FIRST BANCORP /PR/

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______

FORM10-Q (Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedSeptember 30, 2024 or [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to _____

COMMISSION FILE NUMBER001-14793

FIRST BANCORP. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Puerto Rico66-0561882 (State or other jurisdiction of(I.R.S. Employer incorporation or organization)Identification No.)
1519 Ponce de León Avenue,Stop 2300908 San Juan,Puerto Rico(Zip Code)

(Address of principal executive offices)
(787)729-8200 (Registrant’s telephone number, including area code)
Not applicable (Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered Common Stock ($0.10 par value per share)FBPNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes☑No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes☑No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐

Non-accelerated filer☐Smaller reporting company☐ Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐No☑ Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock:163,870,232shares outstanding as of November 1, 2024.

FIRST BANCORP.

INDEX PAGE

PART I. FINANCIAL INFORMATIONPAGE Item 1.Financial Statements:
Consolidated Statements of Financial Condition (Unaudited) as of September 30, 2024 and December 31, 20235 Consolidated Statements of Income (Unaudited) – Quarters and Nine-Month Periods ended6 September 30, 2024 and 2023 Consolidated Statements of Comprehensive Income (Unaudited) – Quarters and Nine-Month Periods ended September 30, 2024 and 20237 Consolidated Statements of Cash Flows (Unaudited) – Nine-Month Periods ended September8 30, 2024 and 2023 Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Quarters and Nine- Month Periods ended September 30, 2024 and 20239 Notes to Consolidated Financial Statements (Unaudited)10 Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations77 Item 3.Quantitative and Qualitative Disclosures About Market Risk130 Item 4.Controls and Procedures130| PART II. OTHER INFORMATION | | |
| --- | --- | --- |
| Item 1. | Legal Proceedings | 131 |
| Item 1A. | Risk Factors | 131 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 132 |
| Item 5. | Other Information | 132 |
| Item 6. | Exhibits | 133 |

SIGNATURES

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended

(the “Exchange Act”), which are subject to the safe harbor created by such sections. When used in this Form 10-Q or future filings by First BanCorp. (the “Corporation,” “we,” “us,” or “our”) with the U.S. Securities and Exchange Commission (the “SEC”), in the Corporation’s press releases or in other public or stockholder communications made by the Corporation, or in oral statements made on behalf of the Corporation by, or with the approval of, an authorized executive officer of the Corporation, the words or phrases “would,” “intends,” “will,” “expect,” “should,” “plans,” “forecast,” “anticipate,” “look forward,” “believes,” and other terms of similar meaning or import, or the negatives of these terms or variations of them, in connection with any discussion of future operating, financial or other performance are meant to identify “forward-looking statements.”

The Corporation cautions readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made or, with respect to such forward-looking statements contained in this Form 10-Q, the date hereof, and advises readers that any such forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, estimates, and assumptions by us that are difficult to predict . Various factors, some of which are beyond our control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements.

Factors that could cause results to differ materially from those expressed in, or implied by, the Corporation’s forward-looking statements include, but are not limited to, risks described or referenced in Part I, Item 1A, “Risk Factors,” in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”), Part II, Item 1A., “Risk Factors,” in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and the following:

●the effect of the current global interest rate environment (including the potential for ongoing reductions in interest rates) and inflation levels on the level, composition and performance of the Corporation’s assets and liabilities, and corresponding effects on the Corporation’s net interest income, net interest margin, loan originations, deposit attrition, overall results of operations, and liquidity position;

●the effects of changes in the interest rate environment, including any adverse change in the Corporation’s ability to attract and retain clients and gain acceptance from current and prospective customers for new and existing products and services, including those related to the offering of digital banking and financial services;

●volatility in the financial services industry, which could result in, among other things, bank deposit runoffs, liquidity constraints, and increased regulatory requirements and costs;

