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

First BanCorp

Investor Presentation

February 2014

Exhibit 99.1

Disclaimer

1

This

presentation

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

Securities

Act

of

1933,

as

amended,

and

Section

21E

of

the

Securities

Exchange

Act

of

1934,

as

amended,

and

are

subject

to

the

safe

harbor

created

by

such

sections.

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

following

could

cause

actual

results

to

differ

materially

from

those

expressed

in,

or

implied

by

such

forward-looking

statements:

uncertainty

about

whether

the

Corporation

and

FirstBank

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

“New

York

Fed”)

and

the

consent

order

dated

June

2,

2010

that

FirstBank

entered

into

with

the

FDIC

and

the

Office

of

the

Commissioner

of

Financial

Institutions

of

the

Commonwealth

of

Puerto

Rico

(the

“FDIC

Order”)

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

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

FDIC

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

New

York

Fed

or

the

Board

of

Governors

of

the

Federal

Reserve

System

(“Federal

Reserve

Board”)

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,

which

has

contributed

and

may

continue

to

contribute

to,

among

other

things,

the

high

levels

of

non-performing

assets,

charge-offs,

and

provisions

and

may

subject

the

Corporation

to

further

risk

from

loan

defaults

and

foreclosures;

the

ability

of

FirstBank

to

realize

the

benefit

of

the

deferred

tax

asset;

adverse

changes

in

general

economic

conditions

in

Puerto

Rico,

the

U.S.,

and

the

U.S.

Virgin

Islands

and

British

Virgin

Islands,

including

the

interest

rate

environment,

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

reduce

the

Corporation’s

revenues,

earnings,

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,

the

current

fiscal

problems

and

budget

deficit

of

the

Puerto

Rico

government

and

recent

credit

downgrades

of

the

Puerto

Rico

government;

a

credit

default

by

the

Puerto

Rico

government

or

any

of

its

public

corporations

or

other

instrumentalities,

and

recent

and/or

future

downgrades

of

the

long-term

debt

ratings

of

the

Puerto

Rico

government,

which

could

adversely

affect

economic

conditions

in

Puerto

Rico;

the

risk

that

any

portion

of

the

unrealized

losses

in

the

Corporation’s

investment

portfolio

is

determined

to

be

other-than-

temporary,

including

unrealized

losses

on

Puerto

Rico

government

obligations;

uncertainty

about

regulatory

and

legislative

changes

for

financial

services

companies

in

Puerto

Rico,

the

U.S.,

and

the

U.S.

Virgin

Islands

and

British

Virgin

Islands,

which

could

affect

the

Corporation’s

financial

condition

or

performance

and

could

cause

the

Corporation’s

actual

results

for

future

periods

to

differ

materially

from

prior

results

and

anticipated

or

projected

results;

changes

in

the

fiscal

and

monetary

policies

and

regulations

of

the

federal

government,

including

those

determined

by

the

Federal

Reserve

Board,

the

New

York

Fed,

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

expenses;

the

impact

on

the

Corporation’s

results

of

operations

and

financial

condition

of

acquisitions

and

dispositions;

a

need

to

recognize

additional

impairments

on

financial

instruments,

goodwill,

or

other

intangible

assets

relating

to

acquisitions;

the

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;

the

risk

of

losses

in

the

value

of

investments

in

unconsolidated

entities

that

the

Corporation

does

not

control;

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.

Eastern

Caribbean:      

7% of Assets

Franchise Overview

Founded in 1948

Headquartered in San Juan, Puerto

Rico with operations in PR, Eastern

Caribbean (Virgin Islands) and Florida

–

~2,500 FTE employees

(1)

2nd largest financial holding company

in Puerto Rico with attractive business

mix and substantial loan market share

Florida presence with focus on

serving south Florida region

The largest depository institution  in

the Virgin Islands with approximately

40% market share

146 ATM machines and largest ATM

network  in the Eastern Caribbean

Region

(2)

A well diversified operation with over

650,000 retail & commercial

customers

Well diversified with significant competitive strengths

As of December 31, 2013.

1) FTE = Full Time Equivalent.

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

3)

Data

as

of

December

31,

2013.

Core

deposits

excludes

brokered

CDs.

2

Total Assets -

$12.7B

Total Loans -

$9.7B

Total Deposits -

$9.9B

12 bank branches

1 Loan Production Office

SE Florida:

9% of Assets

28% of core

deposits

(3)

14% of core

deposits

(3)

12 bank branches

2 First Express branches

Franchise Overview

($ in millions)

Well positioned Puerto Rico institution in a consolidating market

Source: PR Market Share Report prepared with data provided by the Commissioner of Financial Institutions of Puerto Rico as of  9/30/13.

