First BanCorp. (FBP) 8-K Results of Operations and Financial Condition

Investor Presentation

Investor Presentation

July 2013

July 2013

Exhibit 99.1

Disclaimer

2

This presentation contains “forward-looking statements” concerning First BanCorp’s (the “Corporation”) future economic performance. The words or phrases “would be,” “will allow,”

“intends to,” “will likely result,” “are expected to,” “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, uncertainty about whether the Corporation and FirstBank Puerto Rico (“FirstBank” or “the Bank”)  will be able to fully comply with the written agreement

dated June 3, 2010 that the Corporation entered into with the Federal Reserve Bank of New York (the “FED”) and the order dated June 2, 2010 (the “Order”) that FirstBank  entered

into with the FDIC and the Office of the Commissioner of Financial Institutions of Puerto Rico that, among other things, require FirstBank to maintain certain capital levels and reduce

its special mention, classified, delinquent and non-performing assets; the risk of being subject to possible additional regulatory actions; uncertainty as to the availability of certain

funding sources, such as retail brokered CDs; the Corporation’s reliance on brokered CDs and its ability to obtain, on a periodic basis, approval from the FDIC to issue brokered CDs to

fund operations and provide liquidity in accordance with the terms of the Order; the risk of not being able to fulfill the Corporation’s cash obligations or resume paying dividends to

the Corporation’s stockholders in the future due to the Corporation’s inability to receive approval from the FED to receive dividends from FirstBank or FirstBank’s failure to generate

sufficient cash flow to make a dividend payment to the Corporation; the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and their

impact on the credit quality of the Corporation’s loans and other assets, including the Corporation’s construction and commercial real estate loan portfolios, which have contributed

and may continue to contribute to, among other things, the high levels of non-performing assets, charge-offs and the provision expense and may subject the Corporation to further

risk from loan defaults and foreclosures; adverse changes in general economic conditions in the United States and in Puerto Rico, including the interest rate scenario, market liquidity,

housing absorption rates, real estate prices and disruptions in the U.S. capital markets, which may reduce interest margins, impact funding sources and affect demand for all of the

Corporation’s products and services and the value of the Corporation’s assets; 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 continued recession in Puerto Rico and the current fiscal problems and budget

deficit of the Puerto Rico government; uncertainty about 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 prior results and

anticipated or projected results; uncertainty about the effectiveness of the various actions undertaken to stimulate the United States economy and stabilize the United States’

financial markets, and the impact such actions may have on the Corporation’s business, financial condition and results of operations; changes in the fiscal and monetary policies and

regulations of the federal government, including those determined by the Federal Reserve System, the FDIC, government-sponsored housing agencies and regulators in Puerto Rico

and the U.S. and British Virgin Islands; the risk of possible failure or circumvention of controls and procedures and the risk that the Corporation’s risk management policies may not be

adequate; the risk that the FDIC may further increase the deposit insurance premium and/or require special assessments to replenish its insurance fund, causing an additional increase

in the Corporation’s non-interest expense; risks of not being able to recover the assets pledged to Lehman Brothers Special Financing, Inc.; the impact on the Corporation’s results of

operations and financial condition associated with acquisitions and dispositions; a need to recognize additional impairments on financial instruments or goodwill relating to

acquisitions; risks that downgrades in the credit ratings of the Corporation’s long-term senior debt will adversely affect the Corporation’s ability to access necessary external funds; the

impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act on the Corporation’s businesses, business practices and cost of operations; and general competitive factors

and industry consolidation.  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 except as required by the federal securities laws. Investors should refer to the Corporation’s Annual Report on

Form 10-K for the year ended December 31, 2012 for a discussion of such factors and certain risks and uncertainties to which the Corporation is subject.

