First BanCorp Reports Financial Results for the Second Quarter Ended June 30, 2009 and Announces the Suspension of Common and Preferred Dividends

* Reported net loss of $78.7 million or $1.03 per diluted share:

* Recorded total provision for loan and lease losses of $235.2 million, and
increased the total allowance for loan and lease losses to $407.7 million
* Recorded a charge of $8.9 million for the FDIC special assessment
* Recorded a gain on sale of investments of $10.3 million
* Increased net interest income by $9.4 million, compared to the first quarter
of 2009

* Suspended common and preferred dividends, effective with the preferred
dividend for the month of August 2009
* Well-capitalized with estimated total regulatory capital of $2.0 billion and
estimated Tier 1 capital of $1.8 billion, resulting in 14.3% estimated total
capital ratio, 13.1% estimated Tier 1 capital ratio and 9.1% estimated leverage
ratio
* Reported tangible common equity ratio of 4.35%, Tier 1 common equity to
risk-weighted assets ratio of 4.73% and tangible book value per common share of
$9.38
* Grew core deposits by $62.7 million, compared to the first quarter of 2009
* Extended approximately $841.7 million in credit to consumers, corporations,
small businesses, municipalities and non-profit organizations during the second
quarter of 2009

SAN JUAN, Puerto Rico--(Business Wire)--
First BanCorp (the "Corporation") (NYSE:FBP) today reported net loss for the
quarter ended June 30, 2009 of $78.7 million, compared to net income of $21.9
million for the quarter ended March 31, 2009, and net income of $33.0 million
for the quarter ended June 30, 2008. For the six-month period ended June 30,
2009, the Corporation incurred net loss of $56.8 million, compared to net income
of $66.6 million for the same period in 2008. The Corporation`s tangible common
equity ratio stood at 4.35% as of June 30, 2009 compared to 5.11% as of March
31, 2009 and 4.87% as of December 31, 2008. The Tier 1 common to risk-weighted
assets ratio as of June 30, 2009 was 4.73% compared to 5.90% as of March 31,
2009 and 5.92% as of December 31, 2008. This press release should be read in
conjunction with the accompanying tables (Exhibit A), which are an integral part
of this press release.

Mr. Luis M. Beauchamp, Chairman and CEO of First BanCorp commented on First
BanCorp's second quarter results, "This quarter's disappointing loss was the
result of a substantial increase in the Corporation`s provision for loan and
lease losses, resulting from the effects of the unabated recession in the
markets served by the Corporation, principally South Florida and Puerto Rico. In
particular, the continued decline in values of residential and commercial real
estate in the State of Florida, combined with the State`s overall weakened
economy, led the Corporation to take a very significant charge-off in the
construction loan portfolio, as well as an increase in its non-performing
construction loans. By the end of the quarter, 85% of the Florida construction
loans portfolio had been individually reviewed for impairment purposes and
recorded at its estimated realizable value. On the other hand, Puerto Rico has
experienced a severe downturn in the housing market causing an oversupply of
housing units and deceleration in absorption rates. This has impacted most
developers on the Island, some of whom are our customers and to whom, in some
cases, we have provided construction financing."

Regarding the Florida operation, Mr. Beauchamp noted, "The Corporation has taken
several key actions in Florida, most importantly continuing to invest in its
management talent. We have hired an Executive Vice President for the Florida
Region and a Senior Vice President for Special Assets, both with extensive
experience in the State. Also, we have consolidated the Florida operations into
one operating unit which will result in operating synergies and efficiencies."

Mr. Beauchamp continued, "Despite the loss and the increase in loan loss
reserves, in this past quarter First BanCorp`s gross revenues grew, net interest
margin expanded, core deposit base increased and controllable expenses were
stable. The Corporation continues to find prudent lending and business
opportunities in all of our markets. As an example, mortgage loan originations
in Puerto Rico were approximately $150 million and we completed the
securitization of approximately $114 million of FHA/VA mortgage loans into GNMA
mortgage-backed securities."

Mr. Beauchamp commented on the discontinuance of dividend payments, "Considering
the loss reported for this period, the Corporation has made the prudent, and
very difficult, decision to suspend paying dividends on its common and preferred
stock. We note that this is consistent with federal regulatory guidance and
policy that states that a bank holding company should only pay dividends from
current earnings." Mr. Beauchamp continued, "In the long term interest of our
shareholders, the Corporation's focus must be on maintaining a healthy capital
position as the duration and depth of this recession is uncertain. To the extent
the Corporation returns to profitability, we will consider reinstating the
payment of dividends."

"The Corporation continues to be well-capitalized, with approximately $600
million in excess of the requirement to be a well-capitalized institution.
Preserving a strong capital base to weather these times is the primary focus for
First BanCorp," concluded Mr. Beauchamp.

The following are the main factors that impacted the Corporation`s financial
results for the quarter ended June 30, 2009, compared to the previous quarter
ended March 31, 2009:

Provision for Loan and Lease Losses and Credit Quality

The following table sets forth an analysis of the allowance for loan and lease
losses during the periods indicated:

Quarter Ended Six-Month Period Ended
June 30, March 31, June 30, June 30,
(Dollars in thousands) 2009 2009 2008 2009 2008

Allowance for loan and lease losses, beginning of period $ 302,531 $ 281,526 $ 210,495 $ 281,526 $ 190,168
Provision for loan and lease losses 235,152 59,429 41,323 294,581 87,116
Loans net charge-offs:
Residential real estate (3,329 ) (7,162 ) (1,129 ) (10,491 ) (2,368 )
Commercial (27,967 ) (7,907 ) (10,865 ) (35,874 ) (15,037 )
Construction (82,847 ) (8,523 ) (2,526 ) (91,370 ) (6,311 )
Finance leases (2,276 ) (1,920 ) (1,661 ) (4,196 ) (4,033 )
Consumer (13,518 ) (12,912 ) (13,365 ) (26,430 ) (27,263 )
Net charge-offs (129,937 ) (38,424 ) (29,546 ) (168,361 ) (55,012 )
Allowance for loan and lease losses, end of period $ 407,746 $ 302,531 $ 222,272 $ 407,746 $ 222,272
Allowance for loan and lease losses to period end total loans receivable 3.11 % 2.24 % 1.82 % 3.11 % 1.82 %
Net charge-offs (annualized) to average loans outstanding during the period 3.85 % 1.16 % 0.97 % 2.52 % 0.91 %
Provision for loan and lease losses to net charge-offs during the period 1.81x 1.55x 1.40x 1.75x 1.58x

The provision for loan and lease losses amounted to $235.2 million, or 181% of
net charge-offs, for the second quarter of 2009, compared to $59.4 million, or
155% of net charge-offs, for the first quarter of 2009 and $41.3 million, or
140% of net charge-offs for the second quarter of 2008. Approximately $103.3
million, or 44%, of the provision recorded in the second quarter of 2009 is
related to the migration of a substantial portion of loans to the substandard or
doubtful category, thus, requiring a higher reserve. The increase also resulted
from changes in reserve factors used to determine the general reserve for the
Corporation`s construction, commercial and residential mortgage loan portfolios,
in both Puerto Rico and Florida portfolios, and specific reserves necessary for
additional loans classified as impaired during the second quarter of 2009. The
provision for loan losses related to the Corporation`s Florida operations
amounted to $85.7 million for the second quarter of 2009 compared to $15.1
million for the first quarter of 2009 and in respect to the Puerto Rico
operations the provision for loan losses recorded for the second quarter of 2009
amounted to $141.2 million compared to $38.3 million for the first quarter of
2009, mainly for the construction and commercial loan portfolios.

The construction loan portfolio in Florida has been adversely affected by
declining collateral values that resulted in increases in charge-offs (refer to
net charge-offs discussion below for additional information). The construction
and commercial loan portfolios in Puerto Rico continue to be negatively impacted
by further deterioration of economic and housing conditions, reflected in a
persistent decline in the volume of sales of new housing units in Puerto Rico
and an unemployment rate of over 14%. The increase in general reserve factors
was necessary to account for increases in charge-offs and delinquency levels.
General reserves are established based on trends in charge-offs and
delinquencies. The consumer loans general reserve is based on factors such as
delinquency trends, credit bureau score bands, portfolio type, geographical
location, bankruptcy trends, recent market transactions, and other environmental
factors such as economic forecasts. The evaluation of residential mortgages is
performed at the loan level and then aggregated to determine the expected loss
ratio. The model is based on risk-adjusted prepayment curves, default curves,
and severity curves. The severity is affected by the expected house price
scenario based on the most recent house price historical trends. Default curves
are used in the model to determine expected delinquency levels. The
risk-adjusted timing of liquidation and associated costs are used in the model
and are risk-adjusted for the area in which the property is located (Puerto Rico
or Virgin Islands). For residential mortgages in Florida, the model is based on
aggregate historical loss ratios adjusted by changes in appraisal values,
delinquency factors, and other regional environmental factors. For commercial
loans, including construction loans, the general reserve is based on delinquency
trends, historical loss ratios, loan type, risk-rating, geographical location,
changes in collateral values for collateral dependent loans and Gross National
Product (GNP) data.

