First BanCorp. (FBP) 8-K First Bancorp Reports Record Results for Year 2004

Annie Astor-Carbonell
Senior Executive Vice President
and Chief Financial Officer
(787) 729-8088

FIRST BANCORP REPORTS
RECORD RESULTS FOR YEAR 2004

     San Juan, Puerto Rico, January 27, 2005—First BanCorp (NYSE:FBP), the second largest Puerto Rico Financial Holding company, with diversified banking operations in Puerto Rico and the US and British Virgin Islands, reported today earnings for 2004.

     The year ended December 31, 2004 was another record year for First BanCorp, with earnings of $178,877,788 or $3.44 per common share (basic) and $3.34 per common share (diluted), as compared to $152,338,342 or $3.04 per common share (basic) and $2.98 per common share (diluted) for the year ended December 31, 2003. Average common shares outstanding for the year were 40,209,447 (basic) and 41,505,183 (diluted). Earnings for the full year 2004 include a gain of $3,374,937, or 8 cents per

First BanCorp reports record results for year 2004 Page 2

common share (basic and diluted), net of tax, recorded on the sale of a small credit card portfolio in early 2004. Excluding this effect, full year 2004 earnings were $175,502,851 or $3.36 per common share (basic) and $3.26 per common share (diluted). Earnings for the fourth quarter and full year 2003 included an $18,840,065 or $0.47 and $0.46 per common share, basic and diluted, respectively, (net of tax) gain related to the sale of a credit card portfolio. Prior year comparable earnings, excluding the after tax effect of aforementioned gain, were $133,498,277 or $2.57 per common share (basic) and $2.52 per common share (diluted).

     Net income was $49,658,970 or $0.98 per common share (basic) and $0.95 per common share (diluted), for the fourth quarter of 2004, as compared to earnings of $54,954,947 or $1.12 per common share (basic) and $1.09 per common share (diluted), for the fourth quarter of 2003. Earnings per share for the fourth quarter of 2003 include an $18,840,065 or $0.46 per common

First BanCorp reports record results for year 2004 Page 3

share (diluted) special gain related to the sale of a credit card portfolio. Earnings for the fourth quarter of 2003, excluding the after tax effect of such gain, was $36,114,882 or $0.65 per common share (basic) and $0.63 per common share (diluted). The 2004 fourth quarter results represent an earnings increase of 37.50% for this quarter, when comparing earnings excluding the previous year special item aforementioned. Return on Assets (ROA) and Return on Common Equity (ROCE), were 1.37% and 24.40%, respectively for the quarter. Comparable ROA and ROCE for the same quarter in 2003, excluding the special credit card gain were 1.21% and 20.30%, respectively. Average common shares used to calculate earnings per share for the fourth quarter of 2004, were 40,314,658 (basic) and 41,819,962 (diluted).

     Full year 2004 results represent an earnings increase of $42,004,574 or 31.46% when comparing earnings for both years, excluding the special gains on the sale of credit card loans. Main profitability ratios for 2004, excluding the after tax effect of

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the gain on the sale of a small credit card portfolio was: Return on Assets 1.37% for the fourth quarter of 2004 and 1.29% for the full year 2004; Return on Common Equity for the fourth quarter of 2004, 24.40% and 22.76% for the full year 2004; and the efficiency ratio, 38.51% for the fourth quarter and 40.04% for the full year 2004.

     The earnings increase of $42.0 million (excluding the after tax effect of the gain on the sale mentioned above) is attributable mostly to increases in the Corporation’s net interest income net of an increase in operating expenses and a decrease in gains in sale of investments. Commenting on the year 2004 achievements, Mr. Angel Alvarez-Pérez, CEO of First BanCorp said, “2004 was a challenging year due to the uncertainty of the interest rates scenario. Notwithstanding this, we have earned record profits, through the continuous growth of our loan portfolios, especially commercial and residential loans and

First BanCorp reports record results for year 2004 Page 5

maintaining low delinquencies and write offs. In addition, during this year we reinvested most of our investment portfolio which had been maintained short-term, waiting for the market to give us a re-entry opportunity.”

     Net interest income increased by $91.0 million for the year, to end at $383.2 million. The increase in net interest income for the year is the result of volume increases of $3.2 billion in the Corporation’s average loan and investment portfolios. Net interest income was $101.5 million for this quarter, as compared to $84.0 million for the fourth quarter of 2003 and $103.3 million for the third quarter of 2004. The slight decrease from third to fourth quarter of 2004 is due to $385.6 million in agency securities with an average yield of 5.57%, which were called during the fourth quarter and have been reinvested very short-term.

     Net interest margin (on a tax equivalent basis) was 3.30% and 3.40% for the fourth quarter and full year 2004, respectively,

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as compared to 3.32% and 3.24% for the fourth quarter and full year 2003, respectively. Increase for the year is mainly due to reinvestment during mid 2004 in substantial amounts of medium to long term callable agency securities.