Franchise Overview

Founded in 1948 (65 years)

Headquartered in San Juan, Puerto Rico

with operations in PR, Eastern Caribbean

(Virgin Islands) and Florida

A well diversified operation with over

650,000 retail & commercial customers

2nd largest financial holding company in

Puerto Rico with attractive business mix

and substantial loan market share

The largest bank in the Virgin Islands with

over 40% market share

Small presence in Florida serving south

Florida region

151 ATM machines and largest ATM

network  in the Eastern Caribbean Region

~2,500 FTE employees

As of June 30, 2013

Eastern Caribbean Region or ECR includes United States and British Virgin Islands

FTE = Full Time Equivalent

Well diversified with significant competitive strengths

3

Total Assets -

$12.8B

Total Loans -

$9.7B

Total Deposits -

$10.0B

13 bank branches

1 Loan Production Office

Florida:

7% of Assets

14 bank branches

3 First Express branches

Eastern Caribbean:

7% of Assets

Franchise Overview

Our Turnaround Story

2H 2011

2012

1H 2013

June 3, 2010, First BanCorp

entered into the Written

Agreement with the FED

July 20, 2010, the U.S. Treasury

exchanged TARP for preferred,

which the FBP could compel

conversion upon completion  

of capital raise

August 30, 2010, completed

exchange of 89% Series A-E

Noncumulative Perpetual

Preferred Stock for Common

During 2010 & 2011, the Company

initiated Strategic Plan focused on

the following initiatives:  org.

restructuring, increasing capital,

de-risking balance sheet, enhancing

franchise value and the strength

governance & risk mgmt

January 7, 2011, one-for-

fifteen reverse stock split of

all outstanding shares of its

common stock

February 16, 2011, the Corporation

sold loans with a book value of

$270 million to a joint venture

with Goldman & CPG

On March 7, 2011, FBP continued

de-risking and de-leveraging and

sold approximately $330 million

of MBS intended to be held to

maturity. 

Compelled the conversion of the 424,174

shares of the Corporation’s Series G

Preferred Stock, held by the U.S. Treasury,

into 32.9 million shares of common stock

During 2H 2011, continued

deleveraging and de-risking

strategies. 

October 2011, completed a

$525 million capital raise

and converted the UST

to common stock.

May 30, 2012, the Corporation

reentered the credit card business

with the acquisition of an

approximate $406 million portfolio

of FirstBank-branded credit cards

from FIA.

Post capital raise, the Company shifted from a defensive to offensive

posture.

The Company returned to  profitability in 2012 and  generated $179 million

in pre-provision pre-tax income, a 38% increase compared to 2011.  Through

organic workouts the Company reduced NPAs by $99mm & NPLs by

$165mm.

During the first quarter of 2013, the

Corporation entered into three

separate agreements to sell classified

and non-performing loans with an

aggregate carrying value of

approximately $309.7 million.

June 2013, announced the write-off of

$66.6 million collateral pledged to

Lehman , the bulk sale of a non-

performing pool of residential loans

with book value of $203.8 million, as

well as $19.2 million of OREO for $128.3

million in an all cash transaction.

2013 NPAs are down over $1 billion, or

58%, since the peak in Q1 10.  Capital

ratios strong: Total RBC Ratio 16.6%;

Tier 1 Capital Ratio 15.3%; and

Leverage Ratio 11.3%.  DTA of $523

million. 

On October 7, 2011, the Corporation

successfully completed a private

placement of $525 million in shares of

common stock -

Lead investors

include funds affiliated with Thomas

H. Lee Partners & Oaktree Capital

Management.

4

During 2011, as part of de-

leveraging sold $518 million of

performing residential mortgages.

5

Core Franchise is Strong

Effectively executing Strategic Plan towards Profitability

Management focused on continued strengthening of the franchise and

executing on profitability levers

Franchise Value

Pre-tax pre-provision income $86.4 million YTD 2013 up 19% from 1H 2012

Stable Net

Interest

Margin

4.06%

in

6

months

ended

2013

compared

to

3.37%

for

the six months ended June 30, 2012

Expanding products mix and maximizing cross-selling opportunities

Growing core

deposits up $205 million in 2013

Reenergized loan production $1.8 billion originations 1H13 vs. $1.4 billion 1H12

Optimizing expenses;  continued focus on operational excellence

Capital

Strong capital base, growing through earnings generation, to support continued

execution of Strategic Plan. $523 million Deferred Tax Asset Valuation Allowance.