The Corporation`s net charge-offs for the second quarter of 2009 were $129.9
million or 3.85% of average loans on an annualized basis, compared to $38.4
million or 1.16% of average loans for the first quarter of 2009 and $29.5
million or 0.97% for the second quarter of 2008. The increase is due mainly to
the accelerated deterioration in the collateral values of construction loans,
primarily in the Florida region. Florida`s economy has been hampered by a
deteriorated housing market since the second half of 2007. The overbuilding in
the face of waning demand, among other things, has caused a decline in the
housing prices. The Corporation has been obtaining appraisals and increasing its
reserve, as necessary, with expectations for a gradual housing market recovery.
Nonetheless, the passage of time has increase the possibility that the recovery
of the market will not be in the near term. For these reasons, the Corporation
decided to charge-off collateral deficiencies for a significant amount of
collateral dependent loans based on current appraisals obtained. The
deficiencies in the collateral may raise doubts about the potential to collect
on the principal, but many of these borrowers are making interest payments. The
Corporation is engaged in continuous efforts to identify alternatives that
enable borrowers to repay their loans and protect the Corporation`s investment.
Construction loans net charge-offs increased by $74.3 million ($61.4 million for
Florida operations) compared to the first quarter of 2009 and $80.3 million
($60.7 million for Florida operations) compared to the second quarter of 2008.
Commercial loans net charge-offs increased by $20.1 million compared to the
first quarter of 2009 and by $17.1 million compared to the second quarter of
2008, mainly in Puerto Rico. Residential loans net charge-offs decreased by $3.8
million compared to the first quarter of 2009 and increased by $2.2 million
compared to the second quarter of 2008. The ratio of net charge-offs to average
loans on the Corporation`s residential mortgage loan portfolio was 0.39% for the
quarter ended June 30, 2009, lower than the approximately 1.8% average
charge-off rate for commercial banks in the U.S. mainland reported for the first
quarter of 2009. The Puerto Rico housing market has not seen the dramatic
decline in housing prices that is affecting the U.S. mainland; however, there is
currently an oversupply of housing units compounded by a lower demand for
housing due to diminished consumer purchasing power and confidence. Consumer
loans net charge-offs (including finance leases) remained relatively stable,
increasing by $1.0 million and $0.8 million in the second quarter of 2009, as
compared to the first quarter of 2009 and second quarter of 2008, respectively.

The following table presents annualized charge-offs to average loans
held-in-portfolio:

For the Quarter Ended
June 30, 2009 March 31, 2009 December 31, 2008 September 30, 2008 June 30, 2008

Residential mortgage loans 0.39 % 0.82 % 0.26 % 0.19 % 0.14 %

Commercial loans 1.74 % 0.52 % 0.45 % 0.46 % 0.81 %

Construction loans 20.38 % 2.21 % 0.11 % 0.27 % 0.68 %

Consumer loans (1) 3.12 % 2.84 % 3.54 % 2.98 % 3.02 %

Total loans 3.85 % 1.16 % 0.87 % 0.80 % 0.97 %

(1) Includes lease financing.

The above ratios are based on annualized charge-offs and are not necessarily
indicative of the results expected for the entire year or in subsequent periods.

The following table presents charge-offs (annualized) to average loans
held-in-portfolio by geographic segment:

Quarter Ended Six-Month Period Ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
PUERTO RICO:

Residential mortgage loans 0.43 % 0.86 % 0.17 % 0.65 % 0.18 %

Commercial loans 1.09 % 0.53 % 0.15 % 0.81 % 0.25 %

Construction loans 8.33 % 3.17 % 0.08 % 5.88 % 0.04 %

Consumer loans (1) 3.10 % 2.61 % 2.94 % 2.85 % 3.08 %

Total loans 1.90 % 1.19 % 0.67 % 1.55 % 0.76 %

VIRGIN ISLANDS:

Residential mortgage loans 0.19 % 0.03 % 0.09 % 0.11 % 0.05 %

Commercial loans 5.08 % 0.38 % 18.33 % 2.75 % 9.25 %

Construction loans 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %

Consumer loans 2.73 % 4.00 % 3.41 % 3.39 % 3.16 %

Total loans 1.69 % 0.60 % 4.38 % 1.14 % 2.44 %

FLORIDA OPERATIONS:

Residential mortgage loans 0.32 % 1.43 % 0.00 % 0.88 % 0.02 %

Commercial loans 7.11 % 0.43 % 0.02 % 3.82 % 0.01 %

Construction loans 50.28 % 1.37 % 1.60 % 25.53 % 2.00 %

Consumer loans 5.01 % 9.95 % 5.35 % 7.56 % 4.41 %

Total loans 19.93 % 1.31 % 0.81 % 10.60 % 0.97 %

(1) Includes lease financing.

Total non-performing assets as of June 30, 2009 amounted to $1.3 billion,
compared to $773.5 million as of March 31, 2009 and $498.4 million as of June
30, 2008. The increase in non-performing assets since March 31, 2009 was led by
an increase of $333.6 million in loans classified as non-performing in the state
of Florida, an increase of $73.2 million in non-performing residential mortgage
loans in Puerto Rico, an increase of $42.1 million in non-performing
construction loans in Puerto Rico and an increase of $8.8 million in
non-performing commercial loans in Puerto Rico. Also, during the second quarter
of 2009, the Corporation classified as non-performing investment securities with
a book value of $64.5 million that were pledged with Lehman Brothers Special
Financing, Inc., in connection with several interest rate swap agreements
entered into with that institution. Considering that the investment securities
have not yet been recovered by the Corporation, despite its efforts in this
regard, the Corporation has decided to classify such investments as
non-performing. Other increases in non-performing assets mainly consist of
additions to repossessed properties, mainly additions to the real estate owned
portfolio, that increased by $9.3 million and an increase of $1.6 million in
consumer loans (including finance leases).

The main reason for the increase in non-performing assets of the Florida
operations was the construction loan portfolio. As of June 30, 2009, the
Corporation classified approximately $348.5 million as non-performing
construction loans in the state of Florida, an increase of $309.4 million
compared to $39.1 million as of March 31, 2009. Collateral deficiencies on these
loans may raise doubts about the ultimate ability to collect on the principal in
the current economic environment, however, at the close of the second quarter of
2009 approximately $123.1 million of the loans comprising the increase in
non-performing construction loans in Florida were current or with delinquencies
under 90 days in their interest payments and expected collections will be
recorded on a cash basis going forward. As sales continue to lag, some borrowers
reverted to rental projects, as a result of which payment of principal and/or
interest has come from rental income and other sources. In most of these loans
cash collections cover interest plus property taxes, insurance and other
operating costs associated with the projects. Declining sales of newly
constructed housing or condo units and further deterioration of the Florida
economy have depressed values of all real estate, both residential and
commercial, requiring the Corporation to increase its reserves and to downgrade
the classification of most of the loans to substandard.

Total non-performing assets in Puerto Rico amounted to $814.1 million as of June
30, 2009, compared to $617.0 million as of March 31, 2009. The increase is
primarily related to the residential mortgage and construction loan portfolios.
Since March 31, 2009, non-performing residential mortgage loans in Puerto Rico
increased by $73.2 million, reflecting the recessionary conditions in Puerto
Rico`s economy. Additionally, $33.8 million of the increase in non-performing
residential mortgage loans relates to loans that were part of a portfolio that
was acquired during the quarter from R&G Financial Corporation ("R&G"), a Puerto
Rican financial institution. The R&G transaction involved the purchase of
approximately $205 million of residential mortgage loans that previously served
as collateral for a commercial loan extended to R&G. The purchase price of the
transaction was retained by the Corporation to fully pay off the loan, thereby
significantly reducing the Corporation`s exposure to a single borrower. This
acquisition had the effect of improving the Corporation`s regulatory capital
ratios due to the lower risk-weighting of the assets acquired. Additionally, net
interest income improves since the weighted-average effective yield of the
mortgage loans acquired approximates 5.38% (including non-performing loans)
compared to a yield of approximately 150 basis points over 3-month LIBOR in the
commercial loan to R&G.