●the effect of continued changes in the fiscal and monetary policies and regulations of the United States (“U.S.”) federal

government, the Puerto Rico government and other governments, including those determined by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the Federal Reserve Bank of New York (the “FED”), the Federal Deposit Insurance Corporation (the “FDIC”), government-sponsored housing agencies and regulators in Puerto Rico, the U.S., and the U.S. Virgin Islands (the “USVI”) and British Virgin Islands (the “BVI”), that may affect the future results of the Corporation;

●uncertainty as to the ability of the Corporation’s banking subsidiary, FirstBank Puerto Rico (“FirstBank” or the “Bank”), to retain its core deposits and generate sufficient cash flow through its wholesale funding sources, such as securities sold under agreements to repurchase, Federal Home Loan Bank (“FHLB”) advances, and brokered certificates of deposit (“brokered CDs”), which may require us to sell investment securities at a loss;

●adverse changes in general political and economic conditions in Puerto Rico, the U.S., and the USVI and the BVI, including

in the interest rate environment, unemployment rates, market liquidity, housing absorption rates, real estate markets, and U.S.
capital markets, which may affect funding sources, loan portfolio performance and credit quality, market prices of investment securities, and demand for the Corporation’s products and services, and which may reduce the Corporation’s revenues and earnings and the value of the Corporation’s assets;

●the impact of government financial assistance for hurricane recovery and other disaster relief on economic activity in Puerto Rico, and the timing and pace of disbursements of funds earmarked for disaster relief;

●the ability of the Corporation, FirstBank, and third-party service providers to identify and prevent cyber-security incidents, such as data security breaches, ransomware, malware, “denial of service” attacks, “hacking,” identity theft, and state-

sponsored cyberthreats, and the occurrence of and response to any incidents that occur, which may result in misuse or misappropriation of confidential or proprietary information, disruption, or damage to our systems or those of third-party service providers on which we rely, increased costs and losses and/or adverse effects to our reputation;
3

●general competitive factors and other market risks as well as the implementation of existent or planned strategic growth opportunities, including risks, uncertainties, and other factors or events related to any business acquisitions, dispositions, strategic partnerships, strategic operational investments, including systems conversions, and any anticipated efficiencies or other expected results related thereto;

●uncertainty as to the implementation of the debt restructuring plan of Puerto Rico (“Plan of Adjustment” or “PoA”) and the fiscal plan for Puerto Rico as certified on June 5, 2024 (the “2024 Fiscal Plan”) by the oversight board established by the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”), or any revisions to it, on our clients and loan portfolios, and any potential impact from future economic or political developments and tax regulations in Puerto Rico;

●the impact of changes in accounting standards, or determinations and assumptions in applying those standards, and of forecasts of economic variables considered for the determination of the allowance for credit losses (“ACL”);

●the ability of FirstBank to realize the benefits of its net deferred tax assets;

●the ability of FirstBank to generate sufficient cash flow to pay dividends to the Corporation;

●environmental, social, and governance matters, including our climate-related initiatives and commitments;

●the impacts of natural or man-made disasters, widespread health emergencies, geopolitical conflicts (including sanctions, war or armed conflict, such as the ongoing conflict in Ukraine, the conflict in the Middle East, and the possible expansion of such conflicts in surrounding areas and potential geopolitical consequences), terrorist attacks, or other catastrophic external events, including impacts of such events on general economic conditions and on the Corporation’s assumptions regarding forecasts of economic variables;

●the risk that additional portions of the unrealized losses in the Corporation’s debt securities portfolio are determined to be credit-related, resulting in additional charges to the provision for credit losses on the Corporation’s debt securities portfolio, and the potential for additional credit losses that could emerge from further downgrades of the U.S.’s Long-Term Foreign- Currency Issuer Default Rating and negative ratings outlooks;

●the impacts of applicable legislative, tax, or regulatory changes or changes in legislative, tax, or regulatory priorities, potential government shutdowns, and political impasses, including uncertainties regarding the U.S. debt ceiling and federal budget, as well as the change in administration as a result of the 2024 U.S. and Puerto Rico general elections, on the Corporation’s financial condition or performance;

●the risk of possible failure or circumvention of the Corporation’s internal 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 further special assessments, causing an additional increase in the Corporation’s non-interest expenses;

●any need to recognize impairments on the Corporation’s financial instruments, goodwill, and other intangible assets;

●the risk that the impact of the occurrence of any of these uncertainties on the Corporation’s capital would preclude further growth of FirstBank and preclude the Corporation’s Board of Directors (the “Board”) from declaring dividends; and

●uncertainty as to whether FirstBank will be able to continue to satisfy its regulators regarding, among other things, its asset quality, liquidity plans, maintenance of capital levels, and compliance with applicable laws, regulations and related requirements.