Risk Management

Proactive approach to risk management

In compliance with Regulatory Agreements

Enhanced BOD talent with additional financial and risk management expertise

Balance Sheet

Improving risk profile;

focusing

on

reducing NPAs

•

Completed two bulk sales of adversely classified loans and OREO properties

with total book value of $441 million in first half of 2013

•

NPAs decreased for the 13   consecutive quarter

•

NPAs down 39% or $486 million YTD 2013

Executing

on

opportunities

to

reduce

cost

of

funds

•

$1.8 billion brokered CDs maturing in twelve months at average rate of 1.28%

th

Franchise Overview

Source: PR Market Share Report prepared with data provided by the Commissioner of Financial Institutions of Puerto Rico as of  3/31/13.

Unique challenger to Puerto Rico’s largest player

6

Puerto Rico Total Assets

Puerto Rico Total Loans

Puerto Rico Deposits, Net of Brokered

($ in millions)

Strong and uniquely positioned market

franchise in densely populated operating

footprints

Strong market share in loan portfolios

facilitates customer relationship expansion and

cross sell to increase deposit share

Banking Branches

Wholesale Banking

Retail Banking

Consumer Lending

2

Mortgage Banking

Insurance

Retail Brokerage

3

Wholesale Brokerage

4

1 Puerto Rico only; 2 FirstBank acquired the FirstBank-branded credit card portfolio of $391MM book balance as of June 30, 2012; 3 Provided through alliance with UBS; 4 Established primarily for

municipal financing

1

1

1

Puerto Rico

ECR

Florida

47

14

13

Portfolio

Balance

Market

Share

Portfolio

Balance

Market

Share

Portfolio

Balance

Market

Share

1

Banco Popular

$        26,171

39.4%

1

Banco Popular

$        19,586

38.1%

1

Banco Popular

$        17,460

43.6%

2

FirstBank

9,879

14.9%

2

FirstBank

8,313

16.2%

2

Banco Santander

5,672

14.2%

3

Oriental Bank

7,489

11.3%

3

Scotiabank

5,481

10.7%

3

Oriental Bank

4,733

11.8%

4

Banco Santander

7,091

10.7%

4

Oriental Bank

5,302

10.3%

4

FirstBank

3,752

9.4%

5

Scotiabank

7,060

10.6%

5

Banco Santander

5,207

10.1%

5

Scotiabank

3,358

8.4%

6

Doral Bank

5,470

8.2%

6

Doral Bank

3,928

7.6%

6

Citibank

2,702

6.7%

7

Citibank

2,705

4.1%

7

Other

2,667

5.2%

7

Doral Bank

1,951

4.9%

8

Banco Cooperativo

514

0.8%

8

Citibank

746

1.5%

8

Banco Cooperativo

435

1.1%

9

BBU

9

0.0%

9

Banco Cooperativo

203

0.4%

9

BBU

21

0.1%

Total

66,390

$       

100%

Total

51,433

$       

100%

Total

40,084

$       

100%

Institutions

Institutions

Institutions

Dec-09

Mar-13

Rank

18%

2

9%

4

21%

2

17%

3

22%

2

16%

2

6%

4

20%

2

2%

6

3%

3

8%

4

5%

4

10%

4

10%

4

15%

8%

20%

14%

19%

20%

14%

19%

10%

11%

10%

7%

9%

12%

85%

92%

80%

86%

81%

80%

86%

81%

90%

89%

90%

93%

91%

88%

Assets

Personal Loans

Commercial Loans

Construction

Auto/Leasing

Small Personal Loans

Mortgage Originations

Credit Cards

ACH Transactions

POS Terminals

ATM Terminals

Debit Cards

Deposits

Branches

FirstBank

Building Franchise Value

Targeted strategies for growth

7

Puerto Rico

Opportunities for ongoing market share gains on

selected products based on fair share of market

Largest opportunity on deposit products, electronic

banking & transaction services

Selected loan products growth for balanced

risk/return to manage risk concentration and

diversify income sources

Acquired FirstBank-branded credit card portfolio from

FIA Card Services, N.A.