     During 2004 the Corporation experienced solid asset growth, ending the year with assets of $15.6 billion, up 23.30% from total assets as of December 31, 2003 of $12.7 billion. Deposits were $7.9 billion as of December 31, 2004, as compared to $6.8 billion as of December 31, 2003. Loans increased to $9.5 billion as of December 31, 2004, an increase of 34.5%, when compared to $7.0 billion as of December 31, 2003, mostly as a result of an increase of $374 million in commercial loans, $1.8 billion in residential real estate loans, and $254 million in consumer and leasing loans.

     Another factor contributing to the record financial results was the stable write offs of our loan portfolio during the year. Loan losses (net write-offs) were $9.4 million for the fourth

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quarter, (.42% of average loans) under the $10.8 million (.63% of average loans) for the fourth quarter of 2003 and $9.6 million (.47% of average loans), for the immediately preceding third quarter of 2004. For the total year net write-offs were $38.1 million (.48% of average loans), as compared to $41.4 million during 2003, (.66% of average loans). Non-performing loans at year end were $91.7 million or .97% of total loans, compared to $85.5 million or 1.21% of total loans as of December 31, 2003 and $88.7 million or 1.04% of total loans as of September 30, 2004, the previous quarter end. The reserve coverage ratio (allowance for loan losses to non-performing loans) was 153.86% as of December 31, 2004, as compared to 147.77% for December 31, 2003 and 154.68% for September 30, 2004. The allowance for loan losses increased to $141.0 million as of December 31, 2004, from $137.3 million as of September 30, 2004 and $126.4 million as of December 31, 2003. The increase corresponds to a higher

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commercial and consumer loan portfolio, which are the main sources of loan write-offs.

     Other income was $17.5 million for the fourth quarter of 2004. For the fourth quarter of 2003, excluding the gain on the sale of a large part of the credit card portfolio of $30.9 million (before tax), other operating income was $19.5 million. The decrease of $2.0 million, when compared to normalized fourth quarter 2003, is mostly attributable to $2.3 million lower net gains on sale of investments and derivative income (loss).

     The Corporation, mainly through its subsidiary Bank, has maintained a better than average efficiency ratio of 38.51% and 39.74% for fourth quarter and the year 2004 respectively, while it has invested significantly in state of the art technology and infrastructure to provide the latest in delivery channels for financial products and services. Operating expenses were $45.8 million for the fourth quarter 2004, as compared to expenses of

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$45.4 million during the fourth quarter of 2003 and $45.9 million of expenses during the previous third quarter of 2004.

     With $15.6 billion in assets, First BanCorp is the second largest Financial Holding Company in Puerto Rico. It is the parent company of FirstBank Puerto Rico; a state chartered commercial bank in Puerto Rico and Virgin Islands and of FirstBank Insurance Agency. Both First BanCorp and FirstBank Puerto Rico, operate within US banking laws and regulations. The Bank operates a total of 110 financial service facilities throughout Puerto Rico and the US and British Virgin Islands, including the operations of its subsidiaries. On October 1, 2004 the Bank opened a loan office in Coral Gables, Florida. Among the subsidiaries is Money Express, a finance company, First Leasing and Car Rental, a car and truck rental leasing company, and FirstMortgage, a mortgage banking company. In the US and British Virgin Islands the Bank operates FirstBank Insurance VI, an insurance agency, First Trade, Inc., a foreign corporation

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management company, and First Express, a small loan company. On November 22, 2004, the Company announced the signing of a definitive merger agreement for the acquisition of the parent company of UniBank, a $471.4 million asset sized federal savings and loan association, which operates in the state of Florida. The closing of this transaction is pending regulatory approval.

     The Corporation’s common and preferred shares trade on the New York Stock Exchange, under the symbols FBP, FBPPrA, FBPPrB, FBPPrC, FBPPrD and FBPPrE.

     This press release may contain certain “forward-looking statements” concerning the Corporation’s economic future performance. The words or phrases “expect”, “anticipate”, “look forward”, “should”, and similar expressions are meant to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

     The Corporation wishes to caution readers not to place undue reliance on any such “forward-looking statements”, which

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speak only as of the date made and to advise readers that various factors, including regional and national economic conditions, changes in interest rates, competitive and regulatory factors and legislative changes, could affect the Corporation’s financial performance and could cause the Corporation’s actual results for future period 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.

The following table provides a reconciliation of financial information, as reported under generally accepted accounting principles (GAAP), to information excluding the effect of the after tax gain on sale of credit card loan portfolios in 2004 and 2003.

First BanCorp
Press Release
(Unaudited)

Fourth Quarter 2004

2004 4th

2004 4th

2004 4th

2004 4th

2004 4th

Quarter

Earnings

Quarter Basic

Quarter Diluted

Quarter

Quarter

Efficiency

for Quarter

EPS

EPS

ROA

ROCE

Ratio

As reported**

$

49,658,970

$

0.98

$

0.95

1.37

%

24.40

%

38.51

%

**No gain on the sale of credit card portfolio was realized during the 4th quarter of 2004.

Fourth Quarter 2003

																2003 4th
				2003 4th			2003 4th			2003 4th			2003 4th			Quarter
	Earnings			Quarter Basic			Quarter Diluted			Quarter			Quarter			Efficiency
	for Quarter			EPS			EPS			ROA			ROCE			Ratio
Under GAAP as reported	$	54,954,947		$	1.12		$	1.09			1.84	%		35.00	%		33.78	%
Effect of the gain on the sale of a large part of the subsidiary bank’s credit card loans in December 2003		(18,840,065	)		(0.47	)		(0.46	)		(0.63	%)		(14.70	%)		10.08	%
Excluding effect stated above	$	36,114,882		$	0.65		$	0.63			1.21	%		20.30	%		43.86	%

Fiscal Year 2004

										2004			2004			2004 Annual
	Earnings for			2004 Annual			2004 Annual			Annual			Annual			Efficiency
	the Year			Basic EPS			Diluted EPS			ROA			ROCE			Ratio
Under GAAP as reported	$	178,877,788		$	3.44		$	3.34			1.31	%		23.33	%		39.74	%
Effect of the gain on the sale of a small credit card portfolio of the subsidiary bank in March 2004		(3,374,937	)		(0.08	)		(0.08	)		(0.02	%)		(0.57	%)		0.30	%
Excluding effect stated above	$	175,502,851		$	3.36		$	3.26			1.29	%		22.76	%		40.04	%

Fiscal Year 2003

										2003			2003			2003 Annual
	Earnings for			2003 Annual			2003 Annual			Annual			Annual			Efficiency
	the Year			Basic EPS			Diluted EPS			ROA			ROCE			Ratio
Under GAAP as reported	$	152,338,342		$	3.04		$	2.98			1.46	%		25.20	%		39.91	%
Effect of the gain on the sale of a large part of the subsidiary bank’s credit card loans in December 2003		(18,840,065	)		(0.47	)		(0.46	)		(0.18	%)		(3.89	%)		3.24	%
Excluding effect stated above	$	133,498,277		$	2.57		$	2.52			1.28	%		21.31	%		43.15	%

FIRST BANCORP
Consolidated Statement of Income
(Unaudited)
Dollars in thousands except per share data

	Three Months Ended								Twelve Months Ended
	December 31,			December 31,			September 30,		December 31,			December 31,
	2004			2003			2004		2004			2003
Interest income:
Loans	$	128,138		$	99,719		$	113,831	$	445,092		$	389,722
Investments		60,417			47,600			66,248		231,298			146,959
Total interest income		188,555			147,319			180,079		676,390			536,681
Interest expense:
Deposits		37,649			28,287			30,730		122,036			112,541
Borrowings		49,453			35,058			46,077		171,148			131,930
Total interest expense		87,102			63,345			76,807		293,184			244,471
Net interest income		101,453			83,974			103,272		383,206			292,210
Provision for loan losses		13,200			14,152			13,200		52,799			55,916
Net interest income after provision for loan losses		88,253			69,822			90,072		330,407			236,294
Other income:
Service charges on deposit accounts		2,707			2,380			2,705		10,938			9,527
Other fees on loans		4,461			5,334			4,384		19,008			20,617
Mortgage banking activities		831			640			1,328		3,921			3,014
Net gain on sale of investments		4,581			6,651			360		9,457			34,856
Derivatives (loss) gain		(661	)		(420	)		763		(1,283	)		619
Rental Income		937			615			814		3,070			2,224
Gain on sale of credit cards portfolio					30,885					5,533			30,885
Other operating income		4,606			4,322			5,367		20,189			16,968
Total other income		17,463			50,407			15,721		70,833			118,710
Other operating expenses:
Employees’ compensation and benefits		20,596			20,494			21,432		83,528			75,213
Occupancy and equipment		10,313			9,637			10,224		39,368			36,394
Business promotion		3,938			4,300			4,355		16,349			12,415
Taxes, other than income taxes		2,286			1,977			2,283		8,468			7,405
Insurance and supervisory fees		1,045			1,254			995		4,126			3,730
Other		7,614			7,729			6,687		28,597			28,837
Total other operating expenses		45,792			45,391			45,976		180,436			163,994
Income before income tax provision		59,924			74,838			59,817		220,804			191,010
Income tax provision		10,265			19,883			10,738		41,926			38,672
Net income	$	49,659		$	54,955		$	49,079	$	178,878		$	152,338
Net income applicable to Common Stock	$	39,590		$	44,849		$	39,010	$	138,602		$	121,979
Net income per common share — basic	$	0.98		$	1.12		$	0.97	$	3.44		$	3.04
Net income per common share — diluted	$	0.95		$	1.09		$	0.94	$	3.34		$	2.98
Dividends declared per common share	$	0.12		$	0.11		$	0.12	$	0.48		$	0.44

FIRST BANCORP
Consolidated Statements of Financial Condition
(Unaudited)
Dollars in thousands

	December 31, 2004			December 31, 2003
Assets
Cash and due from banks	$	98,615		$	89,305
Money market instruments		702,164			705,940
Federal funds sold and securities purchased under agreements to resell		118,000			265,000
Investment securities available for sale, at fair value:
United States and Puerto Rico Government obligations		222,180			16,157
Mortgage backed securities		1,219,500			1,086,891
Corporate bonds		44,288			53,770
Equity investment		58,735			62,320
Total investment securities available for sale		1,544,703			1,219,138
Investment securities held to maturity, at amortized cost:
United States and Puerto Rico Government obligations		1,835,905			1,119,775
Mortgage backed securities		1,540,590			1,970,855
Corporate bonds		—			39,847
Total investment securities held to maturity		3,376,495			3,130,477
Federal Home Loan Bank (FHLB) stock		79,900			45,650
Loans receivable:
Commercial Loans		3,207,110			2,832,635
Finance Leases		214,663			161,283
Consumer Loans		1,371,669			1,171,590
Residential Loans		4,684,575			2,879,010
Total loans receivable		9,478,017			7,044,518
Allowance for loan losses		(141,036	)		(126,378	)
Total loans, net		9,336,981			6,918,140
Other real estate owned		9,649			4,617
Premises and equipment, net		95,814			85,269
Accrued interest receivable		57,095			41,508
Other assets		200,401			162,866
Total assets	$	15,619,817		$	12,667,910
Liabilities & Stockholders’ Equity
Liabilities:
Deposits	$	7,902,982		$	6,765,107
Federal funds purchased and securities sold under agreements to repurchase		4,221,523			3,650,297
Advances from FHLB		1,598,000			913,000
Notes Payable & Subordinated Notes		259,576			82,818
Other Borrowings		231,525
Accounts payable and other liabilities		183,300			167,119
		14,396,906			11,578,341
Stockholders’ equity:
Preferred Stock		550,100			550,100
Common stock outstanding		40,389			40,027
Additional paid in capital		4,863			269
Capital Reserve and Legal Surplus		263,397			243,107
Retained earnings		319,032			220,038
Accumulated other comprehensive income, net of tax		45,130			36,028
		1,222,911			1,089,569
Total liabilities and stockholders’ equity	$	15,619,817		$	12,667,910
Book value per common share	$	16.66		$	13.48

FIRST BANCORP
Selected Financial Data
(Unaudited)
Dollars in thousands

Credit quality Data at:	December 31, 2004			December 31, 2003
Non-performing Assets	$	108,605		$	100,771
Non-performing Loans		91,665			85,525
Past Due Loans		18,359			23,493
Allowance for Loan Losses		141,036			126,378
Non-performing Assets to Total Assets		0.70	%		0.80	%
Non-performing Loans to Total Loans		0.97	%		1.21	%
Allowance to Non-Performing Loans		153.86	%		147.77	%

Selected Performance Ratios:	Three Months Ended						Three Months Ended			Year Ended
	December 31,						September 30,			December 31,
	2004			2003			2004			2004			2003
Net Interest Yield (1)		3.30	%		3.32	%		3.53	%		3.40	%		3.24	%
Return on Assets		1.37	%		1.84	%		1.37	%		1.31	%		1.46	%
Return on Equity		16.56	%		20.69	%		17.03	%		15.63	%		17.06	%
Return on Common Equity		24.40	%		35.00	%		25.88	%		23.33	%		25.20	%
Net Write offs to Average Loans		0.42	%		0.63	%		0.47	%		0.48	%		0.66	%
Efficiency Ratio		38.51	%		33.78	%		38.64	%		39.74	%		39.91	%
Average Balances:
Assets	$	14,549,503		$	11,958,774		$	14,299,336		$	13,612,033		$	10,430,262
Earnings Assets		14,142,289			11,627,166			13,936,724			13,231,591			10,077,446
Loans		8,894,613			6,887,854			8,110,497			7,946,550			6,291,937
Deposits		7,575,263			6,601,516			7,116,981			7,081,781			5,861,346
Interest-bearing liabilities		12,547,998			10,258,656			12,403,584			11,729,742			8,939,851
Stockholders Equity		1,199,175			1,062,619			1,152,992			1,144,246			892,760
Common Stockholders Equity		649,075			512,519			602,892			594,146			483,951

(1) On a taxable equivalent basis.