The Corporation does not undertake to, 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.

(In thousands, except for share information)
ASSETS
Cash and due from banks								$	684,028$	661,925
Money market investments:
Time deposits with other financial institutions									500	300
Other short-term investments									843	939
Total money market investments									1,343	1,239
Available-for-sale debt securities, at fair value (amortized cost of $				5,372,557	as of September 30, 2024 and
$5,863,294	as of December 31, 2023; ACL of $		526as of September 30, 2024 and $			511as of December 31, 2023)		4,894,781		5,229,984
Held-to-maturity debt securities, at amortized cost, net of ACL of $				1,119	as of September 30, 2024 and $		2,197
as of December 31, 2023 (fair value of $		316,854	as of September 30, 2024 and $		346,132	as of December 31, 2023)			322,023	351,981
Equity securities									52,432	49,675
Total investment securities								5,269,236		5,631,640
Loans, net of ACL of $	246,996	as of September 30, 2024 and $		261,843as of December 31, 2023				12,199,028		11,923,640
Mortgage loans held for sale, at lower of cost or market									12,641	7,368
Total loans, net								12,211,669		11,931,008
Accrued interest receivable on loans and investments									67,112	77,716
Premises and equipment, net									136,401	142,016
Other real estate owned (“OREO”)									19,330	32,669
Deferred tax asset, net									137,484	150,127
Goodwill									38,611	38,611
Other intangible assets									8,260	13,383
Other assets									285,696	229,215
Total assets								$18,859,170	$	18,909,549
LIABILITIES
Non-interest-bearing deposits								$5,275,733	$	5,404,121
Interest-bearing deposits								11,071,657		11,151,864
Total deposits								16,347,390		16,555,985
Long-term advances from the FHLB									500,000	500,000
Other long-term borrowings									111,700	161,700
Accounts payable and other liabilities									199,195	194,255
Total liabilities								17,158,285		17,411,940
Commitments and contingencies (See Note 21)									(nil)	(nil)
STOCKHOLDERS’ EQUITY
Common stock, $	0.10par value,	2,000,000,000	shares authorized;	223,663,116	shares issued;	163,875,810
shares outstanding as of September 30, 2024 and			169,302,812	as of December 31, 2023					22,366	22,366
Additional paid-in capital									962,973	965,707
Retained earnings, includes legal surplus reserve of $			199,576	as of each of September 30, 2024 and December 31, 2023				1,989,419		1,846,112
Treasury stock (at cost),	59,787,306	shares as of September 30, 2024 and			54,360,304	shares as of December 31, 2023			( 790,252 )	( 697,406 )
Accumulated other comprehensive loss, net of tax of $			8,581	as of each of September 30, 2024 and December 31, 2023					( 483,621 )	( 639,170 )
Total stockholders’ equity								1,700,885		1,497,609
Total liabilities and stockholders’ equity								$18,859,170	$	18,909,549

The accompanying notes are an integral part of these statements.