1) Puerto Rico only.

2) Calculated as institution bank branches within a mile of an FBP branch as a percentage of total institution branches.

3) Alphabetical order.

3

Puerto Rico Total Assets

(1)

Puerto Rico Total Loans

(1)

Puerto Rico Deposits, Net of Brokered

(1)

Strong and uniquely positioned franchise in

densely populated regions of core operating

footprint

Strong market share in loan portfolios

facilitates customer relationship expansion and

cross-sell to increase deposit share

Long-term opportunity for additional

consolidation

—

Branch overlap of greater than 40% with six

Puerto Rico institutions

(2)

1-mile branch overlap

(3)

64

42

80%

42

47

44

Portfolio

Balance

Market

Share

Portfolio

Balance

Market

Share

Portfolio

Balance

Market

Share

1

Banco Popular

$25,305

39.7%

1

Banco Popular

$18,951

38.7%

1

Banco Popular

$17,478

44.1%

2

FirstBank

9,620

15.1%

2

FirstBank

8,081

16.5%

2

Banco Santander

5,585

14.1%

3

Oriental Bank

7,400

11.6%

3

Banco Santander

5,302

10.8%

3

Oriental Bank

4,832

12.2%

4

Scotiabank

6,805

10.7%

4

Oriental Bank

5,216

10.7%

4

FirstBank

3,886

9.8%

5

Banco Santander

6,707

10.5%

5

Scotiabank

4,958

10.1%

5

Scotiabank

3,467

8.7%

6

Doral Bank

5,363

8.4%

6

Doral Bank

2,776

5.7%

6

Citibank

2,011

5.1%

7

Citibank

2,011

3.2%

7

Other

2,732

5.6%

7

Doral Bank

1,954

4.9%

8

Banco Cooperativo

513

0.8%

8

Citibank

711

1.5%

8

Banco Cooperativo

430

1.1%

9

BBU

23

0.0%

9

Banco Cooperativo

183

0.4%

9

BBU

25

0.1%

Total

$63,746

100%

Total

$48,911

100%

Total

$39,669

100%

Institutions

Institutions

Institutions

2009

2013

Change ('09-'13)

% improvement

NPAs

$1,711

$725

$986

58%

NPAs/assets

8.7%

5.7%

298 bps

Tier 1 Common

4.1%

12.7%

862 bps

104%

TCE / TA

3.2%

8.7%

551 bps

75%

Core deposits

$5,108

$6,738

$1,630

32%

NIM

2.69%

4.11%

142 bps

Our turnaround story

Franchise Overview

($ in millions)

De-Risking of Balance Sheet

Capital

Enhanced Franchise Value

4

June 2010:

Written

Agreement

with the FED

and Consent

Order with

FDIC

July 2010:

The U.S.

Treasury

exchanged

TARP for

convertible

preferred

August 2010:

Exchange of 89%

Perpetual

Preferred Stock

for Common

February 2011:

Sale of non-

performing

loans with a

book value of

$269 million

Feb-April 2011:

Sale of $330

million of MBS

and  $518

million of

performing

residential

mortgages

March 2013:

Sale of non-performing

loans with a book value

of $217.7 million and

entered two separate

agreements for sale of

NPLs with a book value

of $99 million

2010

2011

2013

October 2011:

Conversion of

the shares held

by the U.S.

Treasury into

32.9 million

shares of

common stock

May 2012:

Acquisition of a $406

million portfolio of

FirstBank-branded

credit cards from FIA

June 2013:

Write-off of $66.6

million collateral

pledged to

Lehman, sale of

NPLs with book

value of $203.8

million and $19.2

million of OREO

October 2011:

Private placement

of $525 million in

common stock. 

Lead investors

included Thomas H.

Lee & Oaktree

2012

1) Represents change in dollar amount. 

(1)

(1)

(1)

(1)

August 2013:

Completed

secondary

offering reducing

ownership

interest of U S

Treasury and PE

Investors

Highlights

Fiscal Year 2013

Effectively executing strategic plan as we continue to de-risk the balance sheet and

focus efforts on strengthening our core franchise across our three geographies

Asset Quality:

Remains our top priority…

NPAs, down $513 million, or 41%, compared to FYE 2012;

Completed

two

large

bulk

sale

transactions

in

first

half

of

2013

with

a

loss

$140.8

million;

and

Wrote-off assets pledged as collateral to Lehman.