Meanwhile, the construction loan portfolio accounted for $42.1 million, or 34%
of the total increase in non-performing loans in Puerto Rico since March 2009.
Approximately $36.3 million, or 86%, of the increase pertained to two lending
relationships in Puerto Rico, dedicated to the development of residential
properties. The Corporation is evaluating restructuring alternatives to mitigate
losses and enable borrowers to repay their loans under revised terms seeking to
preserve the value of the Corporation`s interests over the long-term.

The allowance to non-performing loans ratio as of June 30, 2009 was 34.81%,
compared to 42.49% as of March 31, 2009 and 49.56% as of June 30, 2008. The
decrease in the ratio is attributable in part to the amount of non-performing
collateral dependent loans evaluated individually for impairment that, after
charging-off any excess of the recorded investment in the loan over the fair
value of the collateral, reflected limited impairment or no impairment at all,
and other impaired loans that did not require specific reserves based on
analyses conducted under SFAS 114. As of June 30, 2009 and March 31, 2009,
impaired loans and their related allowance were as follows:

As of As of
June 30, March 31,
2009 2009
(In thousands)

Impaired loans with valuation allowance, net of charge-offs $ 647,390 $ 583,161
Impaired loans without valuation allowance, net of charge-offs 288,199 157,632
Total impaired loans $ 935,589 $ 740,793

Allowance for impaired loans $ 117,526 $ 103,128

About 85%, or $372.4 million of the Corporation`s total exposure to construction
loans in Florida, has been individually measured for impairment purposes and
recorded at its realizable value as of June 30, 2009.

The following table sets forth information concerning the composition of the
Corporation`s allowance for loan and lease losses as of June 30, 2009 and March
31, 2009 by loan category and by whether the allowance and related provisions
were calculated individually pursuant the requirements of SFAS 114 or through a
general valuation allowance in accordance with the provisions of SFAS 5:

As of June 30, 2009
Construction Commercial Commercial Mortgage Residential Mortgage Consumer and
(Dollars in thousands) Loans Loans Loans Loans Finance Leases Total

SFAS 114 - Specific Reserves
Principal balance of loans $ 552,331 $ 183,343 $ 130,958 $ 68,957 $ - $ 935,589
Allowance for loan and lease losses 78,455 22,860 12,640 3,571 - 117,526
Allowance for loan and lease losses to principal balance 14.20 % 12.47 % 9.65 % 5.18 % - 12.56 %

SFAS 5 - General Allowance
Principal balance of loans 1,027,876 4,155,263 1,433,975 3,552,539 1,997,529 12,167,182
Allowance for loan and lease losses 56,824 103,886 19,981 30,861 78,668 290,220
Allowance for loan and lease losses to principal balance 5.53 % 2.50 % 1.39 % 0.87 % 3.94 % 2.39 %

Total portfolio, excluding loans held for sale
Principal balance of loans $ 1,580,207 $ 4,338,606 $ 1,564,933 $ 3,621,496 $ 1,997,529 $ 13,102,771
Allowance for loan and lease losses 135,279 126,746 32,621 34,432 78,668 407,746
Allowance for loan and lease losses to principal balance 8.56 % 2.92 % 2.08 % 0.95 % 3.94 % 3.11 %

As of March 31, 2009
Construction Commercial Commercial Mortgage Residential Mortgage Consumer and
(Dollars in thousands) Loans Loans Loans Loans Finance Leases Total

SFAS 114 - Specific Reserves
Principal balance of loans $ 421,003 $ 169,102 $ 100,653 $ 50,035 $ - $ 740,793
Allowance for loan and lease losses 66,272 24,302 11,546 1,008 - 103,128
Allowance for loan and lease losses to principal balance 15.74 % 14.37 % 11.47 % 2.01 % - 13.92 %

SFAS 5 - General Allowance
Principal balance of loans 1,140,810 4,734,309 1,418,614 3,425,026 2,050,400 12,769,159
Allowance for loan and lease losses 39,244 49,012 9,386 20,095 81,666 199,403
Allowance for loan and lease losses to principal balance 3.44 % 1.04 % 0.66 % 0.59 % 3.98 % 1.56 %

Total portfolio, excluding loans held for sale
Principal balance of loans $ 1,561,813 $ 4,903,411 $ 1,519,267 $ 3,475,061 $ 2,050,400 $ 13,509,952
Allowance for loan and lease losses 105,516 73,314 20,932 21,103 81,666 302,531
Allowance for loan and lease losses to principal balance 6.76 % 1.50 % 1.38 % 0.61 % 3.98 % 2.24 %

The following table sets forth an analysis of the activity in the allowance for
construction and commercial impaired loans for the periods presented:

For the quarter ended June 30, 2009
Construction Commercial Commercial Mortgage
Loans Loans Loans
(In thousands)
Allowance for impaired loans, beginning of period $ 66,272 $ 24,302 $ 11,546
Provision for impaired loans 94,749 8,842 14,930
Charge-offs (82,566 ) (10,284 ) (13,836 )
Allowance for impaired loans, end of period $ 78,455 $ 22,860 $ 12,640

For the quarter ended March 31, 2009
Construction Commercial Commercial Mortgage
Loans Loans Loans
(In thousands)
Allowance for impaired loans, beginning of period $ 56,330 $ 18,343 $ 8,681
Provision for impaired loans 18,436 10,621 2,865
Charge-offs (8,494 ) (4,662 ) -
Allowance for impaired loans, end of period $ 66,272 $ 24,302 $ 11,546

Given the discouraging economic outlook in the Corporation`s main markets and in
spite of the actions taken, the Corporation may experience further deterioration
in its portfolios, which may result in higher credit losses and additions to
reserve balances.

Non-interest expenses

Non-interest expenses increased to $96.0 million from $84.5 million for the
first quarter of 2009 and $81.8 million for the second quarter of 2008. The
Corporation recorded $8.9 million in the second quarter of 2009 for the accrual
of the special assessment levied by the FDIC. The FDIC special assessment,
together with an increase of $3.6 million in the regular deposit insurance
premium, resulted in an increase of over $12 million in FDIC assessments as
compared to the second quarter of 2008.

Property tax expenses were higher by approximately $2.6 million for the second
quarter of 2009, compared to the first quarter of 2009 and to the second quarter
of 2008, mainly attributable to accruals for the reassessed value of certain
properties.

Losses on real estate owned ("REO") operations amounted to $6.6 million for the
second quarter of 2009, compared to $5.4 million for the first quarter of 2009
and $3.2 million for the second quarter of 2008. Among the components of these
increasing losses are expenses incurred in REO insurance, taxes and maintenance
associated with a higher inventory and write-downs of the value of repossessed
properties due to declining real estate prices, including a $1.5 million
write-down during the second quarter of 2009 to a foreclosed condo-conversion
project in the U.S. mainland.

All other operating expenses not detailed above remained stable, as reflected in
slight increases of $0.2 million in employees` compensation and benefits and
$0.2 million in professional service fees, as compared to the first quarter of
2009. Business promotion expenses increased by $0.7 million as compared to the
first quarter of 2009, as a result of new marketing campaigns in Puerto Rico.
Partially offsetting the aforementioned marginal increases in non-interest
expenses was the favorable variance against the previous trailing quarter caused
by the $3.7 million impairment of the core deposit intangible of FirstBank
Florida recorded in the first quarter of 2009 associated with decreases in the
base of core deposits acquired.

The Corporation had other reductions in operating expenses, as compared to the
second quarter of 2008, including a decrease of $1.6 million in professional
service fees, a decrease of $1.0 million in business promotion expenses, a
decrease of $0.7 million in occupancy and equipment expenses and a decrease of
$0.5 million in employees` compensation and benefit expenses. The Corporation is
committed to its Business Rationalization program, which includes revenue
generating and cost-cutting initiatives. Refer to Table 4 of accompanying
Exhibit A for additional details.

Non-interest income

Non-interest income decreased to $23.4 million for the second quarter of 2009
from $30.1 million for the first quarter of 2009. The decline in non-interest
income is mainly related to a lower volume of sales and gains of investment
securities. A realized gain of $10.3 million was recorded in the second quarter
of 2009 on the sale of investment securities, compared to a realized gain of
$17.8 million for the first quarter of 2009 on the sale of approximately $423
million in investment securities, mainly U.S. agency mortgage-backed securities
("MBS"). During the second quarter of 2009, the Corporation completed the sale
of approximately $242 million of U.S. agency MBS realizing a gain of $9.4
million and also sold its remaining exposure to auto industry corporate bonds of
$1.5 million realizing a gain of $0.9 million in the process. A high prepayment
scenario for MBS is anticipated through the rest of the year. Given this
outlook, and the fact that certain available-for-sale securities were trading at
a substantial premium over par, the Corporation continued to re-structure its
investment portfolio, rather than wait for the MBS to be pre-paid at par, which
has resulted in the realization of gains on sales.