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)| | Quarter Ended September 30, | | | Nine-Month Period Ended September 30, | | |
| --- | --- | --- | --- | --- | --- | --- |
| | 2024 | | 2023 | 2024 | | 2023 |
| (In thousands, except per share information) | | | | | | |
| Interest and dividend income: | | | | | | |
| Loans | $ | 243,720$ | 227,930 | $ | 720,776$ | 656,632 |
| Investment securities | | 22,173 | 24,519 | | 69,553 | 77,887 |
| Money market investments and interest-bearing cash accounts | | 8,782 | 10,956 | | 25,096 | 23,486 |
| Total interest and dividend income | | 274,675 | 263,405 | | 815,425 | 758,005 |
| Interest expense: | | | | | | |
| Deposits | | 63,704 | 54,298 | | 190,400 | 125,787 |
| Short-term securities sold under agreements to repurchase | | - | 359 | | - | 2,756 |
| Advances from the FHLB: | | | | | | |
| Short-term | | - | - | | - | 4,776 |
| Long-term | | 5,672 | 5,675 | | 16,892 | 14,123 |
| Other long-term borrowings | | 3,235 | 3,345 | | 9,921 | 10,135 |
| Total interest expense | | 72,611 | 63,677 | | 217,213 | 157,577 |
| Net interest income | | 202,064 | 199,728 | | 598,212 | 600,428 |
| Provision for credit losses - expense (benefit): | | | | | | |
| Loans and finance leases | | 16,470 | 10,643 | | 41,317 | 47,669 |
| Unfunded loan commitments | | ( 1,041 ) | ( 128 ) | | ( 1,177 ) | 488 |
| Debt securities | | ( 184 ) | ( 6,119 ) | | ( 1,123 ) | ( 6,029 ) |
| Provision for credit losses - expense | | 15,245 | 4,396 | | 39,017 | 42,128 |
| Net interest income after provision for credit losses | | 186,819 | 195,332 | | 559,195 | 558,300 |
| Non-interest income: | | | | | | |
| Service charges and fees on deposit accounts | | 9,684 | 9,552 | | 29,071 | 28,380 |
| Mortgage banking activities | | 3,199 | 2,821 | | 9,500 | 8,493 |
| Gain on early extinguishment of debt | | - | - | | - | 1,605 |
| Insurance commission income | | 3,003 | 2,790 | | 11,296 | 10,384 |
| Card and processing income | | 11,768 | 10,841 | | 34,603 | 32,894 |
| Other non-interest income | | 4,848 | 4,292 | | 14,053 | 17,329 |
| Total non-interest income | | 32,502 | 30,296 | | 98,523 | 99,085 |
| Non-interest expenses: | | | | | | |
| Employees’ compensation and benefits | | 59,081 | 56,535 | | 176,043 | 167,271 |
| Occupancy and equipment | | 22,424 | 21,781 | | 65,656 | 64,064 |
| Business promotion | | 4,116 | 4,759 | | 12,317 | 12,901 |
| Professional service fees | | 12,538 | 11,022 | | 37,645 | 34,591 |
| Taxes, other than income taxes | | 5,665 | 5,465 | | 16,202 | 15,701 |
| FDIC deposit insurance | | 2,164 | 2,143 | | 7,582 | 6,419 |
| Net gain on OREO operations | | ( 1,339 ) | ( 2,153 ) | | ( 6,400 ) | ( 6,133 ) |
| Credit and debit card processing expenses | | 7,095 | 6,779 | | 20,453 | 18,637 |
| Communications | | 2,170 | 2,219 | | 6,528 | 6,427 |
| Other non-interest expenses | | 9,021 | 8,088 | | 26,514 | 24,945 |
| Total non-interest expenses | | 122,935 | 116,638 | | 362,540 | 344,823 |
| Income before income taxes | | 96,386 | 108,990 | | 295,178 | 312,562 |
| Income tax expense | | 22,659 | 26,968 | | 72,155 | 89,187 |

Net income$73,727$82,022$223,023$223,375| Net income attributable to common stockholders | | $ | 73,727$ | 82,022 | $ | 223,023$ | 223,375 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Net income per common share: | | | | | | | |
| Basic | | $ | 0.45$ | 0.47 | $ | 1.35$ | 1.25 |
| Diluted | | $ | 0.45$ | 0.46 | $ | 1.35$ | 1.25 |
| | The accompanying notes are an integral part of these statements. | | | | | | |

