FIRST BANCORP /PR/ — Earnings Release 2017

Apr 25, 2017

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): April 25, 2017 First BanCorp. (Exact Name of Registrant as Specified in its Charter)

Puerto Rico	001-14793	66-0561822
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

| 1519 Ponce de Leon Ave. P.O. Box 9146 San
Juan, Puerto Rico | 00908-0146 |
| --- | --- |
| (Address of Principal Executive Offices) | (Zip Code) |

(787) 729-8200 (Registrant’s Telephone Number, including Area Code) Not applicable (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02 Results of Operations and Financial Condition.

On April 25, 2017, First BanCorp. (the “Corporation”), the bank holding company for FirstBank Puerto Rico (“FirstBank” or “the Bank”), issued a press release announcing its unaudited results of operations for the first quarter ended March 31, 2017. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

A copy of the presentation that the Corporation will use at its conference call to discuss its financial results for the first quarter ended March 31, 2017 is attached hereto as Exhibit 99.2 and is incorporated herein by reference. As announced in a press release dated April 6, 2017, the call may be accessed via a live Internet webcast at 10:00 a.m. Eastern time on Tuesday, April 25, 2017 through the investor relations section of the Corporation’s website: www.1firstbank.com or through the dial-in telephone number 877-506-6537 or 412-380-2001 for international callers. The conference number is 10104827.

The Corporation has included in this release the following financial measures that are not recognized under generally accepted accounting principles, which are referred to as non-GAAP financial measures:

| 1. | Net interest income, interest rate spread, and net interest margin
are reported excluding the changes in the fair value of derivative
instruments and on a tax-equivalent basis in order to provide to
investors additional information about the Corporation’s net
interest income that management uses and believes should
facilitate comparability and analysis. The changes in the fair
value of derivative instruments have no effect on interest due or
interest earned on interest-bearing liabilities or
interest-earning assets, respectively. The tax-equivalent
adjustment to net interest income recognizes the income tax
savings when comparing taxable and tax-exempt assets and assumes a
marginal income tax rate. Income from tax-exempt earning assets is
increased by an amount equivalent to the taxes that would have
been paid if this income had been taxable at statutory rates.
Management believes that it is a standard practice in the banking
industry to present net interest income, interest rate spread, and
net interest margin on a fully tax-equivalent basis. This
adjustment puts all earning assets, most notably tax-exempt
securities and certain loans, on a common basis that facilitates
comparison of results to the results of peers. |
| --- | --- |
| 2. | The tangible common equity ratio and tangible book value per
common share are non-GAAP financial measures generally used by the
financial community to evaluate capital adequacy. Tangible common
equity is total equity less preferred equity, goodwill, core
deposit intangibles, and other intangibles, such as the purchased
credit card relationship intangible and the insurance customer
relationship intangible. Tangible assets are total assets less
goodwill, core deposit intangibles, and other intangibles, such as
the purchased credit card relationship intangible and the
insurance customer relationship intangible. Management and many
stock analysts use the tangible common equity ratio and tangible
book value per common share in conjunction with more traditional
bank capital ratios to compare the capital adequacy of banking
organizations with significant amounts of goodwill or other
intangible assets, typically stemming from the use of the purchase
method of accounting for mergers and acquisitions. Accordingly,
the Corporation believes that disclosures of these financial
measures may be useful also to investors. Neither tangible common
equity nor tangible assets, or the related measures should be
considered in isolation or as a substitute for stockholders’
equity, total assets, or any other measure calculated in
accordance with GAAP. Moreover, the manner in which the
Corporation calculates its tangible common equity, tangible
assets, and any other related measures may differ from that of
other companies reporting measures with similar names. |
| 3. | Adjusted pre-tax, pre-provision income is a non-GAAP performance
metric that management uses and believes that investors may find
useful in analyzing underlying performance trends, particularly in
times of economic stress. Adjusted pre-tax, pre-provision income,
as defined by management, represents income before income taxes
excluding the provision for loan and lease losses, as well as
certain items that management believes are not reflective of core
operating performance, are not expected to reoccur with any
regularity or may reoccur at uncertain times and in uncertain
amounts. |