The Corporation adopted Financial Accountings Standards Board Staff Position No.
("FSP") FAS 115-2 and FAS 124-2 in the second quarter of 2009. FSP FAS 115-2 and
FAS 124-2 amended the Other-than-Temporary Impairment ("OTTI") model for debt
securities. Under the new guidance, OTTI loss must be recognized in earnings if
an investor has the intent to sell the debt security or it is more likely than
not that it will be required to sell the debt security before recovery of its
amortized cost basis. However, even if an investor does not expect to sell a
debt security, it must evaluate expected cash flows to be received and determine
if a credit loss has occurred.

Debt securities issued by U.S. Government agencies, government-sponsored
entities and the U.S. Treasury accounted for more than 95% of the total
available-for-sale and held to maturity portfolio as of June 30, 2009 and do not
have any credit losses, given the explicit and implicit guarantees provided by
the U.S. federal government. The Corporation`s assessment was concentrated
mainly on the approximately $130 million private label MBS for which the
Corporation evaluates for credit losses on a quarterly basis. The Corporation
recorded a $1.1 million OTTI loss through earnings in the second quarter of 2009
that represents the credit loss of available-for-sale private label MBS. The
non-credit component of the unrealized loss was $31.5 million as of June 30,
2009 recorded in comprehensive income. Since the Corporation does not have the
intention to sell the securities and has sufficient capital and liquidity to
hold these securities until a recovery of the fair value occurs, only the credit
loss component was reflected in earnings and contributed to the decrease in
non-interest income.

With respect to equity securities, no OTTI loss was recorded during the second
quarter of 2009, compared to a charge of $0.4 million for the first quarter of
2009.

Despite the aforementioned unfavorable variances, non-interest income was
positively affected by a $1.6 million increase in gains from mortgage banking
activities, as compared to the first quarter of 2009, driven by a higher volume
of loan sales and securitizations. Servicing rights recorded for loan sales and
securitizations during the second quarter of 2009 amounted to $2.0 million,
compared to $1.1 million for the first quarter of 2009. During the second
quarter the Corporation completed the securitization of approximately $114
million of FHA/VA mortgage loans into GNMA MBS, compared to $73 million for the
first quarter of 2009.

Non-interest income increased to $23.4 million for the second quarter of 2009
from $12.0 million for the second quarter of 2008. The increase was related to
the aforementioned realized gains of $10.3 million on the sale of investment
securities and the $1.6 million increase in gains from mortgage banking
activities as, for the first time in several years, the Corporation has been
engaged in the securitization of mortgage loans, as mentioned above. There were
no sales of investment securities during the second quarter of 2008. Fee income
from deposit accounts and non-deferrable loan fees remained stable. Despite an
increase in the deposit base, service charges on deposits remained stable as a
result of the decrease in the volume of transactions that require service
charges. Customers engaged in fewer transactions because of the current economic
environment.

Income Taxes

For the quarter ended June 30, 2009, the Corporation recognized an income tax
benefit of $98.1 million, compared to an income tax benefit of $14.2 million
recorded for the first quarter of 2009. The favorable variance in the financial
results was mainly attributable to a lower taxable income and the reversal,
during the second quarter of 2009, of approximately $16.1 million in
Unrecognized Tax Benefits, including $5.3 million of related accrued interest,
for positions taken on income tax returns recorded under the provisions of
Financial Accounting Standard Board Interpretation No. ("FIN") 48 due to the
lapse of the statute of limitations for the 2004 taxable year. The statute of
limitations under the Puerto Rico Internal Revenue Code of 1994, as amended (the
"PR Code"), is 4 years; and under the applicable law for Virgin Islands and U.S.
income tax purposes is 3 years after a tax return is due or filed, whichever is
later.

The income tax benefit recorded in the second quarter of 2009 increased by $88.6
million, compared to the second quarter of 2008, mainly as a result of lower
taxable income and adjustments to deferred tax amounts, as a result of changes
to the PR Code enacted rates. On March 9, 2009, the Government of Puerto Rico
approved Act No. 7 (the "Act") to stimulate Puerto Rico`s economy and to reduce
the Puerto Rico Government`s fiscal deficit. The Act imposes a series of
temporary and permanent measures, including the imposition of a 5% surtax over
the total income tax determined, which is applicable to corporations, among
others, whose combined income exceeds $100,000. In addition, under the Act, all
International Banking Entities ("IBEs") will be subject to a special 5% tax on
their net income not otherwise subject to tax pursuant to the PR Code. These two
temporary measures are effective for tax years that commenced after December 31,
2008 and before January 1, 2012. Accordingly, the Corporation recorded an
additional income tax benefit of $1.6 million and $6.0 million for the quarter
and six-month period ended June 30, 2009, respectively. Deferred tax amounts
have been adjusted for the effect of the change in the income tax rate
considering the enacted tax rate expected to apply to taxable income in the
period in which the deferred tax asset or liability is expected to be settled or
realized.

Net Interest Income

Net interest income was $131.0 million for the second quarter of 2009, an
increase of $9.4 million compared to the first quarter of 2009. Net interest
income included a net unrealized gain of $2.4 million for the second quarter of
2009, compared to a net unrealized gain of $3.6 million for the first quarter of
2009, related to the fair value of derivative instruments and financial
liabilities elected to be measured at fair value under SFAS No. 159 ("SFAS 159
liabilities"). Net interest spread and margin on a tax-equivalent basis of 2.60%
and 2.92%, respectively, for the second quarter of 2009 increased 13 and 7 basis
points, respectively, compared to the first quarter of 2009. The increase in net
interest income also resulted from lower funding costs and an increase in
average earning assets. The decrease in the Corporation`s average cost of funds
is related to the current low level of short-term interest rates as well as the
change in the mix of funding sources. Brokered certificates of deposit ("CDs")
with original maturities over 6 months and issued when interest rates were
higher matured or were called during the quarter and current short-term rates on
repurchase agreements and Federal Home Loan Bank ("FHLB") and Federal Reserve
("FED") advances provided a cost effective funding alternative. Since approved
to participate during the first quarter of 2009 in the Borrower-in-Custody
Program ("BIC") of the FED, the Corporation has taken advantage of that
alternative funding channel. Through the BIC program, a broad range of loans
(including commercial, consumer and mortgages) are pledged as collateral for
borrowings at the FED Discount Window. The Corporation has increased its use of
this low-cost source of funding, and as of June 30, 2009, the Corporation had
approximately $1.4 billion on assets pledged through the BIC program. Also, the
current low interest rate levels made available the issuance of new short-term
brokered CDs at rates significantly lower than those that matured. The
Corporation increased its short-term borrowing as a measure of interest rate
risk management to match the shortening in the average life of the investment
portfolio and has been reducing the pricing of its core deposits given current
market rates. Also contributing to the improvement was the continued increase in
spreads charged on loans that began in prior quarters. Average interest-earning
assets increased by $731.5 million for the second quarter of 2009 as compared to
the first quarter of 2009, which was driven by a $469.8 million increase in
average investment securities. Funds obtained through short-term borrowings as
well as proceeds from the sales and prepayments of MBS were reinvested, in part,
in the purchase of U.S. agency callable debentures having contractual maturities
ranging from two to three years (approximately $600 million at a
weighted-average yield of 2.00%), 7-10 Year U.S. Treasury Notes (approximately
$96 million at a weighted-average yield of 3.54%) and 15-Year U.S. agency MBS
(approximately $1.3 billion at a weighted-average rate of 3.85%). The
Corporation sold approximately $240 million of fixed-rate U.S. agency MBS
(mainly 30-Year 6% MBS coupons) and $100 million of 5.50% Puerto Rico Government
Obligations during the second quarter of 2009. Approximately $717 million of
U.S. agency debentures with an average yield of 5.83% were called during the
second quarter of 2009.

Partially offsetting the aforementioned positive factors were lower yields in
the Corporation`s loan portfolio, which was adversely affected mainly by the
increased levels of construction loans that entered into non-accrual status.
Refer to the Non-Performing Assets section for additional information with
respect to non-performing levels.