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)| | | Quarter Ended September 30, | | | Nine-Month Period Ended September 30, | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | 2024 | 2023 | | 2024 | | 2023 |
| (In thousands) | | | | | | | |
| Net income | $ | 73,727 | $ | 82,022$ | | 223,023$ | 223,375 |
| Other comprehensive income (loss), net of tax: | | | | | | | |
| Available-for-sale debt securities: | | | | | | | |
| Net unrealized holding gains (losses) on debt securities | (1) | 160,054 | | ( 78,976 ) | | 155,549 | ( 46,585 ) |
| Other comprehensive income (loss) for the period | | 160,054 | | ( 78,976 ) | | 155,549 | ( 46,585 ) |
| Total comprehensive income | $ | 233,781 | $ | 3,046$ | | 378,572$ | 176,790 |

(1)Net unrealized holding gains (losses) on available-for-sale debt securities have no tax effect because securities are either tax-exempt, held by an International Banking Entity (“IBE”), or have a full deferred tax asset valuation allowance.

The accompanying notes are an integral part of these statements.

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine-Month Period Ended September 30,

20242023| (In thousands)Cash flows from operating activities: | | | | |
| --- | --- | --- | --- | --- |
| Net income | $ | 223,023 | $ | 223,375 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Depreciation and amortizationAmortization of intangible assets | | 13,9955,123 | | 15,2745,889 |
| Provision for credit lossesDeferred income tax expense | | 39,01712,643 | | 42,1285,539 |
| Stock-based compensationGain on early extinguishment of debt | | 6,789- | | ( 1,605 )5,898 |
| Unrealized gain on derivative instrumentsNet gain on disposals or sales, and impairments of premises and equipment and other assets | | ( 232 )( 68 ) | | ( 464 )( 235 ) |
| Net gain on sales of loans and loans held-for-sale valuation adjustmentsNet amortization of discounts, premiums, and deferred loan fees and costs | | ( 2,864 )449 | | ( 1,422 )839 |
| Originations and purchases of loans held for saleSales and repayments of loans held for sale | | ( 116,430 )113,176 | | ( 125,886 )126,800 |
| Amortization of broker placement feesNet amortization of premiums and discounts on investment securities | | 3,887554 | | 3,836216 |
| Decrease in accrued interest receivableIncrease in accrued interest payable | | 10,2489,890 | | 13,7293,545 |
| (Increase) decrease in other assetsDecrease in other liabilities | | ( 11,293 )( 558 ) | | ( 39,810 )6,077 |
| Net cash provided by operating activities | | 307,349 | | 283,723 |
| Cash flows from investing activities:Net disbursements on loans held for investment | | ( 365,298 ) | | ( 485,198 ) |
| Proceeds from sales of loans held for investmentProceeds from sales of repossessed assets | | 18,36251,129 | | 40,3846,663 |
| Purchases of available-for-sale debt securitiesProceeds from principal repayments and maturities of available-for-sale debt securities | | 530,232( 44,063 ) | | 393,958( 5,458 ) |
| Proceeds from principal repayments of held-to-maturity debt securitiesAdditions to premises and equipment | | 32,467( 8,387 ) | | ( 19,938 )79,889 |
| Proceeds from sales of premises and equipment and other assetsNet (purchases) redemptions of other investment securities | | ( 2,637 )1,317 | | 6,520578 |
| Proceeds from the settlement of insurance claims - investing activities | | 670 | | 133 |
| Cash flows from financing activities:Net cash provided by investing activities | | 213,792 | | 17,531 |
| Net (decrease) increase in depositsNet repayments of short-term borrowings | | ( 268,556 )- | | ( 550,133 )275,825 |
| Repayments of long-term borrowingsProceeds from long-term borrowings | | ( 48,500 )- | | 300,000( 19,795 ) |
| Repurchase of outstanding common stockDividends paid on common stock | | ( 102,369 )( 79,509 ) | | ( 126,918 )( 75,825 ) |
| Net cash used in financing activities | | ( 498,934 ) | | ( 196,846 ) |
| Net increase in cash and cash equivalentsCash and cash equivalents at beginning of year | | 663,16422,207 | | 104,408480,505 |

Cash and cash equivalents at end of period$685,371$584,913| Cash and cash equivalents include: | | | | |
| --- | --- | --- | --- | --- |
| Cash and due from banksMoney market investments | $ | 684,0281,343 | $ | 583,9131,000 |
| | $ | 685,371 | $ | 584,913 |

The accompanying notes are an integral part of these statements.