Profitability:

Achieved in second half of 2013 following bulk sale transactions…

FYE

2013

loss

of

$164.5

million,

impacted

by

accelerated

balance

sheet

clean-up,

adj.

income

of

$45.4

million;

NIM improved 47 basis points to 4.11% compared to FYE 2012 through reduced funding costs; and

Posted a strong pre-tax pre-provision income for 2013 of $184 million, still impacted by high credit cost.

Core Deposits:

Continued building product capabilities and deepening relationships…

Increased $248 million, or 4%, during 2013; and

Reduced

reliance

on

brokered

CDs

by

$233

million

compared

to

FYE

2012.

Loan Originations:

Key strength of the franchise…

$3.7 billion of originations for 2013, an increase of approximately $600 million compared to 2012;

Continued focus on rebuilding our credit card book, C&I and mortgage loans while strengthening our dominant

position on the island in consumer and auto lending; and

Achieved loan growth in our Florida book.

Capital Position:

Strong capital position allowing us to continue to address our legacy asset issues in a challenging

economic environment.  Our deferred tax asset valuation allowance is $523 million.

5

*

See

reconciliation

on

page

22

–

Use

of

Non

GAAP

Financial

Measures

*

Profitability

•

Net

income

of

$14.8

million,

or

$0.07

per

diluted

share,

including

$2.5

million

for

attorneys’

fees

awarded to the counterparty on the Lehman Brothers litigation and $1.4 million in branch

consolidation and restructuring  expenses.

•

Adjusted net income of $18.5 million, excluding the aforementioned items. These results were also

impacted by a $5.9 million loss in the equity of the unconsolidated entity and $7 million increase in

write-downs to certain commercial OREO properties.

•

Net interest margin increased by 5 basis points to 4.25% driven by reductions in funding costs.

•

Pre-tax, pre-provision income of $47.6 million compared to $50.9 million in 3Q 2013.

Asset Quality

•

Total NPAs decreased by $0.6 million compared to 3Q 2013.  NPAs/Assets of 5.7%.  No large held for

sale loans or OREO sales were completed during the quarter.

•

Inflows

of

nonperforming

loans

increased

by

$10.4

million

driven

by

residential

mortgages

and

two

large commercial loan relationships. 

•

Provision

for

loan

and

lease

losses

of

$23.0

million

compared

to

$22.2

million

in

3Q

2013.

•

Net charge-offs of $26.5 million, or an annualized 1.10% of average loans, compared to $33.9 million in

the third quarter of 2013.

Core Deposits

•

Deposits, net of government and brokered, increased by $17.4 million in 4Q 2013.

•

Government deposits decreased by $53.1 million in 4Q 2013.

•

Brokered certificates of deposit decreased by $38.5 million in 4Q 2013.

Capital

•

Deferred Tax Asset valuation allowance of $523 million

•

Q4 2013 Capital position was further strengthened:

–

Risk Based Capital Ratio 17.1% compared to 16.9% in 3Q 2013

–

Tier 1 Ratio 15.8% compared to 15.6% in 3Q 2013

–

Leverage Ratio 11.7% compared to 11.7% in 3Q 2013

–

Tier 1 Common Ratio 12.7% compared to 12.6% in 3Q 2013

–

Tangible Common Equity Ratio 8.71% compared to 8.65% in 3Q 2013

Effectively Executing Strategic Plan

Fourth Quarter 2013

6

Core deposit growth strategy continues producing positive

results; $1.6billion since 2009

–

Florida continues to be a strong funding source

–

Focus remains on cross-selling opportunities

Cost of deposits, net of brokered CDs, decreased to 0.81%

Reduced reliance on brokered CDs

–

$3.1 billion (32% of deposits) today vs. $7.4 billion

(60%) in 2009

7

Core Deposits

(1)

Total Deposit Composition

Cost of Deposits

(1)

Brokered CDs    

32%

Non-interest

bearing              

9%

Interest bearing    

59%

4Q 2013

1) Total Deposits excluding Brokered CDs.