Diversifies revenue stream and loan portfolio

composition

Opportunity to broaden and deepen relationships

Florida

Expansion prospects in Florida given long term

demographic trends

Continue focus in core deposit growth, commercial

and transaction banking and conforming residential

mortgages

Virgin Islands

Solidify leadership position by further increasing

customer share of wallet

1 Puerto Rico only

Source: Office of the Commissioner of Financial Institutions of Puerto Rico as of 3/31/13 and internal reports; commercial loans include loans collateralized by real estate

Market

Share

in

Main

Market

1

1 Total Deposits excluding Brokered CDs

Building Franchise Value

Successful deposits growth over recent years

8

($ in millions)

Core Deposits

Total Deposit Composition

Cost of Deposits

Core deposit growth strategy continues providing

positive results; $1.5B since 2009

Focus remains on cross-selling opportunities

Cost of interest bearing deposits, net of brokered CDs,

decreased to 0.93%

Reduced reliance on brokered CDs

–

33% of deposits are brokered CDs, down from

60% in 2009

$1.8 billion brokered CDs maturing in twelve months at

average rate of 1.28%

1

1

Well Diversified Loan Portfolio

Continued focus on revenue generation through growth in

Consumer and Residential Mortgage market share & rebuilding

Commercial portfolio.

Strong origination activity at $1 billion for Q2 13:

Residential mortgages originations increased $33 million

Consumer loans originations increased $33 million

•

Auto loan originations increased $11 million

•

Personal loan originations increased $13 million

•

Credit card utilization activity of $96 million

Strong Origination Capabilities

9

($ in millions)

Loan Portfolio

Asset Composition

Loan Originations

Loans Held for Sale

Commercial

Construction

Consumer & Finance Leases

Residential Mortgage

1 Originations including refinancings and draws from existing revolving and non-revolving commitments

1

Focus on Strategic Plan

Rebuild earnings and de-risk Balance Sheet

10

($ in millions, except per share results)

2Q 2013 Highlights

Net loss of $122.6 million, or $0.60 per diluted share, including a $72.9 million loss related to the bulk sale of assets and $66.6

million loss related to the write-off of assets pledged as collateral with Lehman.

Adjusted net income of $16.8 million, or $0.08 per diluted share, excluding the aforementioned items.

Net interest margin increased by 8 basis points to 4.04%; 58 basis point increase YoY driven by further reductions in funding

costs.

Completed the bulk sale of a nonperforming pool of residential loans with book value of $203.8 million, as well as $19.2 million

of

OREO for $128.3 million in an all cash transaction.

Completed sale of $40.8 million non-performing commercial mortgage loan (one of two transactions moved to held for sale

status in Q1) without incurring in additional losses.

Capital remains strong with total capital ratio, tier 1 and leverage of 16.6%, 15.3% and 11.3%, respectively

Expect credit related expenses for the second half of 2013 to be

lower than the first half by approximately $10 million

Income Statement

2Q 2012

3Q 2012

4Q 2012

1Q 2013

2Q 2013

GAAP Net Interest Income

108.7

$             

125.5

$             

125.6

$             

124.5

$             

126.9

$             

Provision for loan and lease losses

24.9

29.0

30.5

111.1

87.5

Non-interest income

16.5

17.3

20.1

19.1

14.3

Impairment of collateral pledged to Lehman

(66.6)

Equity in (losses) gains of unconsolidated entities

(2.5)

(2.2)

(8.3)

(5.5)

0.6

Non-interest expense

86.9

91.8

90.9

98.0

111.3

Pre-tax net income (loss)

10.9

19.8

16.0

(71.0)

(123.6)

Income tax (expense) benefit

(1.5)