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)| | Quarter Ended September 30, | | | Nine-Month Period Ended September 30, | | |
| --- | --- | --- | --- | --- | --- | --- |
| | 2024 | | 2023 | 2024 | | 2023 |
| (In thousands, except per share information) | | | | | | |
| Common Stock | $ | 22,366$ | 22,366 | $ | 22,366$ | 22,366 |

Additional Paid-In Capital:
Balance at beginning of period	961,254	962,229	965,707	970,722
Stock-based compensation expense	1,942	1,901	6,789	5,898
Common stock reissued under stock-based compensation plan	( 274 )	( 351 )	( 9,621 )	( 13,490 )
Restricted stock forfeited	51	12	98	661
Balance at end of period	962,973	963,791	962,973	963,791

Retained Earnings:
Balance at beginning of period				1,941,980	1,733,497	1,846,112	1,644,209
Impact of adoption of Accounting Standards Update (“ASU”) 2022-02				-	-	-	( 1,357 )
Net income				73,727	82,022	223,023	223,375
Dividends on common stock ($	0.16per share and $	0.14per share for the quarters ended
September 30, 2024 and 2023, respectively; $		0.48per share and $	0.42per share for the
nine-month periods ended September 30, 2024 and 2023, respectively)				( 26,288 )	( 24,867 )	( 79,716 )	( 75,575 )
Balance at end of period				1,989,419	1,790,652	1,989,419	1,790,652

Treasury Stock (at cost):
Balance at beginning of period	( 790,465 )	( 547,706 )	( 697,406 )	( 506,979 )
Common stock repurchases (See Note 13)	( 10 )	( 75,011 )	( 102,369 )	( 128,228 )
Common stock reissued under stock-based compensation plan	274	351	9,621	13,490
Restricted stock forfeited	( 51 )	( 12 )	( 98 )	( 661 )
Balance at end of period	( 790,252 )	( 622,378 )	( 790,252 )	( 622,378 )

Accumulated Other Comprehensive Loss, net of tax:
Balance at beginning of period	( 643,675 )	( 772,387 )	( 639,170 )	( 804,778 )
Other comprehensive income (loss), net of tax	160,054	( 78,976 )	155,549	( 46,585 )
Balance at end of period	( 483,621 )	( 851,363 )	( 483,621 )	( 851,363 )
Total stockholders’ equity	$1,700,885	$1,303,068	$1,700,885	$1,303,068

The accompanying notes are an integral part of these statements.

FIRST BANCORP.

INDEX TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS| | | PAGE |
| --- | --- | --- |
| Note 1 – | Basis of Presentation and Significant Accounting Policies | 11 |
| Note 2 – | Debt Securities | 13 |
| Note 3 – | Loans Held for Investment | 23 |
| Note 4– | Allowance for Credit Losses for Loans and Finance Leases | 43 |
| Note 5 – | Other Real Estate Owned (“OREO”) | 46 |
| Note 6 – | Goodwill and Other Intangibles | 47 |
| Note 7 – | Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets | 48 |
| Note 8 – | Deposits | 52 |
| Note 9 – | Advances from the Federal Home Loan Bank (“FHLB”) | 53 |
| Note 10 – | Other Long-Term Borrowings | 53 |
| Note 11 – | Earnings per Common Share | 54 |
| Note 12 – | Stock-Based Compensation | 55 |
| Note 13 – | Stockholders’ Equity | 58 |
| Note 14 – | Accumulated Other Comprehensive Loss | 60 |
| Note 15 – | Employee Benefit Plans | 60 |
| Note 16 – | Income Taxes | 61 |
| Note 17– | Fair Value | 62 |
| Note 18– | Revenue from Contracts with Customers | 67 |
| Note 19 – | Segment Information | 69 |
| Note 20 – | Supplemental Statement of Cash Flows Information | 71 |
| Note 21 – | Regulatory Matters, Commitments, and Contingencies | 72 |
| Note 22 – | First BanCorp. (Holding Company Only) Financial Information | 75 |

