges,
partially offset by a decrease in depreciation charges.
●
A $1.6 million increase in other
 
non-interest expenses, mainly due to
 
a $2.8 million increase in charges
 
for operational and
fraud
 
losses, partially
 
offset
 
by
 
decreases
 
of
 
$0.8
 
million
 
in amortization
 
of
 
intangible
 
assets due
 
to
 
the
 
aforementioned
core deposit intangible assets which were fully amortized in 2024, and $0.5 million
 
in net periodic cost of pension plans.
 
93
Income Taxes
For
 
the
 
third
 
quarter
 
and
 
first nine
 
months
 
of 2024,
 
the
 
Corporation
 
recorded
 
an
 
income tax
 
expense
 
of $22.7
 
million
 
and
 
$72.2
million, respectively,
 
compared to $27.0 million and $89.2 million,
 
respectively, for
 
the same periods in 2023. The decrease
 
in income
tax expense
 
for the
 
third quarter
 
of 2024
 
was mainly
 
due to
 
lower pre-tax
 
income and,
 
to a
 
lesser extent,
 
a lower
 
estimated effective
tax rate due
 
to increased business
 
activities with preferential
 
tax treatment under
 
the PR Tax
 
Code and a
 
$0.4 million tax
 
contingency
accrual release
 
in connection with
 
the expiration
 
of the statute
 
of limitation on
 
some uncertain tax
 
positions. Meanwhile, the
 
decrease
in income
 
tax expense
 
for the first
 
nine months
 
of 2024
 
was driven
 
by a lower
 
estimated effective
 
tax rate due
 
to the
 
aforementioned
increased business activities with preferential tax treatment and,
 
to a lesser extent, lower pre-tax income.
The
 
Corporation’s
 
annual
 
estimated
 
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
 
nine
 
months
 
of
 
2024,
 
compared
 
to
 
28.2%
 
for
 
the
 
same
 
period
 
in
 
2023.
 
The
estimated effective
 
tax rate
 
of the
 
Corporation is
 
impacted by,
 
among other
 
things, the
 
composition and
 
source of
 
its taxable
 
income.
See Note 16 – “Income Taxes,
 
”
 
to the unaudited consolidated financial statements herein for additional
 
information.
As of
 
September 30,
 
2024, the
 
Corporation had
 
a net
 
deferred tax
 
asset of
 
$137.5 million,
 
net of
 
a valuation
 
allowance of
 
$121.6
million against
 
the deferred
 
tax asset,
 
compared to
 
a net
 
deferred tax
 
asset of
 
$150.1 million,
 
net of
 
a valuation
 
allowance of
 
$139.2
million, as
 
of December
 
31, 2023.
 
The decrease
 
in the
 
net deferred
 
tax asset
 
was mainly
 
related to
 
the usage
 
of alternative
 
minimum
tax credits
 
and the
 
decrease in
 
the ACL.
 
Meanwhile, the
 
decrease in
 
the valuation
 
allowance was
 
related primarily
 
to changes
 
in the
market
 
value
 
of available
 
-for-sale
 
debt
 
securities
 
which
 
resulted
 
in
 
an
 
equal
 
change
 
in
 
the net
 
deferred
 
tax
 
asset without
 
impacting
earnings.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
94
Assets
 
The Corporation’s
 
total assets
 
were $18.9
 
billion as
 
of September
 
30, 2024,
 
a decrease
 
of $50.4
 
million from
 
December 31,
 
2023,
primarily related to repayments of investment securities, partially offset
 
by an increase in total loans and cash and cash equivalents.
Loans Receivable, including Loans Held for Sale
As of
 
September 30,
 
2024, the
 
Corporation’s
 
total loan
 
portfolio before
 
the ACL
 
amounted to
 
$12.5 billion,
 
an increase
 
of $265.8
million
 
compared
 
to
 
December
 
31,
 
2023.
 
In
 
terms
 
of
 
geography,
 
the
 
growth
 
consisted
 
of
 
increases
 
of
 
$162.9
 
million
 
in
 
the
 
Puerto
Rico region and
 
$146.0 million in
 
the Florida region,
 
partially offset
 
by a decrease
 
of $43.1 million
 
in the Virgin
 
Islands region. On
 
a
portfolio basis,
 
the growth
 
consisted of
 
increases of
 
$178.4 million
 
in commercial
 
and construction
 
loans,
 
$83.7 million
 
in consumer
loans,
 
primarily auto loans and finance leases, and $3.7 million in residential mortgage loans.
As of
 
September
 
30,
 
2024,
 
the Corporation’s
 
loans
 
held-for-investment
 
portfolio
 
was
 
comprised
 
of
 
commercial
 
and
 
construction
loans
 
(48%),
 
consumer
 
and
 
finance
 
leases
 
(29%),
 
and
 
residential
 
real
 
estate
 
loans
 
(23%).
 
Of
 
the
 
total
 
gross
 
loan
 
portfolio
 
held
 
for
investment
 
of
 
$12.4
 
billion
 
as
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
credit
 
risk
 
concentration
 
of
 
approximately
 
80%
 
in
 
the
Puerto Rico region,
 
17% in the
 
United States region
 
(mainly in the
 
state of Florida),
 
and 3% in
 
the Virgin
 
Islands region, as
 
shown in
the following table:
As of September 30, 2024
Puerto Rico
Virgin Islands
United States
Total
(In thousands)
Residential mortgage loans
$
2,168,590
$
159,088
$
492,469
$
2,820,147
Construction loans
173,352
2,001
31,989
207,342
Commercial mortgage loans
1,728,552
68,781
674,547
2,471,880
C&I loans
2,161,688
81,942
961,683
3,205,313
 
Total commercial loans
4,063,592
152,724
1,668,219
5,884,535
Consumer loans and finance leases
3,663,990
69,751
7,601
3,741,342
 
Total loans held for investment,
 
gross
$
9,896,172
$
381,563
$
2,168,289
$
12,446,024
Loans held for sale
12,641
-
-
12,641
 
Total loans, gross
$
9,908,813
$
381,563
$
2,168,289
$
12,458,665
As of December 31, 2023
Puerto Rico
Virgin Islands
United States
Total
(In thousands)
Residential mortgage loans
$
2,187,875
$
168,131
$
465,720
$
2,821,726
Construction loans
111,664
3,737
99,376
214,777
Commercial mortgage loans
1,725,325
65,312
526,446
2,317,083
C&I loans
2,130,368
119,040
924,824
3,174,232
 
Total commercial loans
3,967,357
188,089
1,550,646
5,706,092
Consumer loans and finance leases
3,583,272
68,498
5,895
3,657,665
 
Total loans held for investment,
 
gross
$
9,738,504
$
424,718
$
2,022,261
$
12,185,483
Loans held for sale
7,368
-
-
7,368
 
Total loans, gross
$
9,745,872
$
424,718
$
2,022,261
$
12,192,851
 
 
 
 
 
 
 
 
 
 
 
 
 
95
Residential Real Estate Loans
As of
 
September 30,
 
2024, the
 
Corporation’s
 
total residential
 
mortgage
 
loan portfolio,
 
including loans
 
held for
 
sale, increased
 
by
$3.7
 
million
 
compared
 
to
 
the
 
balance
 
as
 
of
 
December
 
31,
 
2023.
 
The
 
increase
 
in
 
the
 
residential
 
mortgage
 
loan
 
portfolio
 
reflects
 
an
increase of $26.7 million in the Florida region, partially offset
 
by decreases of $14.0 million in the Puerto Rico region and $9.0 million
in the
 
Virgin
 
Islands region.
 
The increase
 
was driven
 
by the
 
volume of
 
new loan
 
originations kept
 
on the
 
balance sheet,
 
which more
than
 
offset
 
repayments.
 
Approximately
 
48%
 
of
 
the
 
$254.5
 
million
 
residential
 
mortgage
 
loan
 
originations
 
in
 
the
 
Puerto
 
Rico
 
region
during
 
the first
 
nine
 
months
of
 
2024 consisted
 
of conforming
 
loans, compared
 
to 52%
 
of the
 
$243.2
 
million
 
originated
 
for
 
the first
nine months
of 2023.
 
As of
 
September 30,
 
2024, the
 
majority of
 
the Corporation’s
 
outstanding balance
 
of residential
 
mortgage loans
 
in the
 
Puerto Rico
and the Virgin
 
Islands regions consisted
 
of fixed-rate loans
 
that traditionally carry
 
higher yields than
 
residential mortgage loans
 
in the
Florida region. In
 
the Florida region,
 
approximately 35% of the
 
residential mortgage loan
 
portfolio consisted of
 
hybrid adjustable-rate
mortgages. In
 
accordance with
 
the Corporation’s
 
underwriting guidelines,
 
residential mortgage
 
loans are
 
primarily fully
 
documented
loans, and the Corporation does not originate negative amortization loans.
Commercial and Construction Loans
As of September
 
30, 2024, the
 
Corporation’s
 
commercial and construction
 
loans portfolio increased
 
by $178.4 million,
 
as compared
to the
 
balance as
 
of December
 
31, 2023.
 
The growth
 
included an
 
increase of
 
$117.6
 
million in
 
the Florida
 
region, reflecting,
 
among
other things, the effect of the origination
 
of various commercial and construction relationships, each in
 
excess of $10 million, of which
$109.3
 
million
 
are related
 
to six
 
C&I relationships
 
and
 
$52.3
 
million
 
are related
 
to three
 
commercial
 
mortgage
 
relationships.
 
These
variances were partially
 
offset by payoffs
 
and paydowns of four
 
C&I relationships totaling
 
$56.6 million and
 
lower utilization of C&I
lines of credit.
The
 
Puerto
 
Rico region
 
also grew
 
by $96.2
 
million, when
 
compared
 
to the
 
balance
 
as of
 
December 31,
 
2023.
 
This increase
 
was
driven by a $61.7
 
million increase in construction
 
loans; the origination
 
of two commercial
 
relationships with an
 
aggregate balance of
$72.4 million; higher utilization
 
of C&I lines of
 
credit; and the origination
 
of two loans to
 
municipalities with an
 
aggregate balance of
$27.7 million. These variances
 
were partially offset
 
by multiple payoffs
 
and paydowns, including the
 
payoffs of three
 
commercial and
construction relationships totaling $47.5 million and the sale of an
 
$8.2 million nonaccrual C&I loan, net of a $1.2 million charge
 
-off.
In
 
the
 
Virgin
 
Islands
 
region,
 
commercial
 
and
 
construction
 
loans
 
decreased
 
by
 
$35.4
 
million,
 
as
 
compared
 
to
 
the
 
balance
 
as
 
of
December 31, 2023, mainly associated with a $42.6 million repayment of
 
a government line of credit.
 
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
 
September
 
30, 2024,
 
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 41%
 
in the
 
retail industry,
 
26% in
 
office real
 
estate, and
 
21% in
 
the hotel
 
industry.
 
The $0.7
 
billion
exposure
 
in the
 
Florida region
 
was comprised
 
mainly of
 
33% in
 
the retail
 
industry,
 
23% in
 
the hotel
 
industry,
 
and 8%
 
in office
 
real
estate.
 
Of
 
the
 
Corporation’s
 
total
 
commercial
 
mortgage
 
loan
 
exposure
 
of
 
$2.5
 
billion,
 
$400.2
 
million
 
matures
 
within
 
the
 
next
 
12
months and has a weighted-average
 
interest rate of approximately 6.17%.
 
Commercial mortgage loan exposure
 
in the office real estate
industry,
 
which
 
matures
 
within
 
the
 
next
 
12
 
months,
 
amounted
 
to
 
$108.1
 
million
 
and
 
has
 
a
 
weighted-average
 
interest
 
rate
 
of
approximately 6.22%.
 
As
 
of
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023,
 
the
 
Corporation’s
 
total
 
exposure
 
to
 
shared
 
national
 
credit
 
(“SNC”)
 
loans
(including
 
unused
 
commitments)
 
amounted
 
to $1.3
 
billion
 
and
 
$1.2
 
billion,
 
respectively.
 
As of
 
September
 
30,
 
2024,
 
approximately
$385.3 million of the SNC exposure is related to the portfolio
 
in the Puerto Rico region and $870.3 million is related to
 
the portfolio in
the Florida region.
Consumer Loans and Finance Leases
As of September 30, 2024, the Corporation’s
 
consumer loans and finance leases portfolio increased
 
by $83.7 million to $3.7 billion,
mainly in
 
the Puerto
 
Rico region,
 
reflecting growth
 
of $69.4
 
million and
 
$36.6 million
 
in the
 
auto loan
 
and finance
 
lease portfolios,
respectively,
 
partially offset by decreases in the remaining portfolio classes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
96
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 September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands)
Puerto Rico:
 
Residential mortgage
$
94,258
$
93,237
$
254,525
$
243,202
 
Construction
33,898
36,758
108,008
94,025
 
Commercial mortgage
63,646
25,763
165,400
122,454
 
C&I
419,673
452,889
1,162,239
1,267,866
 
Consumer
406,448
452,264
1,204,999
1,318,950
 
Total loan production
$
1,017,923
$
1,060,911
$
2,895,171
$
3,046,497
Virgin Islands:
 
Residential mortgage
$
791
$
1,320
$
2,913
$
3,089
 
Construction
131
-
293
6
 
Commercial mortgage
6,949
112
7,372
3,971
 
C&I
18,447
21,545
41,907
96,159
 
Consumer
9,995
9,581
26,788
31,189
 
Total loan production
$
36,313
$
32,558
$
79,273
$
134,414
Florida:
 
Residential mortgage
$
21,864
$
35,295
$
69,849
$
76,114
 
Construction
10,510
9,585
31,165
34,817
 
Commercial mortgage
30,539
33,357
108,472
63,883
 
C&I
184,936
125,947
576,189
342,812
 
Consumer
530
187
3,957
1,216
 
Total loan production
$
248,379
$
204,371
$
789,632
$
518,842
Total:
 
Residential mortgage
$
116,913
$
129,852
$
327,287
$
322,405
 
Construction
44,539
46,343
139,466
128,848
 
Commercial mortgage
101,134
59,232
281,244
190,308
 
C&I
623,056
600,381
1,780,335
1,706,837
 
Consumer
416,973
462,032
1,235,744
1,351,355
 
Total loan production
$
1,302,615
$
1,297,840
$
3,764,076
$
3,699,753
 
 
 
97
Commercial
 
and
 
construction
 
loan
 
originations
 
(excluding
 
government
 
loans)
 
for
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
September 30,
 
2024 increased
 
by $102.8
 
million in
 
the third
 
quarter of
 
2024, as
 
compared to
 
the same
 
period in
 
2023, mainly
 
due to
increases of
 
$57.1
 
million
 
in the
 
Florida
 
region
 
and $39.9
 
million
 
in the
 
Puerto
 
Rico region.
 