Net interest income decreased 3% to $131.0 million for the second quarter of
2009, from $134.6 million in the second quarter of 2008. Net interest income was
adversely impacted by lower loan yields, resulting from the significant increase
in non-accrual loans and from the repricing of variable-rate construction and
commercial loans tied to short-term indexes. Net interest margin on a
tax-equivalent basis decreased from 3.28% for the second quarter of 2008 to
2.92% for the second quarter of 2009. Lower loan yields more than offset the
benefit of lower short-term rates in the average cost of funding and the
increase in average interest-earning assets. The weighted-average yield on loans
on a tax-equivalent basis decreased from 6.72% to 5.53%. The target for the
Federal Funds rate was lowered between 200 and 225 basis points from March 31,
2008 to June 30, 2009 and the Prime Rate dropped to 3.25% from 5.25% as of March
31, 2008. The increase in average interest-earning assets was mainly driven by
the growth of the Corporation`s commercial loan portfolio in Puerto Rico. More
than 40% of the increase in average commercial loans is related to the $500
million loan facility extended to the Puerto Rico Sales Tax Financing Corp.
(COFINA under its Spanish acronym), an instrumentality of the Government of
Puerto Rico, that was outstanding for almost the entire second quarter of 2009
until it was paid-off on June 18, 2009.

Financial Condition and Operating Data

Total assets increased to $20.0 billion as of June 30, 2009, up $303.7 million
from $19.7 billion as of March 31, 2009. The increase in total assets was
primarily a result of an increase of $816.1 million in investment securities,
partially offset by a decrease of $397.4 million in gross loans. The decrease in
total gross loans was mainly due to the repayment of the $500 million loan
facility extended to COFINA and net charge-offs of $129.9 million in the second
quarter of 2009, partially offset by loan originations. Loan originations,
including purchases, for the second quarter of 2009 amounted to $900.4 million
(excluding the unwinding transaction with R&G), including an increase of $38.2
million in mortgage loan originations through retail channels as compared to the
first quarter of 2009. Approximately 50% of the residential mortgage loan
originations during the second quarter of 2009 consisted of conforming mortgage
loans. The Corporation increased its investment securities portfolio with the
purchase of highly liquid securities, such as U.S. agency MBS and debt
securities as well as U.S. Treasury investments, which contributed to the
increase in net interest income. Refer to the Net Interest Income discussion
above for additional information about securities acquired during the second
quarter of 2009.

As of June 30, 2009, total liabilities amounted to $18.2 billion, an increase of
approximately $440.3 million, as compared to $17.7 billion as of March 31, 2009.
The increase in total liabilities was mainly attributable to an increase of
$956.3 million in repurchase agreements, mainly new short-term repurchase
agreements entered into to fund the growth of the investment portfolio. There
was also an increase of $353.4 million in brokered CDs, mainly short-term
brokered CDs issued during the quarter to finance investment activities. Core
deposits increased by $62.7 million; mainly in Puerto Rico. The aforementioned
increases were partially offset by a decrease of approximately $1.0 billion in
advances from the FHLB and the FED.

The Corporation`s stockholders` equity amounted to $1.8 billion as of June 30,
2009, a decrease of $136.6 million compared to the balance as of March 31, 2009,
driven by a net loss of $78.7 million, a net unrealized loss of $36.3 million on
the fair value of available-for-sale securities recorded as part of
comprehensive income and dividends declared amounting to $21.6 million for the
second quarter of 2009 ($6.5 million on common stock, or $0.07 per common share,
and $15.1 million on preferred stock). As previously mentioned, the Corporation
decided to suspend the payment of common and preferred dividends, effective with
the preferred dividend for the month of August 2009.

The Corporation is well-capitalized having sound margins over minimum
well-capitalized regulatory requirements. As of June 30, 2009, the total
regulatory capital ratio is estimated to be close to 14.3% and the Tier 1
capital ratio is estimated to be close to 13.1%. This translates to
approximately $600 million and $975 million of total capital and Tier 1 capital,
respectively, in excess of the total capital and Tier 1 capital well capitalized
requirements of 10% and 6%, respectively. The Corporation will use this capital
to support customers` needs and, together with private and public sector
initiatives, to support the local economy and the communities it serves.

The Corporation`s tangible common equity ratio stands at 4.35% as of June 30,
2009, compared to 5.11% as of March 31, 2009, and the Tier 1 common equity to
risk-weighted assets ratio as of June 30, 2009 was 4.73% compared to 5.90% as of
March 31, 2009. The following table is a reconciliation of the Corporation's
tangible common equity and tangible assets for the periods ended June 30, 2009,
March 31, 2009 and June 30, 2008, respectively:

June 30, March 31, June 30,
(In thousands) 2009 2009 2008

Total equity per consolidated financial statements $ 1,840,686 $ 1,977,240 $ 1,401,693
Preferred equity (926,259 ) (925,162 ) (550,100 )
Goodwill (28,098 ) (28,098 ) (28,098 )
Core deposit intangible (18,130 ) (19,273 ) (25,802 )

Tangible common equity $ 868,199 $ 1,004,707 $ 797,693

Total assets per consolidated financial statements $ 20,012,887 $ 19,709,150 $ 18,828,786
Goodwill (28,098 ) (28,098 ) (28,098 )
Core deposit intangible (18,130 ) (19,273 ) (25,802 )

Tangible assets $ 19,966,659 $ 19,661,779 $ 18,774,886

Tangible common equity ratio 4.35 % 5.11 % 4.25 %

Tier 1 common equity to risk-weighted assets ratio is calculated by dividing (a)
tier 1 capital less non-common elements including qualifying perpetual preferred
stock and qualifying trust preferred securities, by (b) risk-weighted assets,
which assets are calculated in accordance with applicable bank regulatory
requirements. The Tier 1 common equity ratio is not required by U.S. generally
accepted accounting principles, or GAAP, or on a recurring basis by applicable
bank regulatory requirements. However, this ratio was used by the Federal
Reserve in connection with its stress test administered to the 19 largest U.S.
bank holding companies under the Supervisory Capital Assessment Program
("SCAP"), the results of which were announced on May 7, 2009. Although we
understand that the Federal Reserve does not intend to prospectively require
calculation of the Tier 1 common equity ratio, due to the recent timing of the
SCAP, management is currently monitoring this ratio, along with the other ratios
set forth in the table above, in evaluating the Corporation`s capital levels and
believes that, at this time, the ratio may be of interest to investors.

The following table reconciles stockholders` equity (GAAP) to Tier 1 common
equity:

June 30, March 31, June 30,
(In thousands) 2009 2009 2008

Total equity per consolidated financial statements $ 1,840,686 $ 1,977,240 $ 1,401,693
Qualifying preferred stock (926,259 ) (925,162 ) (550,100 )
Unrealized (gain) loss on available-for-sale securities (1) (46,382 ) (82,751 ) 78,765
Disallowed deferred tax asset (2) (172,187 ) (83,302 ) (57,328 )
Goodwill (28,098 ) (28,098 ) (28,098 )
Core deposit intangible (18,130 ) (19,272 ) (25,802 )
Cumulative change loss (gain) in fair value of liabilities elected to be measured at fair value under SFAS 159, net of tax 2,604 (3,555 ) (1,566 )
Other disallowed assets (347 ) (625 ) (526 )
Tier 1 common equity $ 651,887 $ 834,475 $ 817,038

Total risk-weighted assets $ 13,785,093 $ 14,141,259 $ 13,049,833

Tier 1 common equity to risk-weighted assets ratio 4.73 % 5.90 % 6.26 %

(1) Tier 1 capital excludes net unrealized gains (losses) on available-for-sale debt securities and net unrealized gains on available-for-sale equity securities with readily
determinable fair values, in accordance with regulatory risk-based capital guidelines. In arriving at Tier 1 capital, institutions are required to deduct net unrealized
losses on available-for-sale equity securities with readily determinable fair values, net of tax.

(2) Approximately $49 million of the Corporation's $218 million of net deferred tax assets at June 30, 2009 (March 31, 2009 - $59 million of $141 million of net deferred tax
assets; June 30, 2008 - $49 million of $106 million net deferred tax assets) were included without limitation in regulatory capital pursuant to the risk-based capital
guidelines, while approximately $172 million of such assets at June 30, 2009 (March 31, 2009 - $83 million; June 30, 2008 - $57 million) exceeded the limitation imposed
by these guidelines and, as "disallowed deferred tax assets," were deducted in arriving at Tier 1 capital. According to regulatory capital guidelines, the deferred tax
assets that are dependent upon future taxable income are limited for inclusion in Tier 1 capital to the lesser of: (i) the amount of such deferred tax asset that the
entity expects to realize within one year of the calendar quarter end-date, based on its projected future taxable income for that year or (ii) 10% of the amount of the
entity's Tier 1 capital. Approximately $3 million of the Corporation's other net deferred tax liability at June 30, 2009 (March 31, 2009 - $1 million; June 30, 2008 - $0)
represented primarily the deferred tax effects of unrealized gains and losses on available-for-sale debt securities, which are permitted to be excluded prior to deriving
the amount of net deferred tax assets subject to limitation under the guidelines.