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The Consolidated Financial Statements (unaudited) for the quarter and nine-month period ended September 30, 2024 (the “unaudited consolidated financial statements”) of First BanCorp. (the “Corporation”) have been prepared in conformity with the accounting policies stated in the Corporation’s Audited Consolidated Financial Statements for the fiscal year ended December 31, 2023 (the “audited consolidated financial statements”) included in the 2023 Annual Report on Form 10-K, as updated by the information contained in this report. Certain information and note disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from these statements pursuant to the rules and regulations of the SEC and, accordingly, these financial statements should be read in conjunction with the audited consolidated financial statements, which are included in the 2023 Annual Report on Form 10-K. All adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the statement of financial position, results of operations and cash flows for the interim periods have been reflected. All significant intercompany accounts and transactions have been eliminated in consolidation. The Corporation evaluates subsequent events through the date of filing with the SEC. The results of operations for the quarter and nine-month period ended September 30, 2024 are not necessarily indicative of the results to be expected for the entire year.

Adoption of New Accounting Requirements The Corporation was not impacted by the adoption of the following Accounting Standards Updates (“ASUs”) during 2024: ● ASU 2023-02, “Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method” ● ASU 2023-01, “Leases (Topic 842): Common Control Arrangements” ● ASU 2022-03, “Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” Recently Issued Accounting Standards Not Yet Effective or Not Yet Adopted ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” In November 2024, the FASB issued ASU 2024-03, which requires disclosure in the notes to financial statements at each interim and annual reporting period, of specified information about certain costs and expenses in a tabular format, including but not limited to, employee compensation and intangible asset amortization; the inclusion of amounts already required under previous GAAP in the same disclosure as these disaggregation requirements; and a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The amendments in this Update should be applied either prospectively to financial statements issued for reporting periods after the effective date of this Update or retrospectively to any or all prior periods presented in the financial statements and are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure” In November 2023, the FASB issued ASU 2023-07 to improve the disclosures about a public entity’s reportable segments. Among other things, the amendments in this ASU require disclosure on an interim and annual basis of the following: significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss; and an amount for other segment items (to reconcile segment revenues less significant expenses to the reported measure(s) of a segment’s profit or loss) by reportable segment and a description of its composition. This ASU also requires disclosure on an annual basis of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. In addition, this ASU requires interim disclosure of segment-related disclosures that were previously only required on an annual basis and permits disclosure of multiple measures of segment profit or loss, provided that disclosure of the measure that is closest to GAAP is also provided and certain other criteria are met.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Corporation has carried out the necessary data updates to be able to include the above information in its footnote disclosures for all periods presented. The Corporation does not expect adoption of the standard during the fourth quarter of 2024 to have a material impact on its consolidated financial statements. The Corporation does not expect to be impacted by the following ASUs issued during 2024 that are not yet effective or have not yet been adopted: ● ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concepts Statements” ● ASU 2024-01, “Compensation – Stock Compensation (Topic 718): Stock Application of Profits Interest and Similar Awards”

For other issued accounting standards not yet effective or not yet adopted, see Note 1 – “Nature of Business and Summary of Significant Accounting Policies”, to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 2 – DEBT SECURITIES Available-for-Sale Debt Securities The amortized cost, gross unrealized gains and losses, ACL, estimated fair value, and weighted-average yield of available-for-sale debt securities by contractual maturities as of September 30, 2024 and December 31, 2023 were as follows:

September 30, 2024 Amortized cost (1) Gross Unrealized ACL Fair Value (2) Weighted- Gains Losses average yield% (Dollars in thousands) U.S. