{"url_path":"/sec/fbp/10-q/2026/item-7","section_key":"item-7","section_title":"Item 7 , “Management’s","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-08","source_url":"https://www.sec.gov/Archives/edgar/data/1057706/0001057706-26-000012-index.html","accession_number":"0001057706-26-000012","cik":"0001057706","ticker":"FBP","issuer_name":"FIRST BANCORP /PR/","edgar_url":"https://www.sec.gov/Archives/edgar/data/1057706/0001057706-26-000012-index.html","primary_entity_key":"0001057706","primary_entity_name":"FIRST BANCORP /PR/"},"word_count":11008,"has_tables":false,"body_markdown":"Item 7, “Management’s\n\nDiscussion and Analysis of\n\nFinancial\n\nCondition\n\nand\n\nResults\n\nof\n\nOperations\n\n(“MD&A”),”\n\nin\n\nthe\n\n2025\n\nAnnual\n\nReport\n\non\n\nForm\n\n10-K.\n\nIn\n\naddition,\n\nthe\n\n“Risk\n\nManagement –\n\nCredit Risk Management”\n\nsection of this\n\nMD&A details the\n\npolicies, assumptions,\n\nand judgments related\n\nto the ACL.\n\nActual results could differ from estimates and assumptions if different\n\noutcomes or conditions prevail.\n\n62\n\nOverview of Results of Operations\n\nThe\n\nCorporation’s\n\nresults\n\nof\n\noperations\n\ndepend\n\nprimarily\n\non\n\nits\n\nnet\n\ninterest\n\nincome,\n\nwhich\n\nis\n\nthe\n\ndifference\n\nbetween\n\nthe\n\ninterest\n\nincome\n\nearned\n\non\n\nits\n\ninterest-earning\n\nassets,\n\nincluding\n\ninvestment\n\nsecurities\n\nand\n\nloans,\n\nand\n\nthe\n\ninterest\n\nexpense\n\nincurred\n\non\n\nits\n\ninterest-bearing\n\nliabilities,\n\nincluding\n\ndeposits\n\nand\n\nborrowings.\n\nNet\n\ninterest\n\nincome\n\nis\n\naffected\n\nby\n\nvarious\n\nfactors,\n\nincluding\n\nthe\n\nfollowing:\n\n(i)\n\nthe\n\ninterest\n\nrate\n\nenvironment;\n\n(ii)\n\nthe\n\nvolumes,\n\nmix,\n\nand\n\ncomposition\n\nof\n\ninterest-earning\n\nassets,\n\nand\n\ninterest-bearing\n\nliabilities; and (iii) the repricing characteristics of these assets and liabilities.\n\nThe\n\nCorporation\n\nhad\n\nnet\n\nincome\n\nof\n\n$88.8\n\nmillion\n\n($0.57\n\nper\n\ndiluted\n\ncommon\n\nshare),\n\nfor\n\nthe\n\nquarter\n\nended\n\nMarch\n\n31,\n\n2026,\n\ncompared to $77.1\n\nmillion ($0.47 per\n\ndiluted common\n\nshare), for the\n\nquarter ended March\n\n31, 2025. Other\n\nrelevant selected financial\n\nindicators for the periods presented are included below:\n\nQuarter Ended March 31,\n\n2026\n\n2025\n\nKey Performance Indicators:\n\n(1)\n\nReturn on Average Assets\n\n(2)\n\n1.89\n\n%\n\n1.64\n\n%\n\nReturn on Average Common Equity\n\n(3)\n\n17.92\n\n17.90\n\nEfficiency Ratio\n\n(4)\n\n49.14\n\n49.58\n\n(1)\n\nThese financial ratios are used by management to monitor the Corporation’s\n\nfinancial performance and whether it is using its assets\n\nefficiently.\n\n(2)\n\nIndicates how profitable the Corporation is in relation to its total assets\n\nand is calculated by dividing net income on an annualized\n\nbasis by its average total assets.\n\n(3)\n\nMeasures the Corporation’s\n\nperformance based on its\n\naverage common stockholders’ equity and\n\nis calculated by dividing net\n\nincome on an annualized\n\nbasis by its average total\n\ncommon\n\nstockholders’ equity.\n\n(4)\n\nMeasures how much the Corporation incurred to generate a\n\ndollar of revenue and is calculated by dividing non-interest expenses\n\nby total revenue.\n\nThe key drivers\n\nof the Corporation’s\n\nGAAP financial results\n\nfor the quarter\n\nended March 31,\n\n2026, compared to\n\nthe first quarter of\n\n2025, include the following:\n\n●\n\nNet interest income\n\nincreased by\n\n$8.6 million\n\nto $221.0\n\nmillion for the\n\nfirst quarter of\n\n2026, compared\n\nto $212.4\n\nmillion for\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2025.\n\nNet\n\ninterest\n\nmargin\n\nfor\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026\n\nincreased\n\nby\n\n23\n\nbps\n\nto\n\n4.75%,\n\ndriven\n\nby\n\nthe\n\ndeployment\n\nof cash\n\nflows from\n\nlower-yielding\n\ninvestment securities\n\nto higher-yielding\n\nassets, and\n\na decrease\n\nin the\n\ncost of\n\ninterest-bearing\n\nliabilities\n\ndue\n\nto\n\nthe\n\neffect\n\nof\n\nlower\n\ninterest\n\nrates\n\non\n\ndeposits,\n\nprimarily\n\non\n\nnon-maturity\n\ngovernment\n\ndeposits,\n\nand\n\nthe\n\nrepayments\n\nof\n\nFederal\n\nHome\n\nLoan\n\nBank\n\n(“FHLB”)\n\nadvances\n\nand\n\nredemption\n\nof\n\njunior\n\nsubordinated\n\ndebentures. These\n\nfactors were\n\npartially offset\n\nby the\n\ndownward repricing\n\nof variable-rate\n\ncommercial loans\n\nand the\n\noverall\n\ndecline\n\nin\n\nthe\n\nhigher-yielding\n\nconsumer\n\nloan\n\nportfolio.\n\nSee\n\n“Results\n\nof\n\nOperations\n\n–\n\nNet\n\nInterest\n\nIncome”\n\nbelow\n\nfor\n\nadditional information.\n\n●\n\nThe provision for credit\n\nlosses on loans, finance\n\nleases, unfunded loan commitments\n\nand debt securities for the\n\nquarter ended\n\nMarch\n\n31,\n\n2026\n\nwas $17.3\n\nmillion,\n\ncompared\n\nto $24.8\n\nmillion\n\nfor\n\nthe first\n\nquarter\n\nof 2025.\n\nThe decrease\n\nwas driven\n\nby\n\na\n\nfavorable\n\nyear-over-year\n\nvariance\n\nin\n\nthe\n\nprovision\n\nfor\n\nthe\n\ncommercial\n\nand\n\nconstruction\n\nloan\n\nportfolios,\n\nprimarily\n\ndue\n\nto\n\nimprovements in the projections of the unemployment rate and the commercial\n\nreal estate (“CRE”) price index.\n\nNet\n\ncharge-offs\n\ntotaled\n\n$21.1\n\nmillion\n\nfor\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026,\n\nor\n\nan\n\nannualized\n\n0.65%\n\nof\n\naverage\n\nloans,\n\ncompared\n\nto\n\n$21.4 million,\n\nor an\n\nannualized 0.68%\n\nof average\n\nloans, for\n\nthe same\n\nperiod in\n\n2025. The\n\n$0.3 million\n\ndecrease was\n\ndriven\n\nby a $1.1 million reduction\n\nin consumer loans and\n\nfinance leases net charge-offs,\n\nafter considering the impact\n\nof $2.4 million\n\nin\n\nrecoveries\n\nrelated\n\nto\n\nthe\n\nbulk\n\nsale\n\nof\n\nfully\n\ncharged-off\n\nconsumer\n\nloans\n\nand\n\nfinance\n\nleases\n\nrecognized\n\nduring\n\nthe\n\nfirst\n\nquarter of\n\n2025.\n\nThis improvement\n\nwas partially\n\noffset\n\nby a\n\n$0.6 million\n\ncharge-off\n\non a\n\nnonaccrual\n\ncommercial\n\nmortgage\n\nloan in\n\nthe Virgin\n\nIslands region\n\nduring the\n\nfirst quarter\n\nof 2026.\n\nSee “Results\n\nof Operations\n\n– Provision\n\nfor Credit\n\nLosses”\n\nand “Risk Management” below for analyses of the ACL and non-performing\n\nassets and related ratios.\n\n●\n\nNon-interest\n\nincome increased\n\nby $2.0\n\nmillion to\n\n$37.7 million\n\nfor the\n\nfirst quarter\n\nof 2026,\n\ncompared to\n\n$35.7 million\n\nfor\n\nthe same period\n\nin 2025, driven\n\nin part by\n\n$0.9 million\n\nin higher revenues\n\nfrom mortgage banking\n\nactivities. See “Results\n\nof\n\nOperations – Non-Interest Income” below for additional information.\n\n●\n\nNon-interest expenses\n\nincreased by\n\n$4.1 million\n\nto $127.1\n\nmillion for\n\nthe first\n\nquarter of\n\n2026, compared\n\nto $123.0\n\nmillion\n\nfor the same period in\n\n2025, mainly due to a $3.2\n\nmillion increase in employees’\n\ncompensation and benefits expenses,\n\nin part\n\ndue to annual salary merit increases. See “Results of Operations – Non-Interest\n\nExpenses” below for additional information.\n\n63\n\n●\n\nIncome tax expense increased by\n\n$2.3 million to $25.5 million for\n\nthe first quarter of 2026, compared\n\nto $23.2 million for the\n\nsame period\n\nin 2025,\n\ndriven by\n\nhigher pre-tax\n\nincome,\n\npartially offset\n\nby a\n\ndecrease in\n\nthe annual\n\neffective tax\n\nrate due to\n\na\n\nhigher proportion\n\nof exempt\n\nto taxable\n\nincome. For\n\nthe year,\n\nthe Corporation’s\n\nannual effective\n\ntax rate,\n\nexcluding discrete\n\nitems,\n\nwas\n\nestimated\n\nat\n\n21.9%\n\nfor\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026,\n\ncompared\n\nto\n\n23.9%\n\nfor\n\nthe\n\ncomparable\n\nperiod\n\nin\n\n2025.\n\nSee\n\n“Income\n\nTaxes”\n\nbelow\n\nand\n\nNote\n\n13\n\n–\n\n“Income\n\nTaxes”\n\nto\n\nthe\n\nunaudited\n\nconsolidated\n\nfinancial\n\nstatements\n\nherein\n\nfor\n\nadditional information.\n\n●\n\nAs of\n\nMarch 31,\n\n2026,\n\ntotal assets\n\nwere approximately\n\n$19.1 billion,\n\na decrease\n\nof $46.8\n\nmillion from\n\nDecember 31,\n\n2025,\n\nprimarily\n\nrelated\n\nto\n\na\n\ndecrease\n\nin\n\ncash\n\nand\n\ncash\n\nequivalents\n\nresulting\n\nfrom\n\ncapital\n\ndeployment\n\nactions\n\nand\n\nthe\n\ndecrease\n\nin\n\ngovernment\n\ndeposits\n\nand\n\nbrokered\n\ncertificates\n\nof\n\ndeposit\n\n(“CDs”),\n\npartially\n\noffset\n\nby\n\nthe\n\nnet\n\nincome\n\ngenerated\n\nin\n\nthe\n\nfirst\n\nquarter of 2026.\n\n●\n\nAs of March 31, 2026,\n\ntotal liabilities were $17.1\n\nbillion, a decrease of\n\n$47.2 million from December\n\n31, 2025, driven by\n\nthe\n\naforementioned\n\ndecrease\n\nin deposits.\n\nSee\n\n“Risk Management\n\n–\n\nLiquidity\n\nRisk”\n\nbelow\n\nfor\n\nadditional\n\ninformation\n\nabout the\n\nCorporation’s funding\n\nsources and strategy.\n\n●\n\nThe\n\nCorporation’s\n\nprimary\n\nsources\n\nof\n\nfunding\n\nare\n\nconsumer\n\nand\n\ncommercial\n\ncore\n\ndeposits,\n\nwhich\n\nexclude\n\ngovernment\n\ndeposits\n\nand\n\nbrokered\n\nCDs.\n\nExcluding\n\nfully\n\ncollateralized\n\ngovernment\n\ndeposits,\n\nestimated\n\nuninsured\n\ndeposits\n\namounted\n\nto\n\n$4.8\n\nbillion\n\nas\n\nof\n\nMarch\n\n31,\n\n2026.\n\nThe\n\nCorporation\n\nhad\n\napproximately\n\n$2.9\n\nbillion\n\nin\n\ncash\n\nand\n\ncash\n\nequivalents\n\nand\n\nfree\n\nhigh-quality liquid\n\nsecurities as of\n\nMarch 31, 2026.\n\nWhen adding\n\napproximately $2.6\n\nbillion available\n\nfor funding\n\nunder the\n\nFED’s\n\nDiscount Window\n\nand $1.0\n\nbillion available\n\nfor additional\n\nborrowing capacity\n\non the\n\nFHLB lines\n\nof credit\n\nbased on\n\ncollateral pledged at these entities, the Corporation had $6.5 billion,\n\nor 134%\n\nof estimated uninsured deposits (excluding fully\n\ncollateralized\n\ngovernment\n\ndeposits), available\n\nto meet\n\nliquidity\n\nneeds.\n\nSee “Risk\n\nManagement\n\n– Liquidity\n\nRisk” below\n\nfor\n\nadditional information about the Corporation’s\n\nfunding sources and strategy.\n\n●\n\nAs\n\nof\n\nMarch\n\n31,\n\n2026,\n\nthe\n\nCorporation’s\n\ntotal\n\nstockholders’\n\nequity\n\nwas\n\n$2.0\n\nbillion,\n\nan\n\nincrease\n\nof\n\n$0.4\n\nmillion\n\nfrom\n\nDecember\n\n31,\n\n2025,\n\ndriven\n\nby\n\nthe\n\nnet\n\nincome\n\ngenerated\n\nin\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026,\n\npartially\n\noffset\n\nby\n\n$50.0\n\nmillion\n\nin\n\ncommon\n\nstock\n\nrepurchases,\n\n$31.5\n\nmillion,\n\nor\n\n$0.20\n\nper\n\ncommon\n\nshare,\n\nin\n\ncommon\n\nstock\n\ndividends\n\ndeclared\n\nin\n\nthe\n\nfirst\n\nquarter of\n\n2026, and\n\na $6.2\n\nmillion decrease\n\nin the\n\nfair value\n\nof available\n\n-for-sale\n\ndebt securities.\n\nThe Corporation’s\n\nCET1\n\ncapital, tier 1\n\ncapital, total capital, and\n\nleverage ratios were 16.93%,\n\n16.93%, 18.19%, and\n\n11.66%, respectively,\n\nas of March\n\n31, 2026, compared to CET1 capital, tier 1 capital, total capital, and\n\nleverage ratios of 16.76%, 16.76%, 18.01%, and 11.58%,\n\nrespectively, as of\n\nDecember 31, 2025.\n\nSee “Risk Management – Capital” below for additional information.\n\n●\n\nTotal\n\nloan\n\nproduction,\n\nincluding\n\npurchases,\n\nrefinancings,\n\nrenewals,\n\nand\n\ndraws\n\nfrom\n\nexisting\n\nrevolving\n\nand\n\nnon-revolving\n\ncommitments,\n\nincreased\n\nby\n\n$71.6\n\nmillion\n\nto\n\n$1.2\n\nbillion\n\nfor\n\nthe\n\nquarter\n\nended\n\nMarch\n\n31,\n\n2026,\n\nas\n\ncompared\n\nto\n\nthe\n\nfirst\n\nquarter of 2025. See “Results of Operations – Loan Production”\n\nbelow for additional information.\n\n●\n\nTotal\n\nnon-performing assets were\n\n$108.8 million as\n\nof March 31,\n\n2026, a decrease\n\nof $5.3 million\n\nfrom December 31,\n\n2025,\n\nprimarily\n\nreflecting a\n\n$4.8 million\n\nreduction in\n\nnonaccrual loans\n\nand a\n\n$1.2 million\n\ndecrease in\n\nthe other\n\nreal estate\n\nowned\n\n(“OREO”) portfolio\n\nbalance. See\n\n“Risk Management\n\n– Nonaccrual\n\nLoans and\n\nNon-Performing Assets”\n\nbelow for\n\nadditional\n\ninformation.\n\n●\n\nAdversely classified\n\ncommercial and construction\n\nloans were $76.0\n\nmillion as of\n\nMarch 31, 2026,\n\na decrease of\n\n$5.4 million\n\nfrom December\n\n31, 2025, driven\n\nby $3.8 million\n\nin repayments on\n\nthree commercial and\n\nindustrial (“C&I”)\n\nloans, including\n\na $1.2 million repayment of a nonaccrual C&I loan in the Puerto Rico region.\n\n64\n\nNON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS\n\nThe Corporation has included in this Quarterly Report on Form 10-Q\n\nthe following financial measures that are not recognized under\n\nGAAP,\n\nwhich are referred to as non-GAAP financial measures:\n\nNet Interest Income,\n\nInterest Rate Spread,\n\nand Net Interest Margin on\n\na Tax\n\n-Equivalent Basis\n\nNet\n\ninterest\n\nincome,\n\ninterest\n\nrate\n\nspread,\n\nand\n\nnet\n\ninterest\n\nmargin\n\nare\n\nreported\n\non\n\na\n\ntax-equivalent\n\nbasis\n\nin\n\norder\n\nto\n\nprovide\n\nto\n\ninvestors\n\nadditional\n\ninformation\n\nabout\n\nthe\n\nCorporation’s\n\nnet\n\ninterest\n\nincome\n\nthat\n\nmanagement\n\nuses\n\nand\n\nbelieves\n\nshould\n\nfacilitate comparability and\n\nanalysis\n\nof\n\nthe\n\nperiods\n\npresented.\n\nThe\n\ntax-equivalent\n\nadjustment\n\nto\n\nnet\n\ninterest\n\nincome\n\nrecognizes\n\nthe\n\nincome tax savings\n\nwhen comparing\n\ntaxable and tax-exempt\n\nassets and assumes\n\na marginal\n\nincome tax rate.\n\nIncome from tax-exempt\n\nearning assets is increased\n\nby an amount equivalent\n\nto the taxes that would\n\nhave been paid if this\n\nincome had been taxable\n\nat statutory\n\nrates. Management believes that it\n\nis a standard practice in the banking\n\nindustry to present net interest income,\n\ninterest rate spread, and\n\nnet interest margin\n\non a fully tax-equivalent basis.\n\nThis adjustment puts all earning\n\nassets, most notably tax-exempt\n\nsecurities and tax-\n\nexempt loans, on a common basis that facilitates comparison of\n\nresults to the results of peers.\n\nSee\n\n“Results\n\nof\n\nOperations\n\n–\n\nNet\n\nInterest\n\nIncome\n\n–\n\nPart\n\nI”\n\nbelow\n\nfor\n\na\n\nreconciliation\n\nof\n\nthe\n\nCorporation’s\n\nnon-GAAP\n\nfinancial\n\nmeasure of net interest income on a tax-equivalent basis to net interest income\n\nin accordance with GAAP.\n\nTangible\n\nCommon Equity Ratio and Tangible\n\nBook Value\n\nPer Common Share\n\nThe tangible\n\ncommon equity\n\nratio and\n\ntangible book\n\nvalue per\n\ncommon share\n\nare non-GAAP\n\nfinancial measures\n\nthat management\n\nbelieves are generally\n\nused by the financial\n\ncommunity to evaluate\n\ncapital adequacy.\n\nTangible\n\ncommon equity is total\n\ncommon equity\n\nless goodwill\n\nand other\n\nintangible assets.\n\nSimilarly,\n\ntangible assets\n\nare total\n\nassets less\n\ngoodwill and\n\nother intangible\n\nassets. Tangible\n\ncommon\n\nequity\n\nratio\n\nis\n\ntangible\n\ncommon\n\nequity\n\ndivided\n\nby\n\ntangible\n\nassets.\n\nTangible\n\nbook\n\nvalue\n\nper\n\ncommon\n\nshare\n\nis\n\ntangible\n\ncommon\n\nequity divided\n\nby the\n\nnumber of\n\ncommon shares\n\noutstanding.\n\nManagement uses\n\nand believes\n\nthat many\n\nstock analysts\n\nuse\n\nthe tangible\n\ncommon equity\n\nratio and\n\ntangible book\n\nvalue per\n\ncommon share\n\nin conjunction\n\nwith other\n\nmore traditional\n\nbank capital\n\nratios\n\nto\n\ncompare\n\nthe\n\ncapital\n\nadequacy\n\nof\n\nbanking\n\norganizations\n\nwith\n\nsignificant\n\namounts\n\nof\n\ngoodwill\n\nor\n\nother\n\nintangible\n\nassets,\n\ntypically\n\nstemming\n\nfrom\n\nthe use\n\nof\n\nthe\n\npurchase\n\nmethod\n\nof\n\naccounting\n\nfor\n\nmergers\n\nand\n\nacquisitions.\n\nAccordingly,\n\nthe Corporation\n\nbelieves that\n\ndisclosures of\n\nthese financial\n\nmeasures may\n\nbe useful\n\nto investors.\n\nNeither tangible\n\ncommon equity\n\nnor tangible\n\nassets,\n\nor the related\n\nmeasures, should be\n\nconsidered in isolation\n\nor as a substitute\n\nfor stockholders’\n\nequity,\n\ntotal assets, or any\n\nother measure\n\ncalculated in accordance\n\nwith GAAP.\n\nMoreover,\n\nthe manner in which\n\nthe Corporation calculates its\n\ntangible common\n\nequity, tangible\n\nassets, and any other related measures may differ from\n\nthat of other companies reporting measures with similar names.\n\nSee “Risk\n\nManagement –\n\nCapital” below\n\nfor the\n\ntable that\n\nreconciles the\n\nCorporation’s\n\ntotal equity\n\nand total\n\nassets in\n\naccordance\n\nwith GAAP to\n\nthe tangible common\n\nequity and tangible\n\nassets figures used\n\nto calculate the\n\nnon-GAAP financial measures\n\nof tangible\n\ncommon equity ratio and tangible book value per common share.\n\n65\n\nAdjusted Net Income and Adjusted Non-Interest Expenses\n\nTo\n\nsupplement the\n\nCorporation’s\n\nfinancial statements\n\npresented in\n\naccordance with\n\nGAAP,\n\nthe Corporation\n\nuses, and believes\n\nthat\n\ninvestors benefit from disclosure of, non\n\n-GAAP financial measures that reflect\n\nadjustments to net income and non-interest\n\nexpenses to\n\nexclude\n\nitems that\n\nmanagement believes\n\nare not\n\nreflective of\n\ncore operating\n\nperformance (“Special\n\nItems”). The\n\nfinancial results\n\nfor\n\nthe first\n\nquarter of\n\n2025\n\ndid not\n\ninclude any\n\nsignificant Special\n\nItems. The\n\nfinancial results\n\nfor the\n\nfirst quarter\n\nof 2026\n\nincluded the\n\nfollowing Special Item:\n\nFederal Deposit Insurance Corporation (“FDIC”) Special Assessment Reversal\n\n-\n\nA benefit\n\nof $0.1\n\nmillion ($57\n\nthousand\n\nafter-tax,\n\ncalculated based\n\non the\n\nstatutory tax\n\nrate of\n\n37.5%) was\n\nrecorded\n\nduring\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026\n\nfollowing\n\nreceipt\n\nof\n\nthe\n\nFDIC\n\nassessment\n\ninvoice,\n\npaid\n\non\n\nMarch\n\n30,\n\n2026,\n\nwhich\n\nreduced\n\nthe\n\nquarterly\n\nspecial assessment\n\nrate for\n\nthe eighth\n\nand final\n\ncollection period\n\nfrom 3.36\n\nbps to\n\n2.97 bps\n\n.\n\nAny future\n\noffsets or\n\none-time final shortfall special assessment\n\ncollection, if any,\n\nwill be communicated by the\n\nFDIC through future invoices. The\n\nFDIC deposit\n\nspecial assessment\n\nis reflected\n\nin the\n\nconsolidated\n\nstatements of\n\nincome\n\nas part\n\nof “FDIC\n\ndeposit\n\ninsurance”\n\nexpenses.\n\nAdjusted Net\n\nIncome –\n\nThe following\n\ntable reconciles,\n\nfor the first\n\nquarter of\n\n2026, net\n\nincome to\n\nadjusted net\n\nincome, which\n\nis a\n\nnon-GAAP financial measure that excludes the Special Item identified\n\nabove, and shows net income, for the first quarter of 2025:\n\nQuarter Ended March 31,\n\n2026\n\n2025\n\n(In thousands)\n\nNet income, as reported (GAAP)\n\n$\n\n88,778\n\n$\n\n77,059\n\nAdjustment:\n\nFDIC special assessment reversal\n\n(92)\n\n-\n\nIncome tax impact of adjustment\n\n(1)\n\n35\n\n-\n\nAdjusted net income (Non-GAAP)\n\n$\n\n88,721\n\n$\n\n77,059\n\n(1)\n\nSee “Adjusted Net Income and Adjusted Non-Interest Expenses”\n\nabove for the individual tax impact related to the above adjustment,\n\nwhich was based on the Puerto Rico statutory tax\n\nrate of 37.5%.\n\n66\n\nRESULTS\n\nOF OPERATIONS\n\nNet Interest Income\n\nNet interest\n\nincome is\n\nthe excess of\n\ninterest earned\n\nby First\n\nBanCorp. on\n\nits interest-earning\n\nassets over\n\nthe interest\n\nincurred on its\n\ninterest-bearing\n\nliabilities.\n\nFirst\n\nBanCorp.’s\n\nnet\n\ninterest\n\nincome\n\nis\n\nsubject\n\nto\n\ninterest\n\nrate\n\nrisk\n\ndue\n\nto\n\nthe\n\nrepricing\n\nand\n\nmaturity\n\nmismatch\n\nof\n\nthe\n\nCorporation’s\n\nassets\n\nand\n\nliabilities.\n\nIn\n\naddition,\n\nvariable\n\nsources\n\nof\n\ninterest\n\nincome,\n\nsuch\n\nas\n\nloan\n\nfees,\n\nperiodic\n\ndividends, and collection of interest on nonaccrual loans, can fluctuate\n\nfrom period to period. Net interest income for the quarter\n\nended\n\nMarch\n\n31, 2026\n\nwas $221.0\n\nmillion,\n\ncompared\n\nto $212.4\n\nmillion\n\nfor\n\nthe comparable\n\nperiod\n\nin 2025.\n\nOn\n\na tax-equivalent\n\nbasis,\n\nnet\n\ninterest income\n\nfor the\n\nquarter ended\n\nMarch 31,\n\n2026 was\n\n$232.4 million,\n\ncompared to\n\n$218.6 million\n\nfor the\n\ncomparable period\n\nin\n\n2025.\n\nThe\n\nfollowing\n\ntables\n\ninclude a\n\ndetailed\n\nanalysis\n\nof net\n\ninterest income\n\nfor\n\nthe indicated\n\nperiods.\n\nPart I\n\npresents\n\naverage volumes\n\n(based\n\non\n\nthe\n\naverage\n\ndaily\n\nbalance)\n\nand\n\nrates\n\non\n\nan\n\nadjusted\n\ntax-equivalent\n\nbasis\n\nand\n\nPart\n\nII\n\npresents,\n\nalso\n\non\n\nan\n\nadjusted\n\ntax-\n\nequivalent basis,\n\nthe extent\n\nto which\n\nchanges in\n\ninterest rates\n\nand changes\n\nin the\n\nvolume of\n\ninterest-related assets\n\nand liabilities\n\nhave\n\naffected\n\nthe Corporation’s\n\nnet interest\n\nincome. For\n\neach category\n\nof interest-earning\n\nassets and\n\ninterest-bearing\n\nliabilities, the\n\ntables\n\nprovide\n\ninformation\n\non\n\nchanges\n\nin\n\n(i)\n\nvolume\n\n(changes\n\nin\n\nvolume\n\nmultiplied\n\nby\n\nprior\n\nperiod\n\nrates),\n\nand\n\n(ii)\n\nrate\n\n(changes\n\nin\n\nrate\n\nmultiplied by\n\nprior period\n\nvolumes). The\n\nCorporation has\n\nallocated rate-volume\n\nvariances (changes\n\nin rate\n\nmultiplied by\n\nchanges in\n\nvolume) to either the changes in volume or the changes in rate based upon the\n\neffect of each factor on the combined totals.\n\nNet\n\ninterest\n\nincome\n\non\n\nan\n\nadjusted\n\ntax-equivalent\n\nbasis\n\nis\n\na\n\nnon-GAAP\n\nfinancial\n\nmeasure.\n\nFor\n\nthe\n\ndefinition\n\nof\n\nthis\n\nnon-GAAP\n\nfinancial measure, refer to the discussion in “Non-GAAP Financial Measures\n\nand Reconciliations” above.\n\n67\n\nPart I\n\nAverage volume\n\nInterest income\n\n(1)\n\n/ expense\n\nAverage rate\n\n(1)\n\nQuarter ended March 31,\n\n2026\n\n2025\n\n2026\n\n2025\n\n2026\n\n2025\n\n(Dollars in thousands)\n\nInterest-earning assets:\n\nMoney market and other short-term investments\n\n$\n\n618,371\n\n$\n\n1,111,087\n\n$\n\n5,630\n\n$\n\n12,205\n\n3.69\n\n%\n\n4.45\n\n%\n\nGovernment obligations\n\n(2)\n\n1,467,672\n\n1,971,327\n\n11,426\n\n6,970\n\n3.16\n\n%\n\n1.43\n\n%\n\nMortgage-backed securities (“MBS”)\n\n3,645,699\n\n3,308,964\n\n26,814\n\n17,497\n\n2.98\n\n%\n\n2.14\n\n%\n\nFHLB stock\n\n24,150\n\n32,661\n\n474\n\n790\n\n7.96\n\n%\n\n9.81\n\n%\n\nOther investments\n\n20,952\n\n19,977\n\n139\n\n247\n\n2.69\n\n%\n\n5.01\n\n%\n\nTotal investments\n\n(3)\n\n5,776,844\n\n6,444,016\n\n44,483\n\n37,709\n\n3.12\n\n%\n\n2.37\n\n%\n\nResidential mortgage loans\n\n2,911,731\n\n2,841,918\n\n43,249\n\n41,484\n\n6.02\n\n%\n\n5.92\n\n%\n\nConstruction loans\n\n247,415\n\n232,295\n\n5,791\n\n5,596\n\n9.49\n\n%\n\n9.77\n\n%\n\nC&I and commercial mortgage loans\n\n6,225,066\n\n5,806,929\n\n101,920\n\n99,756\n\n6.64\n\n%\n\n6.97\n\n%\n\nConsumer loans and finance leases\n\n3,684,662\n\n3,751,359\n\n95,871\n\n98,752\n\n10.55\n\n%\n\n10.68\n\n%\n\nTotal loans\n\n(4)(5)\n\n13,068,874\n\n12,632,501\n\n246,831\n\n245,588\n\n7.66\n\n%\n\n7.88\n\n%\n\nTotal interest-earning assets\n\n$\n\n18,845,718\n\n$\n\n19,076,517\n\n$\n\n291,314\n\n$\n\n283,297\n\n6.27\n\n%\n\n6.02\n\n%\n\nTax-equivalent adjustment\n\n(11,465)\n\n(6,232)\n\nInterest income - GAAP\n\n279,849\n\n277,065\n\n6.02\n\n%\n\n5.89\n\n%\n\nInterest-bearing liabilities:\n\nTime deposits\n\n$\n\n3,542,960\n\n$\n\n3,048,778\n\n$\n\n29,237\n\n$\n\n25,468\n\n3.35\n\n%\n\n3.39\n\n%\n\nBrokered CDs\n\n555,938\n\n483,774\n\n5,759\n\n5,461\n\n4.20\n\n%\n\n4.58\n\n%\n\nOther interest-bearing deposits\n\n7,033,139\n\n7,693,900\n\n20,935\n\n27,568\n\n1.21\n\n%\n\n1.45\n\n%\n\nAdvances from the FHLB\n\n277,000\n\n468,667\n\n2,962\n\n5,190\n\n4.34\n\n%\n\n4.49\n\n%\n\nOther borrowings\n\n-\n\n53,892\n\n-\n\n981\n\n-\n\n%\n\n7.38\n\n%\n\nTotal interest-bearing liabilities\n\n$\n\n11,409,037\n\n$\n\n11,749,011\n\n$\n\n58,893\n\n$\n\n64,668\n\n2.09\n\n%\n\n2.23\n\n%\n\nNet interest income/margin - non-GAAP\n\n(1)\n\n$\n\n232,421\n\n$\n\n218,629\n\n5.00\n\n%\n\n4.65\n\n%\n\nNet interest income/margin - GAAP\n\n$\n\n220,956\n\n$\n\n212,397\n\n4.75\n\n%\n\n4.52\n\n%\n\nNet interest spread - non-GAAP\n\n(1)\n\n4.18\n\n%\n\n3.79\n\n%\n\nNet interest spread - GAAP\n\n3.93\n\n%\n\n3.66\n\n%\n\n(1)\n\nNon-GAAP measure reported on an adjusted\n\ntax-equivalent basis. The Corporation estimated the\n\nadjusted tax-equivalent yield by dividing the net\n\ninterest spread on exempt assets by 1\n\nless\n\nthe Puerto Rico statutory tax rate\n\nof 37.5% and adding to it the\n\ncost of interest-bearing liabilities. The\n\ntax-equivalent adjustment recognizes the income\n\ntax savings when comparing taxable\n\nand tax-exempt assets.\n\nManagement believes\n\nthat it is\n\na standard practice\n\nin the banking\n\nindustry to present\n\nnet interest income,\n\ninterest rate spread\n\nand net interest\n\nmargin on a\n\nfully tax-\n\nequivalent\n\nbasis.\n\nTherefore,\n\nmanagement\n\nbelieves\n\nthese\n\nmeasures\n\nprovide\n\nuseful\n\ninformation\n\nto\n\ninvestors\n\nby\n\nallowing\n\nthem\n\nto\n\nmake\n\npeer\n\ncomparisons.\n\nSee\n\n“Non-GAAP\n\nFinancial\n\nMeasures and Reconciliations” above.\n\n(2)\n\nGovernment obligations include debt issued by government-sponsored\n\nagencies.\n\n(3)\n\nUnrealized gains and losses on available-for-sale debt securities\n\nare excluded from the average volumes.\n\n(4)\n\nAverage loan balances include\n\nthe average of nonaccrual loans.\n\n(5)\n\nInterest income on loans includes\n\n$4.0 million and $5.4 million\n\nfor the quarters ended March\n\n31, 2026 and 2025, respectively,\n\nof income from prepayment penalties\n\nand late fees related to\n\nthe Corporation’s loan portfolio.\n\n68\n\nPart II\n\nQuarter Ended March 31,\n\n2026 Compared to 2025\n\nVariance due to:\n\nVolume\n\nRate\n\nTotal\n\n(In thousands)\n\nInterest income on interest-earning assets:\n\nMoney market and other short-term investments\n\n$\n\n(4,753)\n\n$\n\n(1,822)\n\n$\n\n(6,575)\n\nGovernment obligations\n\n(2,921)\n\n7,377\n\n4,456\n\nMBS\n\n1,924\n\n7,393\n\n9,317\n\nFHLB stock\n\n(183)\n\n(133)\n\n(316)\n\nOther investments\n\n10\n\n(118)\n\n(108)\n\nTotal investments\n\n(5,923)\n\n12,697\n\n6,774\n\nResidential mortgage loans\n\n1,030\n\n735\n\n1,765\n\nConstruction loans\n\n363\n\n(168)\n\n195\n\nC&I and commercial mortgage loans\n\n7,097\n\n(4,933)\n\n2,164\n\nConsumer loans and finance leases\n\n(2,563)\n\n(318)\n\n(2,881)\n\nTotal loans\n\n5,927\n\n(4,684)\n\n1,243\n\nTotal interest income\n\n$\n\n4\n\n$\n\n8,013\n\n$\n\n8,017\n\nInterest expense on interest-bearing liabilities:\n\nTime deposits\n\n$\n\n4,134\n\n$\n\n(365)\n\n$\n\n3,769\n\nBrokered CDs\n\n790\n\n(492)\n\n298\n\nOther interest-bearing deposits\n\n(3,029)\n\n(3,604)\n\n(6,633)\n\nAdvances from the FHLB\n\n(2,055)\n\n(173)\n\n(2,228)\n\nOther borrowings\n\n(981)\n\n-\n\n(981)\n\nTotal interest expense\n\n(1,141)\n\n(4,634)\n\n(5,775)\n\nChange in net interest income\n\n$\n\n1,145\n\n$\n\n12,647\n\n$\n\n13,792\n\nNet interest income\n\namounted to $221.0\n\nmillion for the quarter\n\nended March 31, 2026,\n\nan increase of $8.6\n\nmillion, when compared\n\nto $212.4 million for the same period in 2025. The increase in net interest income\n\nconsisted of:\n\n●\n\nA $5.8 million decrease in interest expense on interest-bearing liabilities, consisting\n\nof:\n\no\n\nA $3.2\n\nmillion\n\ndecrease in\n\ninterest expense\n\non borrowings,\n\ndue\n\nto a\n\n$191.7 million\n\ndecrease in\n\nthe average\n\nbalance\n\nof\n\nFHLB advances and the redemption of the remaining junior subordinated\n\ndebentures during the first half of 2025.\n\no\n\nA $2.6 million decrease in interest expense on interest-bearing deposits, driven\n\nby:\n\n-\n\nA $6.6\n\nmillion decrease\n\nin interest\n\nexpense on\n\ninterest-bearing checking\n\nand saving\n\naccounts, due\n\nto a $3.6\n\nmillion\n\ndecrease\n\nassociated\n\nwith\n\nlower\n\ninterest\n\nrates\n\npaid\n\nand\n\na\n\n$3.0\n\nmillion\n\ndecrease\n\nassociated\n\nwith\n\na\n\n$660.8\n\nmillion\n\ndecrease\n\nin\n\nthe\n\naverage\n\nbalance.\n\nThe\n\naverage\n\ncost\n\nof\n\ninterest-bearing\n\nchecking\n\nand\n\nsaving\n\naccounts\n\nin\n\nthe\n\nfirst\n\nquarter of\n\n2026 decreased\n\n24 bps to\n\n1.21% when\n\ncompared to\n\nthe same\n\nperiod in\n\n2025, driven\n\nby a\n\ndecrease in\n\nthe\n\ncost\n\nof\n\ngovernment\n\ndeposits.\n\nExcluding\n\ngovernment\n\ndeposits,\n\nthe\n\naverage\n\ncost\n\nof\n\ninterest-bearing\n\nchecking\n\nand\n\nsavings accounts for the quarter ended March 31, 2026 was 0.66%,\n\ncompared to 0.77% for the same period in 2025.\n\nPartially offset by:\n\n-\n\nA\n\n$3.8\n\nmillion\n\nincrease\n\nin\n\ninterest\n\nexpense\n\non\n\ntime\n\ndeposits,\n\nexcluding\n\nbrokered\n\nCDs,\n\ndriven\n\nby\n\na\n\n$4.1\n\nmillion\n\nincrease associated with a $494.2 million increase in the average balance.\n\n●\n\nA $2.6 million net increase in interest income on investment securities and interest-bearing\n\ncash balances, driven by:\n\no\n\nA $9.6\n\nmillion\n\nincrease\n\nin\n\ninterest\n\nincome\n\non\n\ndebt\n\nsecurities,\n\nmainly\n\ndue\n\nto\n\nan 81\n\nbps\n\nimprovement\n\nin\n\nyield resulting\n\nfrom purchases of higher-yielding available-for\n\n-sale debt securities replacing maturities of lower-yielding\n\ndebt securities.\n\n69\n\nPartially offset by:\n\no\n\nA $6.6 million decrease\n\nin interest income from\n\ninterest-bearing cash balances,\n\ndue to a $4.8\n\nmillion decrease associated\n\nwith a\n\n$492.7 million\n\nnet reduction\n\nin the\n\naverage balances,\n\nwhich\n\nconsisted primarily\n\nof\n\ncash maintained\n\nat the\n\nFED,\n\nand a $1.8 million decrease associated with the reduction of the federal funds\n\nrate.\n\n●\n\nA $0.2 million increase in interest income on loans, a net effect of:\n\no\n\nA $1.8\n\nmillion\n\nincrease\n\nin\n\ninterest income\n\non residential\n\nmortgage\n\nloans,\n\nof which\n\n$1.1 million\n\nwas associated\n\nwith\n\na\n\n$69.8 million increase in the average balance.\n\no\n\nA\n\n$1.3\n\nmillion\n\nincrease\n\nin\n\ninterest\n\nincome\n\non\n\ncommercial\n\nand\n\nconstruction\n\nloans,\n\ndriven\n\nby\n\na\n\n$7.4\n\nmillion\n\nincrease\n\nmainly\n\nassociated\n\nwith\n\na\n\n$433.3\n\nmillion\n\nincrease\n\nin\n\nthe\n\naverage\n\nbalance,\n\npartially\n\noffset\n\nby\n\na\n\n$4.9\n\nmillion\n\ndecrease\n\nmainly related\n\nto the\n\neffect of\n\nlower interest\n\nrates on\n\nthe downward\n\nrepricing of\n\nvariable-rate loans\n\nand $1.2\n\nmillion in\n\ninterest\n\nincome\n\nrecognized\n\nduring\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2025\n\nas\n\na\n\nresult\n\nof\n\nthe\n\npayoff\n\nof\n\na\n\n$73.8\n\nmillion\n\ncommercial\n\nmortgage loan.\n\nAs of\n\nMarch 31,\n\n2026, the\n\ninterest rate\n\non approximately\n\n51% of\n\nthe Corporation’s\n\ncommercial and\n\nconstruction loans\n\nwas tied\n\nto variable\n\nrates, with\n\n32% based\n\nupon Secured\n\nOvernight Financing\n\nRate (“SOFR”)\n\nof 3\n\nmonths or\n\nless, 12%\n\nbased upon the Prime rate index, and 7% based on other indexes.\n\nFor the quarter ended March 31, 2026, the average one-\n\nmonth SOFR\n\ndecreased 64\n\nbps, the\n\naverage three-month\n\nSOFR decreased\n\n63 bps,\n\nand the average\n\nPrime rate\n\ndecreased\n\n75 bps, when compared to the same period in 2025.\n\nPartially offset by:\n\no\n\nA $2.9\n\nmillion decrease\n\nin interest\n\nincome on\n\nconsumer loans\n\nand finance\n\nleases, of\n\nwhich $2.6\n\nmillion was\n\nassociated\n\nwith a $66.7 million net decrease in the average balance.\n\nNet interest margin\n\nfor the first quarter\n\nof 2026 was\n\n4.75%, an increase\n\nof 23 bps,\n\ncompared to 4.52%\n\nfor the same\n\nperiod in 2025.\n\nThe\n\nincrease\n\nin\n\nthe\n\nnet\n\ninterest\n\nmargin\n\nmostly\n\nreflects\n\nthe\n\ndeployment\n\nof\n\ncash\n\nflows\n\nfrom\n\nlower-yielding\n\ninvestment\n\nsecurities\n\nto\n\nhigher-yielding assets,\n\nand a decrease\n\nin the cost\n\nof interest-bearing\n\nliabilities due to\n\nthe effect\n\nof lower\n\ninterest rates on\n\ndeposits and\n\nthe\n\naforementioned\n\nrepayments\n\nof\n\nFHLB\n\nadvances\n\nand\n\nredemption\n\nof\n\njunior\n\nsubordinated\n\ndebentures.\n\nThese\n\nfactors\n\nwere\n\npartially\n\noffset\n\nby\n\nthe\n\ndownward\n\nrepricing\n\nof\n\nvariable-rate\n\ncommercial\n\nloans\n\nand\n\nthe\n\noverall\n\ndecline\n\nin\n\nthe\n\nhigher-yielding\n\nconsumer\n\nloan\n\nportfolio.\n\n70\n\nProvision for Credit Losses\n\nThe provision\n\nfor credit\n\nlosses consists of\n\nprovisions for\n\ncredit losses on\n\nloans and\n\nfinance leases,\n\nunfunded loan\n\ncommitments, as\n\nwell as the debt securities portfolio. The principal changes in the provision\n\nfor credit losses by main categories follow:\n\nProvision for credit losses for\n\nloans and finance leases\n\nThe\n\nprovision\n\nfor\n\ncredit\n\nlosses\n\nfor\n\nloans\n\nand\n\nfinance\n\nleases\n\nwas\n\n$17.2\n\nmillion\n\nfor\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026,\n\ncompared\n\nto\n\n$24.8\n\nmillion for the first quarter of 2025.\n\nThe variances by major portfolio category were as follows:\n\n●\n\nProvision for\n\ncredit losses\n\nfor the\n\ncommercial and\n\nconstruction loan\n\nportfolios was\n\na net\n\nbenefit of\n\n$1.0 million\n\nfor the\n\nfirst\n\nquarter of\n\n2026, compared\n\nto an expense\n\nof $4.6\n\nmillion for the\n\nfirst quarter\n\nof 2025.\n\nThe favorable\n\nyear-over-year\n\nvariance\n\nwas driven by improvements\n\nin the projections of the unemployment rate and the CRE price index.\n\n●\n\nProvision\n\nfor\n\ncredit losses\n\nfor\n\nthe consumer\n\nloan\n\nand\n\nfinance lease\n\nportfolios\n\nwas an\n\nexpense\n\nof $18.0\n\nmillion\n\nfor\n\nthe first\n\nquarter of 2026, compared to an\n\nexpense of $19.2 million for the first quarter\n\nof 2025. The decrease in provision\n\nexpense was\n\ndriven\n\nby\n\nlower\n\ndelinquency\n\nlevels,\n\npartially\n\noffset\n\nby\n\n$2.4\n\nmillion\n\nin\n\nrecoveries\n\nfrom\n\nthe\n\nbulk\n\nsale\n\nof\n\nfully\n\ncharged-off\n\nconsumer\n\nloans\n\nand\n\nfinance\n\nleases\n\nthat\n\ntook\n\nplace\n\nin\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2025\n\nand\n\na\n\nlower\n\nfavorable\n\nimpact\n\nfrom\n\nupdated\n\nmacroeconomic variables, mainly in the projection of the unemployment\n\nrate.\n\n●\n\nProvision for\n\ncredit losses\n\nfor the\n\nresidential mortgage\n\nloan portfolio\n\nwas an\n\nexpense of\n\n$0.2 million\n\nfor the\n\nfirst quarter\n\nof\n\n2026, compared to an expense of $1.0 million for the first quarter of 2025.\n\nProvision for credit losses for\n\nunfunded loan commitments and debt securities\n\nThe\n\nprovision\n\nfor\n\ncredit losses\n\nfor\n\nunfunded\n\ncommercial\n\nand\n\nconstruction\n\nloan\n\ncommitments and\n\nstandby\n\nletters of\n\ncredit for\n\nthe\n\nfirst quarter 2026 was an expense of $0.1 million, compared to a net\n\nbenefit of $63 thousand for the same period in 2025.\n\nThe provision for credit\n\nlosses for held-to-maturity and\n\navailable-for-sale debt securities for the\n\nfirst quarter 2026 was a\n\nnet benefit\n\n$4 thousand, compared to an expense of $36 thousand for the same period\n\nin 2025.\n\n71\n\nNon-Interest Income\n\nNon-interest income amounted to $37.7 million for the\n\nfirst quarter of 2026, compared to $35.7 million for\n\nthe same period in 2025.\n\nThe $2.0 million increase in non-interest income was primarily due\n\nto:\n\n●\n\nA $0.9 million\n\nincrease in revenues\n\nfrom mortgage\n\nbanking activities, driven\n\nby an increase\n\nin the net\n\nrealized gain\n\non sales\n\nof\n\nresidential\n\nmortgage\n\nloans\n\nin\n\nthe\n\nsecondary\n\nmarket.\n\nDuring\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026,\n\nnet\n\nrealized\n\ngains\n\nof\n\n$2.4\n\nmillion\n\nwere\n\nrecognized\n\nas\n\na\n\nresult\n\nof\n\nGovernment\n\nNational\n\nMortgage\n\nAssociation\n\n(“GNMA”)\n\nsecuritizations\n\ntransactions\n\namounting\n\nto\n\n$41.6\n\nmillion,\n\ncompared\n\nto\n\n$1.3\n\nmillion\n\nin\n\nnet\n\nrealized\n\ngains\n\nfor\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2025\n\nrelated\n\nto\n\nGNMA\n\nsecuritizations and whole loan sales to U.S. government-sponsored entities\n\n(“GSEs”) amounting to $46.3 million.\n\n●\n\nA\n\n$0.4\n\nmillion\n\nincrease\n\nin\n\nother\n\nnon-interest\n\nincome,\n\nof\n\nwhich\n\n$0.2\n\nmillion\n\nwas\n\nrelated\n\nto\n\nhigher\n\nrealized\n\ngains\n\nfrom\n\npurchased income tax credits.\n\n●\n\nA $0.3\n\nmillion\n\nincrease\n\nin service\n\ncharges\n\nand fees\n\non deposit\n\naccounts,\n\ndriven\n\nby\n\nan increase\n\nin\n\nservice\n\nfees\n\nearned from\n\ncash management services.\n\n●\n\nA $0.3 million increase in card and processing income mainly due\n\nto higher transactional volumes.\n\nNon-Interest Expenses\n\nNon-interest\n\nexpenses\n\nfor\n\nthe first\n\nquarter\n\nof\n\n2026\n\namounted\n\nto\n\n$127.1\n\nmillion,\n\nan\n\nincrease\n\nof\n\n$4.1\n\nmillion,\n\ncompared\n\nto\n\n$123.0\n\nmillion for\n\nthe same\n\nperiod in\n\n2025. The\n\nefficiency ratio\n\nfor the\n\nfirst quarter\n\nof 2026\n\nwas 49.14%,\n\ncompared to\n\n49.58% for\n\nthe first\n\nquarter of 2025. The increase in non-interest expenses was primarily\n\ndue to:\n\n●\n\nA $3.2\n\nmillion\n\nincrease\n\nin employees’\n\ncompensation\n\nand benefits\n\nexpenses,\n\ndriven by\n\nannual\n\nsalary merit\n\nincreases and\n\nthe filling of previously vacant positions.\n\n●\n\nA\n\n$2.2\n\nmillion\n\nincrease\n\nin\n\ncredit\n\nand\n\ndebit\n\ncard\n\nprocessing\n\nexpenses,\n\nmainly\n\ndue\n\nto $1.0\n\nmillion\n\nin\n\ncredit\n\ncard\n\nexpense\n\nreimbursements received\n\nduring the first\n\nquarter of 2025,\n\nwhich for 2026 are\n\nexpected to be received\n\nlater in the year,\n\nand\n\nhigher transactional volumes during the first quarter of 2026.\n\n●\n\nA $1.4 million\n\nincrease in professional services\n\nfees, mainly due\n\nto a $0.7 million\n\nincrease in legal fees\n\nand a $0.7 million\n\nincrease in outsourcing technology fees.\n\nPartially offset by:\n\n●\n\nA $2.8\n\nmillion decrease\n\nin other\n\nnon-interest\n\nexpenses, mainly\n\ndue\n\nto a\n\n$1.0 million\n\ndecrease in\n\ncharges\n\nfor operational\n\nand\n\nfraud\n\nlosses,\n\na\n\n$1.0\n\nmillion\n\ndecrease\n\nin\n\nthe\n\namortization\n\nof\n\ncore\n\ndeposit\n\nintangible\n\nassets\n\nrelated\n\nto\n\nnon-interest-\n\nbearing checking\n\naccounts from\n\nthe Banco\n\nSantander Puerto\n\nRico acquisition,\n\nwhich were\n\nfully amortized\n\nin 2025,\n\nand a\n\n$0.3 million decrease in costs associated with the purchase of plastic cards.\n\nIncome Taxes\n\nFor the first quarter\n\nof 2026, the Corporation\n\nrecorded an income tax\n\nexpense of $25.5 million,\n\ncompared to an income\n\ntax expense\n\nof $23.2\n\nmillion for\n\nthe same\n\nperiod in\n\n2025. The\n\nincrease in\n\nincome tax\n\nexpense was\n\nmainly due\n\nto higher\n\npre-tax income,\n\npartially\n\noffset\n\nby\n\na\n\ndecrease\n\nin\n\nthe\n\nannual\n\neffective\n\ntax\n\nrate\n\ndue\n\nto\n\na\n\nhigher\n\nproportion\n\nof\n\nexempt\n\nto\n\ntaxable\n\nincome.\n\nFor\n\nthe\n\nyear,\n\nthe\n\nCorporation’s\n\nannual\n\neffective\n\ntax\n\nrate, excluding\n\ndiscrete\n\nitems,\n\nwas estimated\n\nat\n\n21.9%\n\nfor\n\nthe first\n\nquarter of\n\n2026,\n\ncompared\n\nto\n\n23.9% for the comparable period\n\nin 2025. See Note 13 –\n\n“Income Taxes”\n\nto the unaudited consolidated\n\nfinancial statements herein for\n\nadditional information.\n\nAs of March 31, 2026,\n\nthe Corporation had a net deferred\n\ntax asset of $143.6 million, net\n\nof a valuation allowance of\n\n$75.9 million,\n\ncompared to\n\na net\n\ndeferred tax\n\nasset of\n\n$149.0 million,\n\nnet of\n\na valuation\n\nallowance of\n\n$75.0 million,\n\nas of\n\nDecember 31,\n\n2025. The\n\ndecrease in\n\nthe net\n\ndeferred tax\n\nasset was\n\nmainly related\n\nto stock-based\n\ncompensation, the\n\nusage of\n\nalternative minimum\n\ntax credits,\n\nand changes in the ACL.\n\n72\n\nAssets\n\nThe\n\nCorporation’s\n\ntotal\n\nassets\n\nwere\n\n$19.1\n\nbillion\n\nas\n\nof\n\nMarch\n\n31,\n\n2026,\n\na\n\ndecrease\n\nof\n\n$46.8\n\nmillion\n\nfrom\n\nDecember\n\n31,\n\n2025,\n\nprimarily related to\n\na decrease in cash\n\nand cash equivalents\n\nresulting from capital\n\ndeployment actions and\n\nthe decrease in government\n\ndeposits and brokered CDs, partially offset by the net\n\nincome generated in the first quarter of 2026.\n\nLoans Receivable, including Loans Held for Sale\n\nAs of March 31,\n\n2026,\n\nthe Corporation’s\n\ntotal loan portfolio before\n\nthe ACL amounted to\n\n$13.1 billion, a decrease\n\nof $38.2 million\n\ncompared to December\n\n31, 2025, driven\n\nby a $49.9 million\n\ndecrease in consumer\n\nloans, of which\n\n$28.6 million was in\n\nauto loans and\n\nfinance leases in\n\nthe Puerto\n\nRico region. In\n\nterms of geography,\n\nthe decline consisted\n\nof a $112.9\n\nmillion decrease in\n\nthe Puerto Rico\n\nregion,\n\ndriven by\n\nthe aforementioned\n\ndecrease\n\nin consumer\n\nloans and\n\nlower utilization\n\nof C&I\n\nlines of\n\ncredit, mainly\n\nin automotive\n\nlending, partially offset by increases of $47.2 million\n\nin the Florida region and $27.5 million in the Virgin\n\nIslands region.\n\nAs of\n\nMarch 31,\n\n2026, the\n\nCorporation’s\n\nloans held-for-investment\n\nportfolio was\n\ncomprised of\n\ncommercial and\n\nconstruction loans\n\n(49%),\n\nconsumer\n\nloans\n\nand\n\nfinance\n\nleases\n\n(29%),\n\nand\n\nresidential\n\nreal\n\nestate\n\nloans\n\n(22%).\n\nOf\n\nthe\n\ntotal\n\ngross\n\nloan\n\nportfolio\n\nheld\n\nfor\n\ninvestment of\n\n$13.1 billion\n\nas of\n\nMarch 31,\n\n2026, the\n\nCorporation had\n\ncredit risk\n\nconcentration of\n\napproximately 77%\n\nin the\n\nPuerto\n\nRico region,\n\n19% in\n\nthe United\n\nStates region\n\n(mainly\n\nin the\n\nstate of\n\nFlorida),\n\nand\n\n4% in\n\nthe Virgin\n\nIslands region,\n\nas shown\n\nin the\n\nfollowing table:\n\nAs of March 31, 2026\n\nPuerto Rico\n\nVirgin Islands\n\nUnited States\n\nTotal\n\n(In thousands)\n\nResidential mortgage loans\n\n$\n\n2,231,306\n\n$\n\n147,082\n\n$\n\n536,510\n\n$\n\n2,914,898\n\nConstruction loans\n\n178,810\n\n14,167\n\n2,290\n\n195,267\n\nCommercial mortgage loans\n\n1,753,712\n\n72,837\n\n800,564\n\n2,627,113\n\nC&I loans\n\n2,290,891\n\n203,810\n\n1,200,142\n\n3,694,843\n\nTotal commercial loans\n\n4,223,413\n\n290,814\n\n2,002,996\n\n6,517,223\n\nConsumer loans and finance leases\n\n3,587,266\n\n65,834\n\n5,856\n\n3,658,956\n\nTotal loans held for investment,\n\ngross\n\n$\n\n10,041,985\n\n$\n\n503,730\n\n$\n\n2,545,362\n\n$\n\n13,091,077\n\nLoans held for sale\n\n12,805\n\n-\n\n-\n\n12,805\n\nTotal loans, gross\n\n$\n\n10,054,790\n\n$\n\n503,730\n\n$\n\n2,545,362\n\n$\n\n13,103,882\n\nAs of December 31, 2025\n\nPuerto Rico\n\nVirgin Islands\n\nUnited States\n\nTotal\n\n(In thousands)\n\nResidential mortgage loans\n\n$\n\n2,227,053\n\n$\n\n150,551\n\n$\n\n530,698\n\n$\n\n2,908,302\n\nConstruction loans\n\n249,466\n\n14,174\n\n1,928\n\n265,568\n\nCommercial mortgage loans\n\n1,690,176\n\n73,751\n\n790,325\n\n2,554,252\n\nC&I loans\n\n2,348,274\n\n170,728\n\n1,169,356\n\n3,688,358\n\nTotal commercial loans\n\n4,287,916\n\n258,653\n\n1,961,609\n\n6,508,178\n\nConsumer loans and finance leases\n\n3,636,072\n\n66,947\n\n5,857\n\n3,708,876\n\nTotal loans held for investment,\n\ngross\n\n$\n\n10,151,041\n\n$\n\n476,151\n\n$\n\n2,498,164\n\n$\n\n13,125,356\n\nLoans held for sale\n\n16,697\n\n-\n\n-\n\n16,697\n\nTotal loans, gross\n\n$\n\n10,167,738\n\n$\n\n476,151\n\n$\n\n2,498,164\n\n$\n\n13,142,053\n\nSee “Risk Management –\n\nExposure to Puerto Rico Government”\n\nand “Risk Management –\n\nExposure to USVI Government”\n\nbelow\n\nfor information on the Corporation’s\n\ncredit exposure to PR and USVI government entities.\n\nAs of\n\nMarch 31,\n\n2026, the\n\nCorporation’s\n\ntotal commercial\n\nmortgage loan\n\nexposure amounted\n\nto $2.6\n\nbillion, or\n\n20% of\n\nthe total\n\nloan portfolio.\n\nThe $1.7 billion\n\nexposure in the\n\nPuerto Rico region\n\nwas comprised mainly\n\nof 39% in\n\nthe retail industry,\n\n25% in office\n\nreal estate,\n\nand 19%\n\nin the\n\nhotel industry.\n\nThe $0.8\n\nbillion exposure\n\nin the\n\nFlorida region\n\nwas comprised\n\nmainly of\n\n36% in\n\nthe retail\n\nindustry,\n\n19% in\n\nthe\n\nhotel industry,\n\nand\n\n6%\n\nin\n\noffice\n\nreal estate.\n\nOf\n\nthe\n\nCorporation’s\n\ntotal\n\ncommercial\n\nmortgage\n\nloan exposure\n\nof\n\n$2.6\n\nbillion,\n\n$626.5\n\nmillion\n\nmatures\n\nwithin\n\nthe\n\nnext\n\n12\n\nmonths\n\nand\n\nhas\n\na\n\nweighted-average\n\ninterest\n\nrate\n\nof\n\napproximately\n\n5.48%.\n\nCommercial mortgage\n\nloan exposure\n\nin the office\n\nreal estate industry,\n\nwhich matures\n\nwithin the next\n\n12 months,\n\namounted to $119.3\n\nmillion and has a weighted-average interest rate of approximately 5.60%.\n\nAs of\n\neach of\n\nMarch 31,\n\n2026 and\n\nDecember 31,\n\n2025, the\n\nCorporation’s\n\ntotal exposure\n\nto shared\n\nnational credit\n\n(“SNC”) loans\n\n(including unused commitments)\n\namounted to $1.1\n\nbillion. As of March\n\n31, 2026, approximately $332.3\n\nmillion of the SNC\n\nexposure\n\nis related to the portfolio in the Puerto Rico region and $778.6 million is related\n\nto the portfolio in the Florida region.\n\n73\n\nLoan Production\n\nFirst BanCorp.\n\nrelies primarily\n\non its\n\nretail network\n\nof branches\n\nto originate\n\nresidential and\n\nconsumer loans.\n\nThe Corporation\n\nmay\n\nsupplement\n\nits residential\n\nmortgage originations\n\nwith wholesale\n\nservicing released\n\nmortgage loan\n\npurchases from\n\nmortgage bankers.\n\nThe\n\nCorporation\n\nmanages\n\nits\n\nconstruction\n\nand\n\ncommercial\n\nloan\n\noriginations\n\nthrough\n\ncentralized\n\nunits\n\nand\n\nmost\n\nof\n\nits\n\noriginations\n\ncome\n\nfrom\n\nexisting\n\ncustomers,\n\nas\n\nwell\n\nas\n\nthrough\n\nreferrals\n\nand\n\ndirect\n\nsolicitations.\n\nAuto\n\nloans\n\nand\n\nfinance\n\nleases\n\noriginations\n\nrely\n\nprimarily on relationships with auto dealers and dedicated sales professionals who\n\nserve selected locations to facilitate originations.\n\nThe\n\nfollowing\n\ntable\n\nprovides\n\na\n\nbreakdown\n\nof\n\nFirst\n\nBanCorp.’s\n\nloan\n\nproduction,\n\nincluding\n\npurchases,\n\nrefinancings,\n\nrenewals\n\nand\n\ndraws from existing revolving and non-revolving commitments by geographic\n\nsegment,\n\nfor the indicated periods:\n\nQuarter Ended March 31,\n\n2026\n\n2025\n\n(In thousands)\n\nPuerto Rico:\n\nResidential mortgage\n\n$\n\n96,714\n\n$\n\n101,420\n\nConstruction\n\n13,330\n\n26,714\n\nCommercial mortgage\n\n54,309\n\n4,284\n\nC&I\n\n343,863\n\n364,188\n\nConsumer\n\n340,686\n\n369,436\n\nTotal loan production\n\n$\n\n848,902\n\n$\n\n866,042\n\nVirgin Islands:\n\nResidential mortgage\n\n$\n\n-\n\n$\n\n723\n\nConstruction\n\n-\n\n7,801\n\nCommercial mortgage\n\n1,035\n\n8,450\n\nC&I\n\n162,987\n\n24,465\n\nConsumer\n\n6,882\n\n7,758\n\nTotal loan production\n\n$\n\n170,904\n\n$\n\n49,197\n\nFlorida:\n\nResidential mortgage\n\n$\n\n19,032\n\n$\n\n11,687\n\nConstruction\n\n384\n\n14,791\n\nCommercial mortgage\n\n28,479\n\n47,621\n\nC&I\n\n180,336\n\n186,913\n\nConsumer\n\n183\n\n333\n\nTotal loan production\n\n$\n\n228,414\n\n$\n\n261,345\n\nTotal:\n\nResidential mortgage\n\n$\n\n115,746\n\n$\n\n113,830\n\nConstruction\n\n13,714\n\n49,306\n\nCommercial mortgage\n\n83,823\n\n60,355\n\nC&I\n\n687,186\n\n575,566\n\nConsumer\n\n347,751\n\n377,527\n\nTotal loan production\n\n$\n\n1,248,220\n\n$\n\n1,176,584\n\nCommercial\n\nand\n\nconstruction\n\nloan\n\noriginations\n\n(excluding\n\ngovernment\n\nloans)\n\nfor the\n\nquarter ended\n\nMarch 31,\n\n2026\n\namounted\n\nto\n\n$622.2\n\nmillion,\n\ncompared\n\nto $656.3\n\nmillion\n\nfor\n\nthe\n\nfirst\n\nquarter\n\nof 2025.\n\nThe\n\ndecrease of\n\n$34.1\n\nmillion\n\nin\n\nthe first\n\nquarter\n\nof 2026\n\nconsisted\n\nof\n\ndecreases\n\nof\n\n$40.1\n\nmillion\n\nin\n\nthe\n\nFlorida\n\nregion\n\nand\n\n$10.5\n\nmillion\n\nin Virgin\n\nIslands\n\nregion,\n\npartially\n\noffset\n\nby\n\na\n\n$16.5\n\nmillion increase in the Puerto Rico region.\n\nGovernment\n\nloan\n\noriginations\n\nfor\n\nthe\n\nquarter\n\nended\n\nMarch\n\n31,\n\n2026\n\namounted\n\nto\n\n$162.5\n\nmillion,\n\nan\n\nincrease\n\nof\n\n$133.6\n\nmillion,\n\ncompared to\n\n$28.9 million for\n\nthe first quarter\n\nof 2025. The\n\n$133.6 million\n\nincrease was mainly\n\nrelated to the\n\norigination of a\n\n$138.1\n\nmillion\n\ngovernment\n\nline\n\nof\n\ncredit\n\nin\n\nthe\n\nVirgin\n\nIslands\n\nregion\n\nduring\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026,\n\nof\n\nwhich\n\n$108.1\n\nmillion\n\nwas\n\na\n\nrefinancing.\n\nOriginations\n\nof\n\nauto\n\nloans\n\nand\n\nfinance\n\nleases\n\nfor\n\nthe\n\nquarter\n\nended\n\nMarch\n\n31,\n\n2026\n\namounted\n\nto\n\n$199.5\n\nmillion,\n\ncompared\n\nto\n\n$227.7\n\nmillion\n\nfor\n\nthe\n\nfirst\n\nquarter\n\nof 2025.\n\nThe\n\ndecrease was\n\nmainly\n\nin\n\nthe\n\nPuerto\n\nRico\n\nregion.\n\nOther consumer\n\nloan\n\noriginations,\n\nother\n\nthan\n\ncredit\n\ncards,\n\nfor\n\nthe\n\nquarter\n\nended\n\nMarch\n\n31,\n\n2026\n\namounted\n\nto\n\n$53.3\n\nmillion,\n\ncompared\n\nto\n\n$47.6\n\nmillion\n\nfor\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2025.\n\nThe utilization\n\nactivity on\n\nthe outstanding\n\ncredit\n\ncard\n\nportfolio\n\nfor\n\nthe quarter\n\nended\n\nMarch 31,\n\n2026\n\namounted\n\nto\n\n$94.9 million, compared to $102.2 million for the same period in 2025.\n\n74\n\nInvestment Activities\n\nAs\n\npart\n\nof\n\nits\n\nliquidity,\n\nrevenue\n\ndiversification,\n\nand\n\ninterest\n\nrate\n\nrisk\n\nmanagement\n\nstrategies,\n\nFirst\n\nBanCorp.\n\nmaintains\n\na\n\ndebt\n\nsecurities portfolio classified as available for sale or held to maturity.\n\nSubstantially\n\nall\n\nof\n\nthe\n\nCorporation’s\n\navailable-for-sale\n\ndebt\n\nsecurities\n\nportfolio\n\nwas\n\ninvested\n\nin\n\nU.S.\n\nTreasury\n\nsecurities,\n\nU.S.\n\nGSEs’\n\nobligations,\n\nand\n\nfixed-rate\n\nGSEs’\n\nMBS.\n\nThe\n\nCorporation’s\n\ntotal\n\navailable-for-sale\n\ndebt\n\nsecurities\n\nportfolio\n\nas\n\nof\n\nMarch\n\n31,\n\n2026\n\namounted\n\nto\n\n$4.7\n\nbillion,\n\na\n\n$114.7\n\nmillion\n\nincrease\n\nfrom\n\nDecember\n\n31,\n\n2025.\n\nThe\n\nincrease\n\nwas\n\ndriven\n\nby\n\n$807.6\n\nmillion\n\nin\n\npurchases, of\n\nwhich $437.0\n\nmillion were\n\nU.S. agencies’\n\nresidential MBS\n\nand debentures\n\nwith an\n\naverage yield\n\nof 4.57%; and\n\n$370.6\n\nmillion\n\nwere\n\nU.S.\n\nTreasury\n\nsecurities\n\nwith\n\nan\n\naverage\n\nyield\n\nof\n\n3.65%.\n\nThese\n\nfactors\n\nwere\n\npartially\n\noffset\n\nby\n\n$500.7\n\nmillion\n\nin\n\nmaturities, $189.9\n\nmillion in\n\nprincipal repayments\n\nand a\n\n$6.2 million\n\ndecrease in\n\nfair value\n\nattributable to\n\nchanges in\n\nmarket interest\n\nrates. As of March\n\n31, 2026, the Corporation\n\nhad a net unrealized\n\nloss on available-for-sale\n\ndebt securities of $353.4\n\nmillion. This net\n\nunrealized\n\nloss\n\nis\n\nprimarily\n\nattributable\n\nto\n\ninstruments\n\non\n\nbooks\n\ncarrying\n\na\n\nlower\n\ninterest\n\nrate\n\nthan\n\nmarket\n\nrates.\n\nThe\n\nCorporation\n\nexpects\n\nthat\n\nthis\n\nunrealized\n\nloss\n\nwill\n\nreverse\n\nover\n\ntime\n\nand\n\nit\n\nis\n\nlikely\n\nthat\n\nit\n\nwill\n\nnot\n\nbe\n\nrequired\n\nto\n\nsell\n\nthe\n\nsecurities\n\nbefore\n\ntheir\n\nanticipated\n\nrecovery.\n\nThe Corporation\n\nexpects the\n\nportfolio will\n\ncontinue\n\nto decrease\n\nand the\n\naccumulated other\n\ncomprehensive loss\n\nwill decrease accordingly,\n\nexcluding the impact of market interest rates.\n\nHeld-to-maturity\n\ndebt\n\nsecurities\n\ninclude\n\nfixed-rate\n\nGSEs’\n\nMBS\n\nwith\n\na\n\ncarrying\n\nvalue\n\nof\n\n$177.7\n\nmillion\n\n(fair\n\nvalue\n\nof\n\n$171.4\n\nmillion)\n\nas of\n\nMarch\n\n31,\n\n2026,\n\ncompared\n\nto\n\n$184.4\n\nmillion\n\nas of\n\nDecember 31,\n\n2025.\n\nHeld-to-maturity\n\ndebt\n\nsecurities also\n\ninclude\n\n$79.8\n\nmillion\n\nas\n\nof\n\nMarch\n\n31,\n\n2026,\n\ncompared\n\nto\n\n$80.9\n\nmillion\n\nas\n\nof\n\nDecember\n\n31,\n\n2025,\n\nof\n\nfinancing\n\narrangements\n\nwith\n\nthe\n\ngovernment issued in bond\n\nform, which the Corporation\n\naccounts for as securities,\n\nbut which were underwritten\n\nas loans with features\n\nthat\n\nare\n\ntypically\n\nfound\n\nin\n\ncommercial\n\nloans.\n\nAs\n\nof\n\nMarch\n\n31,\n\n2026,\n\napproximately\n\n59%\n\nof\n\nthe\n\nCorporation’s\n\ngovernment\n\nbonds\n\nconsisted of obligations issued by three of the largest municipalities\n\nin Puerto Rico.\n\nAs\n\nof\n\nMarch\n\n31,\n\n2026,\n\ncash\n\ninflows\n\nexpected\n\nto\n\nbe\n\nreceived\n\nduring\n\nthe\n\nremainder\n\nof\n\n2026\n\nfrom\n\nmaturities\n\nand\n\nexpected\n\nprepayments\n\nof\n\nthe\n\ndebt\n\nsecurities\n\nportfolio\n\n(excluding\n\nU.S.\n\nTreasury\n\nsecurities)\n\namounted\n\nto\n\napproximately\n\n$0.8\n\nbillion,\n\nof\n\nwhich\n\n$0.7 billion have a weighted-average yield\n\nof 1.81%. These inflows are expected\n\nto be redeployed to fund loan growth, reinvested\n\ninto\n\nhigher-yielding securities,\n\nor used\n\nto repay\n\nmaturing brokered\n\nCDs. See Note\n\n2 –\n\n“Debt Securities”\n\nfor information\n\nand details\n\nabout\n\nthe Corporation’s available\n\n-for-sale debt securities portfolio.\n\nSee\n\n“Risk Management\n\n–\n\nExposure\n\nto Puerto\n\nRico\n\nGovernment”\n\nbelow\n\nfor\n\ninformation\n\nand\n\ndetails\n\nabout\n\nthe Corporation’s\n\ntotal\n\ndirect exposure\n\nto the\n\nPuerto Rico\n\ngovernment, including\n\nmunicipalities,\n\nand “Risk\n\nManagement\n\n– Credit\n\nRisk Management”\n\nbelow\n\nand Note 2 – “Debt Securities” for the ACL of the exposure to government\n\nbonds.\n\n75\n\nThe carrying\n\nvalues of\n\ndebt securities\n\nas of\n\nMarch 31,\n\n2026 and\n\nDecember 31,\n\n2025 by\n\ncontractual maturity\n\n(excluding MBS)\n\nand\n\nweighted-average yield, are shown below:\n\nMarch 31, 2026\n\nDecember 31, 2025\n\nWeighted-Average\n\nYield %\n\nCarrying\n\nAmount\n\nWeighted-Average\n\nYield %\n\nCarrying\n\nAmount\n\n(Dollars in thousands)\n\nU.S government and agencies obligations:\n\nDue within one year\n\n2.37\n\n$\n\n946,428\n\n2.54\n\n$\n\n895,052\n\nAfter 1 to 5 years\n\n2.08\n\n369,615\n\n1.45\n\n483,916\n\nAfter 5 to 10 years\n\n4.75\n\n14,865\n\n4.75\n\n14,985\n\nAfter 10 years\n\n3.95\n\n6,263\n\n3.97\n\n6,501\n\n2.32\n\n1,337,171\n\n(1)\n\n2.19\n\n1,400,454\n\nPuerto Rico government obligation:\n\nAfter 10 years (2)\n\n-\n\n1,609\n\n-\n\n1,620\n\nMBS:\n\nResidential MBS:\n\nFederal Home Loan Mortgage Corporation (“FHLMC”)\n\n1.72\n\n870,323\n\n1.72\n\n901,779\n\nGNMA\n\n2.92\n\n253,816\n\n2.50\n\n196,569\n\nFederal National Mortgage Association (“FNMA”)\n\n1.94\n\n1,113,083\n\n1.90\n\n1,138,925\n\nU.S. Agencies collateralized mortgage obligations (“CMOs”)\n\n4.08\n\n999,192\n\n3.94\n\n819,807\n\nPrivate Label MBS\n\n5.95\n\n3,113\n\n5.92\n\n3,266\n\nCommercial MBS\n\n2.36\n\n268,124\n\n2.35\n\n276,007\n\nTotal MBS\n\n2.57\n\n3,507,651\n\n2.41\n\n3,336,353\n\nGovernment bonds:\n\nDue within one year\n\n4.75\n\n1,071\n\n4.94\n\n1,044\n\nAfter 1 to 5 years\n\n6.85\n\n53,409\n\n7.05\n\n54,611\n\nAfter 5 to 10 years\n\n4.49\n\n10,438\n\n4.78\n\n10,376\n\nAfter 10 years\n\n7.13\n\n14,870\n\n7.46\n\n14,870\n\n6.57\n\n79,788\n\n6.81\n\n80,901\n\nACL on held-to-maturity debt securities\n\n-\n\n(641)\n\n-\n\n(733)\n\nTotal debt securities\n\n2.57\n\n$\n\n4,925,578\n\n2.41\n\n$\n\n4,818,595\n\n(1)\n\nIncludes approximately $562.8 million in\n\ncallable debt securities with an\n\naverage yield of 1.85%, of which approximately\n\n59% were purchased at a\n\ndiscount. See “Risk Management” below\n\nfor further analysis of\n\nthe effects of\n\nchanging interest rates\n\non the Corporation’s\n\nnet interest income and\n\nthe Corporation’s\n\ninterest risk management\n\nstrategies. Also, refer\n\nto Note 2 -\n\n“Debt\n\nSecurities” for additional information regarding the Corporation’s\n\ndebt securities portfolio.\n\n(2)\n\nConsists of a\n\nresidential pass-through MBS\n\nissued by the\n\nPuerto Rico Housing Finance\n\nAuthority (\"PRHFA\")\n\nthat is collateralized\n\nby certain second\n\nmortgages originated under\n\na program\n\nlaunched by the Puerto Rico government in 2010 and is in\n\nnonaccrual status based on the delinquency status of the underlying\n\nsecond mortgage loans collateral.\n\n76\n\nRISK MANAGEMENT\n\nGeneral\n\nRisks\n\nare\n\ninherent\n\nin\n\nvirtually\n\nall\n\naspects\n\nof\n\nthe\n\nCorporation’s\n\nbusiness\n\nactivities\n\nand\n\noperations.\n\nConsequently,\n\neffective\n\nrisk\n\nmanagement\n\nis\n\nfundamental\n\nto\n\nthe\n\nsuccess\n\nof\n\nthe\n\nCorporation.\n\nThe\n\nprimary\n\ngoals\n\nof\n\nrisk\n\nmanagement\n\nare\n\nto\n\nensure\n\nthat\n\nthe\n\nCorporation’s\n\nrisk-taking activities are\n\nconsistent with the\n\nCorporation’s\n\nobjectives and risk\n\ntolerance, and that\n\nthere is an appropriate\n\nbalance between risks and rewards to maximize stockholder value.\n\nThe\n\nCorporation\n\nhas\n\nin\n\nplace\n\na\n\nrisk\n\nmanagement\n\nframework\n\nto\n\nmonitor,\n\nevaluate\n\nand\n\nmanage\n\nthe\n\nprincipal\n\nrisks\n\nassumed\n\nin\n\nconducting its activities.\n\nFirst BanCorp’s\n\nbusiness is subject to\n\neleven broad categories\n\nof risks: (i) liquidity\n\nrisk; (ii) interest rate\n\nrisk;\n\n(iii) market risk; (iv)\n\ncredit risk; (v) operational\n\nrisk; (vi) legal and\n\nregulatory risk; (vii)\n\nreputational risk; (viii) model\n\nrisk; (ix) capital\n\nrisk; (x)\n\nstrategic risk;\n\nand (xi)\n\ninformation technology\n\nrisk. First\n\nBanCorp. has\n\nadopted policies\n\nand procedures\n\ndesigned to\n\nidentify\n\nand manage the risks to which the Corporation is exposed.\n\nLiquidity Risk and Capital Adequacy\n\nLiquidity\n\nrisk\n\ninvolves\n\nthe\n\nongoing\n\nability\n\nto\n\naccommodate\n\nliability\n\nmaturities\n\nand\n\ndeposit\n\nwithdrawals,\n\nfund\n\nasset growth\n\nand\n\nbusiness operations,\n\nand meet\n\ncontractual obligations\n\nthrough unconstrained\n\naccess to funding\n\nat reasonable\n\nmarket rates. Liquidity\n\nmanagement\n\ninvolves\n\nforecasting\n\nfunding\n\nrequirements\n\nand\n\nmaintaining\n\nsufficient\n\ncapacity\n\nto\n\nmeet\n\nliquidity\n\nneeds\n\nand\n\naccommodate\n\nfluctuations\n\nin\n\nasset\n\nand\n\nliability\n\nlevels\n\ndue\n\nto\n\nchanges\n\nin\n\nthe\n\nCorporation’s\n\nbusiness\n\noperations\n\nor\n\nunanticipated\n\nevents.\n\nThe Corporation\n\nmanages liquidity at\n\ntwo levels. The\n\nfirst is the\n\nliquidity of\n\nthe parent\n\ncompany,\n\nor First BanCorp.,\n\nwhich is the\n\nholding\n\ncompany\n\nthat\n\nowns\n\nthe\n\nbanking\n\nand\n\nnon-banking\n\nsubsidiaries.\n\nThe\n\nsecond\n\nis\n\nthe\n\nliquidity\n\nof\n\nthe\n\nbanking\n\nsubsidiary,\n\nFirstBank.\n\nThe\n\nAsset\n\nand\n\nLiability\n\nCommittee\n\nof\n\nthe\n\nCorporation’s\n\nBoard\n\nof\n\nDirectors\n\nis\n\nresponsible\n\nfor\n\noverseeing\n\nmanagement’s\n\nestablishment\n\nof\n\nthe\n\nCorporation’s\n\nliquidity\n\npolicy,\n\nas\n\nwell\n\nas\n\napproving\n\noperating\n\nand\n\ncontingency\n\nprocedures\n\nand\n\nmonitoring\n\nliquidity\n\non\n\nan\n\nongoing\n\nbasis.\n\nThe\n\nManagement’s\n\nInvestment\n\nand\n\nAsset\n\nLiability\n\nCommittee\n\n(“MIALCO”),\n\nwhich\n\nreports\n\nto\n\nthe\n\nBoard’s\n\nAsset\n\nand\n\nLiability\n\nCommittee,\n\nuses\n\nmeasures\n\nof\n\nliquidity\n\ndeveloped\n\nby\n\nmanagement\n\nthat\n\ninvolve\n\nthe\n\nuse\n\nof\n\nseveral\n\nassumptions\n\nto\n\nreview\n\nthe\n\nCorporation’s\n\nliquidity\n\nposition\n\non\n\na\n\nmonthly\n\nbasis.\n\nThe\n\nMIALCO\n\noversees\n\nliquidity\n\nmanagement,\n\ninterest rate risk, market risk, and other related matters.\n\nThe\n\nMIALCO\n\nis\n\ncomposed\n\nof\n\nsenior\n\nmanagement\n\nofficers,\n\nincluding\n\nthe\n\nCorporation’s\n\nChief\n\nExecutive\n\nOfficer\n\n(“CEO”),\n\nthe\n\nChief Financial\n\nOfficer (“CFO”),\n\nthe Chief\n\nRisk Officer\n\n(“CRO”), the\n\nTreasurer,\n\nthe Chief\n\nConsumer Officer\n\nand Corporate\n\nChief\n\nof\n\nStaff,\n\nthe\n\nCorporate\n\nStrategic\n\nand\n\nBusiness\n\nDevelopment\n\nDirector,\n\nthe\n\nTreasury\n\nand\n\nInvestments\n\nRisk\n\nManager,\n\nthe\n\nFinancial\n\nPlanning\n\nand\n\nAsset\n\nand\n\nLiability\n\nManagement\n\n(“ALM”)\n\nDirector,\n\nand\n\nthe\n\nChief\n\nOperating\n\nOfficer\n\n(“COO”).\n\nThe\n\nTreasury\n\nand\n\nInvestments\n\nDivision\n\nis\n\nresponsible\n\nfor\n\nplanning\n\nand\n\nexecuting\n\nthe\n\nCorporation’s\n\nfunding\n\nactivities\n\nand\n\nstrategy,\n\nmonitoring\n\nliquidity availability daily,\n\nand reviewing liquidity\n\nmeasures on a weekly\n\nbasis. The Investments Accounting\n\nand Operations area of\n\nthe\n\nCorporate\n\nController’s\n\nDepartment\n\nis\n\nresponsible\n\nfor\n\ncalculating\n\nthe\n\nliquidity\n\nmeasurements\n\nused\n\nby\n\nthe\n\nTreasury\n\nand\n\nInvestment Division\n\nto review the\n\nCorporation’s\n\nliquidity position\n\non a\n\nweekly basis.\n\nThe Financial\n\nPlanning and\n\nALM Division\n\nis\n\nresponsible for operating the liquidity and interest rate risk models.\n\nTo\n\nensure\n\nadequate liquidity\n\nthrough the\n\nfull range\n\nof potential\n\noperating\n\nenvironments and\n\nmarket conditions,\n\nthe Corporation\n\nconducts\n\nits\n\nliquidity\n\nmanagement\n\nand\n\nbusiness\n\nactivities\n\nin\n\na\n\nmanner\n\nthat\n\nis\n\nintended\n\nto\n\npreserve\n\nand\n\nenhance\n\nfunding\n\nstability,\n\nflexibility,\n\nand\n\ndiversity.\n\nKey\n\ncomponents\n\nof\n\nthis\n\noperating\n\nstrategy\n\ninclude\n\na\n\nstrong\n\nfocus\n\non\n\nthe\n\ncontinued\n\ndevelopment\n\nof\n\ncustomer-based\n\nfunding, the\n\nmaintenance\n\nof direct\n\nrelationships with\n\nwholesale\n\nmarket funding\n\nproviders, and\n\nthe maintenance\n\nof\n\nthe ability to liquidate certain assets when, and if, requirements warrant.\n\n77\n\nThe\n\nCorporation\n\ndevelops\n\nand\n\nmaintains\n\ncontingency\n\nfunding\n\nplans.\n\nThese\n\nplans\n\nevaluate\n\nthe\n\nCorporation’s\n\nliquidity\n\nposition\n\nunder various\n\noperating circumstances\n\nand are\n\ndesigned to\n\nhelp ensure\n\nthat the\n\nCorporation will\n\nbe able\n\nto operate\n\nthrough periods\n\nof stress when\n\naccess to normal\n\nsources of funds\n\nis constrained. The\n\nplans project funding\n\nrequirements during\n\na potential period\n\nof\n\nstress, specify and quantify sources of liquidity,\n\noutline actions and procedures for effectively managing\n\nliquidity through a period of\n\nstress, and\n\ndefine roles\n\nand responsibilities\n\nfor the\n\nCorporation’s\n\nemployees. Under\n\nthe contingency\n\nfunding plans,\n\nthe Corporation\n\nstresses the\n\nbalance sheet\n\nand the\n\nliquidity position\n\nto critical levels\n\nthat mimic\n\ndifficulties in\n\ngenerating funds\n\nor even maintaining\n\nthe current\n\nfunding position\n\nof the\n\nCorporation and\n\nthe Bank\n\nand are\n\ndesigned to\n\nhelp ensure\n\nthe ability\n\nof the\n\nCorporation and\n\nthe\n\nBank to honor\n\ntheir respective commitments.\n\nThe Corporation has\n\nestablished liquidity\n\ntriggers that the\n\nMIALCO monitors in\n\norder\n\nto maintain the\n\nordinary funding of\n\nthe banking business.\n\nThe MIALCO has\n\ndeveloped contingency funding\n\nplans for the\n\nfollowing\n\nthree\n\nscenarios:\n\na\n\ncredit rating\n\ndowngrade,\n\nan\n\neconomic\n\ncycle\n\ndownturn\n\nevent,\n\nand\n\na\n\nconcentration\n\nevent.\n\nThe\n\nBoard’s\n\nAsset and\n\nLiability Committee reviews and approves these plans on an annual basis.\n\nLiquidity Risk Management\n\nThe Corporation manages\n\nits liquidity in\n\na proactive manner and\n\nin an effort\n\nto maintain a sound\n\nliquidity position. It uses\n\nmultiple\n\nmeasures\n\nto monitor\n\nits liquidity\n\nposition,\n\nincluding\n\ncore\n\nliquidity,\n\nbasic\n\nliquidity,\n\nand time-based\n\nreserve\n\nmeasures. Cash\n\nand\n\ncash\n\nequivalents\n\namounted to\n\n$550.9 million\n\nas of\n\nMarch 31,\n\n2026, compared\n\nto $658.6\n\nmillion\n\nas of\n\nDecember 31,\n\n2025. When\n\nadding\n\n$2.3 billion of free high-quality liquid securities that could be liquidated\n\nor pledged within one day (which includes assets such as U.S.\n\ngovernment and\n\nGSEs’ obligations),\n\nthe total core\n\nliquidity amounted\n\nto $2.9 billion\n\nas of March\n\n31, 2026, or\n\n14.66% of total\n\nassets,\n\ncompared to $2.6 billion, or 13.54%\n\nof total assets as of December 31, 2025.\n\nIn addition\n\nto the aforementioned\n\n$2.9 billion in\n\ncash and free\n\nhigh quality\n\nliquid assets, the\n\nCorporation had $1.0\n\nbillion available\n\nfor credit with the FHLB based on the value of loans and\n\nsecurities collateral pledged with the FHLB. As such, the basic liquidity\n\nratio\n\n(which\n\nadds\n\nsuch\n\navailable\n\nsecured\n\nlines\n\nof\n\ncredit\n\nto\n\nthe\n\ncore\n\nliquidity)\n\nwas\n\napproximately\n\n20.14%\n\nof\n\ntotal\n\nassets\n\nas\n\nof\n\nMarch\n\n31,\n\n2026,\n\ncompared to 19.39% of total assets as of December 31, 2025.\n\nFurther,\n\nthe\n\nCorporation\n\nalso\n\nmaintains\n\nborrowing\n\ncapacity\n\nat\n\nthe\n\nFED\n\nDiscount\n\nWindow\n\nand\n\nhad\n\napproximately\n\n$2.6\n\nbillion\n\navailable for\n\nfunding under\n\nthe FED’s\n\nBorrower-in-Custody (“BIC”)\n\nProgram as\n\nof each\n\nof March\n\n31, 2026\n\nand December\n\n31, 2025\n\nas an\n\nadditional\n\nsource of\n\nliquidity.\n\nTotal\n\nloans pledged\n\nto the\n\nFED BIC\n\nProgram\n\namounted to\n\n$3.4 billion\n\nas of\n\neach of\n\nMarch 31,\n\n2026 and December 31, 2025. The\n\nCorporation does not rely on uncommitted\n\ninter-bank lines of credit (federal\n\nfunds lines) to fund its\n\noperations.\n\nIn\n\nthe\n\naggregate,\n\nas\n\nof\n\nMarch\n\n31,\n\n2026,\n\nthe\n\nCorporation\n\nhad\n\n$6.5\n\nbillion\n\navailable\n\nto\n\nmeet\n\nliquidity\n\nneeds,\n\nor\n\n134%\n\nof\n\nestimated uninsured\n\ndeposits, excluding\n\nfully collateralized\n\ngovernment deposits\n\n,\n\ncompared to\n\n$6.3 billion\n\nor 132%,\n\nrespectively,\n\nas\n\nof December 31, 2025.\n\nLiquidity\n\nat\n\nthe Bank\n\nlevel\n\nis highly\n\ndependent\n\non\n\nbank deposits,\n\nwhich\n\nfund\n\n87.3%\n\nof the\n\nBank’s\n\nassets (or\n\n84.7%\n\nexcluding\n\nbrokered CDs).\n\nIn addition,\n\nas further\n\ndiscussed below,\n\nthe Corporation\n\nmaintains a\n\ndiversified base\n\nof readily\n\navailable wholesale\n\nfunding\n\nsources,\n\nincluding\n\nadvances\n\nfrom\n\nthe\n\nFHLB\n\nthrough\n\npledged\n\nborrowing\n\ncapacity,\n\nsecurities\n\nsold\n\nunder\n\nagreements\n\nto\n\nrepurchase, and access to brokered CDs. Funding\n\nthrough wholesale funding may continue to increase\n\nthe overall cost of funding for\n\nthe Corporation and adversely affect the net interest margin.\n\n78\n\nCommitments to extend credit and standby\n\nletters of credit\n\nAs\n\na\n\nprovider\n\nof\n\nfinancial\n\nservices,\n\nthe\n\nCorporation\n\nroutinely\n\nenters\n\ninto\n\ncommitments\n\nwith\n\noff-balance\n\nsheet\n\nrisk\n\nto\n\nmeet\n\nthe\n\nfinancial\n\nneeds\n\nof\n\nits\n\ncustomers.\n\nThese\n\nfinancial\n\ninstruments\n\nmay\n\ninclude\n\nloan\n\ncommitments\n\nand\n\nstandby\n\nletters\n\nof\n\ncredit.\n\nThese\n\ncommitments\n\nare\n\nsubject\n\nto\n\nthe\n\nsame\n\ncredit\n\npolicies\n\nand\n\napproval\n\nprocesses\n\nused\n\nfor\n\non-balance\n\nsheet\n\ninstruments.\n\nThese\n\ninstruments involve, to varying degrees,\n\nelements of credit and interest rate risk\n\nin excess of the amount recognized in the\n\nstatements\n\nof financial\n\ncondition.\n\nCommitments to\n\nextend\n\ncredit are\n\nagreements\n\nto lend\n\nto a\n\ncustomer as\n\nlong\n\nas there\n\nis no\n\nviolation\n\nof any\n\ncondition\n\nestablished\n\nin\n\nthe\n\ncontract.\n\nSince\n\ncertain\n\ncommitments\n\nare\n\nexpected\n\nto\n\nexpire\n\nwithout\n\nbeing\n\ndrawn\n\nupon,\n\nthe\n\ntotal\n\ncommitment\n\namount\n\ndoes\n\nnot\n\nnecessarily\n\nrepresent\n\nfuture\n\ncash\n\nrequirements.\n\nFor\n\nmost\n\nof\n\nthe\n\ncommercial\n\nlines\n\nof\n\ncredit,\n\nthe\n\nCorporation\n\nhas\n\nthe\n\noption\n\nto\n\nreevaluate\n\nthe\n\nagreement\n\nprior\n\nto\n\nadditional\n\ndisbursements.\n\nThere\n\nhave\n\nbeen\n\nno\n\nsignificant\n\nor\n\nunexpected draws\n\non existing\n\ncommitments. In\n\nthe case\n\nof credit\n\ncards and\n\npersonal lines\n\nof credit,\n\nthe Corporation\n\ncan cancel\n\nthe\n\nunused credit facility at any time and without cause.\n\nThe following table summarizes commitments to extend credit and standby letters of\n\ncredit as of the indicated dates:\n\nMarch 31, 2026\n\nDecember 31, 2025\n\n(In thousands)\n\nFinancial instruments whose contract amounts represent credit risk:\n\nCommitments to extend credit:\n\nConstruction undisbursed funds\n\n$\n\n159,031\n\n$\n\n191,879\n\nUnused credit card lines\n\n767,653\n\n760,531\n\nUnused personal lines of credit\n\n34,512\n\n34,932\n\nCommercial lines of credit\n\n1,145,553\n\n1,146,541\n\nLetters of credit:\n\nCommercial letters of credit\n\n41,011\n\n32,252\n\nStandby letters of credit\n\n22,042\n\n21,430\n\nThe\n\nCorporation\n\nengages\n\nin\n\nthe ordinary\n\ncourse\n\nof business\n\nin\n\nother\n\nfinancial\n\ntransactions\n\nthat\n\nare not\n\nrecorded\n\non the\n\nbalance\n\nsheet\n\nor\n\nmay\n\nbe\n\nrecorded\n\non\n\nthe\n\nbalance\n\nsheet\n\nin\n\namounts\n\nthat\n\nare\n\ndifferent\n\nfrom\n\nthe\n\nfull\n\ncontract\n\nor\n\nnotional\n\namount\n\nof\n\nthe\n\ntransaction\n\nand, thus,\n\naffect\n\nthe Corporation’s\n\nliquidity position.\n\nThese transactions\n\nare designed\n\nto (i)\n\nmeet the\n\nfinancial needs\n\nof\n\ncustomers, (ii) manage the\n\nCorporation’s credit,\n\nmarket and liquidity risks, (iii)\n\ndiversify the Corporation’s\n\nfunding sources, and (iv)\n\noptimize capital.\n\nIn addition to the\n\naforementioned off-balance\n\nsheet debt obligations\n\nand unfunded commitments\n\nto extend credit,\n\nthe Corporation\n\nhas obligations and commitments to make future\n\npayments under contracts, amounting to approximately\n\n$4.4\n\nbillion as of March 31,\n\n2026.\n\nOur\n\nmaterial\n\ncash\n\nrequirements\n\ncomprise\n\nprimarily\n\nof\n\ncontractual\n\nobligations\n\nto\n\nmake\n\nfuture\n\npayments\n\nrelated\n\nto\n\ntime\n\ndeposits,\n\nlong-term\n\nborrowings,\n\nand operating\n\nlease obligations.\n\nWe\n\nalso have\n\nother contractual\n\ncash obligations\n\nrelated\n\nto certain\n\nbinding agreements\n\nwe have\n\nentered into\n\nfor services\n\nincluding outsourcing\n\nof technology\n\nservices, security,\n\nadvertising and\n\nother\n\nservices\n\nwhich\n\nare\n\nnot\n\nmaterial\n\nto\n\nour\n\nliquidity\n\nneeds.\n\nWe\n\ncurrently\n\nanticipate\n\nthat\n\nour\n\navailable\n\nfunds,\n\ncredit\n\nfacilities,\n\nand\n\ncash\n\nflows from\n\noperations will\n\nbe sufficient\n\nto meet\n\nour operational\n\ncash needs\n\nand support\n\nloan growth\n\nand capital\n\nplan execution\n\nfor\n\nthe foreseeable future.\n\nOff-balance sheet\n\ntransactions are continuously\n\nmonitored to consider\n\ntheir potential impact\n\nto our liquidity\n\nposition and changes\n\nare applied to the balance between sources and uses of funds, as deemed appropriate,\n\nto maintain a sound liquidity position.\n\n79\n\nSources of Funding\n\nThe Corporation\n\nutilizes different\n\nsources of\n\nfunding to\n\nhelp ensure\n\nthat adequate\n\nlevels of\n\nliquidity are\n\navailable when\n\nneeded.\n\nDiversification\n\nof\n\nfunding\n\nsources\n\nis\n\nof\n\ngreat\n\nimportance\n\nto\n\nprotect\n\nthe\n\nCorporation’s\n\nliquidity\n\nfrom\n\nmarket\n\ndisruptions.\n\nThe\n\nprincipal\n\nsources\n\nof\n\nshort-term\n\nfunding\n\nare\n\ndeposits,\n\nincluding\n\nbrokered\n\nCDs.\n\nAdditional\n\nfunding\n\nis\n\nprovided\n\nby\n\nsecurities\n\nsold\n\nunder agreements\n\nto repurchase and\n\nlines of credit\n\nwith the FHLB.\n\nIn addition,\n\nthe Corporation also\n\nmaintains as additional\n\nsources\n\nborrowing capacity at the FED’s BIC Program\n\n,\n\nas discussed above.\n\nThe Asset and Liability Committee reviews credit availability\n\non a regular basis. The Corporation may\n\nalso sell mortgage loans as\n\na supplementary source of funding and obtain long-term funding\n\nthrough the issuance of notes and long-term brokered CDs.\n\nWhile\n\nliquidity\n\nis\n\nan\n\nongoing\n\nchallenge\n\nfor\n\nall\n\nfinancial\n\ninstitutions,\n\nmanagement\n\nbelieves\n\nthat\n\nthe\n\nCorporation’s\n\navailable\n\nborrowing capacity and\n\nefforts to grow\n\ncore deposits will be\n\nadequate to provide\n\nthe necessary funding\n\nfor the Corporation’s\n\nbusiness\n\nplans in the next 12 months and beyond.\n\nRetail\n\nand\n\ncommercial\n\ncore\n\ndeposits\n\n–\n\nThe\n\nCorporation’s\n\ndeposit\n\nproducts\n\ninclude\n\nregular\n\nsaving\n\naccounts,\n\ndemand\n\ndeposit\n\naccounts,\n\nmoney\n\nmarket\n\naccounts,\n\nand\n\nretail\n\nCDs. As\n\nof\n\nMarch\n\n31,\n\n2026\n\nand\n\nDecember\n\n31,\n\n2025,\n\nthe\n\nCorporation’s\n\ncore\n\ndeposits,\n\nwhich\n\nexclude\n\ngovernment\n\ndeposits\n\nand\n\nbrokered\n\nCDs,\n\ntotaled\n\n$13.2\n\nbillion\n\nand\n\n$13.1\n\nbillion,\n\nrespectively.\n\nThe\n\n$158.5\n\nmillion\n\nincrease\n\nin\n\nsuch\n\ndeposits\n\nwas\n\ndriven\n\nby\n\nincreases\n\nof\n\n$97.0\n\nmillion\n\nin\n\nthe\n\nPuerto\n\nRico\n\nregion,\n\n$37.8\n\nmillion\n\nin\n\nthe\n\nVirgin\n\nIslands\n\nregion, and $23.7\n\nmillion in the Florida\n\nregion.\n\nBy deposit type, the\n\nincrease consisted of a\n\n$115.4 million\n\nincrease in interest-bearing\n\ndeposits, of which $73.1 million was in the Puerto Rico region, and a $43.1 million\n\nincrease in non-interest-bearing deposits.\n\nGovernment deposits\n\n(fully collateralized)\n\n– As\n\nof March\n\n31, 2026,\n\nthe Corporation\n\nhad $2.4\n\nbillion of\n\nPuerto Rico\n\npublic sector\n\ndeposits\n\n($2.3\n\nbillion\n\nin\n\ntransactional\n\naccounts\n\nand\n\n$151.9\n\nmillion\n\nin\n\ntime\n\ndeposits),\n\ncompared\n\nto\n\n$2.5\n\nbillion\n\nas\n\nof\n\nDecember\n\n31,\n\n2025.\n\nGovernment\n\ndeposits\n\nare\n\ninsured\n\nby\n\nthe\n\nFDIC\n\nup\n\nto\n\nthe\n\napplicable\n\nlimits\n\nand\n\nthe\n\nuninsured\n\nportions\n\nare\n\nfully\n\ncollateralized.\n\nApproximately\n\n20% of\n\nthe public\n\nsector\n\ndeposits as\n\nof\n\nMarch\n\n31,\n\n2026 were\n\nfrom municipalities\n\nand\n\nmunicipal\n\nagencies\n\nin\n\nPuerto\n\nRico and 80% were from public corporations, the central\n\ngovernment and its agencies, and U.S. federal government agencies\n\nin Puerto\n\nRico.\n\nThe\n\nuninsured\n\nportions of\n\ngovernment\n\ndeposits were\n\ncollateralized\n\nby securities\n\nand\n\nloans with\n\nan amortized\n\ncost of\n\n$2.8\n\nbillion\n\nand $3.0\n\nbillion as\n\nof March\n\n31, 2026\n\nand December\n\n31, 2025,\n\nrespectively,\n\nand an\n\nestimated market\n\nvalue of\n\n$2.6 billion\n\nand $2.8\n\nbillion as\n\nof March\n\n31, 2026\n\nand December\n\n31, 2025,\n\nrespectively.\n\nIn addition\n\nto securities\n\nand loans,\n\nas of\n\neach of\n\nMarch 31,\n\n2026\n\nand December 31, 2025,\n\nthe Corporation used $225.0\n\nmillion in letters of credit\n\nissued by the FHLB as\n\npledges for a portion\n\nof public\n\ndeposits in the Virgin\n\nIslands.\n\nEstimate\n\nof\n\nUninsured\n\nDeposits\n\n–\n\nAs\n\nof\n\nMarch\n\n31,\n\n2026\n\nand\n\nDecember\n\n31,\n\n2025,\n\nthe\n\nestimated\n\namounts\n\nof\n\nuninsured\n\ndeposits\n\ntotaled\n\n$7.4\n\nbillion and\n\n$7.5 billion,\n\nrespectively,\n\nincluding government\n\ndeposits, generally\n\nrepresenting\n\nthe portion\n\nof deposits\n\nthat\n\nexceed\n\nthe\n\nFDIC\n\ninsurance\n\nlimit\n\nof\n\n$250,000\n\nand\n\namounts\n\nin\n\nany\n\nother\n\nuninsured\n\ndeposit\n\naccount.\n\nAs\n\nof\n\nMarch\n\n31,\n\n2026\n\nand\n\nDecember\n\n31,\n\n2025,\n\nthe\n\nuninsured\n\nportion\n\nof\n\nfully\n\ncollateralized\n\ngovernment\n\ndeposits\n\namounted\n\nto\n\n$2.6\n\nbillion\n\nand\n\n$2.7\n\nbillion,\n\nrespectively.\n\nExcluding\n\nfully\n\ncollateralized\n\ngovernment\n\ndeposits,\n\nthe\n\nestimated\n\namounts\n\nof\n\nuninsured\n\ndeposits\n\namounted\n\nto\n\n$4.8\n\nbillion\n\nas\n\nof\n\neach\n\nof\n\nMarch\n\n31,\n\n2026\n\nand\n\nDecember\n\n31,\n\n2025,\n\nwhich\n\nrepresents\n\n30.12%\n\nand\n\n29.79%\n\nof\n\ntotal\n\ndeposits\n\n(excluding\n\nbrokered CDs), respectively.\n\nThe\n\nestimated\n\namount\n\nof\n\nuninsured\n\ndeposits\n\nis\n\ncalculated\n\nbased\n\non\n\nthe\n\nsame\n\nmethodologies\n\nand\n\nassumptions\n\nused\n\nfor\n\nour\n\nbank\n\nregulatory reporting requirements adjusted for cash held by wholly-owned\n\nsubsidiaries at the Bank.\n\nThe following table presents by contractual maturities the amount of U.S. time deposits in\n\nexcess of FDIC insurance limits (over\n\n$250,000) and other time deposits that are otherwise uninsured as of March\n\n31, 2026:\n\n(In thousands)\n\n3 months or\n\nless\n\n3 months to\n\n6 months\n\n6 months to\n\n1 year\n\nOver 1 year\n\nTotal\n\nU.S. time deposits in excess of FDIC insurance limits\n\n$\n\n267,792\n\n$\n\n270,912\n\n$\n\n434,412\n\n$\n\n169,315\n\n$\n\n1,142,431\n\nOther uninsured time deposits\n\n$\n\n30,597\n\n$\n\n9,782\n\n$\n\n8,650\n\n$\n\n4,096\n\n$\n\n53,125\n\nBrokered CDs\n\n– Total brokered\n\nCDs decreased by $86.5 million to $507.0 million as of March 31, 2026,\n\ndriven by a decrease in the\n\nFlorida region.\n\nThe decrease reflects\n\nmaturing brokered\n\nCDs amounting to\n\n$119.6 million\n\nwith an all-in\n\ncost of 4.42%\n\nthat were paid\n\noff\n\nduring\n\nthe\n\nfirst\n\nquarter\n\nof\n\n2026,\n\npartially\n\noffset\n\nby\n\n$33.1\n\nmillion\n\nof\n\nnew\n\nissuances\n\nwith\n\noriginal\n\naverage\n\nmaturities\n\nof\n\napproximately 1.2 years and an all-in cost of 3.77%.\n\nThe average remaining term to maturity of the brokered CDs outstanding\n\nas of March 31, 2026 was approximately 1.0 year.\n\n80\n\nThe future use\n\nof brokered\n\nCDs will depend\n\non multiple factors\n\nincluding excess\n\nliquidity at each\n\nof the regions,\n\nfuture cash needs\n\nand\n\nany\n\ntax implications.\n\nAlso,\n\ndepending\n\non\n\nlending or\n\nother\n\ninvestment\n\nopportunities available,\n\ncash\n\ninflows from\n\nrepayments\n\nof\n\ninvestment securities\n\nmay be used\n\nas well\n\nto repay brokered\n\nCDs. Brokered\n\nCDs are insured\n\nby the FDIC\n\nup to regulatory\n\nlimits and\n\ncan be obtained faster than regular retail deposits.\n\nThe\n\nfollowing\n\ntable\n\npresents\n\nthe\n\nremaining\n\ncontractual\n\nmaturities\n\nand\n\nweighted-average\n\ninterest\n\nrates\n\nof\n\nbrokered\n\nCDs\n\nas\n\nof\n\nMarch 31, 2026:\n\nTotal\n\nWeighted-average\n\ninterest rate %\n\n(In thousands)\n\nThree months or less\n\n$\n\n92,188\n\n4.17\n\nOver three months to six months\n\n81,539\n\n4.06\n\nOver six months to one year\n\n185,268\n\n3.89\n\nOver one year to two years\n\n105,138\n\n3.80\n\nOver two years to three years\n\n27,401\n\n4.44\n\nOver four years to five years\n\n5,952\n\n4.63\n\nOver five years\n\n9,525\n\n4.60\n\nTotal\n\n$\n\n507,011\n\n4.00\n\nRefer to\n\n“Net Interest\n\nIncome” above\n\nfor information\n\nabout average\n\nbalances of\n\ninterest-bearing deposits\n\nand the\n\naverage interest\n\nrate paid on such deposits for the quarters ended March 31, 2026\n\nand 2025.\n\nBorrowings\n\nAs of each of March 31, 2026 and December 31, 2025, total borrowings\n\namounted to $290.0 million.\n\nAdvances\n\nfrom\n\nthe\n\nFHLB\n\n–\n\nThe\n\nBank\n\nis\n\na\n\nmember\n\nof\n\nthe\n\nFHLB\n\nsystem\n\nand\n\nobtains\n\nadvances\n\nto\n\nfund\n\nits\n\noperations\n\nunder\n\na\n\ncollateral\n\nagreement\n\nwith\n\nthe\n\nFHLB\n\nthat\n\nrequires\n\nthe\n\nBank\n\nto\n\nmaintain\n\nqualifying\n\nmortgages\n\nand/or\n\ninvestments\n\nas\n\ncollateral\n\nfor\n\nadvances\n\ntaken.\n\nAs of\n\neach of\n\nMarch\n\n31, 2026\n\nand\n\nDecember\n\n31, 2025,\n\nthe total\n\noutstanding\n\nbalance of\n\nfixed-rate\n\nFHLB advances\n\nwas $290.0 million.\n\nDuring the first quarter\n\nof 2026, the\n\nCorporation added a\n\n$90.0 million short-term\n\nfixed-rate FHLB advance\n\nwith\n\nan interest rate of 3.86%\n\nand repaid at maturity $90.0\n\nmillion of long-term FHLB advances\n\nat an average rate of\n\n4.49%. Of the $290.0\n\nmillion\n\nin\n\nFHLB advances\n\nas\n\nof\n\nMarch\n\n31,\n\n2026,\n\n$100.0\n\nmillion\n\nwere\n\npledged\n\nwith\n\ninvestment\n\nsecurities\n\nand\n\n$190.0\n\nmillion\n\nwere\n\npledged with mortgage\n\nloans. As of March\n\n31, 2026, the Corporation\n\nhad $1.0 billion available\n\nfor additional credit on\n\nFHLB lines of\n\ncredit based on collateral pledged at the FHLB of New York.\n\nThe following\n\ntable presents the\n\nremaining contractual\n\nmaturities and\n\nweighted-average interest\n\nrates of\n\nadvances from\n\nthe FHLB\n\nas of March 31, 2026:\n\nTotal\n\nWeighted-average\n\ninterest rate %\n\n(In thousands)\n\nThree months or less\n\n$\n\n90,000\n\n3.86\n\nOver one year to two years\n\n200,000\n\n4.25\n\nTotal\n\n(1)\n\n$\n\n290,000\n\n4.13\n\n(1) Average remaining term to maturity\n\nof 1.13 years.\n\nSecurities\n\nsold\n\nunder\n\nagreements\n\nto\n\nrepurchase\n\n–\n\nFrom\n\ntime\n\nto\n\ntime,\n\nthe\n\nCorporation\n\nenters\n\ninto\n\nrepurchase\n\nagreements\n\nas\n\nan\n\nadditional\n\nsource\n\nof\n\nfunding.\n\nAs\n\nof\n\neach\n\nof\n\nMarch\n\n31,\n\n2026\n\nand\n\nDecember\n\n31,\n\n2025,\n\nthere\n\nwere\n\nno\n\noutstanding\n\nrepurchase\n\nagreements.\n\nWhen\n\nthe\n\nCorporation\n\nenters\n\ninto\n\nrepurchase\n\nagreements,\n\nas is\n\nthe\n\ncase\n\nwith\n\nderivative\n\ncontracts,\n\nthe\n\nCorporation\n\nis\n\nrequired\n\nto\n\npledge\n\ncash\n\nor\n\nqualifying\n\nsecurities\n\nto\n\nmeet\n\nmargin\n\nrequirements.\n\nTo\n\nthe\n\nextent\n\nthat\n\nthe\n\nvalue\n\nof\n\nsecurities\n\npreviously\n\npledged\n\nas\n\ncollateral\n\ndeclines\n\ndue\n\nto\n\nchanges\n\nin\n\ninterest\n\nrates,\n\na\n\nliquidity\n\ncrisis\n\nor\n\nany\n\nother\n\nfactor,\n\nthe\n\nCorporation\n\nis\n\nrequired\n\nto\n\ndeposit\n\nadditional\n\ncash\n\nor\n\nsecurities\n\nto\n\nmeet\n\nits\n\nmargin\n\nrequirements,\n\nthereby\n\nadversely\n\naffecting\n\nits\n\nliquidity.\n\nGiven\n\nthe\n\nquality\n\nof\n\nthe\n\ncollateral\n\npledged,\n\nthe\n\nCorporation\n\nhas\n\nnot\n\nexperienced\n\nmargin\n\ncalls\n\nfrom\n\ncounterparties\n\narising\n\nfrom\n\ncredit-quality-related\n\nwrite-\n\ndowns in valuations.\n\n81\n\nFED Discount Window\n\n– The Corporation participates in\n\nthe BIC Program of the FED.\n\nThrough the BIC Program, a\n\nbroad range of\n\nloans\n\nmay\n\nbe\n\npledged\n\nas\n\ncollateral\n\nfor\n\nborrowings\n\nthrough\n\nthe\n\nFED\n\nDiscount\n\nWindow.\n\nAs\n\npreviously\n\nmentioned,\n\nas\n\nof\n\nMarch\n\n31,\n\n2026,\n\nthe\n\nCorporation\n\nhad\n\napproximately\n\n$2.6\n\nbillion\n\nfully\n\navailable\n\nfor\n\nfunding\n\nunder\n\nthe\n\nFED’s\n\nDiscount\n\nWindow\n\nbased\n\non\n\ncollateral pledged at the FED.\n\nEffect of Credit Ratings on Access to Liquidity\n\nThe\n\nCorporation’s\n\nliquidity\n\nis\n\ncontingent\n\nupon\n\nits\n\nability\n\nto\n\nobtain\n\ndeposits\n\nand\n\nother\n\nexternal\n\nsources\n\nof\n\nfunding\n\nto\n\nfinance\n\nits\n\noperations.\n\nThe Corporation’s\n\ncurrent\n\ncredit ratings\n\nand any\n\ndowngrade\n\nin credit\n\nratings can\n\nhinder the\n\nCorporation’s\n\naccess to\n\nnew\n\nforms\n\nof\n\nexternal\n\nfunding\n\nand/or\n\ncause\n\nexternal\n\nfunding\n\nto\n\nbe\n\nmore\n\nexpensive,\n\nwhich\n\ncould,\n\nin\n\nturn,\n\nadversely\n\naffect\n\nits\n\nresults\n\nof\n\noperations.\n\nThe Corporation\n\ndoes not\n\nhave any\n\noutstanding debt\n\nor derivative\n\nagreements that\n\nwould be\n\naffected by\n\ncredit rating\n\ndowngrades.\n\nFurthermore, given the Corporation’s\n\nnon-reliance on corporate debt or other\n\ninstruments directly linked in terms\n\nof pricing or volume\n\nto credit\n\nratings, the\n\nliquidity of\n\nthe Corporation\n\nhas not been\n\naffected in\n\nany material\n\nway by downgrades.\n\nThe Corporation’s\n\nability\n\nto access new non-deposit sources of funding, however,\n\ncould be adversely affected by credit downgrades.\n\nAs\n\nof\n\nthe\n\ndate\n\nhereof,\n\nthe\n\nCorporation’s\n\nlong-term\n\nissuer\n\ncredit\n\nratings\n\nare\n\nBB+\n\nfrom\n\nFitch\n\nand\n\nBBB\n\nfrom\n\nKroll\n\nBond\n\nRating\n\nAgency (“KBRA”).\n\nAs of\n\nthe date\n\nhereof, FirstBank’s\n\nlong-term issuer\n\ncredit ratings\n\nare BB+\n\nfrom Fitch,\n\nwhich is\n\none notch\n\nbelow\n\nthe minimum\n\nBBB- level required\n\nto be considered\n\ninvestment grade,\n\nand BBB+ from\n\nKBRA, which is\n\nconsidered investment\n\ngrade.\n\nThe Corporation’s\n\ncredit ratings\n\nare dependent\n\non a\n\nnumber of\n\nfactors, both\n\nquantitative and\n\nqualitative, and\n\nare subject\n\nto change\n\nat\n\nany time. The disclosure\n\nof credit ratings is\n\nnot a recommendation\n\nto buy,\n\nsell or hold the Corporation’s\n\nsecurities. Each rating should\n\nbe evaluated independently of any other rating.\n\n82\n\nCash Flows\n\nCash and\n\ncash equivalents\n\nwere $550.9\n\nmillion as\n\nof March\n\n31, 2026,\n\na decrease\n\nof $107.7\n\nmillion when\n\ncompared to\n\nDecember\n\n31, 2025.\n\nThe following\n\ndiscussion highlights\n\nthe major\n\nactivities and\n\ntransactions that\n\naffected\n\nthe Corporation’s\n\ncash flows\n\nduring\n\nthe first quarters of 2026 and 2025:\n\nCash Flows from Operating Activities\n\nFirst BanCorp.’s\n\noperating assets and\n\nliabilities vary significantly\n\nin the normal course\n\nof business due to\n\nthe amount and timing\n\nof\n\ncash flows.\n\nManagement believes\n\nthat cash\n\nflows from\n\noperations, available\n\ncash balances,\n\nand the\n\nCorporation’s\n\nability to\n\ngenerate\n\ncash through\n\nshort and long-term\n\nborrowings will be\n\nsufficient to\n\nfund the Corporation’s\n\noperating liquidity\n\nneeds for the\n\nforeseeable\n\nfuture.\n\nFor the quarters\n\nended March 31,\n\n2026 and 2025,\n\nnet cash provided\n\nby operating activities\n\nwas $121.1 million\n\nand $108.2 million,\n\nrespectively.\n\nNet cash\n\ngenerated from\n\noperating activities\n\nwas higher\n\nthan reported\n\nnet income\n\nlargely as\n\na result\n\nof adjustments\n\nfor\n\nnon-cash items such\n\nas depreciation and\n\namortization,\n\ndeferred income tax\n\nexpense and the provision\n\nfor credit losses, as\n\nwell as cash\n\ngenerated from sales and repayments of loans held for sale.\n\nCash Flows from Investing Activities\n\nThe Corporation’s\n\ninvesting activities primarily\n\nrelate to originating\n\nloans to be\n\nheld for investment,\n\nas well as\n\npurchasing, selling,\n\nand repaying\n\navailable-for-sale and\n\nheld-to-maturity debt\n\nsecurities. For the\n\nquarter ended March\n\n31, 2026, net\n\ncash used in\n\ninvesting\n\nactivities\n\nwas\n\n$62.2\n\nmillion,\n\nprimarily\n\ndue\n\nto\n\npurchases\n\nof\n\nU.S.\n\nagencies\n\nMBS\n\nand\n\ndebentures,\n\npartially\n\noffset\n\nby\n\nmaturities\n\nand\n\nprincipal repayments of U.S. agencies MBS and debentures,\n\nas well as proceeds from sales of repossessed assets.\n\nFor the\n\nquarter ended\n\nMarch 31,\n\n2025, net\n\ncash provided\n\nby investing\n\nactivities was\n\n$393.6 million,\n\nprimarily due\n\nto maturities of\n\nU.S. agencies debentures and U.S. Treasury\n\nsecurities and principal repayments of U.S. agencies MBS and debentures,\n\nnet repayments\n\non loans held for investment, proceeds from sales of repossessed assets, and\n\nproceeds from the bulk sale of fully charged-off\n\nconsumer\n\nloans and finance leases, partially offset by purchases of MBS during\n\nthe first quarter of 2025.\n\nCash Flows from Financing Activities\n\nThe\n\nCorporation’s\n\nfinancing\n\nactivities\n\nprimarily\n\ninclude\n\nthe\n\nreceipt\n\nof\n\ndeposits\n\nand\n\nthe\n\nissuance\n\nof\n\nbrokered\n\nCDs,\n\nthe\n\nissuance\n\nand/or repayment of\n\nlong-term borrowings,\n\nthe issuance of equity\n\ninstruments, return of\n\ncapital, and activities\n\nrelated to its short\n\n-term\n\nfunding.\n\nFor\n\nthe\n\nquarter\n\nended\n\nMarch\n\n31,\n\n2026,\n\nnet\n\ncash\n\nused\n\nin\n\nfinancing\n\nactivities\n\nwas\n\n$166.6\n\nmillion,\n\nmainly\n\nreflecting\n\ncapital\n\nreturned to\n\nstockholders and\n\na decrease\n\nin total\n\ndeposits. In\n\naddition, during\n\nthe first\n\nquarter of\n\n2026, the\n\nCorporation added\n\na $90.0\n\nmillion short-term fixed-rate FHLB advance and repaid at maturity $90.0\n\nmillion of long-term FHLB advances.\n\nFor the quarter ended March\n\n31, 2025, net cash used\n\nin financing activities was $332.9\n\nmillion, mainly reflecting the repayments\n\nof\n\nlong-term borrowings,\n\nconsisting of\n\n$180.0 million\n\nin FHLB advances\n\nand the\n\nredemption of\n\njunior subordinated\n\ndebentures;\n\ncapital\n\nreturned to stockholders; and a decrease in total deposits.\n\n83\n\nCapital\n\nAs\n\nof\n\nMarch\n\n31,\n\n2026,\n\nthe\n\nCorporation’s\n\nstockholders’\n\nequity\n\nwas\n\n$2.0\n\nbillion,\n\nan\n\nincrease\n\nof\n\n$0.4\n\nmillion\n\nfrom\n\nDecember\n\n31,\n\n2025. The increase\n\nwas driven by\n\nnet income generated\n\nin the first quarter\n\nof 2026, partially\n\noffset by $50.0\n\nmillion in common\n\nstock\n\nrepurchases,\n\n$31.5 million,\n\nor $0.20\n\nper common\n\nshare, in\n\ncommon stock\n\ndividends declared\n\nin the\n\nfirst quarter\n\nof 2026,\n\nand a\n\n$6.2\n\nmillion\n\ndecrease\n\nin\n\nthe\n\nfair\n\nvalue\n\nof\n\navailable-for-sale\n\ndebt\n\nsecurities\n\ndue\n\nto\n\nchanges\n\nin\n\nmarket\n\ninterest\n\nrates\n\nrecognized\n\nas\n\npart\n\nof\n\naccumulated other comprehensive loss in the consolidated statements of\n\nfinancial condition.\n\nOn\n\nApril\n\n22,\n\n2026,\n\nthe\n\nCorporation’s\n\nBoard\n\nof\n\nDirectors\n\ndeclared\n\na\n\nquarterly\n\ncash\n\ndividend\n\nof\n\n$0.20\n\nper\n\ncommon\n\nshare.\n\nThe\n\ndividend is\n\npayable on\n\nJune 12,\n\n2026 to\n\nshareholders of\n\nrecord at\n\nthe close\n\nof business\n\non May\n\n28, 2026.\n\nThe Corporation\n\nintends to\n\ncontinue\n\nto\n\npay\n\nquarterly\n\ndividends\n\non\n\ncommon\n\nstock.\n\nHowever,\n\nthe\n\nCorporation’s\n\ncommon\n\nstock\n\ndividends,\n\nincluding\n\nthe\n\ndeclaration, timing,\n\nand amount, remain\n\nsubject to consideration\n\nand approval by\n\nthe Corporation’s\n\nBoard of Directors\n\nat the relevant\n\ntimes.\n\nOn October 22, 2025, the Corporation announced\n\nthat its Board of Directors approved a stock repurchase\n\nprogram authorizing up to\n\n$200\n\nmillion\n\nof\n\nits\n\noutstanding\n\ncommon\n\nstock,\n\nwhich\n\nit\n\nexpects\n\nto\n\nexecute\n\nthrough\n\nthe\n\nend\n\nof\n\nthe\n\nfourth\n\nquarter\n\nof\n\n2026.\n\nThe\n\nCorporation repurchased approximately\n\n2.4 million shares of\n\ncommon stock for a\n\ntotal cost of $50.0\n\nmillion during the first\n\nquarter of\n\n2026.\n\nFor\n\nmore\n\ninformation,\n\nsee\n\nPart\n\nII,"}