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| 4. | Adjusted provision for loan and lease losses, adjusted net
charge-offs, adjusted net charge-offs to average loans ratios, and
adjusted provision for loan and lease losses to net charge-offs
ratios are non-GAAP financial measures that excludes the effects
related to the sale of the Corporation’s participation in the
Puerto Rico Electric Power Authority (“PREPA”) line of credit in
the first quarter of 2017 with a book value of $64 million at the
time of sale and the sale of a $16.3 million pool of
non-performing assets in the fourth quarter of 2016. Management
believes this information helps investors understand the effect of
items that are not expected to reoccur with any regularity or may
reoccur at uncertain times and in uncertain amounts on reported
results and facilitate comparisons with prior periods. |
| --- | --- |
| 5. | Adjusted non-interest income that excludes the effect of
other-than-temporary impairment (“OTTI”) charges on debt
securities in the first quarter of 2017 and first quarter of 2016,
the effect of a gain from a recovery of a residual collateralized
mortgage obligation (“CMO”) previously written off recorded in the
fourth quarter of 2016, the effect of brokerage and insurance
commissions from the sale of large fixed annuities contracts in
the fourth quarter of 2016, the effect of a gain on the repurchase
and cancellation of trust preferred securities in the first
quarter of 2016, and the effect of a gain on sale of a U.S.
Treasury bill in the first quarter of 2016. Management believes
this information helps investors understand the effect of items
that are not expected to reoccur with any regularity or may
reoccur at uncertain times and in uncertain amounts on reported
results, facilitates comparisons with prior periods, and provides
an alternate presentation of the Corporation’s performance. |
| 6. | Adjusted non-interest expenses that exclude the effect of costs
associated with secondary offerings of the Corporation’s common
stock by certain of the existing stockholders in the first quarter
of 2017 and fourth quarter of 2016, an adjustment recorded in the
fourth quarter of 2016 to reduce the credit card rewards liability
due to unusually large customer forfeitures related to the
expiration of reward points earned by customers up to September
2013 (the conversion date of the credit card portfolio acquired
from FIA in May 2012), and the effect of incentive costs related
to the sale of large fixed annuities contracts in the fourth
quarter of 2016. Management believes this information helps
investors understand the effect of adjustments that are above
normal or recurring levels, are not expected to reoccur with any
regularity or may reoccur at uncertain times and in uncertain
amounts on reported results, facilitate comparisons with prior
periods, and provides an alternate presentation of the
Corporation’s performance. |
| 7. | Adjusted net income that excludes the effect of a tax benefit
recorded in the first quarter of 2017 related to the change in tax
status of certain subsidiaries from taxable corporations to
limited liability companies, and the effect of all the items
mentioned above and their tax related impacts. Management believes
this information helps investors understand the effect of items
that are not reflective of core operating performance, are not
expected to reoccur with any regularity or may reoccur at
uncertain times and in uncertain amounts on reported results,
facilitate comparisons with prior periods, and provides an
alternate presentation of the Corporation’s performance. |

The Corporation uses and believes that these non-GAAP financial measures enhance the ability of analysts and investors to analyze trends in the Corporation’s business and better understand the performance of the Corporation. In addition, the Corporation may utilize these non-GAAP financial measures as a guide in its budgeting and long-term planning process. Any analysis of these non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.

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The release includes a reconciliation of these non-GAAP financial measures to the GAAP financial measures, except for the adjusted provision for loans and lease losses to net charge-offs ratio for the first quarter of 2017 and the fourth quarter of 2016 that is included below:

| | Provision for loan and lease losses to Net Charge-Offs (Non-GAAP
to GAAP reconciliation) — Quarter Ended March 31, 2017 | | Provision for loan and lease losses to Net Charge-Offs (Non-GAAP
to GAAP reconciliation) — Quarter Ended December 31, 2016 | |
| --- | --- | --- | --- | --- |
| (In thousands) | Provision for Loan and Lease Losses | Net Charge-Offs | Provision for Loan and Lease Losses | Net Charge-Offs |
| Provision for loan and lease losses and net charge-offs (GAAP) | $ 25,442 | $ 27,814 | $ 23,191 | $ 31,658 |
| Less Special items: | | | | |
| Sale of the PREPA credit line | 569 | 10,734 | - | - |
| Sale of the $16.3 million pool of non-performing assets | - | - | 1,799 | 4,631 |
| Provision for loan and lease losses and net charge-offs, excluding
special items (Non-GAAP) | $ 24,873 | $ 17,080 | $ 21,392 | $ 27,027 |
| Provision for loan and lease losses to net charge-offs (GAAP) | 91.47 % | | 73.26 % | |
| Provision for loan and lease losses to net charge-offs, excluding
special items (Non-GAAP) | 145.63 % | | 79.15 % | |

Item 9.01. Financial Statements and Exhibits. (d) Exhibits

Exhibit Description of Exhibit

| 99.1 | Press Release dated April 25, 2017 - First BanCorp Announces
Earnings for the quarter ended March 31, 2017 |
| --- | --- |
| 9.2 | First BanCorp Conference Call Presentation – Financial Results for
the first quarter ended March 31, 2017 |
| | Exhibits 99.1 and 99.2 referenced therein, shall not be deemed
“filed” for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, nor shall Exhibits 99.1 and 99.2 be deemed
incorporated by reference in any filings under the Securities Act
of 1933, as amended. |

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:
By:	/s/ Orlando Berges
Name:	Orlando Berges
Title:	EVP and Chief Financial Officer

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Exhibit Index

Exhibit	Description of Exhibit
99.1	Press Release dated April 25, 2017 - First BanCorp Announces
Earnings for the quarter ended March 31, 2017
99.2	First BanCorp Conference Call Presentation – Financial Results for
the first quarter ended March 31, 2017

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