Opportunity for Earnings Growth

Successful deposit growth over recent years

Brokered CDs    

60%

Non-interest

bearing              

6%

Interest bearing    

34%

4Q 2009

2,381 

2,477 

2,654 

2,776 

2,842 

774 

763 

915 

1,108 

1,136 

1,505 

2,090 

2,126 

2,077 

2,054 

448 

470 

481 

529 

706 

$5,108 

$5,800 

$6,176 

$6,490 

$6,738 

$0

$1,500

$3,000

$4,500

$6,000

2009

2010

2011

2012

2013

Retail

Commercial

CDs & IRA

Public Funds

($ in millions)

1.88%

1.56%

1.34%

0.97%

0.81%

0.50%

1.00%

1.50%

2.00%

2009

2010

2011

2012

2013

Total Deposits, Net of Brokered

3,417 

2,874 

2,747 

2,714 

2,511 

2,519 

2,549

1,716 

1,562 

2,013 

2,020 

2,047 

2,059 

2,067

701 

428 

362 

223 

195 

164 

169

5,822 

5,695 

4,932 

4,604 

4,692 

4,766 

4,852

301 

16 

85 

276 

238 

115 

76

$11,957

$10,575

$10,140

$9,836

$9,683

$9,623

$9,712

$0

$5,000

$10,000

$15,000

2010

2011

2012

1Q 2013

2Q 2013

3Q 2013

4Q 2013

Residential

Consumer & Finance Leases

Construction

Commercial

Loans Held for Sale

214 

229 

262 

177 

162 

305 

279 

308 

290 

284 

39 

28 

15 

5 

9 

357 

265 

431 

448 

517 

$914 

$802 

$1,016 

$920 

$972 

$0

$220

$440

$660

$880

$1,100

4Q 2012

1Q 2013

2Q 2013

3Q 2013

4Q 2013

Continued focus on revenue generation through

growth in commercial and consumer book following

recent bulk sale transactions.

Focus on increasing Consumer and Residential

Mortgage market share & rebuilding our Commercial

portfolio.

–

4Q 2013 originations were strong at $972

million; and

–

Residential mortgage originations declined in

second half of 2013 primarily driven by an

increase in market interest rates and a reduction

in new housing sales.

Anticipating a more challenging market environment

in Puerto Rico and have planned accordingly to

achieve 2014 origination targets.

Continue executing on Florida growth opportunities

–

$57 million increase in Florida C&I in 4Q 13

driven by new commercial strategies in the

territory.

8

Loan Portfolio

1) Originations include purchases, refinancings, and draws from existing revolving and non-revolving commitments.

Strong Origination Capabilities

Loan Originations

(1)

($ in millions)

Rebuilding & replacing to achieve higher yielding portfolio

Continuing De-risking of the Balance Sheet

9

Net Charge-offs (NCO)

(1)

Non-performing Assets (NPA)

NPAs are down over $1 billion, or 59%, since the peak in 1Q 2010

Recent actions (2013):

Bulk sale of NPAs ($441m book value), resulting in NCOs of $197m

Non-cash charge of $67m due to write-off of securities pledged to

Lehman

(2)

($ in millions)

1) Excludes bulk sales. 

2) Excludes

$165

million

of

net

charge-offs

associated with

the

bulk sale

to

CPG

in

2010.

3)

Excludes

$232

million

of

net-charge

offs

associated

with

the

bulk

asset

sales

and

transfer

of

loans

in2013.

4) December

31,

2013.

5)

Net

Carrying

Amount

=

%

of

carrying

value

net

of

reserves

and

accumulated

charge-offs.

(3)

2010

2011

2012

2013

1,639 

1,551 

1,506 

1,239 

1,233 

1,208 

1,184 

1,138 

1,119 

1,066 

1,008 

976 

683 

506 

498 

496 

150 

150 

163 

163 

172 

176 

188 

194 

213 

242 

251 

260 

256 

151 

147 

175 

159 

148 

95 

80 

55 

$1,790 

$1,701 

$1,669 

$1,562 

$1,410 

$1,390 

$1,377 

$1,337 

$1,332 

$1,308 

$1,259 

$1,238 

$1,087 

$752 

$726 

$725 

9.5%

10.0%

9.3%

10.2%

10.2%

9.6%

8.4%

5.7%

5.7%

$0

$400

$800

$1,200

$1,600

$2,000

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

NPLs Held for Sale

Repossessed Assets & Other

Loans Held for Investment

NPAs / Assets

Product

Book

Value

Accumulated

Charge-offs

Reserves

Net Carrying

Amount

(5)

C&I

$114.8

$50.6

$22.1

56.1%

CRE

127.1

46.6

20.9

61.1%

Const.

106.6

92.9

15.1

45.9%

Total

$348.6

$190.2

$58.1

53.9%

Commercial Non-performing Loans (includes HFS)

(4)

63

39

37

29

54

38

35

56

142

118

67

68

186

101

41

7

$445 

$295 

$180 

$161 

$0

$200

$400

$600

2010

2011

2012

2013

Construction

Commercial

Consumer

Residential

Focus remains on organic reductions of nonperforming assets including the

disposition of $230million of HFS and OREO

Income Statement

4Q 2012

1Q 2013

2Q 2013

3Q 2013

4Q 2013

GAAP Net Interest Income

125.6

$             

124.5

$             

126.9

$             

130.9

$             

132.7

$             

Provision for loan and lease losses

30.5

111.1

87.5

22.2

23.0

Non-interest income

20.1

19.1

14.3

16.0

18.4

Impairment of collateral pledged to Lehman

(66.6)

-

-

Equity in (losses) gains of unconsolidated entities

(8.3)

(5.5)

0.6

(5.9)

(5.9)

Non-interest expense

90.9

98.0

111.3

99.2

106.5

Pre-tax net income (loss)

16.0

(71.0)

(123.6)

19.6

15.6

Income tax (expense) benefit

(1.5)

(1.6)

1.0

(3.7)

(0.8)

Net income (loss)

14.5

$                 

(72.6)

$              

(122.6)

$            

15.9

$                 

14.8

$                 

Adjusted Pre-tax pre-provision earnings

54.5

$                 

50.5

$                 

35.9

$                 

50.9

$                 

47.6

$                 

Net Interest Margin, (GAAP) (%)

3.91%

3.96%

4.04%

4.20%

4.25%

Net income (loss) per common share-basic

0.07

$                 

(0.35)

$              

(0.60)

$              

0.08

$                 

0.07

$                 

Focus on Strategic Plan

Rebuild earnings and de-risk balance sheet

($ in millions, except per share results)

10

1) See reconciliation on page 20.

Net loss of $164.5 million compared to net income of $29.8 million in 2012

driven by:

$140.8 million loss on bulk sales; and

$69.1 million in charges on Lehman write-off & contingency for counterparty attorney' fees.

Net income of $14.8 million compared to $15.9 million in the third quarter

Adjusted Net income $45.4 million, excluding these items, a 52%

improvement over 2012.

Adjusted net income of $18.5 million vs. $19.3 million in the 3rd quarter,

excluding the impact of:

$2.5MM  legal contingency for fees awarded by the court to the other party; and

$1.4 MM in restructuring charges on branch consolidations

Pre-tax pre-provision of $184 million compared to $179 million in 2012.

Pre-tax pre-provision of $47.6 million compared to $50.9 million in the 3rd

quarter impacted by higher OREO adjustments.

Net interest income growth of $53.2 million and NIM improvement to

4.11% from 3.64% in 2012.

Net interest income growth of $1.75 million and NIM improvement to 4.25%

from 4.20%.

Fiscal Year 2013

Fiscal Year 2013

Fourth Quarter 2013

Fourth Quarter 2013

Operating expenses increased $60 million largely due to:

Full year impact of credit cards operation & conversion costs;

Bulk sale related expenses;  and

Higher OREO expenses -

more cases moved to disposition state.

Operating expenses increase of $7.4 million driven by higher OREO value

adjustments, the contingency for counterparty attorney fees on Lehman

litigation, and higher credit card costs due to post conversion.

(1)

Opportunity for Earnings Growth

Targeted strategies for growth

1) Source: Office of the Commissioner of Financial Institutions of Puerto Rico as of 9/30/13 and internal reports.

11

Puerto Rico Market Share

(1)

Puerto Rico

Opportunities for ongoing market share gains

Recently acquired FirstBank-branded credit card portfolio

SE Florida

Expansion prospects in Florida given long-term

demographic trends

Virgin Islands

Solidify leadership position by further increasing

customer share of wallet

Auto / leasing

Commercial

Credit cards

Mortgage

originations

Personal

ACH Transactions

ATM Terminals

Debit Cards

POS Terminals

Branches

Deposits

20%

20%

18%

15%

8%

11%

10%

7%

12%

12%

12%

2

2

2

3

4

5

3

4

2

4

4

Current

Market

Share

Sept-13

Rank

–

Largest opportunity on deposit products, electronic

banking & transaction services

–

Growth in selected loan products for balanced

risk/return to manage risk concentration and

diversify income sources

–

Diversifies revenue stream and loan portfolio

composition

–

Opportunity to broaden and deepen relationships

–

Continue focus in core deposit growth, commercial

and transaction banking and conforming residential

mortgages

–

Recently hired corporate and commercial lending 

teams generating growth in loan portfolio

Opportunity for Earnings Growth

12

Path to improved profitability

Net Interest

Income

Improvement

Cash liquidity re-

investment

$600MM currently

yielding 28 bps

Replacement of NPLs

for performing loans

Additional loan

growth  as economy

recovers across our

geographies

Provision

Reduction

Currently 116bps of

loans (excluding bulk

sales)