(0.8)

(1.5)

(1.6)

1.0

Net income (loss)

9.4

$                   

19.1

$                 

14.5

$                 

(72.6)

$              

(122.6)

$            

Adjusted Pre-tax pre-provision earnings

37.9

$                 

51.4

$                 

54.5

$                 

50.5

$                 

35.9

$                 

Net Interest Margin, (GAAP) (%)

3.46%

3.98%

3.91%

3.96%

4.04%

Net income (loss) per common share-basic

0.05

$                 

0.09

$                 

0.07

$                 

(0.35)

$    ��         

(0.60)

$              

1,639

506

1,790

1,087

752

$-

$1,800

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Loans Held for Sale

Repossessed Assets & Other

NPLs Held for Investment

Improving Risk Profile

11

($ in millions)

Net Charge-offs

Non-performing Assets

1)

In 2010 there were $165 million of net charge-offs associated with the bulk sale to CPG.  Excluding the bulk sale net charge-offs for 2010 were $444 million.

2)

June 30, 2013.

3)

Net Carrying Amount = % of carrying value net of reserves and accumulated charge-offs

NPAs are down over $1 billion, or 58%, since the peak in Q1 10.

Total

NPLs

are

also

down

over

$1

billion,

or

73%,

since

the

peak

in

Q1

10.

1

st

Half of 12013:

Completed a bulk sale of adversely classified loans and OREO properties with a

book value of $217.7 million, including $185.0 million of non-performing

assets,

for

$120.2

million

in

a

cash

transaction.

Resulting

net

charge-

offs

$98.5 million.

Transferred $181.6 million of loans to held for sale resulting in net charge-offs

of $36.0 million.  Completed sale of a $40.8 million loan held for sale.

Completed a bulk sale of nonperforming residential loans with book value of

$203.8 million, as well as $19.2 million of OREO, for $128.3 million in a cash

transaction.  Resulting net charge-offs $98.0 million.

Recorded a non-cash charge of $66.6 million associated with the write-off of

the

carrying

value

and

accrued

interest

for

securities

pledged

to

Lehman.

2010

2011

2012

2013

Excl. Bulk Sales

Product

Book Value

Accumulated

Charge-offs

Reserves

Net Carrying

Amount

3

C & I

$129.1

$45.1

$28.2

57.9%

CRE

177.6

42.9

29.7

67.1%

Construction

125.1

104.5

15.6

47.7%

Total

$431.8

$192.5

$73.5

57.4%

Commercial Non-performing Loans (includes HFS)

2

Proactively Managing Asset Quality

12

Capital Position and Asset Quality

Asset

quality

remains

our

number

one

focus,

while

preserving

and

growing

capital.

Strong capital position:  Total capital, Tier 1 capital and Leverage ratios of the Corporation of

16.6%, 15.3% and 11.3%, respectively.  $523

million

Deferred

Tax

Asset

Valuation

Allowance.

Core Franchise is Strong

9.5%

NPAs / Assets

8.4%

5.9%

13.3%

Total Capital Ratio

17.4%

16.6%

12.0%

Tier 1 Capital Ratio

16.2%

15.3%

8.4%

Leverage Ratio

12.1%

11.3%

0.0%

6.0%

12.0%

18.0%

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Q1 12

Q2 12

Q3 12

Q4 12

Q1 13

Q2 13

13

We are confident in the strength of our core franchise and in our ability to

successfully execute on our strategic plan.

Investment Opportunity

Focus on execution of our Strategic Plan & Drivers for Improved Profitability:

Asset Quality

remains our number one focus and our Special Assets group continues to

make progress.  We will continue to closely manage our NPA book.

As NPAs continue to

roll-off,

we

will

re-deploy

thorough

growth

in

higher

yielding

consumer,

residential

and

commercial loan portfolio.

Profitability

$86.4 million of pre-tax pre-provision income for YTD 2013 compared to

$72.7 million same period 2012;  Stable Net Interest Margin of 4.06% YTD 2013. 

Continued focus on reduction in funding costs, optimization of expense base and

growth in noninterest income.

Loan Portfolio

focus on solid relationships with core balances toward achieving loan

portfolio growth.  Origination activity over $1.8 billion YTD 2013.

Core Deposits

continue to grow, up $205 million YTD 2013, as we cross-sell with new

and enhanced product offering while reducing our reliance on brokered CDs.

–

–

–

–

Core Franchise is Strong

Exhibits

Exhibits

Investor Presentation

Investor Presentation

July 2013

July 2013

15

Stock Profile

Trading Symbol:

•

FBP

Exchange:

•

NYSE

Share

Price

(7/26/13):

•

$7.96

Shares Outstanding:

•

206,982,105

Market Capitalization

(7/26/13):

•

$1.65 Billion

1 Yr. Average Daily Volume:

•

374,127

Price

(7/26/13)

to

Tangible

Book

(6/30/13):

•

1.50x

Beneficial Owner

Amount

Percent of

Class

Entities affiliated with Thomas H. Lee

Partners, L.P.

50,684,485

24.59%

Entities affiliated with Oaktree Capital

Management, L.P.

50,684,485

24.59%

Wellington Management Company, LLP.

20,336,087

9.87%

United States Department of the

Treasury¹

34,227,696

16.50%

5% or more Beneficial Ownership

1 Includes the U.S. Treasury warrant that entitles it to purchase up to 1,285,899 shares of Common Stock at an exercise price of $3.29 per share, as adjusted as a result of the issuance of shares of

Common Stock in the Corporation’s recently completed $525MMprivate placement of Common Stock (the “Capital Raise”). The exercise price and the number of shares issuable upon exercise

of the warrant are subject to further adjustments under certain circumstances to prevent dilution. The warrant has a 10-year term from its issue date and is exercisable in whole or in part at

any time. 

16

Economic Activity

Adopted Fiscal Measures

Puerto Rico’s Planning Board most recent economic growth

projections of -0.4% and 0.2% for FY 2013 and FY 2014,

respectively.

The Government Development Bank’s Economic Activity Index

(EAI) for the month of May 2013 reflected a 3.4% decline

compared to May 2012. 

EAI fiscal year-to-date as of May 2013 reflected a reduction of

0.5% compared to the same period during previous fiscal year.

Employment

•

June 2013 unemployment rate of 13.2% compared to June

2012 of 14.1%

•

Average unemployment rate for FY 2013 was 14.1% compared

to 15.2% during the same period for FY 2014.

Tourism

•

Recent tourism activity showing marked improvement as hotel

registrations were up 6.7% for the first eight months of FY

2013 compared to same period on previous year.

•

Hotel occupancy rate of 69.9% for the first eight months of FY

2013 up compared to average occupancy rate of 68.6% during

previous three fiscal years.

Public Private Partnerships (PPPs)

On June 26, 2013, the Board of Directors of the Puerto Rico

Public-Private Partnerships Authority (PPPA) announced plans to

move forward with the evaluation of strategic infrastructure

projects including a commuter train from San Juan to Caguas, new

correctional facilities, and key natural gas conversion projects

at

PREPA’s main generating plants.

Critical measures adopted by government to safeguard Puerto

Rico’s general obligations credit rating:

•

Extension of excise tax on multinational foreign corporations

(Act 154 of 2010) for five year period –

significant source of

revenue for General Fund.

•

Enacted meaningful Pension Reform to address unfunded

liability of major public pension system.

•

Adopted revenue enhancement measures to curtail

operational deficits at major public corporations and utilities

(i.e. Aqueduct and Sewer Authority and Highways and

Transportation Authority) to address continued needed

financial support from GDB.

Adopted FY 2014 Budget and General Fund Structural Deficit

On June 30, 2013, the Puerto Rico Government approved Act No.

40, which amended the Puerto Rico Internal Revenue Code of

2011, and Act No. 46 bringing several changes, among others:

•

Modification to sales and use tax regime (business-to-business)

•

New national gross receipts tax

•

Higher AMT rate

Adopted budget reduces projected general fund deficit to $820

million, or 8.6% of projected revenues, down from estimated $1.3

billion deficit as of end of FY 2013 and lowest projected deficit

compared to previous five fiscal years.

Budgeted revenue base for FY 2014 is expected to increase $1.380

billion as a result of adopted legislation to address structural

deficit.

Puerto Rico Market

Non-performing Assets

1 Collateral pledged with Lehman Brothers Special Financing, Inc.

17

($ in millions)

2009

2010

2011

2012

6/30/2013

Non-performing loans held for investment:

  Residential mortgage

441,642

$         

392,134

$         

338,208

$         

313,626

$         

133,937

$         

  Commercial mortgage

196,535

217,165

240,414

214,780

136,737

  Commercial & industrial

241,316

317,243

270,171

230,090

131,906

  Construction

634,329

263,056

250,022

178,190

68,204

  Consumer & finance leases

50,041

49,391

39,547

38,875

35,416

   Total non-performing loans held for investment

1,563,863

1,238,989

1,138,362

975,561

506,200

OREO

69,304

84,897

114,292

185,764

139,257

Other repossessed property

12,898

14,023

15,392

10,107

11,503

Other assets

(1)

64,543

64,543

64,543

64,543

-

  Total non-performing assets, excluding loans held for sale

1,710,608

1,402,452

1,332,589

1,235,975

656,960

Non-performing loans held for sale

-

159,321

4,764

2,243

94,951

  Total non-performing assets

1,710,608

$     

1,561,773

$     

1,337,353

$     

1,238,218

$     

751,911

$         

18

Adjusted Pre-tax, Pre-provision Income Reconciliation

($ in thousands)

2Q 2012

3Q 2012

4Q 2012

1Q 2013

2Q 2013

Income (loss) before income taxes

10,901

$        

19,834

$        

16,028

$        

(71,011)

$      

(123,562)

$    

Add: Provision for loan and lease losses

24,884

28,952

30,466

111,123

87,464

Add: Net loss on investments and impairments

143

547

69

117

42

Less: Unrealized gain (loss) on derivatives instruments and

liabilities measured at fair value

(506)

(170)

(432)

(400)

(708)

Add: Bulk sales related expenses and other professional fees related

to the terminated preferred stock exchange offer

-

-

-

5,096

3,198

Add:  Loss on certain OREO properties sold as part of the bulk sale

of non-performing residential mortgage assets

-

-

-

-

1,879

Add:  National gross tax receipts tax corresponding to Q1 2013 

recorded during Q2 2013 after enactment

-

-

-

-

1,656

Add: write-off of collateral pledged to Lehman

-

-

-

-

66,574

Add: Equity in losses (earnings) of unconsolidated entities

2,491

2,199

8,330

5,538

(648)

Adjusted Pre-tax, pre-provision income

37,913

$        

51,362

$        

54,461

$        

50,463

$        

35,895

$        

Quarter Ended

19

Increase of $8.1 million in credit

related expenses:

–

$1.9 million loss on OREO sales as part

of the bulk sale transaction

–

$5.3 million in fair value adjustment of

almost all commercial OREOs in the VI

$3.2 million impact of new tax on

gross revenues enacted by the PR tax

authorities.  Includes $1.7 million

retroactive impact from Q1 13.

Increase of $2.7 million in outsourcing

technology services to FIS, partially

offset by savings of $1.8 million in

compensation  expense and computer

applications maintenance fees

through the relationship with FIS.

($ in millions)

Q1 13

Q2 13

Credit related expenses

9.2

$      

17.3

$   

Bulk sale professional fees

3.9

3.1

Terminated preferred stock exchange

1.1

0.1

Outsourcing technology services

1.3

4.3

Taxes other than income tax

3.0

6.2

All other expenses

79.5

80.3

Total

98.0

$    

111.3

$ 

Results of Operations –

Operating Expenses