Liquidity

The Corporation has maintained a basic surplus (cash, short-term assets minus
short-term liabilities, and secured lines of credit) in excess of a self-imposed
minimum limit of 5% of total assets. As of June 30, 2009, the estimated basic
surplus ratio of approximately 8.7% included unpledged assets, FHLB lines of
credit, collateral pledged at the FED Discount Window Program, and cash.
Unpledged liquid securities as of June 30, 2009 mainly consisted of fixed-rate
MBS and U.S. agency debentures totaling approximately $711 million, which can be
sold under agreements to repurchase. The Corporation does not rely on
uncommitted inter-bank lines of credit (federal funds lines) to fund its
operations and does not include them in the basic surplus computation. The
Corporation has taken direct actions to keep sound liquidity levels and to
safeguard its access to credit. Such initiatives include, among other things,
the posting of additional collateral, thereby increasing its borrowing capacity
with the FHLB and the FED through the Discount Window Program. The Corporation
will continue to monitor the different alternatives available under programs
currently in place by the FED and the FDIC.

About First BanCorp

First BanCorp is the parent corporation of FirstBank Puerto Rico, a
state-chartered commercial bank with operations in Puerto Rico, the Virgin
Islands and Florida; of FirstBank Insurance Agency; and of Ponce General
Corporation. First BanCorp, FirstBank Puerto Rico and FirstBank Florida, the
thrift subsidiary of Ponce General, all operate within U.S. banking laws and
regulations. The Corporation operates a total of 186 branches, stand-alone
offices and in-branch service centers throughout Puerto Rico, the U.S. and
British Virgin Islands, and Florida. Among the subsidiaries of FirstBank Puerto
Rico are Money Express, a finance company; First Leasing and Car Rental, a car
and truck rental leasing company; and FirstMortgage, a mortgage origination
company. In the U.S. Virgin Islands, FirstBank operates First Insurance VI, an
insurance agency, and First Express, a small loan company. First BanCorp`s
common and publicly-held preferred shares trade on the New York Stock Exchange
under the symbols FBP, FBPPrA, FBPPrB, FBPPrC, FBPPrD and FBPPrE. Additional
information about First BanCorp may be found at www.firstbankpr.com.

Safe Harbor

This press release may contain "forward-looking statements" concerning the
Corporation`s future economic performance. The words or phrases "expect,"
"anticipate," "look forward," "should," "believes" and similar expressions are
meant to identify "forward-looking statements" within the meaning of Section 27A
of the Private Securities Litigation Reform Act of 1995, and are subject to the
safe harbor created by such section. The Corporation wishes to caution readers
not to place undue reliance on any such "forward-looking statements," which
speak only as of the date made, and to advise readers that various factors,
including, but not limited to, the risks arising from credit and other risks of
the Corporation`s lending and investment activities, including the condo
conversion loans from its Miami Corporate Banking operations and the
construction and commercial loan portfolios in Puerto Rico, which have affected
and may continue to affect, among other things, the level of non-performing
assets, charge-offs and the provision expense; an adverse change in the
Corporation`s ability to attract new clients and retain existing ones; a
decrease in demand for the Corporation`s products and services and lower
revenues and earnings because of the recession in the United States, the
continued recession in Puerto Rico and the current fiscal problems and budget
deficit of the Puerto Rico government; adverse changes in general economic
conditions in the state of Florida and Puerto Rico, including the interest rate
scenario, market liquidity, rates and prices, and the disruptions in the U.S.
capital markets, which may reduce interest margins, impact funding sources and
affect demand for the Corporation`s products and services and the value of the
Corporation`s assets, including the value of derivative instruments used for
protection from interest rate fluctuations; uncertainty about the impact of
measures adopted by the Puerto Rico government in response to its fiscal
situation on the different sectors of the economy; uncertainty about the
effectiveness and impact of the U.S. government`s rescue plan, including the
bailout of U.S. housing government-sponsored agencies, on the financial markets
in general and on the Corporation's business, financial condition and results of
operations; risks of not being able to recover all assets pledged to Lehman
Brothers Special Financing, Inc.; changes in the Corporation`s expenses
associated with acquisitions and dispositions; risks associated with the
soundness of other financial institutions; developments in technology; the
impact of Doral Financial Corporation`s financial condition on the repayment of
its outstanding secured loans to the Corporation; the Corporation`s ability to
issue brokered certificates of deposit and fund operations; risks associated
with downgrades in the credit ratings of the Corporation`s securities; general
competitive factors and industry consolidation; and risks associated with
regulatory and legislative changes for financial services companies in Puerto
Rico, the United States, and the U.S. and British Virgin Islands, which could
affect the Corporation`s financial performance and could cause the Corporation`s
actual results for future periods to differ materially from those anticipated or
projected. The Corporation does not undertake, 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.

EXHIBIT A

Table 1. Selected Financial Data

SELECTED FINANCIAL DATA
(In thousands, except for per share and financial ratios)
Quarter ended Six-month period ended
June 30, March 31, June 30, June 30,
2009 2009 2008 2009 2008
Condensed Income Statements:
Total interest income $ 252,780 $ 258,323 $ 276,608 $ 511,103 $ 555,695
Total interest expense 121,766 136,725 142,002 258,491 296,631
Net interest income 131,014 121,598 134,606 252,612 259,064
Provision for loan and lease losses 235,152 59,429 41,323 294,581 87,116
Non-interest income 23,415 30,053 12,002 53,468 41,382
Non-interest expenses 95,988 84,528 81,763 180,516 163,950
(Loss) Income before income taxes (176,711 ) 7,694 23,522 (169,017 ) 49,380
Income tax benefit 98,053 14,197 9,472 112,250 17,203
Net (loss) income (78,658 ) 21,891 32,994 (56,767 ) 66,583
Net (loss) income attributable to common stockholders (94,825 ) 6,773 22,925 (88,052 ) 46,445
Per Common Share Results:
Net (loss) income per share basic $ (1.03 ) $ 0.07 $ 0.25 $ (0.95 ) $ 0.50
Net (loss) income per share diluted $ (1.03 ) $ 0.07 $ 0.25 $ (0.95 ) $ 0.50
Cash dividends declared $ 0.07 $ 0.07 $ 0.07 $ 0.14 $ 0.14
Average shares outstanding 92,511 92,511 92,505 92,511 92,505
Average shares outstanding diluted 92,511 92,511 92,708 92,511 92,650
Book value per common share $ 9.88 $ 11.37 $ 9.21 $ 9.88 $ 9.21
Tangible book value per common share $ 9.38 $ 10.86 $ 8.62 $ 9.38 $ 8.62
Selected Financial Ratios (In Percent):
Profitability:
Return on Average Assets (1.57 ) 0.45 0.72 (0.58 ) 0.74
Interest Rate Spread (1) 2.60 2.47 2.92 2.53 2.78
Net Interest Margin (1) 2.92 2.85 3.28 2.89 3.19
Return on Average Total Equity (15.93 ) 4.66 9.16 (5.89 ) 9.26
Return on Average Common Equity (36.14 ) 2.65 10.29 (16.99 ) 10.46
Average Total Equity to Average Total Assets 9.85 9.73 7.91 9.79 8.04
Tangible common equity ratio 4.35 5.11 4.25 4.35 4.25
Dividend payout ratio (6.84 ) 95.72 28.25 (14.73 ) 27.88
Efficiency ratio (2) 62.16 55.74 55.77 58.98 54.57
Asset Quality:
Allowance for loan and lease losses to loans receivable 3.11 2.24 1.82 3.11 1.82
Net charge-offs (annualized) to average loans 3.85 1.16 0.97 2.52 0.91
Provision for loan and lease losses to net charge-offs 180.97 154.66 139.86 174.97 158.36
Non-performing assets to total assets 6.53 3.92 2.65 6.53 2.65
Non-accruing loans to total loans receivable 8.94 5.27 3.67 8.94 3.67
Allowance to total non-accruing loans 34.81 42.49 49.56 34.81 49.56
Allowance to total non-accruing loans excluding residential real estate loans 52.85 76.28 101.85 52.85 101.85
Other Information:
Common Stock Price: End of period $ 3.95 $ 4.26 $ 6.34 $ 3.95 $ 6.34

As of As of As of
June 30, March 31, December 31,
2009 2009 2008
Balance Sheet Data:
Loans and loans held for sale $ 13,135,710 $ 13,533,087 $ 13,088,292
Allowance for loan and lease losses 407,746 302,531 281,526
Money market and investment securities 6,368,167 5,506,997 5,709,154
Intangible assets 46,228 47,371 52,083
Deferred tax asset, net 217,843 140,851 128,039
Total assets 20,012,887 19,709,150 19,491,268
Deposits 12,035,427 11,619,348 13,057,430
Borrowings 5,846,879 5,903,751 4,736,670
Total preferred equity 926,259 925,162 550,100
Total common equity 868,045 969,327 940,628
Accumulated other comprehensive income, net of tax 46,382 82,751 57,389
Total equity 1,840,686 1,977,240 1,548,117

1- On a tax equivalent basis (see discussion in Table 2 below).
2- Non-interest expenses to the sum of net interest income and non-interest income. The denominator includes non-recurring income and changes in the fair value of derivative instruments and financial instruments measured at fair value under SFAS 159.

Table 2. Statement of Average Interest-Earning Assets and Average Interest-Bearing Liabilities (On a Tax Equivalent Basis)

Average volume Interest income(1) / expense Average rate(1)
June 30, March 31, June 30, June 30, March 31, June 30, June 30, March 31, June 30,
Quarter ended 2009 2009 2008 2009 2009 2008 2009 2009 2008
(Dollars in thousands)
Interest-earning assets:
Money market & other short-term investments $ 101,819 $ 114,837 $ 374,559 $ 117 $ 91 $ 1,813 0.46 % 0.32 % 1.95 %
Government obligations (2) 1,540,821 1,141,091 1,303,468 15,904 19,601 20,566 4.14 % 6.97 % 6.35 %
Mortgage-backed securities 4,322,708 4,254,355 3,806,115 60,012 63,421 58,034 5.57 % 6.05 % 6.13 %
Corporate bonds 7,458 7,711 6,103 202 33 141 10.86 % 1.74 % 9.29 %
FHLB stock 86,509 71,119 66,703 788 360 1,140 3.65 % 2.05 % 6.87 %
Equity securities 1,977 2,360 4,183 18 18 - 3.65 % 3.09 % 0.00 %
Total investments (3) 6,061,292 5,591,473 5,561,131 77,041 83,524 81,694 5.10 % 6.06 % 5.91 %
Residential real estate loans 3,425,235 3,496,429 3,308,950 51,717 54,049 54,239 6.06 % 6.27 % 6.59 %
Construction loans 1,626,141 1,545,731 1,475,995 13,142 14,102 20,745 3.24 % 3.70 % 5.65 %
Commercial loans 6,423,055 6,110,754 5,379,906 66,801 64,145 73,461 4.17 % 4.26 % 5.49 %
Finance leases 347,732 360,276 376,007 7,111 7,582 8,108 8.20 % 8.53 % 8.67 %
Consumer loans 1,678,057 1,725,350 1,613,563 47,436 48,594 46,479 11.34 % 11.42 % 11.59 %
Total loans (4) (5) 13,500,220 13,238,540 12,154,421 186,207 188,472 203,032 5.53 % 5.77 % 6.72 %
Total interest-earning assets $ 19,561,512 $ 18,830,013 $ 17,715,552 $ 263,248 $ 271,996 $ 284,726 5.40 % 5.86 % 6.46 %

Interest-bearing liabilities:
Brokered CDs $ 7,051,179 $ 7,461,148 $ 7,373,267 $ 56,677 $ 72,833 $ 72,218 3.22 % 3.96 % 3.94 %
Other interest-bearing deposits 4,146,552 4,027,725 3,671,865 23,443 25,192 26,077 2.27 % 2.54 % 2.86 %
Loans payable 768,505 297,556 - 614 346 - 0.32 % 0.47 % 0.00 %
Other borrowed funds 3,862,885 3,651,695 3,724,955 31,646 32,922 32,351 3.29 % 3.66 % 3.49 %
FHLB advances 1,450,478 1,246,373 1,151,861 8,317 8,292 9,572 2.30 % 2.70 % 3.34 %
Total interest-bearing liabilities (6) $ 17,279,599 $ 16,684,497 $ 15,921,948 $ 120,697 $ 139,585 $ 140,218 2.80 % 3.39 % 3.54 %
Net interest income $ 142,551 $ 132,411 $ 144,508
Interest rate spread 2.60 % 2.47 % 2.92 %
Net interest margin 2.92 % 2.85 % 3.28 %

Average volume Interest income(1) / expense Average rate(1)
Six-Month Period Ended June 30, 2009 2008 2009 2008 2009 2008
(Dollars in thousands)
Interest-earning assets:
Money market & other short-term investments $ 108,314 $ 402,774 $ 208 $ 5,072 0.39 % 2.53 %
Government obligations (2) 1,341,934 1,786,011 35,505 57,711 5.34 % 6.50 %
Mortgage-backed securities 4,288,731 3,102,385 123,433 92,025 5.80 % 5.97 %
Corporate bonds 7,584 6,185 235 282 6.25 % 9.17 %
FHLB stock 78,856 64,274 1,148 2,261 2.94 % 7.07 %
Equity securities 2,167 4,186 36 11 3.35 % 0.53 %
Total investments (3) 5,827,586 5,365,815 160,565 157,362 5.56 % 5.90 %
Residential real estate loans 3,460,647 3,249,913 105,766 105,959 6.16 % 6.56 %
Construction loans 1,586,125 1,474,252 27,244 44,465 3.46 % 6.07 %
Commercial loans 6,267,792 5,301,551 130,946 158,901 4.21 % 6.03 %
Finance leases 353,969 377,004 14,693 16,396 8.37 % 8.75 %
Consumer loans 1,701,580 1,633,598 96,030 94,535 11.38 % 11.64 %
Total loans (4) (5) 13,370,113 12,036,318 374,679 420,256 5.65 % 7.02 %
Total interest-earning assets $ 19,197,699 $ 17,402,133 $ 535,244 $ 577,618 5.62 % 6.67 %

Interest-bearing liabilities:
Brokered CDs $ 7,255,053 $ 7,286,442 $ 129,510 $ 157,921 3.60 % 4.38 %
Other interest-bearing deposits 4,087,541 3,492,825 48,635 52,350 2.40 % 3.03 %
Loans payable 534,331 - 960 - 0.36 % 0.00 %
Other borrowed funds 3,609,918 3,697,892 64,568 70,845 3.61 % 3.85 %
FHLB advances 1,496,949 1,109,465 16,609 20,720 2.24 % 3.76 %
Total interest-bearing liabilities (6) $ 16,983,792 $ 15,586,624 $ 260,282 $ 301,836 3.09 % 3.89 %
Net interest income $ 274,962 $ 275,782
Interest rate spread 2.53 % 2.78 %
Net interest margin 2.89 % 3.19 %

(1) On an adjusted tax equivalent basis. The adjusted tax equivalent yield was estimated by dividing the interest rate spread on .
exempt assets by (1 less Puerto Rico statutory tax rate (40.95% for the Corporation`s subsidiaries other than IBEs in 2009,
35.95% for the Corporation`s IBEs in 2009 and 39% for all subsidiaries in 2008)) and adding to it the cost of interest-bearing
liabilities. When adjusted to a tax equivalent basis, yields on taxable and exempt assets are comparable. Changes in the fair
value of derivative instruments and unrealized gains or losses on SFAS 159 liabilities are excluded from interest income and
interest expense because the changes in valuation do not affect interest paid or received
(2) Government obligations include debt issued by government sponsored agencies.
(3) Unrealized gains and losses in available-for-sale securities are excluded from the average volumes.
(4) Average loan balances include the average of non-accruing loans.
(5) Interest income on loans includes $2.7 million, $2.8 million and $2.9 million for the second quarter of 2009, first quarter of
2009 and second quarter of 2008, respectively, and $5.5 million and $5.4 million for the six-month period ended June 30, 2009
and 2008, respectively, of income from prepayment penalties and late fees related to the Corporation`s loan portfolio.
(6) Unrealized gains and losses on SFAS 159 liabilities are excluded from the average volumes.

Table 3. Non-Interest Income

Quarter Ended Six-month period ended
June 30, March 31, June 30, June 30,
2009 2009 2008 2009 2008
(In thousands)

Other service charges on loans $ 1,523 $ 1,529 $ 1,418 $ 3,052 $ 2,731
Service charges on deposit accounts 3,327 3,165 3,191 6,492 6,555
Mortgage banking activities 2,373 806 804 3,179 1,123
Rental income 407 449 579 856 1,122
Insurance income 2,229 2,370 2,551 4,599 5,279
Other operating income 4,312 4,284 4,138 8,596 9,058

Non-interest income before net gain on investments 14,171 12,603 12,681 26,774 25,868

Gain on VISA shares - - - - 9,342
Net gain on sale of investments 10,305 17,838 (190 ) 28,143 6,661
Other-than-temporary impairment on equity securities - (388 ) (489 ) (388 ) (489 )
Other-than-temporary impairment on debt securities (1,061 ) - - (1,061 ) -
Net gain on investments 9,244 17,450 (679 ) 26,694 15,514

Total $ 23,415 $ 30,053 $ 12,002 $ 53,468 $ 41,382

Table 4. Non-Interest Expenses

Quarter Ended Six-month period ended
June 30, March 31, June 30, June 30,
2009 2009 2008 2009 2008
(In thousands)

Employees' compensation and benefits $ 34,472 $ 34,242 $ 34,994 $ 68,714 $ 71,320
Occupancy and equipment 14,824 14,774 15,541 29,598 30,520
Deposit insurance premium 14,895 4,880 2,345 19,775 4,691
Other taxes, insurance and supervisory fees 8,368 5,793 5,588 14,161 11,252
Professional fees - recurring 3,138 2,823 3,620 5,961 8,180
Professional fees - non-recurring 204 363 1,299 567 1,798
Servicing and processing fees 2,246 2,312 2,381 4,558 4,969
Business promotion 3,836 3,116 4,802 6,952 9,067
Communications 2,018 2,127 2,250 4,145 4,523
Net loss on REO operations 6,626 5,375 3,172 12,001 6,428
Other (1) 5,361 8,723 5,771 14,084 11,202
Total $ 95,988 $ 84,528 $ 81,763 $ 180,516 $ 163,950

(1) Includes core deposit intangible impairment charge of $4.0 million for the six-month period ended June 30, 2009.

Table 5. Loan Portfolio

Composition of the loan portfolio including loans held for sale at period-end.

June 30, March 31, December 31, June 30,
2009 2009 2008 2008
(In thousands)

Residential real estate loans $ 3,654,435 $ 3,498,196 $ 3,491,728 $ 3,393,934

Commercial loans:
Construction loans 1,580,207 1,561,813 1,526,995 1,467,544
Commercial real estate loans 1,564,933 1,519,267 1,535,758 1,324,509
Commercial loans 4,002,306 4,346,552 3,857,728 3,502,929
Loans to local financial institutions collateralized by real estate mortgages 336,300 556,859 567,720 591,674
Commercial loans 7,483,746 7,984,491 7,488,201 6,886,656

Finance leases 341,119 352,247 363,883 373,588

Consumer and other loans 1,656,410 1,698,153 1,744,480 1,595,867
Total loans $ 13,135,710 $ 13,533,087 $ 13,088,292 $ 12,250,045

Table 6. Loan Portfolio by Geography

Puerto Virgin
As of June 30, 2009 Rico Islands Florida Total
(In thousands)
Residential real estate loans, including loans held for sale $ 2,801,139 $ 452,588 $ 400,708 $ 3,654,435

Construction loans (1) 965,944 176,392 437,871 1,580,207
Commercial real estate loans 957,835 77,522 529,576 1,564,933
Commercial loans 3,794,278 175,393 32,635 4,002,306
Loans to local financial institutions collateralized by real estate mortgages 336,300 - - 336,300
Total commercial loans 6,054,357 429,307 1,000,082 7,483,746

Finance leases 341,119 - - 341,119

Consumer loans 1,504,645 112,641 39,124 1,656,410

Total loans, gross $ 10,701,260 $ 994,536 $ 1,439,914 $ 13,135,710

(1) Construction loans of Florida operations include approximately $153.7 million of condo-conversion loans.

Table 7. Non-Performing Assets

June 30, March 31, December 31, June 30,
(Dollars in thousands) 2009 2009 2008 2008
Non-accruing loans:
Residential real estate $ 399,844 $ 315,385 $ 274,923 $ 230,240
Commercial and commercial real estate 219,409 197,238 144,301 127,158
Construction 506,642 155,494 116,290 49,283
Finance leases 5,474 5,599 6,026 4,619
Consumer 39,979 38,295 45,635 37,175
1,171,348 712,011 587,175 448,475

REO 58,064 49,434 37,246 38,620
Other repossessed property 12,732 12,088 12,794 11,270
Investment securities (1) 64,543 - - -
Total non-performing assets $ 1,306,687 $ 773,533 $ 637,215 $ 498,365
Past due loans 90 days and still accruing $ 190,399 $ 208,339 $ 471,364 $ 124,078
Allowance for loan and lease losses $ 407,746 $ 302,531 $ 281,526 $ 222,272
Allowance to total non-accruing loans 34.81 % 42.49 % 47.95 % 49.56 %
Allowance to total non-accruing loans, excluding residential real estate loans 52.85 % 76.28 % 90.16 % 101.85 %

(1) Collateral pledged with Lehman Brothers Special Financing, Inc.

Table 8. Non-Performing Assets by Geography

PUERTO RICO June 30, March 31, December 31, June 30,
(Dollars in thousands) 2009 2009 2008 2008
Non-accruing loans:
Residential real estate $ 342,501 $ 269,311 $ 244,843 $ 206,759
Commercial and commercial real estate 157,322 148,481 116,027 93,122
Construction 156,112 114,029 71,127 35,288
Finance leases 5,474 5,599 6,026 4,619
Consumer 35,696 34,905 40,313 32,903
697,105 572,325 478,336 372,691

REO 40,164 33,144 22,012 18,002
Other repossessed property 12,261 11,553 12,221 10,755
Investment securities 64,543 - - -
Total non-performing assets $ 814,073 $ 617,022 $ 512,569 $ 401,448
Past due loans 90 days and still accruing $ 185,132 $ 135,905 $ 220,270 $ 123,113

VIRGIN ISLANDS June 30, March 31, December 31, June 30,
(Dollars in thousands) 2009 2009 2008 2008
Non-accruing loans:
Residential real estate $ 7,381 $ 8,429 $ 8,492 $ 8,208
Commercial and commercial real estate 4,723 2,938 3,531 25,362
Construction 2,052 2,353 4,113 2,157
Finance leases - - - -
Consumer 3,296 2,799 3,688 3,802
17,452 16,519 19,824 39,529

REO 599 662 430 819
Other repossessed property 400 411 388 334
Total non-performing assets $ 18,451 $ 17,592 $ 20,642 $ 40,682
Past due loans 90 days and still accruing $ 3,346 $ 1,184 $ 27,471 $ 965

FLORIDA OPERATIONS June 30, March 31, December 31, June 30,
(Dollars in thousands) 2009 2009 2008 2008
Non-accruing loans:
Residential real estate $ 49,962 $ 37,645 $ 21,588 $ 15,273
Commercial and commercial real estate 57,364 45,819 24,743 8,674
Construction 348,478 39,112 41,050 11,838
Finance leases - - - -
Consumer 987 591 1,634 470
456,791 123,167 89,015 36,255

REO 17,301 15,628 14,804 19,799
Other repossessed property 71 124 185 181
Total non-performing assets $ 474,163 $ 138,919 $ 104,004 $ 56,235
Past due loans 90 days and still accruing $ 1,921 $ 71,250 $ 223,623 $ -

Table 9. Ratios of Net Charge-Offs to Average Loans

Six-Months Ended
June 30, Year Ended December 31,
2009 2008 2007 2006 2005

Residential real estate loans 0.61 % 0.19 % 0.03 % 0.04 % 0.05 %

Commercial loans 1.14 % 0.51 % 0.22 % 0.05 % 0.10 %

Construction loans 11.52 % 0.52 % 0.26 % 0.00 % 0.00 %

Consumer loans (1) 2.98 % 3.19 % 3.48 % 2.90 % 2.06 %

Total loans 2.52 % 0.87 % 0.79 % 0.55 % 0.39 %

(1) Includes lease financing

First BanCorp
Alan Cohen, Senior Vice President, Marketing and
Public Relations, 787-729-8256
alan.cohen@firstbankpr.com

Copyright Business Wire 2009

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