2000-2008 weighted

average provision of

98bps on loans

Deposit fee income 

from expansion of

transaction deposit base

Non-interest bearing

represents only 9% of

deposit base

Market share  

expansion of 

transaction processing

POS Terminals, Debit

cards, ACH transactions,

ATM Terminals

Credit costs of

$50MM

(1)

for 2013

compared to 2008

annual expense of

$23MM

FDIC Cost reduction

with credit profile

improvement

($15 –

20 million

annually)

Fee Income

Opportunities

Operating Expense

Reduction

Long-term Efficiency Ratio Target of 55%

1) Represents net loss on REO operations and professional fees from collections, appraisals and other credit related fees.

Key Investment Highlights

13

As of December 31, 2013.

1) See reconciliation to net income on page 20. 

2) See reconciliation to total equity on page 21. 

3) Assuming 100% reversal of Deferred Tax Asset Valuation Allowance of $523m; shares outstanding of 207m. See reconciliation to adjusted tangible book value on page 21.

Improving core operating performance

Average pre-tax pre-provision income for the last five quarters of approximately $48m

(1)

NIM expanded 142 bps since 2009 to 4.11% in FYE 2013

Focus on stabilization of non-interest expenses; expected reduction in credit-related expense

Healthy capital levels

Tier 1 Common of $1.2bn or 12.7% and Tier 1 capital of 15.8%

Tangible Book Value of $1.1bn or $5.30 / share

(2)

Deferred

Tax

Asset

Valuation

Allowance

of

$523m;

Adjusted

Tangible

Book

Value

(3)

of

$7.83

/

share

Continuing de-risking of the balance sheet

Total NPAs down over $1bn or 59% since peak in 1Q 2010

Focus remains on reductions of non-performing assets

Opportunity for revenue expansion and earnings growth

Strong loan origination capabilities ($3.7bn FYE 2013)

Potential for NIM expansion through replacement of performing for NPLs

Expected reduction in credit-related and other expenses (e.g., FDIC insurance)

Expected benefits of branch rationalization in 2013

Increasing market share in fee generating products and services,

consumer and mortgage loan originations

Opportunity

for

commercial

loan

growth

in

SE

Florida

with

hiring

of

commercial

and

corporate

loan

teams.

Long-term potential for value creation from consolidation in Puerto Rico

Appendix

Puerto Rico Government Exposure

15

As of December 31, 2013

($ in millions)

Total asset exposure to the Puerto

Rico Government as of December 31,

2013 was approximately $470 million.

–

Exposure supported by first lien on tax

and operating revenues.

In addition, there is $205 million of

indirect exposure to the Tourism

Development Fund supporting hotel

projects.

Total Government Deposits as of

December 31, 2013 were $546

million.

Total

Government Unit

Source of Repayment

Outstanding

Investment Portfolio

71.0

$        

Central Government:

Commonwealth Appropriations

26.9

Federal Funds

10.8

Tax & Revenue Anticipation Notes

75.0

   Total Central Government (4 Loans)

112.7

Public Corporations:

Operating Revenues

80.6

Rental Income

4.0

   Total Public Corporations (4 Loans)

84.6

Municipalities (10 Loans)

Property Tax Revenues

200.5

Total Direct Government Exposure

468.8

$      

Government Unit

Time

Deposits

Transaction

Accounts

Total

Federal Funds

-

$              

8.9

$            

8.9

$            

Municipalities

21.6

84.9

106.5

Public Agencies

4.2

191.0

195.3

Public Corporations

235.0

0.7

235.7

  Total

260.8

$       

285.5

$       

546.4

$       

Stock Profile

16

Trading Symbol:

•

FBP

Exchange:

•

NYSE

Share

Price

(2/21/14):

•

$4.60

Shares Outstanding         

(as of December 31, 2013):

•

207,091,478

Market Capitalization

(2/21/14):

•

$953 million

1 Yr. Average Daily Volume:

•

775,024

Price

(2/21/14)

to

Tangible

Book

(12/31/13):

•

0.87x

Price

(2/21/14)

to

Adjusted

Tangible

Book

(1)

(12/31/13):

•

0.59x

1)

Assuming

100%

reversal

of

Deferred

Tax

Valuation

Allowance

of

$523m;shares

outstanding

of

207m.

2) 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 $525m private placement of Common Stock completed in October 2011. 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.

Beneficial Owner

Amount

Percent of

Class

Entities affiliated with Thomas H. Lee

Partners, L.P.