For the
 
first nine
 
months
of 2024,
 
the
increase of $259.8
 
million was mainly
 
due to an increase
 
of $274.3 million
 
in the Florida region.
 
The growth in the
 
Florida region for
the first
 
nine
 
months
of 2024
 
includes
 
the effect
 
of the
 
origination
 
of ten
 
C&I relationships,
 
each in
 
excess of
 
$10 million,
 
with an
aggregate
 
balance
 
of
 
$193.7
 
million,
 
increased
 
utilization
 
of
 
C&I
 
lines
 
of
 
credit,
 
and
 
an
 
increase
 
in
 
the
 
commercial
 
mortgage
 
loan
portfolio of $44.6 million.
Government
 
loan
 
originations
 
for
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024
 
amounted
 
to
 
$45.1
 
million
 
and
$83.9
 
million,
 
respectively,
 
compared
 
to
 
$85.1
 
million
 
and
 
$168.7
 
million,
 
respectively,
 
for
 
the
 
comparable
 
periods
 
in
 
2023.
 
The
decrease for
 
the first nine
 
months of 2024
 
was mainly related
 
to the refinancing
 
of a $46.5
 
million municipal
 
bond into a
 
commercial
loan in the Puerto Rico region for the first nine months of 2023 and lower
 
line of credit utilization in the Virgin
 
Islands region.
Originations of auto
 
loans (including finance
 
leases) for the
 
quarter and nine-month
 
period ended September
 
30, 2024 amounted
 
to
$238.8
 
million
 
and
 
$700.8
 
million,
 
respectively,
 
compared
 
to
 
$259.2
 
million
 
and
 
$754.6
 
million,
 
respectively,
 
for
 
the
 
comparable
periods
 
in
 
2023.
 
The
 
decrease
 
in
 
the
 
third
 
quarter
 
and
 
first
 
nine
 
months
 
of
 
2024,
 
as
 
compared
 
with
 
the
 
same
 
periods
 
in
 
2023,
 
was
mainly
 
in
 
the
 
Puerto
 
Rico
 
region.
 
Other
 
consumer
 
loan
 
originations,
 
other
 
than
 
credit
 
cards,
 
for
 
the
 
quarter
 
and
 
nine-month
 
period
ended September 30, 2024 amounted
 
to $60.9 million and $185.4 million,
 
respectively,
 
compared to $79.5 million and $229.0 million,
respectively,
 
for the
 
comparable periods
 
in 2023.
 
Most of
 
the decrease
 
in other
 
consumer loan
 
originations for
 
the third
 
quarter and
first nine
 
months
of 2024,
 
as compared
 
with the
 
same periods
 
in 2023,
 
was in
 
the Puerto
 
Rico region.
 
The utilization
 
activity on
 
the
outstanding
 
credit card
 
portfolio
 
for
 
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024
 
amounted
 
to $117.2
 
million
 
and
$349.5 million, respectively,
 
compared to $123.4 million and $367.8 million, respectively,
 
for the comparable periods in 2023.
 
98
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.
 
The
 
Corporation’s
 
total
 
available-for-sale
 
debt
 
securities
 
portfolio
 
as
 
of
 
September
 
30,
 
2024
 
amounted
 
to
 
$4.9
 
billion,
 
a
 
$335.2
million decrease
 
from December 31,
 
2023. The decrease
 
was driven by
 
repayments of approximately
 
$274.3 million of
 
U.S. agencies
MBS and
 
debentures,
 
and repayments
 
of $255.9
 
million
 
associated to
 
matured securities
 
.
 
These variances
 
were partially
 
offset
 
by a
$155.5
 
million
 
increase
 
in
 
fair
 
value
 
attributable
 
to
 
changes
 
in
 
market
 
interest
 
rates
 
and
 
$44.1
 
million
 
in
 
purchases
 
of
 
Community
Reinvestment Act qualified debt
 
securities,
 
mainly commercial MBS, during
 
the first nine months of 2024.
 
As of September 30, 2024,
the Corporation had a net
 
unrealized loss on available-for-sale
 
debt securities of $477.3 million.
 
This net unrealized loss is 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 September
 
30, 2024, approximately
 
$480 million and
 
$350 million in
 
cash inflows, which
 
are expected to
be received during the remainder of 2024 and in the first quarter
 
of 2025, respectively, from
 
contractual maturities of the available-for-
sale debt securities
 
portfolio,
 
are expected
 
to be redeployed
 
to fund
 
loan growth,
 
reinvested into
 
higher-yielding securities,
 
or used to
repay maturing brokered CDs.
 
As
 
of
 
September
 
30,
 
2024,
 
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. In
 
addition, as
 
of September
 
30, 2024,
 
the Corporation
 
held a
 
bond
issued
 
by
 
the
 
Puerto
 
Rico
 
Housing
 
Finance
 
Authority
 
(“PRHFA”),
 
classified
 
as
 
available
 
for
 
sale,
 
specifically
 
a
 
residential
 
pass-
through
 
MBS in
 
the
 
aggregate
 
amount
 
of
 
$3.0
 
million
 
(fair
 
value
 
-
 
$1.6
 
million).
 
This
 
residential
 
pass-through
 
MBS
 
issued
 
by
 
the
PRHFA
 
is collateralized
 
by certain
 
second
 
mortgages originated
 
under a
 
program
 
launched by
 
the Puerto
 
Rico government
 
in 2010
and had an unrealized loss
 
of $1.4 million as of
 
September 30, 2024, of which
 
$0.3 million is due to
 
credit deterioration. During 2021,
the Corporation
 
placed this
 
instrument in
 
nonaccrual status
 
based on
 
the delinquency
 
status of
 
the underlying
 
second mortgage
 
loans
collateral.
Held-to-maturity
 
debt
 
securities
 
include
 
fixed-rate
 
GSEs’
 
MBS
 
with
 
a
 
carrying
 
value
 
of
 
$231.0
 
million
 
(fair
 
value
 
of
 
$222.2
million) as of September 30, 2024,
 
compared to $247.1 million as of December
 
31, 2023. Held-to-maturity debt securities also
 
include
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.
 
Puerto Rico
 
municipal bonds
 
typically
are
 
not
 
issued
 
in
 
bearer
 
form,
 
are
 
not
 
registered
 
with
 
the
 
SEC,
 
and
 
are
 
not
 
rated
 
by
 
external
 
credit
 
agencies.
 
These
 
bonds
 
have
seniority to the payment of operating costs and expenses of
 
the municipality and, in most cases, are supported by assigned
 
property tax
revenues.
 
As
 
of
 
September
 
30,
 
2024,
 
approximately
 
57%
 
of
 
the
 
Corporation’s
 
municipal
 
bonds
 
consisted
 
of
 
obligations
 
issued
 
by
three
 
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
 
loans. As
 
of September
 
30, 2024,
 
the
Corporation’s
 
held-to-maturity debt
 
securities portfolio,
 
before the
 
ACL, decreased
 
to $323.1
 
million, compared
 
to $354.2
 
million as
of December 31,
 
2023, driven by
 
repayments of approximately
 
$16.6 million of
 
U.S. agencies MBS and
 
$15.9 million of
 
Puerto Rico
municipal bonds.
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”
 
to the
 
unaudited consolidated
 
financial statements
 
herein for
 
the ACL
 
of the
 
exposure to
 
Puerto Rico
municipal bonds.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
99
 
The following table presents the carrying values of investments as of the indicated dates:
September 30, 2024
December 31, 2023
(In thousands)
Money market investments
$
1,343
$
1,239
Available-for-sale
 
debt securities, at fair value:
U.S. government and agencies obligations
2,261,777
2,443,790
Puerto Rico government obligations
1,567
1,415
MBS:
 
Residential
2,438,532
2,633,161
 
Commercial
191,905
151,618
Other
1,000
-
 
Total available-for-sale
 
debt securities, at fair value
4,894,781
5,229,984
Held-to-maturity debt securities, at amortized cost:
MBS:
 
Residential
133,852
146,468
 
Commercial
97,164
100,670
Puerto Rico municipal bonds
92,126
107,040
 
ACL for held-to-maturity Puerto Rico municipal bonds
(1,119)
(2,197)
 
Total held-to-maturity
 
debt securities
322,023
351,981
Equity securities, including $34.0 million and $34.6 million of FHLB stock
as of September 30, 2024 and December 31, 2023
52,432
49,675
Total money market
 
investments and investment securities
$
5,270,579
$
5,632,879
 
The carrying values of debt securities as of September 30, 2024 by contractual maturity
 
(excluding MBS), are shown below:
Carrying Amount
Weighted-Average
 
Yield %
(Dollars in thousands)
U.S. government and agencies obligations:
Due within one year
$
1,037,767
0.82
Due after one year through five years
1,215,849
0.85
Due after ten years
8,161
5.21
2,261,777
0.85
Puerto Rico government and municipalities obligations:
Due within one year
2,131
5.62
Due after one year through five years
61,119
7.81
Due after five years through ten years
13,121
6.42
Due after ten years
17,322
7.39
93,693
7.48
Other
1,000
2.34
MBS
2,861,453
1.72
ACL on held-to-maturity debt securities
(1,119)
-
Total debt securities
$
5,216,804
1.46
 
100
Net
 
interest
 
income
 
in
 
future
 
periods
 
could
 
be
 
affected
 
by
 
prepayments
 
of
 
MBS.
 
Any
 
acceleration
 
in
 
the
 
prepayments
 
of
 
MBS
purchased
 
at
 
a
 
premium
would
 
lower
 
yields
 
on
 
these
 
securities,
 
since
 
the
 
amortization
 
of
 
premiums
 
paid
 
upon
 
acquisition
 
would
accelerate. Conversely,
 
acceleration of the
 
prepayments of MBS would
 
increase yields on
 
securities purchased at
 
a discount, since
 
the
accretion of the discount would accelerate. These risks are
 
directly linked to future period market interest rate fluctuations.
 
Net interest
income in
 
future periods
 
might also be
 
affected by
 
the Corporation’s
 
investment in
 
callable securities.
 
As of September
 
30, 2024,
 
the
Corporation had
 
approximately $1.5
 
billion in
 
callable debt
 
securities (U.S.
 
agencies debt
 
securities) with
 
an average
 
yield of
 
0.81%
of which
 
approximately 62%
 
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 rate
 
risk management
strategies.
 
Also,
 
refer
 
to
 
Note
 
2
 
–
 
“Debt
 
Securities”
 
to
 
the
 
unaudited
 
consolidated
 
financial
 
statements
 
herein
 
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 2023
 
Annual Report on Form 10-K.
Liquidity Risk
 
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
 
Corporate
 
Strategic
 
and
 
Business
 
Development
 
Director,
 
the
 
Business
 
Group
 
Director,
 
the
 
Treasury
 
and
Investments Risk
 
Manager,
 
the Financial
 
Planning and
 
Asset and
 
Liability Management
 
(“ALM”) Director,
 
and the
 
Treasurer.
 
The
Treasury
 
and
 
Investments
 
Division
 
is
 
responsible
 
for
 
planning
 
and
 
executing
 
the
 
Corporation’s
 
funding
 
activities
 
and
 
strategy,
monitoring
 
liquidity availability
 
on a
 
daily basis,
 
and reviewing
 
liquidity measures
 
on a
 
weekly basis.
 
The Financial
 
Planning and
ALM Division is responsible for estimating the liquidity gap.
 
101
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
 
$685.4
 
million
 
as
 
of
 
September
 
30,
 
2024,
 
compared
 
to
 
$663.2
 
million
 
as
 
of
 
December
 
31,
 
2023.
 
When
adding $1.8 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
 
$2.5 billion
 
as of
 
September 30,
 
2024, or
 
13.32% of
total assets, compared to $2.8 billion, or 14.93% of total assets as of December
 
31, 2023.
 
In
 
addition
 
to
 
the
 
aforementioned
 
$1.8
 
billion
 
in
 
cash
 
and
 
free
 
high
 
quality
 
liquid
 
assets,
 
the
 
Corporation
 
had
 
$964.7
 
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
 
18.43% of total
 
assets as of September
 
30,
2024,
 
compared to 19.82% of total assets as of December 31, 2023.
 
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
 
September
 
30,
 
2024
 
as an
 
additional
 
source
 
of
liquidity.
 
Total loans
 
pledged to the FED
 
BIC Program amounted
 
to $3.4 billion as of
 
September 30, 2024. The
 
Corporation also does
not rely
 
on uncommitted
 
inter-bank
 
lines of
 
credit (federal
 
funds lines)
 
to fund
 
its operations.
 
In the
 
aggregate,
 
as of
 
September 30,
2024,
 
the
 
Corporation
 
had
 
$6.1
 
billion
 
available
 
to
 
meet
 
liquidity
 
needs,
 
or
 
131%
 
of
 
estimated
 
uninsured
 
deposits,
 
excluding
 
fully
collateralized government deposits.
 
Liquidity
 
at
 
the Bank
 
level
 
is highly
 
dependent
 
on
 
bank deposits,
 
which
 
fund
 
86.9%
 
of the
 
Bank’s
 
assets (or
 
84.1%
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
102
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 September
 
30, 2024,
 
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:
September 30, 2024
December 31, 2023
(In thousands)
Financial instruments whose contract amounts represent credit risk:
 
Commitments to extend credit:
 
Construction undisbursed funds
$
250,597
$
234,974
 
Unused credit card lines
795,338
882,486
 
Unused personal lines of credit
 
37,869
38,956
 
Commercial lines of credit
1,026,159
862,963
 
Letters of credit:
 
Commercial letters of credit
48,507
69,543
 
Standby letters of credit
18,968
8,313
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
 
$4.3
 
billion
 
as
 
of
September 30,
 
2024. 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.
 
 
 
 
 
103
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 September 30,
 
2024 and
 
December 31, 2023 the Corporation’s
 
core deposits,
which
 
exclude
 
government
 
deposits
 
and
 
brokered
 
CDs,
 
totaled
 
$12.7
 
billion
 
and
 
$12.6
 
billion,
 
respectively.
 
The
 
$69.2
 
million
increase
 
in
 
such
 
deposits
 
consisted
 
of
 
increases
 
of
 
$58.8
 
million
 
in
 
the
 
Florida
 
region
 
and
 
$40.2
 
million
 
in
 
the Puerto
 
Rico
 
region,
partially
 
offset
 
by
 
a
 
$29.8
 
million
 
decrease
 
in
 
the
 
Virgin
 
Islands
 
region.
 
This
 
increase
 
includes
 
a
 
$198.2
 
million
 
increase
 
in
 
time
deposits.
 
Government
 
deposits
 
(fully
 
collateralized)
 
–
 
As
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
$2.7
 
billion
 
of
 
Puerto
 
Rico
 
public
sector
 
deposits
 
($2.5
 
billion
 
in
 
transactional
 
accounts
 
and
 
$150.1
 
million
 
in
 
time
 
deposits),
 
relatively
 
unchanged
 
compared
 
to
 
the
balance as of December 31,
 
2023. Government deposits are insured
 
by the FDIC up to the applicable
 
limits and the uninsured portions
are
 
fully
 
collateralized.
 
Approximately
 
22%
 
of
 
the
 
public
 
sector
 
deposits
 
as
 
of
 
September
 
30,
 
2024
 
were
 
from
 
municipalities
 
and
municipal agencies
 
in Puerto Rico
 
and 78%
 
were from public
 
corporations, the
 
central government
 
and its agencies,
 
and U.S. federal
government agencies in Puerto Rico.
In addition,
 
as of
 
September 30,
 
2024, the
 
Corporation
 
had $443.9
 
million of
 
government deposits
 
in the
 
Virgin
 
Islands region,
 
as
compared
 
to
 
$449.4
 
million
 
as
 
of
 
December
 
31,
 
2023,
 
and
 
$19.2
 
million
 
in
 
the
 
Florida
 
region
 
as
 
compared
 
to
 
$10.2
 
million
 
as
 
of
December 31, 2023.
The
 
uninsured
 
portions of
 
government
 
deposits were
 
collateralized
 
by securities
 
and
 
loans with
 
an amortized
 
cost of
 
$3.3
 
billion
and $3.5
 
billion as
 
of September
 
30, 2024
 
and December
 
31, 2023,
 
respectively,
 
and an
 
estimated market
 
value of
 
$3.1 billion
 
as of
each of
 
such periods.
 
In addition
 
to securities
 
and loans,
 
as of
 
each of
 
September 30,
 
2024 and
 
December 31,2023,
 
the Corporation
used $175.0 million 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 September
 
30, 2024 and
 
December 31, 2023,
 
the estimated amounts
 
of uninsured deposits
totaled $7.6
 
billion and
 
$7.4 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
 
September 30,
 
2024 and
 
December 31,
 
2023, the
 
uninsured
portion
 
of
 
fully
 
collateralized
 
government
 
deposits
 
amounted
 
to
 
$2.9
 
billion
 
and
 
$3.0
 
billion,
 
respectively.
 
Excluding
 
fully
collateralized government
 
deposits, the estimated
 
amounts of uninsured
 
deposits amounted to
 
$4.6 billion, which
 
represent 29.25%
 
of
total deposits (excluding brokered CDs), as of September 30, 2024,
 
compared to $4.4 billion, or 28.13%, as of December 31, 2023.
 
 
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
104
 
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 September
 
30, 2024:
(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
$
400,953
$
322,432
$
223,200
$
143,931
$
1,090,516
Other uninsured time deposits
$
18,400
$
11,720
$
16,134
$
2,133
$
48,387
Brokered
 
CDs
 
– Total
 
brokered CDs decreased
 
by $263.3
 
million to $520.0
 
million as of
 
September 30, 2024,
 
compared to $783.3
million
 
as
 
of
 
December
 
31,
 
2023.
 
The
 
decline
 
reflects
 
maturing
 
brokered
 
CDs
 
amounting
 
to
 
$540.5
 
million
 
with
 
an
 
all-in
 
cost
 
of
5.43%
 
that
 
were
 
paid
 
off
 
during
 
the
 
first
 
nine
 
months
 
of
 
2024,
 
partially
 
offset
 
by
 
$277.2
 
million
 
of
 
new
 
issuances
 
with
 
original
average maturities of approximately 2 years and an all-in cost of 4.91%.
The average remaining term to maturity of the brokered CDs outstanding
 
as of September 30, 2024 was approximately 1.2 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
September 30, 2024:
Total
 
Weighted-average
interest rate %
(In thousands)
Three months or less
$
173,980
5.15
Over three months to six months
35,698
4.79
Over six months to one year
100,287
4.86
Over one year to two years
 
121,687
4.65
Over two years to three years
 
15,328
4.13
Over three years to four years
 
30,280
4.03
Over four years to five years
 
27,342
4.44
Over five years
 
15,446
4.61
 
Total
$
520,048
4.80
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 and nine-month periods ended
 
September 30, 2024 and 2023.
Securities
 
sold
 
under
 
agreements
 
to
 
repurchase
 
–
 
From
 
time
 
to
 
time,
 
the
 
Corporation
 
enters
 
into
 
repurchase
 
agreements
 
as
 
an
additional source of funding. As of September 30, 2024 and December
 
31, 2023, 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
105
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
 
each of
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023,
 
the
 
outstanding
 
balance
 
of
 
long-term
 
fixed-rate
 
FHLB
advances was
 
$500.0 million.
 
Of the
 
$500.0 million
 
in FHLB advances
 
as of
 
September 30,
 
2024, $400.0
 
million were
 
pledged with
investment securities
 
and $100.0
 
million were
 
pledged with
 
mortgage loans.
 
As of
 
September 30,
 
2024, the
 
Corporation had
 
$964.7
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 September 30, 2024:
Total
Weighted-average
interest rate %
(In thousands)
Over three months to six months
$
180,000
4.60
Over six months to one year
30,000
4.83
Over one year to two years
90,000
4.49
Over three years to four years
200,000
4.25
 
Total
(1)
$
500,000
4.45
(1) Average remaining term to maturity
 
of 1.73 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
 
presented
 
in
 
the
 
Corporation’s
 
consolidated
 
statements
 
of
financial condition as
 
other long-term borrowings.
 
Under the indentures,
 
the Corporation has the
 
right, from time
 
to time, and without
causing an
 
event of
 
default, to defer
 
payments of
 
interest on the
 
Junior Subordinated
 
Deferrable Debentures
 
by extending
 
the interest
payment
 
period
 
at
 
any
 
time
 
and
 
from
 
time
 
to
 
time
 
during
 
the
 
term
 
of
 
the
 
subordinated
 
debentures
 
for
 
up
 
to
 
twenty
 
consecutive
quarterly periods.
In September
 
2024,
 
the Corporation
 
redeemed $50.0
 
million,
 
or 42%,
 
of outstanding
 
TruPS
 
issued by
 
FBP Statutory
 
Trust
 
II (or
$48.5 million after
 
excluding the Corporation’s
 
interest in the Trust
 
of approximately $1.5
 
million) at a contractual
 
call price of 100%
as part
 
of the
 
2024 repurchase
 
program.
 
As of
 
September 30,
 
2024 and
 
December 31,
 
2023, the
 
Corporation had
 
junior subordinated
debentures outstanding
 
in the aggregate
 
amount of
 
$111.7
 
million and
 
$161.7 million,
 
respectively,
 
with maturity
 
dates ranging
 
from
June 17, 2034 through September
 
20, 2034. As of September 30,
 
2024, the Corporation was current on
 
all interest payments due on its
subordinated
 
debt.
 
See
 
Note
 
10
 
–
 
“Other
 
Long-Term
 
Borrowings”
 
and
 
Note
 
7
 
–
 
“Non-Consolidated
 
Variable
 
Interest
 
Entities
(“VIEs”) and Servicing Assets” to the unaudited
 
consolidated financial statements herein for additional
 
information. Also, see Note 13
– “Stockholders’ Equity”
 
to the unaudited consolidated
 
financial statements herein
 
for additional details
 
of capital actions that
 
include
the approval
 
of a
 
2024 repurchase
 
program
 
of $250
 
million that
 
could
 
include repurchases
 
of common
 
stock or
 
junior subordinated
debentures.
Other Sources
 
of Funds and
 
Liquidity
 
- The Corporation’s
 
principal uses of
 
funds are for
 
the origination of
 
loans, the repayment
 
of
maturing deposits
 
and borrowings,
 
and deposits
 
withdrawals. Over
 
the years,
 
in connection
 
with its
 
mortgage banking
 
activities, the
Corporation has invested in technology and personnel to enhance the
 
Corporation’s secondary mortgage
 
market capabilities.
These enhanced capabilities
 
improve the Corporation’s
 
liquidity profile as they
 
allow the Corporation to
 
derive liquidity,
 
if needed,
from the
 
sale of mortgage
 
loans in
 
the secondary
 
market. The
 
U.S. (including
 
Puerto Rico)
 
secondary mortgage
 
market is
 
still highly
liquid,
 
in
 
large
 
part because
 
of
 
the
 
sale of
 
mortgages
 
through
 
guarantee
 
programs
 
of
 
the Federal
 
Housing
 
Authority
 
(“FHA”),
 
U.S.
Department of
 
Veterans
 
Affairs (“VA”),
 
U.S. Department
 
of Housing
 
and Urban
 
Development (“HUD”),
 
Federal National
 
Mortgage
Association (“FNMA”) and Federal
 
Home Loan Mortgage Corp. (“FHLMC”).
 
During the first nine months
 
of 2024, loans pooled into
Government
 
National
 
Mortgage
 
Association
 
(“GNMA”)
 
MBS amounted
 
to approximately
 
$87.4
 
million.
 
Also, during
 
the first
 
nine
months of 2024, the Corporation sold approximately $25.8 million of
 
performing residential mortgage loans to FNMA.
The
 
FED
 
Discount
 
Window
 
is
 
a
 
cost-efficient
 
source
 
of
 
short-term
 
funding
 
for
 
the
 
Corporation
 
in
 
highly-volatile
 
market
conditions.
 
As
 
previously
 
mentioned,
 
as
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
approximately
 
$2.6
 
billion
 
fully
 
available
 
for
funding under the FED’s Discount
 
Window based on collateral pledged at the FED.
 
 
106
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.
 
 
 
 
107
Cash Flows
Cash
 
and
 
cash
 
equivalents
 
were
 
$685.4
 
million
 
as
 
of
 
September
 
30,
 
2024,
 
an
 
increase
 
of
 
$22.2
 
million
 
when
 
compared
 
to
December
 
31,
 
2023.
 
The
 
following
 
discussion
 
highlights
 
the
 
major
 
activities
 
and
 
transactions
 
that
 
affected
 
the
 
Corporation’s
 
cash
flows during the first nine months of 2024 and 2023:
 
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 first nine
 
months of September 30,
 
2024 and 2023, net
 
cash provided by operating
 
activities was $307.3 million
 
and $283.7
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 nine
 
-month period
 
ended September
 
30, 2024
 
,
 
net cash
provided by investing activities was $213.8 million, primarily due
 
to repayments of U.S. agencies MBS, U.S. agencies debentures,
 
and
Puerto Rico
 
municipal bonds;
 
proceeds from
 
sales of
 
repossessed assets; and
 
proceeds from
 
sales of
 
loans, driven
 
by the
 
bulk sale
 
of
fully charged-off
 
consumer loans during
 
the first quarter
 
of 2024 and
 
the sale of
 
an $8.2 million
 
nonaccrual C&I loan;
 
partially offset
by net disbursements
 
on loans held for
 
investment and purchases of
 
Community Reinvestment Act qualified
 
debt securities during the
first nine months of 2024.
For the nine-month
 
period ended September
 
30, 2023, net
 
cash provided by
 
investing activities was $17.5
 
million, primarily due
 
to
repayments
 
of
 
U.S.
 
agencies
 
MBS,
 
U.S.
 
agencies
 
debentures,
 
and
 
Puerto
 
Rico
 
municipal
 
bonds;
 
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
 
debt, the
 
issuance of
 
equity instruments,
 
return of
 
capital, and
 
activities related
 
to its
 
short-term funding.
For
 
the
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024,
 
net cash
 
used
 
in
 
financing
 
activities was
 
$498.9
 
million,
 
mainly
 
reflecting
 
a
decrease in total deposits,
 
capital returned to stockholders and the redemption
 
of junior subordinated debentures in September 2024,
 
as
further explained in Note 7 – “Non-Consolidated Variable
 
Interest Entities (“VIEs”) and Servicing Assets”.
 
For the nine
 
-month period
 
ended September 30,
 
2023, net cash
 
used in financing
 
activities was $196.8
 
million, mainly reflecting
 
a
$269.9 million
 
net decrease
 
in borrowings
 
and $200.8
 
million of
 
capital returned
 
to stockholders,
 
partially offset
 
by a
 
$275.8 million
net increase in deposits.
 
108
Capital
As of
 
September 30,
 
2024, the
 
Corporation’s
 
stockholders’ equity
 
was $1.7
 
billion, an
 
increase of
 
$203.3 million
 
from December
31, 2023.
 
The increase
 
was driven
 
by net
 
income generated
 
in the
 
first nine
 
months of
 
2024 and
 
a $155.5
 
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,
 
partially
 
offset
 
by
 
$100.0
 
million
 
in
 
common
 
stock
 
repurchases
 
under
 
the
 
2023
 
stock
 
repurchase
 
program,
 
and
common stock dividends declared in the first nine months of 2024 totaling
 
$79.7 million or $0.48 per common share.
 
On
 
October
 
30,
 
2024,
 
the
 
Corporation’s
 
Board
 
declared
 
a
 
quarterly
 
cash
 
dividend
 
of
 
$0.16
 
per
 
common
 
share.
 
The
 
dividend
 
is
payable on
 
December 13,
 
2024 to
 
shareholders of
 
record at
 
the close
 
of business
 
on November
 
29, 2024.
 
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 the consideration and
 
approval by the Corporation’s Board
 
at the relevant times.
On
 
July
 
24, 2023,
 
the Corporation
 
announced
 
that its
 
Board
 
of Directors
 
approved
 
a stock
 
repurchase
 
program,
 
under which
 
the
Corporation
 
may repurchase
 
up
 
to $225
 
million
 
of its
 
outstanding
 
common
 
stock, which
 
commenced
 
in
 
the fourth
 
quarter
 
of 2023.
During the
 
first nine
 
months of 2024,
 
the Corporation
 
repurchased approximately
 
5.8 million
 
shares of
 
common stock for
 
a total cost
of $100.0
 
million. Furthermore,
 
on July
 
22, 2024,
 
the Corporation
 
announced that
 
its Board
 
of Directors
 
approved a
 
new repurchase
program,
 
under which
 
the Corporation
 
may
 
repurchase
 
up to
 
an
 
additional
 
$250 million
 
that
 
could
 
include
 
repurchases
 
of
 
common
stock or
 
junior subordinated
 
debentures, which
 
it expects
 
to execute
 
through the
 
end of
 
the fourth
 
quarter of
 
2025. As
 
of September
30,
 
2024,
 
the
 
Corporation
 
has
 
remaining
 
authorization
 
of
 
approximately
 
$250.0
 
million
 
under
 
both
 
repurchase
 
programs
 
after
 
the
$50.0 million redemption of
 
junior subordinated debentures in
 
September 2024, as further
 
explained above. For more
 
information, see
Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds,”
 
of this Quarterly Report on Form 10-Q.
Repurchases
 
under
 
the
 
programs
 
may
 
be
 
executed
 
through
 
open
 
market
 
purchases,
 
accelerated
 
share
 
repurchases,
 
privately
negotiated
 
transactions
 
or plans,
 
including
 
plans complying
 
with Rule
 
10b5-1
 
under
 
the Exchange
 
Act, and/or
 
redemption
 
of junior
subordinated
 
debentures, and
 
will be
 
conducted
 
in accordance
 
with applicable
 
legal and
 
regulatory requirements.
 
The Corporation’s
repurchase programs
 
are subject
 
to various
 
factors, including
 
the Corporation’s
 
capital position,
 
liquidity,
 
financial performance
 
and
alternative uses
 
of capital, stock
 
trading price, and
 
general market conditions.
 
The Corporation’s
 
repurchase programs do
 
not obligate
it to acquire any
 
specific number of shares
 
and do not have
 
an expiration date. The
 
repurchase programs may be
 
modified, suspended,
or
 
terminated
 
at
 
any
 
time
 
at
 
the
 
Corporation’s
 
discretion.
 
The
 
Corporation’s
 
holding
 
company
 
has
 
no
 
operations
 
and
 
depends
 
on
dividends,
 
distributions
 
and
 
other
 
payments
 
from
 
its
 
subsidiaries
 
to
 
fund
 
dividend
 
payments,
 
stock
 
repurchases,
 
and
 
to
 
fund
 
all
payments on its obligations, including debt obligations.
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
109
 
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 September 30, 2024 and December 31, 2023, respectively:
September 30, 2024
December 31, 2023
(In thousands, except ratios and per share information)
Total common equity
 
- GAAP
$
1,700,885
$
1,497,609
Goodwill
(38,611)
(38,611)
Other intangible assets
(8,260)
(13,383)
Tangible common
 
equity - non-GAAP
$
1,654,014
$
1,445,615
Total assets - GAAP
$
18,859,170
$
18,909,549
Goodwill
(38,611)
(38,611)
Other intangible assets
(8,260)
(13,383)
Tangible assets - non
 
-GAAP
$
18,812,299
$
18,857,555
Common shares outstanding
163,876
169,303
Tangible common
 
equity ratio - non-GAAP
8.79%
7.67%
Tangible book value
 
per common share - non-GAAP
$
10.09
$
8.54
See Note 21 – “Regulatory
 
Matters, Commitments and Contingencies”
 
to the unaudited consolidated
 
financial statements herein for
the regulatory capital positions of the Corporation and FirstBank as of
 
September 30, 2024 and December 31, 2023, 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
 
$199.6
 
million
 
as
 
of
 
each
 
of
September
 
30, 2024
 
and
 
December 31,
 
2023,
 
respectively.
 
There
 
were no
 
transfers to
 
the legal
 
surplus
 
reserve
 
during the
 
first nine
months of 2024.
 
110
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, brokered
 
CDs rates, and repurchase agreements rates.
As of September
 
30, 2024, the
 
Corporation forecasted
 
the 12-month net
 
interest income assuming
 
September 30, 2024
 
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
 
September
 
30, 2024,
 
as compared
 
with December
 
31, 2023,
 
reflects a
 
decrease
 
of 74
 
bps on
 
average in
 
the
short-term
 
sector
 
of
 
the
 
curve,
 
or
 
between
 
one
 
to
 
twelve
 
months;
 
a
 
decrease
 
of
 
55
 
bps
 
in
 
the
 
medium-term
 
sector
 
of
 
the
 
curve,
 
or
between
 
2 to
 
5 years;
 
and
 
a decrease
 
of 13
 
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
 
76
 
bps
 
in
 
the
 
short-term
 
sector
 
and
 
a
decrease of 42 bps in the medium-term sector.
 
However, the long-term sector of the curve remains practically
 
unchanged.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111
 
The following table presents the results of the static simulations as of September 30,2024
 
and December 31, 2023. 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)
September 30, 2024
December 31, 2023
Gradual Change in Interest Rates:
 
+ 300 bps ramp
2.55
%
1.08
%
 
+ 200 bps ramp
1.71
%
0.73
%
 
- 300 bps ramp
-4.15
%
-3.09
%
 
- 200 bps ramp
-2.70
%
-2.02
%
Immediate Change in Interest Rates:
 
+ 200 bps shock
4.90
%
2.45
%
 
- 200 bps shock
-7.45
%
-5.67
%
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 September 30, 2024, and December 31, 2023,
 
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,
 
2023,
 
due to
 
lower sensitivity
 
in the
 
liabilities
 
side
 
as a
 
result of
 
updated
 
assumptions.
 
Deposit
betas
 
and
 
repricing
 
lags
 
were
 
modified
 
for
 
some
 
deposit
 
categories
 
to
 
reflect
 
current
 
behavior
 
and
 
expectations
 
under
 
current
 
and
projected interest rate scenarios.
 
Also, the sensitivity in the
 
liabilities side was impacted by
 
higher cost shorter term brokered
 
CDs that
are either being repriced at lower rates or are not being renewed.
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 will be redeployed into higher yielding
 
alternatives.
 
112
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” and
 
“Risk Management
 
–
 
Capital”
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,
 
particularly in
 
times of
severe
 
stress.
 
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 September
 
30, 2024
 
and December
 
31, 2023,
 
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.
 
 
 
 
 
 
 
 
113
 
As of
 
September 30,
 
2024, 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
 
contraction
 
of
 
4.00%
 
for
 
the
 
remainder
 
of
 
2024
 
and
 
an
average
 
projected
 
appreciation of
 
0.92% for
 
the year
 
2025, compared
 
to an
 
average projected
 
contraction
 
of 6.24%
 
for the
remainder of 2024 and an average projected appreciation of 2.01%
 
for the year 2025 as of December 31, 2023.
 
●
Regional
 
Home
 
Price
 
Index
 
forecast
 
in
 
Puerto
 
Rico
 
(purchase
 
only
 
prices)
 
is
 
projected
 
to
 
remain
 
relatively
 
flat
 
for
 
the
remainder of 2024,
 
while for the
 
year 2025 shows
 
a deterioration of
 
1.48%, when compared
 
to the same
 
period projection as
of December 31, 2023. For the Florida region,
 
the Home Price Index forecast shows an improvement
 
of 8.50% and 7.05% for
the remainder of 2024 and for the year 2025, respectively,
 
when compared to the same period as of December 31, 2023.
 
●
Average
 
regional unemployment rate
 
in Puerto Rico is
 
forecasted at 6.07%
 
for the remainder
 
of 2024 and 6.30%
 
for the year
2025,
 
compared to
 
7.68% for
 
the remainder
 
of 2024
 
and 8.08%
 
for the
 
year 2025
 
as of December
 
31, 2023.
 
For the
 
Florida
and
 
the
 
U.S.
 
mainland,
 
average
 
unemployment
 
rate
 
is
 
forecasted
 
at
 
3.94%
 
and
 
4.45%,
 
respectively,
 
for
 
the
 
remainder
 
of
2024, and
 
4.51% and 4.96%,
 
respectively,
 
for the year
 
2025, compared
 
to 4.51%
 
and 4.94%,
 
respectively,
 
for the remainder
of 2024, and 4.12%
 
and 4.52%, respectively, for
 
the year 2025 as of December 31, 2023.
●
Annualized change in
 
GDP in the U.S.
 
mainland of 1.69% for
 
the remainder of 2024
 
and 1.04%
 
for the year 2025,
 
compared
to 0.53%
 
for the remainder of 2024 and 1.64%
 
for the year 2025 as of December 31, 2023.
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
 
September 30, 2024,
 
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 6.33%
 
for the
 
remainder of
 
2024, compared
 
to 6.07%
 
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 September
 
30, 2024, 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 $40 million at September
 
30,
2024.
 
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
 
September 30, 2024.
As of
 
September 30,
 
2024, the
 
ACL for
 
loans and
 
finance leases
 
was $247.0
 
million, or
 
1.98% of
 
total loans,
 
a decrease
 
of $14.8
million, from $261.8
 
million, or 2.15% of
 
total loans, as of
 
December 31, 2023. The
 
ACL for residential mortgage
 
loans decreased by
$16.7 million, driven by updated
 
historical loss experience used for determining
 
the ACL estimate resulting in a
 
downward revision of
estimated loss severities
 
and improvements
 
in the long-term
 
projections of
 
the unemployment rate
 
in the Puerto
 
Rico region, partially
offset
 
by newly
 
originated loans.
 
The ACL
 
for commercial
 
and construction
 
loans decreased
 
by $8.8
 
million, mainly
 
due to
 
reserve
releases associated with the improved financial condition
 
of certain borrowers and an improvement on the economic
 
outlook of certain
macroeconomic variables,
 
particularly variables
 
associated with commercial
 
real estate property
 
performance and
 
the forecasted CRE
price index, particularly in the Puerto Rico region, partially offset
 
by increased volume.
 
Meanwhile, the
 
ACL for
 
consumer loans
 
increased by
 
$10.7 million
 
driven by
 
higher charge-off
 
levels and
 
loan portfolio
 
growth,
mainly in auto loans.
The ratio
 
of the ACL
 
for loans and
 
finance leases
 
to total
 
loans held
 
for investment
 
decreased to
 
1.98%
 
as of September
 
30, 2024,
compared to 2.15% as of December 31, 2023. An explanation for the change
 
for each portfolio follows:
●
The ACL to total
 
loans ratio for the
 
residential mortgage loan
 
portfolio decreased from
 
2.03% as of December
 
31, 2023 to
1.44% as
 
of September
 
30, 2024,
 
mainly due
 
to the
 
aforementioned updated
 
historical loss
 
experience and
 
improvements
in the long-term projections of the unemployment rate, partially offset
 
by the aforementioned newly originated loans.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
114
●
The ACL
 
to total
 
loans ratio
 
for the construction
 
loan portfolio
 
decreased from
 
2.61% as
 
of December
 
31, 2023
 
to 1.93%
as of
 
September
 
30,
 
2024,
 
mainly
 
due
 
to an
 
improvement
 
on
 
the
 
economic
 
outlook
 
of
 
certain
 
macroeconomic
 
variables
associated with commercial real estate property performance and the
 
CRE price index.
 
●
The ACL
 
to total
 
loans ratio
 
for the
 
commercial mortgage
 
loan portfolio
 
decreased from
 
1.41% as
 
of December
 
31, 2023
to 0.98%
 
as of September
 
30, 2024, driven
 
by the
 
aforementioned reserve
 
releases associated
 
with the
 
improved financial
condition
 
of
 
certain
 
borrowers
 
and
 
an
 
improvement
 
on
 
the
 
economic
 
outlook
 
of
 
certain
 
macroeconomic
 
variables
associated with commercial real estate property performance and the
 
CRE price index.
●
The
 
ACL
 
to
 
total
 
loans
 
ratio
 
for
 
the
 
C&I
 
loan
 
portfolio
 
remained
 
relatively
 
flat
 
at
 
1.07%
 
as
 
of
 
September
 
30,
 
2024,
compared to 1.05% as of December 31, 2023.
●
The ACL
 
to total
 
loans ratio
 
for the
 
consumer loan
 
portfolio increased
 
from 3.64%
 
as of December
 
31, 2023
 
to 3.84% as
of September 30, 2024, driven by increases in charge-off
 
levels.
 
The ratio
 
of the
 
total ACL
 
for loans
 
and finance
 
leases to
 
nonaccrual loans
 
held for
 
investment was
 
276.46%
 
as of
 
September 30,
2024,
 
compared to 312.81% as of December 31, 2023.
 
See “Results of Operations - Provision for Credit Losses” and Note 4 –
 
“Allowance for Credit Losses for Loans and Finance Leases”
above for additional information.
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(Dollars in thousands)
ACL for loans and finance leases, beginning of year
$
254,532
$
267,058
$
261,843
$
260,464
Impact of adoption of ASU 2022-02
-
-
-
2,116
Provision for credit losses - (benefit) expense:
Residential mortgage
(5,476)
(3,349)
(16,533)
(6,776)
Construction
(1,659)
(642)
(1,642)
1,420
Commercial mortgage
(5,914)
(1,344)
(8,900)
5,901
C&I
1,138
1,931
(2,890)
3,278
Consumer and finance leases
28,381
14,047
71,282
43,846
Total provision for credit losses
 
- expense
16,470
10,643
41,317
47,669
Charge-offs:
Residential mortgage
(421)
(499)
(1,428)
(2,628)
Construction
-
(4)
-
(42)
Commercial mortgage
-
(1)
-
(107)
C&I
(1,350)
(9)
(2,141)
(6,477)
Consumer and finance leases
(27,274)
(19,746)
(81,229)
(53,006)
Total charge offs
(29,045)
(20,259)
(84,798)
(62,260)
Recoveries:
Residential mortgage
497
534
1,215
1,788
Construction
11
1,463
35
1,935
Commercial mortgage
41
75
474
299
C&I
210
161
6,287
383
Consumer and finance leases
4,280
3,940
20,623
(1)
11,221
Total recoveries
5,039
6,173
28,634
(1)
15,626
Net charge-offs
(24,006)
(14,086)
(56,164)
(46,634)
ACL for loans and finance leases, end of period
$
246,996
$
263,615
$
246,996
$
263,615
ACL for loans and finance leases to period-end total loans
 
held for investment
1.98%
2.21%
1.98%
2.21%
Net charge-offs (annualized) to average loans
 
outstanding during the period
0.78%
0.48%
0.61%
(2)
0.54%
Provision for credit losses - expense for loans and finance
 
leases to net charge-offs during
the period
0.69x
0.76x
0.74x
1.02x
(1)
For the nine-month period ended September 30, 2024 includes a recovery totaling $10.0 million associated with the bulk sale of fully charged-off consumer loans and finance leases.
(2)
The recovery associated with the aforementioned bulk sale reduced the ratio of total net charge-offs to related average loans by 11 basis points.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
115
 
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 September 30, 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
$
2,820,147
$
207,342
$
2,471,880
$
3,205,313
$
3,741,342
$
12,446,024
 
Percent of loans in each category to total loans
23
%
2
%
20
%
26
%
29
%
100
%
 
Allowance for credit losses
$
40,651
$
3,998
$
24,205
$
34,446
$
143,696
$
246,996
 
Allowance for credit losses to amortized cost
1.44
%
1.93
%
0.98
%
1.07
%
3.84
%
1.98
%
As of December 31, 2023
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
$
2,821,726
$
214,777
$
2,317,083
$
3,174,232
$
3,657,665
$
12,185,483
 
Percent of loans in each category to total loans
23
%
2
%
19
%
26
%
30
%
100
%
 
Allowance for credit losses
$
57,397
$
5,605
$
32,631
$
33,190
$
133,020
$
261,843
 
Allowance for credit losses to amortized cost
2.03
%
2.61
%
1.41
%
1.05
%
3.64
%
2.15
%
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.
 
As
 
of
 
September
 
30,
 
2024,
 
the
 
ACL
 
for
 
off-balance
 
sheet
credit exposures
 
decreased by
 
$1.1 million
 
to $3.5
 
million, when
 
compared to
 
December 31,
 
2023, driven
 
by an
 
improvement on
 
the
economic outlook of certain macroeconomic variables, particularly
 
in variables associated with the CRE price index.
Allowance for Credit Losses for Held-to-Maturity
 
Debt Securities
As of
 
September
 
30,
 
2024,
 
the ACL
 
for
 
held-to-maturity
 
securities
 
portfolio
 
was entirely
 
related
 
to
 
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
 
September
 
30,
 
2024,
 
the
 
ACL
 
for
 
held-to-maturity
 
debt
securities
 
was
 
$1.1
 
million,
 
compared
 
to
 
$2.2
 
million
 
as
 
of
 
December
 
31,
 
2023.
 
The
 
decrease
 
was
 
driven
 
by
 
improvements
 
in
 
the
underlying updated financial information of a Puerto Rico municipal
 
bond issuer.
Allowance for Credit Losses for Available
 
-for-Sale Debt Securities
 
The
 
ACL
 
for
 
available-for-sale
 
debt
 
securities,
 
which
 
is
 
associated
 
with
 
private
 
label
 
MBS
 
and
 
a
 
residential
 
pass-through
 
MBS
issued by the PRHFA, was $0.5
 
million as of each of September 30, 2024 and December 31, 2023.
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.
 
 
 
 
 
 
116
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 and
accounted
 
for
 
under
 
ASC
 
Subtopic
 
310-30,
 
“Receivables
 
–
 
Loans
 
and
 
Debt
 
Securities
 
Acquired
 
with
 
Deteriorated
 
Credit
 
Quality”
(“ASC
 
Subtopic
 
310-30”).
 
As
 
allowed
 
by
 
CECL,
 
the
 
Corporation
 
elected
 
to
 
maintain
 
pools
 
of
 
loans
 
accounted
 
for
 
under
 
ASC
Subtopic 310-30
 
as “units
 
of accounts,”
 
conceptually treating
 
each pool
 
as a
 
single asset.
 
Regarding interest
 
income recognition,
 
the
prospective
 
transition
 
approach
 
for
 
PCD loans
 
was applied
 
at
 
a
 
pool
 
level, which
 
froze
 
the
 
effective
 
interest
 
rate of
 
the pools
 
as of
January
 
1, 2020.
 
According
 
to regulatory
 
guidance,
 
the determination
 
of nonaccrual
 
or accrual
 
status for
 
PCD loans
 
with respect
 
to
which the Corporation has made
 
a policy election to maintain
 
previously existing pools upon adoption
 
of CECL should be made at
 
the
pool level, not the individual
 
asset level. In addition, the guidance
 
provides that the Corporation can
 
continue accruing interest and
 
not
report
 
the PCD
 
loans as
 
being
 
in nonaccrual
 
status if
 
the following
 
criteria are
 
met: (i)
 
the Corporation
 
can reasonably
 
estimate the
timing and amounts of
 
cash flows expected to
 
be collected; and (ii)
 
the Corporation did not
 
acquire the asset primarily
 
for the rewards
of ownership
 
of the
 
underlying collateral,
 
such as
 
the use
 
in operations
 
or improving
 
the collateral
 
for resale.
 
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
 
autos
 
acquired
 
in settlement
 
of
 
loans.
 
Repossessed
 
autos
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
117
 
The following table shows non-performing assets by geographic segment as of
 
the indicated dates:
September 30, 2024
December 31, 2023
(In thousands)
Puerto Rico:
Nonaccrual loans held for investment:
Residential mortgage
$
16,047
$
18,324
Construction
3,687
595
Commercial mortgage
2,734
3,106
C&I
17,131
13,414
Consumer and finance leases
22,763
21,954
Total nonaccrual loans held for investment
62,362
57,393
OREO
15,715
28,382
Other repossessed property
8,655
7,857
Other assets
1,567
1,415
Total non-performing assets
$
88,299
$
95,047
Past due loans 90 days and still accruing
$
40,458
$
53,308
Virgin Islands:
Nonaccrual loans held for investment:
Residential mortgage
$
6,434
$
6,688
Construction
964
974
Commercial mortgage
8,762
9,099
C&I
1,231
1,169
Consumer
307
419
Total nonaccrual loans held for investment
17,698
18,349
OREO
3,615
4,287
Other repossessed property
186
252
Total non-performing assets
$
21,499
$
22,888
Past due loans 90 days and still accruing
$
3,152
$
6,005
United States:
Nonaccrual loans held for investment:
Residential mortgage
$
9,248
$
7,227
C&I
-
667
Consumer
36
71
Total nonaccrual loans held for investment
9,284
7,965
Other repossessed property
3
6
Total non-performing assets
$
9,287
$
7,971
Past due loans 90 days and still accruing
$
-
$
139
Total
Nonaccrual loans held for investment:
Residential mortgage
$
31,729
$
32,239
Construction
4,651
1,569
Commercial mortgage
11,496
12,205
C&I
18,362
15,250
Consumer and finance leases
23,106
22,444
Total nonaccrual loans held for investment
89,344
83,707
OREO
19,330
32,669
Other repossessed property
8,844
8,115
Other assets
(1)
1,567
1,415
Total non-performing assets
$
119,085
$
125,906
Past due loans 90 days and still accruing
(2) (3) (4)
$
43,610
$
59,452
Non-performing assets to total assets
 
0.63%
0.67%
Nonaccrual loans held for investment to total loans held for investment
0.72%
0.69%
ACL for loans and finance leases
246,996
261,843
ACL for loans and finance leases to total nonaccrual loans held
 
for investment
276.46%
312.81%
ACL for loans and finance leases to total nonaccrual loans held
 
for investment, excluding residential real estate loans
428.70%
508.75%
(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 of maintaining pools
 
of loans as “units of
 
account” 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
$6.5 million and $8.3 million as of September 30, 2024 and December 31, 2023, 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
 
$9.0
 
million
 
and
 
$15.4
 
million of
 
FHA
government guaranteed residential mortgage loans that were over 15 months delinquent as of September 30, 2024 and
 
December 31, 2023, respectively.
(4)
These includes
 
rebooked loans,
 
which were
 
previously pooled into
 
GNMA securities,
 
amounting to
 
$6.6 million
 
and $7.9
 
million as
 
of September 30,
 
2024 and
 
December 31,
 
2023, 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
118
Total
 
non-performing assets
 
decreased by
 
$6.8 million
 
to $119.1
 
million as of
 
September 30,
 
2024, compared
 
to $125.9 million
 
as
of December
 
31, 2023. The
 
decrease in non-performing
 
assets was driven
 
by a $13.3
 
million decrease in
 
the OREO portfolio
 
balance
in
 
the
 
Puerto
 
Rico
 
region,
 
mainly
 
attributable
 
to
 
the
 
sale
 
of
 
a
 
$5.3
 
million
 
commercial
 
real
 
estate
 
OREO
 
property
 
and
 
sales
 
of
residential OREO properties, partially offset by a $5.6
 
million increase in total nonaccrual loans held for investment.
Total
 
nonaccrual
 
loans
 
were
 
$89.3
 
million
 
as
 
of
 
September
 
30,
 
2024.
 
This
 
represents
 
a
 
net
 
increase
 
of
 
$5.6
 
million
 
from
 
$83.7
million as
 
of December
 
31, 2023,
 
mainly in
 
commercial and
 
construction loans,
 
driven by
 
the inflow
 
of a
 
$16.5 million
 
commercial
relationship in the
 
Puerto Rico region
 
in the food retail
 
industry,
 
partially offset by
 
the sale of
 
an $8.2 million
 
nonaccrual C&I loan
 
in
the Puerto Rico region. The sale resulted in a $1.2 million charge
 
-off that had been previously reserved.
 
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 September 30, 2024
Beginning balance
$
4,742
$
11,736
$
27,661
$
44,139
Plus:
Additions to nonaccrual
 
-
100
902
1,002
Less:
Nonaccrual loans charge-offs
-
-
(1,350)
(1,350)
Loan collections
(91)
(340)
(651)
(1,082)
Nonaccrual loans sold, net of charge-offs
-
-
(8,200)
(8,200)
Ending balance
 
$
4,651
$
11,496
$
18,362
$
34,509
Construction
Commercial
Mortgage
C&I
Total
(In thousands)
Quarter Ended September 30, 2023
Beginning balance
$
1,677
$
21,536
$
9,194
$
32,407
Plus:
Additions to nonaccrual
-
522
10,569
11,091
Less:
Loans returned to accrual status
-
-
(199)
(199)
Nonaccrual loans transferred to OREO
-
-
(547)
(547)
Nonaccrual loans charge-offs
-
(1)
(9)
(10)
Loan collections
(37)
(425)
(199)
(661)
Ending balance
 
$
1,640
$
21,632
$
18,809
$
42,081
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
119
Construction
Commercial
Mortgage
C&I
 
Total
(In thousands)
Nine-Month Period Ended September 30, 2024
Beginning balance
$
1,569
$
12,205
$
15,250
$
29,024
Plus:
Additions to nonaccrual
 
3,300
107
26,743
30,150
Less:
Loans returned to accrual status
(35)
(77)
(9,226)
 
(1)
(9,338)
Nonaccrual loans transferred to OREO
(48)
-
(684)
(732)
Nonaccrual loans charge-offs
-
-
(2,141)
(2,141)
Loan collections
(135)
(739)
(3,380)
(4,254)
Nonaccrual loans sold, net of charge-offs
-
-
(8,200)
(8,200)
Ending balance
 
$
4,651
$
11,496
$
18,362
$
34,509
(1)
Mainly related to
 
the restoration to
 
accrual status of
 
a participated C&I
 
loan in the
 
Florida region associated
 
with the power
 
generation industry that
 
entered in nonaccrual
 
status during
the first quarter of 2024.
Construction
Commercial
Mortgage
C&I
 
Total
(In thousands)
Nine-Month Period Ended September 30, 2023
Beginning balance
$
2,208
$
22,319
$
7,830
$
32,357
Plus:
Additions to nonaccrual
127
1,505
20,730
22,362
Less:
Loans returned to accrual status
-
(361)
(725)
(1,086)
Nonaccrual loans transferred to OREO
(332)
(223)
(730)
(1,285)
Nonaccrual loans charge-offs
-
(107)
(6,477)
(6,584)
Loan collections
(363)
(1,507)
(1,819)
(3,689)
Reclassification
-
6
-
6
Ending balance
 
$
1,640
$
21,632
$
18,809
$
42,081
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
120
The following table presents the activity of residential nonaccrual loans
 
held for investment for the indicated periods:
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(In thousands)
Beginning balance
 
$
31,396
$
33,252
$
32,239
$
42,772
 
Plus:
 
Additions to nonaccrual
4,678
4,510
12,671
9,600
 
Less:
 
Loans returned to accrual status
 
(2,692)
(3,788)
(7,662)
(10,439)
 
Nonaccrual loans transferred to OREO
(477)
(984)
(1,624)
(5,243)
 
Nonaccrual loans charge-offs
(2)
(83)
(280)
(704)
 
Loan collections
(1,174)
(961)
(3,615)
(4,034)
 
Reclassification
 
-
-
-
(6)
Ending balance
 
$
31,729
$
31,946
$
31,729
$
31,946
The amount of nonaccrual
 
consumer loans, including finance
 
leases, increased by $0.7
 
million to $23.1 million
 
as of September 30,
2024,
 
compared to
 
$22.4 million
 
as of December
 
31, 2023.
 
The increase
 
was mainly
 
reflected in
 
the auto loan
 
portfolio. The
 
inflows
of nonaccrual
 
consumer loans
 
during the
 
first nine
 
months of
 
2024 amounted
 
to $86.6
 
million, compared
 
to inflows
 
of $63.2
 
million
for the same period in 2023.
As of September 30, 2024,
 
approximately $24.3 million 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 nine-month period ended
 
September 30, 2024, interest income of
 
approximately $0.6 million related to
 
nonaccrual loans
with a
 
carrying value
 
of $30.9
 
million as
 
of September
 
30, 2024,
 
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 $143.4
million as of September
 
30, 2024, a decrease of
 
$7.4 million, compared to
 
$150.8 million as of December
 
31, 2023.
 
The variances by
major portfolio categories are as follows:
 
●
Consumer loans in early delinquency decreased by $8.1 million to $103.9
 
million, mainly reflected in the auto loan portfolio.
●
Residential mortgage loans in early delinquency decreased by $4.6
 
million to $31.9 million.
Partially offset by:
●
Commercial
 
and
 
construction
 
loans
 
in
 
early
 
delinquency
 
increased
 
by
 
$5.3
 
million
 
to
 
$7.6
 
million,
 
mainly
 
due
 
to
 
certain
commercial loans
 
that matured
 
and are
 
in the
 
process of
 
renewal but
 
for which
 
the Corporation
 
continues to
 
receive interest
and principal payments from the borrowers.
In addition,
 
the Corporation
 
provides
 
homeownership
 
preservation
 
assistance to
 
its customers
 
through
 
a loss
 
mitigation
 
program.
Depending
 
upon
 
the
 
nature
 
of
 
a
 
borrower’s
 
financial
 
condition,
 
restructurings
 
or
 
loan
 
modifications
 
through
 
this
 
program
 
are
provided,
 
as well
 
as other
 
modifications of
 
individual C&I,
 
commercial
 
mortgage, construction,
 
and residential
 
mortgage loans.
 
For
the
 
quarter
 
and
 
nine-month
 
period
 
ended
 
September 30,
 
2024,
 
loans modified
 
to borrowers
 
experiencing
 
financial
 
difficulty
 
had
 
an
amortized
 
cost
 
basis
 
of
 
$6.8
 
million
 
and
 
$126.9
 
million,
 
respectively.
 
The
 
modifications
 
for
 
the
 
first
 
nine
 
months
 
of
 
2024
 
include
$110.7 million
 
related to a
 
commercial mortgage relationship
 
that had been
 
previously reported
 
as a troubled
 
debt restructuring
 
under
ASC
 
310-40
 
and
 
was
 
performing
 
according
 
to
 
modified
 
terms.
 
See
 
Note
 
3
 
–
 
“Loans
 
Held
 
for
 
Investment”
 
to
 
the
 
unaudited
consolidated financial statements herein for additional information and
 
statistics about the Corporation’s modified
 
loans.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
121
The
 
OREO
 
portfolio,
 
which
 
is
 
part
 
of
 
non-performing
 
assets,
 
amounted
 
to
 
$19.3
 
million
 
as
 
of
 
September
 
30,
 
2024
 
and
 
$32.7
million as
 
of December
 
31, 2023.
 
The following
 
tables show
 
the composition
 
of the
 
OREO portfolio
 
as of
 
September 30,
 
2024 and
December 31,
 
2023, as well
 
as the activity
 
of the OREO
 
portfolio by geographic
 
area during the
 
nine-month period
 
ended
September
30, 2024:
OREO Composition by Region
 
As of September 30, 2024
(In thousands)
Puerto Rico
Virgin Islands
Florida
Consolidated
Residential
 
$
13,646
$
805
$
-
$
14,451
Construction
1,125
-
-
1,125
Commercial
944
2,810
-
3,754
$
15,715
$
3,615
$
-
$
19,330
As of December 31, 2023
(In thousands)
Puerto Rico
Virgin Islands
Florida
Consolidated
Residential
 
$
18,809
$
1,452
$
-
$
20,261
Construction
1,576
25
-
1,601
Commercial
7,997
2,810
-
10,807
$
28,382
$
4,287
$
-
$
32,669
OREO Activity by Region
 
Nine-Month Period Ended September 30, 2024
(In thousands)
Puerto Rico
Virgin Islands
Florida
Consolidated
Beginning Balance
$
28,382
$
4,287
$
-
$
32,669
Additions
7,568
-
67
7,635
Sales
(18,747)
(639)
(67)
(19,453)
Subsequent measurement adjustments
(227)
(33)
-
(260)
Other adjustments
(1,261)
-
-
(1,261)
Ending Balance
$
15,715
$
3,615
$
-
$
19,330
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
122
Net Charge-offs and Total
 
Credit Losses
 
Net charge-offs
 
totaled $24.0
 
million for
 
the third
 
quarter of
 
2024,
 
or 0.78% of
 
average loans
 
on an annualized
 
basis, compared
 
to
$14.1 million, or
 
an annualized 0.48%
 
of average loans,
 
for the third quarter
 
of 2023. For the
 
nine-month period ended
 
September 30,
2024,
 
net
 
charge-offs
 
totaled
 
$56.2
 
million,
 
or
 
an
 
annualized
 
0.61%
 
of
 
average
 
loans,
 
compared
 
to $46.6
 
million,
 
or an
 
annualized
0.54% of
 
average loans,
 
for the
 
same period
 
in 2023.
Net charge-offs
 
for the
 
nine-month period
 
ended September
 
30, 2024
 
include a
$10.0
 
million
 
recovery
 
associated
 
with
 
the
 
bulk
 
sale
 
of
 
fully
 
charged-off
 
consumer
 
loans
 
and
 
finance
 
leases,
 
which
 
reduced
 
by
 
11
basis points the ratio of total net charge-offs to
 
average loans for such period.
Consumer
 
loans
 
and
 
finance
 
leases
 
net
 
charge-offs
 
for
 
the
 
third
 
quarter
 
of
 
2024
 
were
 
$23.0
 
million,
 
or
 
an
 
annualized
 
2.47%
 
of
related
 
average
 
loans,
 
compared
 
to
 
net
 
charge-offs
 
of
 
$15.8
 
million,
 
or
 
an
 
annualized
 
1.79%
 
of
 
related
 
average
 
loans,
 
for
 
the
 
third
quarter
 
of
 
2023.
 
Net
 
charge-offs
 
of
 
consumer
 
loans
 
and
 
finance
 
leases
 
for
 
the
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024
 
were
$60.6
 
million,
 
or
 
2.19%
 
of
 
related
 
average
 
loans,
 
compared
 
to
 
net
 
charge-offs
 
of
 
$41.8
 
million,
 
or
 
an
 
annualized
 
1.61%
 
of
 
related
average loans, for
 
the same period
 
in 2023. The
 
increase for the third
 
quarter and first
 
nine months of
 
2024 was driven
 
by an increase
in charge-offs
 
across all major portfolio classes, which have been
 
trending higher towards historical loss experience, partially
 
offset by
the
 
aforementioned
 
recovery
 
associated
 
with
 
the
 
aforementioned
 
bulk
 
sale,
 
which
 
reduced
 
by
 
36 basis
 
points
 
the
 
ratio of
 
consumer
loans and finance leases net charge-offs to related average
 
loans for the first nine months of 2024.
 
Construction loans net recoveries
 
for the third quarter
 
of 2024 were $11
 
thousand, or an annualized
 
0.02% of related average
 
loans,
compared to net recoveries of $1.4 million, or an
 
annualized 3.18% of related average loans, for the same period
 
in 2023. Construction
loans
 
net
 
recoveries
 
for
 
the
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024
 
were
 
$35
 
thousand,
 
or
 
an
 
annualized
 
0.02%
 
of
 
related
average
 
loans, compared
 
to net
 
recoveries
 
of $1.9
 
million,
 
or
 
an
 
annualized
 
1.58%
 
of
 
related
 
average
 
loans, for
 
the same
 
period
 
in
2023.
 
The
 
net
 
recoveries
 
for
 
the
 
third
 
quarter
 
and
 
first
 
nine
 
months
 
of
 
2023
 
included
 
a
 
$1.4
 
million
 
recovery
 
recorded
 
on
 
a
construction loan in the Puerto Rico region.
C&I
 
loans
 
net
 
charge-offs
 
for
 
the
 
third
 
quarter
 
of
 
2024
 
were
 
$1.1
 
million,
 
or
 
an
 
annualized
 
0.14%
 
of
 
related
 
average
 
loans,
compared to
 
net recoveries
 
of $0.2
 
million, or
 
an annualized
 
0.02% of related
 
average loans,
 
for the third
 
quarter of
 
2023. C&I loans
net
 
recoveries
 
for
 
the
 
nine-month
 
period
 
ended
 
September
 
30,
 
2024
 
were
 
$4.1
 
million,
 
or
 
an
 
annualized
 
0.17%
 
of
 
related
 
average
loans, compared
 
to net charge-offs
 
of $6.1 million,
 
or an annualized
 
0.28% of related
 
average loans, for
 
the same period
 
in 2023.
 
The
results for the third
 
quarter and first nine
 
months of 2024 include
 
the aforementioned $1.2
 
million charge-off
 
recorded on the sale
 
of a
nonaccrual
 
C&I
 
loan
 
in
 
the
 
Puerto
 
Rico
 
region.
 
The
 
results
 
for
 
the
 
first
 
nine
 
months
 
of
 
2024
 
also
 
include
 
a
 
$5.0
 
million
 
recovery
associated
 
with a
 
C&I loan
 
in the
 
Puerto Rico
 
region and
 
a $0.8
 
million recovery
 
associated with
 
a C&I
 
loan in
 
the Florida
 
region.
Meanwhile, the net charge-offs
 
for the first nine months of 2023
 
include a $6.2 million charge-off
 
recorded on a participated C&I loan
in the Florida region associated with the power generation industry.
Commercial
 
mortgage
 
loans
 
net
 
recoveries
 
for
 
the
 
third
 
quarter
 
were
 
$41
 
thousand,
 
or
 
an
 
annualized
 
0.01%
 
of
 
related
 
average
loans,
 
compared
 
to
 
net
 
recoveries
 
of
 
$0.1
 
million,
 
or
 
an
 
annualized
 
0.01%
 
of
 
related
 
average
 
loans,
 
for
 
the
 
third
 
quarter
 
of
 
2023.
Commercial mortgage
 
loans net
 
recoveries for
 
the nine-month
 
period ended
 
September 30,
 
2024 were
 
$0.5 million,
 
or an
 
annualized
0.03% of
 
related average
 
loans, compared
 
to net
 
recoveries of
 
$0.2 million,
 
or an
 
annualized 0.01%
 
of related
 
average loans,
 
for the
same period
 
in 2023.
 
The net
 
recoveries for
 
the first
 
nine months
 
of 2024
 
include a
 
$0.4 million
 
recovery recorded
 
on a
 
commercial
real estate loan in the Florida region.
 
The following table presents annualized net (recoveries) charge
 
-offs to average loans held-in-portfolio for the indicated periods:
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
Residential mortgage
 
(0.01)
%
(0.01)
%
0.01
%
0.04
%
Construction
 
(0.02)
%
(3.18)
%
(0.02)
%
(1.58)
%
Commercial mortgage
(0.01)
%
(0.01)
%
(0.03)
%
(0.01)
%
C&I
0.14
%
(0.02)
%
(0.17)
%
0.28
%
Consumer and finance leases
2.47
%
1.79
%
2.19
%
(1)
1.61
%
Total loans
 
0.78
%
0.48
%
0.61
%
(1)
0.54
%
(1)
The $10.0 million recovery associated with the bulk sale
 
of fully charged-off consumer loans and finance leases
 
during the first nine months of 2024 reduced the ratios of consumer loans
and finance leases and total net charge-offs to related
 
average loans by 36 basis points and 11 basis
 
points, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
123
 
The following table presents annualized net (recoveries) charge
 
-offs to average loans held in various portfolios by geographic
segment for the indicated periods:
Quarter Ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
PUERTO RICO:
Residential mortgage
(0.01)
%
-
%
0.01
%
0.06
%
Construction
 
-
%
(7.30)
%
-
%
(4.32)
%
Commercial mortgage
-
%
(0.01)
%
-
%
-
%
C&I
0.21
%
(0.03)
%
(0.22)
%
-
%
Consumer and finance leases
 
2.46
%
1.78
%
2.17
%
(1)
1.61
%
Total loans
 
0.96
%
0.59
%
0.76
%
(1)
0.58
%
VIRGIN ISLANDS:
Residential mortgage
-
%
(0.12)
%
-
%
-
%
Construction
 
-
%
0.42
%
-
%
-
%
Commercial mortgage
(0.23)
%
(0.21)
%
(0.22)
%
(0.02)
%
Consumer and finance leases
3.48
%
2.15
%
3.23
%
0.33
%
Total loans
0.57
%
0.26
%
0.50
%
0.05
%
FLORIDA:
Residential mortgage
-
%
(0.01)
%
-
%
(0.02)
%
Construction
 
(0.16)
%
(0.05)
%
(0.07)
%
(0.05)
%
Commercial mortgage
-
%
-
%
(0.08)
%
(0.03)
%
C&I
-
%
(0.01)
%
(0.08)
%
0.88
%
Consumer and finance leases
(1.48)
%
(0.16)
%
(1.61)
%
(0.37)
%
Total loans
(0.01)
%
(0.01)
%
(0.07)
%
0.39
%
(1)
The recovery associated with the aforementioned bulk sale reduced the ratios of consumer loans and finance leases and total net charge-offs to related average loans for the nine-month period ended September 30,
2024 by 37 basis points and 14 basis points, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
124
The following table presents information about the OREO inventory
 
and related gains and losses for the indicated periods:
Quarter ended September 30,
Nine-Month Period Ended September 30,
2024
2023
2024
2023
(Dollars in thousands)
OREO
OREO balances, carrying value:
Residential
$
14,451
$
20,740
$
14,451
$
20,740
Construction
1,125
1,861
1,125
1,861
Commercial
3,754
5,962
3,754
5,962
Total
$
19,330
$
28,563
$
19,330
$
28,563
OREO activity (number of properties):
Beginning property inventory
222
320
277
344
Properties acquired
26
36
75
139
Properties disposed
(51)
(75)
(155)
(202)
Ending property inventory
197
281
197
281
Average holding period (in days)
Residential
501
464
501
464
Construction
2,491
2,302
2,491
2,302
Commercial
3,992
2,598
3,992
2,598
Total average holding period (in days)
1,295
1,029
1,295
1,029
OREO operations (gain) loss:
Market adjustments and (gains) losses on sale:
Residential
$
(1,543)
$
(2,577)
$
(5,287)
$
(7,620)
Construction
(49)
(52)
(68)
(99)
Commercial
(246)
(41)
(2,468)
26
Total net gain
(1,838)
(2,670)
(7,823)
(7,693)
Other OREO operations expenses
499
517
1,423
1,560
Net Gain on OREO operations
$
(1,339)
$
(2,153)
$
(6,400)
$
(6,133)
 
 
 
 
 
 
 
 
 
125
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
 
$12.4 billion as
 
of September 30,
 
2024, the Corporation
 
had credit risk
 
of approximately 80%
 
in
the Puerto Rico region, 17% in the United States region, and 3% 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
On March
 
18, 2024,
 
the Puerto
 
Rico Planning
 
Board (“PRPB”)
 
published
 
an analysis
 
of the
 
Puerto Rico’s
 
economy during
 
fiscal
year 2023, as well as a
 
short-term forecast for fiscal years
 
2024 and 2025. According to
 
the preliminary estimates issued by the
 
PRPB,
Puerto Rico’s
 
real gross
 
national product
 
(“GNP”) grew
 
by 0.7%
 
in fiscal
 
year 2023,
 
the third
 
consecutive year
 
with a positive
 
year-
over-year
 
variance.
 
The
 
main
 
drivers
 
behind
 
growth
 
in
 
fiscal
 
year
 
2023
 
were
 
personal
 
consumption
 
expenditures
 
and
 
fixed
investments
 
in
 
both
 
construction,
 
and
 
machinery
 
and
 
equipment.
 
The
 
PRPB
 
also
 
revised
 
previously
 
published
 
real
 
GNP
 
growth
estimates for fiscal years 2022 and 2021 from 3.7% to 3.8% and from 0.9%
 
to 1.4%, 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 August
 
2024,
 
estimates showed
 
that the
 
EDB-EAI
 
stood
 
at 126.9,
down 0.8%
 
on a
 
year-over-year
 
basis. Over
 
the 12-month
 
period ended
 
August 31,
 
2024, the
 
EDB-EAI averaged
 
126.5, 1.0%
 
above
the comparable figure a year earlier.
 
 
 
126
Labor market trends remain
 
positive. Data published
 
by the Bureau of
 
Labor Statistics showed that
 
non-farm payrolls in September
2024 in Puerto
 
Rico increased by
 
1.6% when compared
 
to September 2023,
 
primarily driven by
 
payrolls in the
 
private sector as
 
these
increased by
 
2.2% from
 
the comparable
 
figure a
 
year earlier.
 
Key industries
 
driving private-sector
 
payroll growth
 
include Leisure
 
&
Hospitality
 
with
 
a
 
year-over-year
 
increase
 
of
 
6.5%
 
and
 
Construction
 
with
 
a
 
positive
 
variance
 
of
 
5.0%.
 
The
 
unemployment
 
rate
continued to trend in the right direction to a record-low level of 5.5% in
 
September 2024.
Fiscal Plan
 
On June
 
5, 2024,
 
the PROMESA
 
oversight board
 
certified the
 
2024 Fiscal
 
Plan for
 
Puerto Rico
 
(the “2024
 
Fiscal Plan”),
 
updated
with
 
the
 
most
 
recent
 
data
 
and
 
projections
 
for
 
revenues
 
and
 
expenses,
 
and
 
renewed
 
roadmap
 
for
 
Puerto
 
Rico
 
to
 
achieve
 
fiscal
responsibility.
 
The 2024
 
Fiscal Plan is
 
made up
 
of four
 
parts: (i) progress
 
made in stabilizing
 
government finances,
 
(ii) Puerto
 
Rico’s
current financial
 
conditions and
 
risks, (iii) details
 
of the actions
 
required to
 
achieve fiscal
 
responsibility and
 
adequate access
 
to credit
markets, and
 
(iv) description
 
of the
 
actions the
 
PROMESA oversight
 
board and
 
the Government must
 
take to complete
 
PROMESA’s
mandate.
 
The 2024
 
Fiscal Plan
 
outlines
 
eight areas
 
of focus
 
to achieve
 
long-term
 
fiscal responsibility:
 
(i) improved
 
economic
 
and revenue
forecasting,
 
(ii)
 
adoption
 
of
 
budget
 
best
 
practices,
 
(iii)
 
comprehensive
 
capital
 
delivery
 
program,
 
(iv)
 
improved
 
management
 
of
education
 
resources,
 
(v)
 
improved
 
government
 
service
 
delivery
 
and
 
labor
 
relations,
 
(vi)
 
outcome-based,
 
data-driven,
 
and
 
controlled
healthcare
 
spending,
 
(vii)
 
improved,
 
transparent
 
financial
 
reporting,
 
and
 
(viii)
 
optimized
 
municipal
 
fiscal
 
management.
 
Success
 
in
these areas, which
 
aim to address
 
the most crucial
 
financial management
 
challenges that Puerto
 
Rico faces, is
 
critical for
 
Puerto Rico
to fully recover from bankruptcy and to fulfill the mandate of PROMESA to achieve
 
fiscal responsibility.
As the
 
debt restructurings
 
come to
 
an end,
 
a significant
 
portion of
 
the uncertainty
 
that has
 
plagued the
 
economy over
 
the past
 
ten
years has
 
faded away.
 
To
 
generate revenues
 
that are
 
resilient even
 
when the
 
unprecedented influx
 
of federal
 
funding subsides,
 
fiscal
stability alone
 
will not
 
suffice. The
 
2024 Fiscal
 
Plan describes
 
an effort
 
to develop
 
an integrated
 
plan that
 
will serve
 
as a
 
roadmap to
unlock
 
future
 
growth.
 
While
 
that
 
plan
 
is
 
developed,
 
the
 
PROMESA
 
oversight
 
board
 
and
 
the
 
Government
 
will
 
continue
 
to
 
support
specific priorities
 
through a first
 
wave of economic
 
growth initiatives that
 
aim to address
 
the most crucial
 
challenges that Puerto
 
Rico
faces.
 
The
 
list
 
of
 
focus
 
areas
 
outlined
 
in
 
the
 
2024
 
Fiscal
 
Plan
 
to
 
promote
 
economic
 
growth
 
include:
 
(i)
 
integrated
 
framework
 
for
economic
 
growth,
 
(ii)
 
human
 
capital,
 
focused
 
on
 
robust,
 
highly-skilled,
 
and
 
health
 
workforce,
 
(iii)
 
economic
 
strategies,
 
focused
 
on
improved
 
ease
 
of
 
doing
 
business,
 
(iv)
 
economic
 
policies,
 
focused
 
on
 
reforms
 
of
 
Puerto
 
Rico’s
 
tax
 
system,
 
and
 
(v)
 
infrastructure,
focused on reduced cost and increased reliability of energy,
 
transportation, and internet connectivity.
 
Similar to
 
previous
 
fiscal plans,
 
the 2024
 
Fiscal Plan
 
includes
 
an updated
 
macroeconomic forecast
 
reflecting
 
the impact
 
of fiscal
and
 
structural
 
measures,
 
natural disasters,
 
COVID-19,
 
and
 
federal
 
funding
 
in response
 
to natural
 
disasters
 
and
 
the
 
pandemic
 
on the
baseline
 
economic
 
trajectory.
 
The
 
2024
 
Fiscal
 
Plan
 
projects
 
Puerto
 
Rico
 
GNP
 
growth
 
in
 
fiscal
 
year
 
2024
 
to
 
be
 
1.0%,
 
followed
 
by
declines of 0.8% and
 
0.1% in fiscal year
 
2025 and fiscal year
 
2026, respectively.
 
On average, Puerto Rico’s
 
GNP is projected
 
to grow
approximately 0.4%
 
between fiscal
 
year 2023
 
and fiscal
 
year 2026.
 
Contrary to
 
previous fiscal
 
plans where
 
Puerto Rico’s
 
population
was projected to decline,
 
the 2024 Fiscal Plan includes
 
a stable population projection
 
through 2029 mainly due to
 
the offset between
 
a
negative
 
natural
 
population
 
decline
 
and
 
positive
 
net
 
migration.
 
Specifically,
 
the
 
revised
 
fiscal
 
plan
 
projections
 
contemplate
 
a
 
net
inflow of over 20,000 people annually through 2029, compared to
 
an average of less than 5,000 people in the 2023 fiscal plan.
The 2024 Fiscal Plan
 
projects that approximately
 
$54.5 billion in total
 
disaster relief funding, from
 
federal and private sources,
 
will
be
 
disbursed
 
as part
 
of
 
the
 
reconstruction
 
efforts
 
over
 
a
 
span of
 
9
 
years
 
(fiscal
 
years
 
2024
 
through
 
2035).
 
These
 
funds
 
will
 
benefit
individuals, the
 
public (e.g.,
 
reconstruction of
 
major infrastructure,
 
roads, and
 
schools), and
 
will cover
 
part of
 
Puerto Rico’s
 
share of
the
 
cost
 
of
 
disaster
 
relief
 
funding.
 
Also,
 
the
 
2024
 
Fiscal
 
Plan
 
projects
 
the
 
$5.9
 
billion
 
in
 
remaining
 
COVID-19
 
relief
 
funds
 
to
 
be
deployed
 
in fiscal
 
years 2024
 
and
 
2025.
 
Additionally,
 
the 2024
 
Fiscal Plan
 
continues
 
to account
 
for $2.1
 
billion
 
in federal
 
funds
 
to
Puerto
 
Rico
 
from
 
the
 
Bipartisan
 
Infrastructure
 
Law
 
directed
 
towards
 
improving
 
Puerto
 
Rico’s
 
infrastructure
 
over
 
fiscal
 
years
 
2024
through
 
2026.
 
Overall,
 
Puerto
 
Rico’s
 
economic
 
growth
 
is highly
 
dependent
 
on
 
the
 
Government’s
 
ability
 
to
 
efficiently
 
deploy
 
these
federal funds.
 
 
127
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
 
until
November
 
13,
 
2024,
 
pursuant
 
to
 
a
 
Court
 
order
 
dated
 
October
 
7,
 
2024,
 
as
 
the
 
mediation
 
team
 
continues
 
to
 
participate
 
in
 
multiple
discussions with the PROMESA oversight
 
board, certain mediation parties and
 
additional parties who filed objections
 
to conformation
of the PREPA
 
plan of adjustment.
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 August 31,
 
2024, over $3.4 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,
 
an
 
11%
 
increase
when
 
compared
 
to
 
the
 
same
 
period
 
in
 
2023.
 
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 October
 
10, 2024,
 
over 3,411
 
projects
had already been completed
 
under FEMA’s
 
Public Assistance programs
 
while over 20,600 projects
 
were active across different
 
stages
of execution
 
for a
 
total cost
 
of $11.5
 
billion, equivalent
 
to approximately
 
32% of
 
the agency’s
 
$36.0 billion
 
obligation, according
 
to
the Central Office for Recovery,
 
Reconstruction and Resiliency (“COR3”).
After more
 
than five
 
years since
 
the confirmation
 
of the
 
COFINA plan
 
of adjustment,
 
on October
 
30, 2024,
 
the Court
 
granted the
PROMESA oversight
 
board’s
 
request for
 
entry of
 
an order
 
closing the
 
COFINA Title
 
III case,
 
making it
 
the first
 
closed bankruptcy
case since the enactment of PROMESA.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
128
Exposure to Puerto Rico Government
As of September
 
30, 2024, the Corporation
 
had $309.0 million
 
of direct exposure
 
to the Puerto Rico
 
government, its municipalities
and
 
public
 
corporations,
 
compared
 
to
 
$297.9
 
million
 
as
 
of
 
December
 
31,
 
2023.
 
The
 
$11.1
 
million
 
increase
 
was
 
mainly
 
due
 
to
 
the
origination
 
of
 
two
 
loans
 
to
 
municipalities,
 
with
 
an
 
aggregate
 
balance
 
of
 
$27.7
 
million,
 
that
 
are
 
supported
 
by
 
assigned
 
property
 
tax
revenues
 
and
 
$15.5
 
million
 
in
 
disbursements
 
on
 
two
 
construction
 
loans
 
to
 
an
 
agency
 
and
 
a
 
public
 
corporation,
 
partially
 
offset
 
by
multiple repayments.
 
As of
 
September 30,
 
2024, approximately
 
$195.6 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. Approximately 72%
 
of the Corporation’s
exposure to
 
Puerto Rico
 
municipalities consisted
 
primarily of
 
senior priority
 
loans and
 
obligations concentrated
 
in four
 
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,
 
$50.7
 
million
 
in
 
loans
 
to
 
agencies
 
or
 
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 $3.0
 
million as
 
part of
 
its available-for-sale
 
debt securities
 
portfolio (fair
 
value of
 
$1.6 million
 
as of
September 30, 2024).
The
 
following
 
table
 
details
 
the
 
Corporation’s
 
total
 
direct
 
exposure
 
to
 
Puerto
 
Rico
 
government
 
obligations
 
according
 
to
 
their
maturities:
As of September 30,2024
Investment
Portfolio
(Amortized cost)
Loans
Total
 
Exposure
(In thousands)
Puerto Rico Housing Finance Authority:
 
After 10 years
$
3,008
$
-
$
3,008
Total Puerto Rico Housing Finance Authority
3,008
-
3,008
Agencies and public corporation of the Puerto Rico government:
 
After 1 to 5 years
-
28,303
28,303
 
After 5 to 10 years
-
22,363
22,363
Total agencies and public corporation of the Puerto Rico government
-
50,666
50,666
 
Affiliate of the Puerto Rico Electric Power Authority:
 
After 1 to 5 years
-
8,819
8,819
Total Puerto Rico government affiliate
-
8,819
8,819
Total Puerto Rico public corporations and government affiliate
-
59,485
59,485
Municipalities:
 
Due within one year
2,131
26,337
28,468
 
After 1 to 5 years
61,119
39,220
100,339
 
After 5 to 10 years
13,121
88,818
101,939
 
After 10 years
15,755
-
15,755
Total Municipalities
92,126
154,375
246,501
Total Direct
 
Government Exposure
$
95,134
$
213,860
$
308,994
In
 
addition,
 
as
 
of
 
September
 
30,
 
2024,
 
the
 
Corporation
 
had
 
$73.5
 
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,
 
2023
 
–
 
$77.7
 
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
 
each
 
of
 
September
 
30,
 
2024
 
and
 
December
 
31,
 
2023,
 
the
 
Corporation
 
had
 
$2.7
 
billion
 
of
 
public
 
sector
 
deposits
 
in
 
Puerto
Rico. Approximately
 
22% of the
 
public sector deposits
 
as of September
 
30, 2024 were
 
from municipalities and
 
municipal agencies
 
in
Puerto Rico
 
and 78%
 
were from
 
public corporations,
 
the Puerto
 
Rico central
 
government and
 
agencies, and
 
U.S. federal
 
government
agencies in Puerto Rico.
 
 
129
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, over
 
$5.5 billion in disaster recovery
 
funds had been disbursed through
 
August 2024 and nearly $11
 
billion were
remaining
 
obligated
 
funds
 
pending
 
to
 
be disbursed.
 
Moreover,
 
labor
 
market
 
trends
 
remain
 
stable
 
with
 
non-farm
 
payrolls during
 
the
third quarter of 2024 slightly down by 0.4% and 0.8% on a quarter
 
-over-quarter and year-over-year basis, respectively.
On December 14, 2023,
 
Fitch Ratings announced that it
 
withdrew the ratings of the
 
U.S. Virgin
 
Islands Water
 
and Power Authority
(“WAPA”)
 
primarily
 
due
 
to
 
limited
 
availability
 
of
 
the
 
authority’s
 
operating
 
and
 
financial
 
information
 
from
 
public
 
sources
 
or
 
from
WAPA’s
 
management.
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
 
September 30,
 
2024 and
 
December 31,
 
2023, the
 
Corporation had
 
$48.4 million
 
and $90.5
 
million, respectively,
 
in loans
 
to
USVI public
 
corporations, of
 
which $15.0
 
million and
 
$57.2 million,
 
respectively,
 
were fully
 
collateralized by
 
cash balances
 
held at
the Bank. As of September 30, 2024, all loans were currently performing
 
and up to date on principal and interest payments.
 
 
 
 
 
130
ITEM 3. QUANTITATIVE
 
AND QUALITATIVE DISCLOSURES
 
ABOUT MARKET
 
RISK
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.
ITEM 4.
 
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
First
 
BanCorp.’s
 
management,
 
including
 
its
 
Chief
 
Executive
 
Officer
 
and
 
Chief
 
Financial
 
Officer,
 
evaluated
 
the
 
effectiveness
 
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
September
 
30,
 
2024,
 
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 September
 
30, 2024
 
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
Office 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
 
our most
 
recent
 
quarter
 
ended September
 
30, 2024
 
that have
 
materially
 
affected,
 
or are
 
reasonably
likely to materially affect, the Corporation’s
 
internal control over financial reporting.
 
 
 
 
131
PART II - OTHER INFORMATION
In accordance with the instructions to Part II
 
of Form 10-Q, the other specified items in
 
this part have been omitted because they are not
applicable, or the information has been previously reported.
ITEM 1.
 
LEGAL PROCEEDINGS
For
 
a
 
discussion
 
of
 
legal
 
proceedings,
 
see
 
Note
 
21
 
–
 
“Regulatory
 
Matters,
 
Commitments
 
and
 
Contingencies,”
 
to
 
the
 
unaudited
consolidated financial statements herein, which is incorporated by reference
 
in this Part II, Item 1.
ITEM 1A.
 
RISK FACTORS
The Corporation’s business, operating results and/or the market price of our common stock may be significantly affected by a number of
factors. A detailed
 
discussion of certain
 
risk factors that
 
could affect
 
the Corporation’s future
 
operations, financial
 
condition or results
 
for
future periods is set forth in Part I, Item 1A, “Risk Factors,” in the 2023 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
 
2023 Annual Report on Form 10-K.
Other than as described below, there have been
 
no material changes from those risk factors previously
 
disclosed in Part I, Item 1A, “Risk
Factors,” in the 2023 Annual Report on Form
 
10-K.
The
 
volatility
 
in
 
the
 
financial
 
services
 
industry,
 
including
 
failures
 
or
 
rumored
 
failures
 
of
 
other
 
depository
 
institutions,
 
and
actions taken by governmental
 
agencies to stabilize the financial
 
system, could result in,
 
among other things, bank deposit
 
runoffs,
liquidity constraints,
 
and increased regulatory requirements and costs.
The closure and
 
placement into receivership
 
with the FDIC
 
of certain large
 
U.S. regional banks with
 
assets over $100 billion
 
in March
and
 
May
 
2023,
 
and
 
adverse
 
developments
 
affecting
 
other
 
banks,
 
resulted
 
in
 
heightened
 
levels
 
of
 
market
 
volatility
 
and
 
consequently
negatively
 
impacted
 
customer
 
confidence
 
in
 
the
 
safety
 
and
 
soundness
 
of
 
financial
 
institutions.
 
These
 
developments
 
resulted
 
in
 
certain
regional banks experiencing higher than normal
 
deposit outflows and an elevated
 
level of competition for available
 
deposits in the market.
The impact of market
 
volatility from the adverse
 
developments in the banking industry,
 
along with continued elevated interest
 
rates on our
business and related financial results, will
 
depend on future developments, which are highly uncertain
 
and difficult to predict.
 
In the
 
aftermath of
 
these recent
 
bank failures,
 
the banking
 
agencies have
 
increased regulatory
 
requirements and
 
costs that
 
may impact
capital ratios or the FDIC deposit insurance premium. For example,
 
in 2023, the FDIC issued a final rule to impose a
 
special assessment to
recover
 
certain estimated
 
losses
 
to
 
the
 
Deposit
 
Insurance
 
Fund
 
(“DIF”) arising
 
from
 
the
 
closures of
 
Silicon Valley
 
Bank
 
and
 
Signature
Bank. The
 
estimated losses
 
will be recovered
 
through quarterly special
 
assessments collected
 
from certain
 
insured depository
 
institutions,
including the
 
Bank, and
 
collection began
 
during the
 
quarter ended
 
June 30,
 
2024. In
 
connection with
 
updates made
 
by the
 
FDIC to
 
the
initial estimated
 
losses to
 
the DIF,
 
the Corporation
 
recorded charges
 
of $1.1
 
million during
 
the nine-month
 
period ended
 
September 30,
2024 in
 
the consolidated
 
statements of
 
income as
 
part of
 
“FDIC deposit
 
insurance” expenses.
 
As of
 
September 30,
 
2024, the
 
estimated
FDIC special assessment amounted to $7.4 million,
 
of which $1.6 million has been paid.
 
The Corporation continues to monitor the FDIC’s
estimated loss to the DIF, which could affect the
 
amount of its accrued liability.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
132
ITEM 2.
 
UNREGISTERED
 
SALES OF
 
EQUITY SECURITIES
 
AND USE OF
 
PROCEEDS
The Corporation did not have any unregistered sales
 
of equity securities during the quarter ended September
 
30, 2024.
Issuer Purchases of Equity Securities
The
 
following
 
table
 
provides
 
information
 
in
 
relation
 
to
 
the
 
Corporation’s
 
purchases
 
of
 
its
 
common
 
stock
 
during
 
the
 
quarter
 
ended
September
 
30, 2024.
Period
Total Number of Shares
Purchased
 
Average Price
Paid per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (1)
Approximate Dollar Value
of Shares that May Yet
 
be
Purchased Under the Plans
or Programs (in
thousands) (1)
July 1, 2024 - July 31, 2024
-
$
-
-
$
300,000
August 1, 2024 - August 31, 2024
-
-
-
300,000
September 1, 2024 - September 30, 2024
898
21.17
-
250,000
Total
898
(2)
-
(1)
As of September 30, 2024,
 
the Corporation was authorized
 
to purchase up to $225 million
 
of the Corporation’s
 
common stock under the
 
program that was publicly announced
 
on July 24,
2023, of
 
which $175
 
million had
 
been utilized.
 
In addition,
 
the Corporation
 
was authorized
 
to purchase
 
up to
 
$250 million
 
that could
 
include repurchases
 
of common
 
stock or
 
junior
subordinated
 
debentures
 
under
 
the
 
program
 
that
 
was
 
publicly
 
announced
 
on
 
July
 
22,
 
2024.
 
During
 
the
 
third
 
quarter
 
of
 
2024,
 
the
 
Corporation
 
redeemed
 
$50.0
 
million
 
of
 
junior
subordinated debentures
 
under the
 
$250 million
 
repurchase program,
 
as further
 
explained in
 
Note 7
 
- “Non-Consolidated
 
Variable
 
Interest Entities
 
(“VIEs”) and
 
Servicing Assets.
 
The
remaining $250.0
 
million in the
 
table represents
 
the remaining amount
 
authorized under
 
both repurchase
 
programs. The
 
Corporation’s
 
repurchase programs
 
do not obligate
 
it to acquire
any specific number of
 
shares and do not
 
have an expiration date.
 
The repurchase programs may
 
be modified, suspended,
 
or terminated at any
 
time at the Corporation's
 
discretion. Under
the stock
 
repurchase program,
 
shares may
 
be repurchased
 
through open
 
market purchases,
 
accelerated share
 
repurchases and/or
 
privately negotiated
 
transactions, including
 
under plans
complying with Rule 10b5-1 under the Exchange Act.
(2)
Consists of 898 shares
 
of common stock acquired
 
by the Corporation to
 
cover minimum tax
 
withholding obligations upon
 
the vesting of equity-based
 
awards. The Corporation
 
intends to
continue to satisfy statutory tax withholding obligations in connection
 
with the vesting of outstanding restricted stock and
 
performance units through the withholding of shares.
ITEM 5.
 
OTHER INFORMATION
During
 
the quarter
 
ended
 
September
 
30,
 
2024, none
 
of the
 
Corporation’s
 
directors or
 
officers
 
(as defined
 
in Rule
 
16a-1(f)
 
of the
Exchange Act)
adopted
 
or
terminated
 
a “Rule 10b5-1 trading
 
arrangement” or
“non-Rule
10b5-1
 
trading arrangement,” as those
 
terms
are defined in Item 408 of Regulation S-K.
 
 
 
 
133
ITEM 6.
 
EXHIBITS
 
See the Exhibit Index below, which is incorporated by
 
reference herein:
 
EXHIBIT INDEX
 
Exhibit No.
Description
31.1
31.2
32.1
32.2
101.INS
Inline XBRL Instance Document, filed herewith. The
 
instance document does not appear in the interactive
 
data file because
its XBRL tags are embedded within the inline XBRL
 
document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document, filed herewith
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document, filed herewith
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document, filed herewith
104
The cover page of First BanCorp. Quarterly Report on Form 10-Q
 
for the quarter ended September 30, 2024, formatted in
Inline XBRL (included within the Exhibit 101 attachments)
 
 
 
134
SIGNATURES
Pursuant to
 
the requirements
 
of the
 
Securities Exchange
 
Act of
 
1934, the
 
Corporation has
 
duly caused
 
this report
 
to be
 
signed on
 
its
behalf by the undersigned hereunto duly authorized:
 
First BanCorp.
Registrant
Date:
 
November 8, 2024
By:
 
/s/ Aurelio Alemán
 
Aurelio Alemán
 
President and Chief Executive Officer
Date: November 8, 2024
By:
 
/s/ Orlando Berges
 
Orlando Berges
 
Executive Vice President and Chief Financial Officer