41,851,067

20.2%

Entities managed by Oaktree Capital

Management, L.P.

41,851,066

20.2

United States Department of the

Treasury

(2)

20,941,797

10.1

Wellington Management Company, LLP

13,210,659

6.4

Capital Position and Asset Quality

17

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 17.1%, 15.8% and

11.7%, respectively.  $523

million

Deferred

Tax

Asset

Valuation

Allowance.

9.5%

9.4%

10.0%

10.0%

9.3%

9.8%

10.2%

10.2%

10.2%

10.1%

9.6%

9.5%

8.4%

5.9%

5.7%

5.7%

13.3%

13.4%

13.3%

12.0%

12.0%

12.4%

12.4%

17.1%

17.4%

17.3%

17.5%

17.8%

17.4%

16.6%

16.9%

17.1%

12.0%

12.1%

12.0%

10.7%

10.7%

11.1%

11.1%

15.8%

16.0%

16.0%

16.2%

16.5%

16.2%

15.3%

15.6%

15.8%

8.4%

8.1%

8.3%

7.6%

7.8%

8.0%

8.4%

11.9%

12.3%

12.5%

12.7%

12.6%

12.1%

11.3%

11.7%

11.7%

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

Q3 '13

Q4 '13

NPAs / Assets

Total Capital

Tier 1

Leverage

Non-performing Assets

($ in millions)

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

18

2009

2010

2011

2012

2013

Non-performing loans held for investment:

  Residential mortgage

441,642

$         

392,134

$         

338,208

$         

313,626

$         

161,441

$         

  Commercial mortgage

196,535

217,165

240,414

214,780

120,107

  Commercial & industrial

241,316

317,243

270,171

230,090

114,833

  Construction

634,329

263,056

250,022

178,190

58,866

  Consumer & finance leases

50,041

49,391

39,547

38,875

40,302

   Total non-performing loans held for investment

1,563,863

1,238,989

1,138,362

975,561

495,549

OREO

69,304

84,897

114,292

185,764

160,193

Other repossessed property

12,898

14,023

15,392

10,107

14,865

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

670,607

Non-performing loans held for sale

-

159,321

4,764

2,243

54,801

  Total non-performing assets

1,710,608

$     

1,561,773

$     

1,337,353

$     

1,238,218

$     

725,408

$         

19

Non-performing Loans Held for Investment

January through June 2013

Residential

Commercial

Mortgage

Commercial &

Industrial

Construction

Consumer

Total

Beginning balance

$313,626

$214,780

$230,090

$178,190

$38,875

$975,561

Plus:

Additions to non-performing

101,404

97,866

26,910

16,858

30,480

273,518

Less:

Non-performing loans transferred to REO

(24,946)

(2,166)

(3,876)

(86)

(135)

(31,209)

Non-performing loans charged-off

(9,628)

(3,697)

(20,757)

(4,948)

(13,972)

(53,002)

Loans returned to accrual status/loan collections 

(46,758)

(14,795)

(17,025)

(1,432)

(19,832)

(99,842)

Reclassification

1,281

(2,816)

1,844

(309)

-

Non-performing loans sold, net of charge offs,

and transfers to HFH

(201,042)

(152,435)

(85,280)

(120,068)

(558,825)

Ending balance

$133,937

$136,737

$131,906

$68,205

$35,416

$506,201

July through December 2013

Residential

Commercial

Mortgage

Commercial and

Industrial

Construction

Consumer

Total

Beginning balance

$133,937

$136,737

$131,906

$68,205

$35,416

$506,201

Plus:

Additions to non-performing

88,547

14,843

22,809

1,191

37,635

165,025

Less:

Non-performing loans transferred to REO

(4,143)

(11,857)

(7,539)

(1,094)

(24,633)

Non-performing loans charged-off

(9,211)

(7,738)

(14,391)

(1,947)

(20,042)

(53,329)

Loans returned to accrual status/loan collections 

(47,689)

(11,878)

(17,952)

(7,489)

(12,707)

(97,715)

Non-performing loans sold, net of charge offs

-

-

-

-

-

Ending balance

$161,441

$120,107

$114,833

$58,866

$40,302

$495,549

($ in millions)

(1) Offering of common stock by certain of the Corporation's existing stockholders.

(2)  Represents the impact of the national gross receipts tax corresponding to the first quarter of 2013, recorded during the second quarter after enactment of Act No. 40.

(3) Represents the impact of the national gross receipt tax related to the trade or business outside of Puerto Rico that was reversed in the fourth quarter after enactment of Act No. 117.

4Q 2012

1Q 2013

2Q 2013

3Q 2013

4Q 2013

Income (loss) before income taxes

16,028

$        

(71,011)

$      

(123,562)

$    

19,616

$        

15,634

$        

Add: Provision for loan and lease losses

30,466

111,123

87,464

22,195

22,969

Add: Net loss on investments and impairments

69

117

42

-

-

Less: Unrealized gain (loss) on derivatives instruments and

liabilities measured at fair value

(432)

(400)

(708)

(232)

(355)

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: Secondary offering costs (1)

-

-

-

1,669

-

Add: Credit card processing platform conversion costs

-

-

-

1,715

-

Add: National gross receipt tax (2)

-

-

1,656

-

-

Less: National gross receipt tax - outside Puerto Rico (3)

-

-

-

-

(473)

Add: Branch consolidations and other restructuring

expenses/valuation adjustments

-

-

-

-

1,421

Add: Write-off collateral pledged to Lehman and related expenses

-

-

66,574

-

2,500

Add: Equity in losses (earnings) of unconsolidated entities

8,330

5,538

(648)

5,908

5,893

Adjusted pre-tax, pre-provision income

54,461

$        

50,463

$        

35,895

$        

50,871

$        

47,589

$        

Quarter Ended

Adjusted Pre-tax, Pre-provision Income Reconciliation

20

($ in thousands)

Tangible Book Value Per Share Reconciliation

21

($ in millions, except for per share data)

1) Assuming 100% recapture of valuation allowance.

4Q 2012

1Q 2013

2Q 2013

3Q 2013

4Q 2013

Tangible equity:

Total equity -

GAAP

1,485

$            

1,404

$            

1,222

$            

1,221

$            

1,216

$            

Preferred equity

(63)

(63)

(63)

(63)

(63)

Goodwill

(28)

(28)

(28)

(28)

(28)

Purchased credit card relationship

(24)

(23)

(22)

(21)

(20)

Core deposit intangible

(9)

(9)

(8)

(8)

(7)

Tangible common equity

1,361

$            

1,282

$            

1,101

$            

1,101

$            

1,098

$            

Common shares outstanding

206

206

207

207

207

Tangible book value per common share

6.60

$               

6.21

$               

5.32

$               

5.32

$               

5.30

$               

Deferred tax valuation allowance

360

$                 

384

$                 

523

$                 

520

$                 

523

$                 

Deferred tax valuation allowance per share

1.75

1.86

2.53

2.51

2.53

Adjusted tangible book value per share

8.34

$               

8.08

$               

7.85

$               

7.83

$               

7.83

$               

(1)

Use of Non-GAAP Financial Measures

22

(In thousands, except per share information)

Year Ended

December 31, 2013

As Reported (GAAP)

Bulk Sales

Transaction Impact

Write-off

collateral pledged

to Lehman and

related

contingency for

attorneys' fees

Year Ended

December 31, 2013

Adjusted (Non-

GAAP)

Year Ended

December 31, 2012

As Reported (GAAP)

Variance

Net interest income

514,945

$                  

-

$                        

-

$                    

514,945

$                 

461,705

$                  

53,240

$  

Provision for loan and lease losses

243,751

(132,002)

-

111,749

120,499

(8,750)

Net interest income after provision for loan and lease losses

271,194

132,002

-

403,196

341,206

61,990

Non-interest (loss) income

(15,489)

-

66,574

51,085

49,391

1,694

Non-interest expenses

415,028

(8,840)

(2,500)

403,688

354,883

48,805

(Loss) Income before income taxes

(159,323)

140,842

69,074

50,593

35,714

14,879

Income tax expense

(5,164)

-

-

(5,164)

(5,932)

768

Net (loss) income

(164,487)

$                 

140,842

$                 

69,074

$               

45,429

$                  

29,782

$                    

15,647

$  

Earnings (loss) per common share:

Basic

(0.80)

$                      

0.68

$                      

0.34

$                  

0.22

$                      

0.15

$                       

0.07

$      

Diluted

(0.80)

$                      

0.68

$                      

0.34

$                  

0.22

$                      

0.14

$                       

0.08

$      

The results for FYE 2013 were negatively impacted by two significant items:

•

an aggregate loss of $140.8 million on two separate bulk sales and valuation adjustments to certain loans transferred to

held for sale; and

•

a $66.6 million loss related to the write-off of assets pledged as collateral to Lehman together with an additional $2.5 million

for a loss contingency of attorneys’

fees awarded to the counterparty related to this matter. 

Excluding these items, net income for FYE 2013 was $45.4 million.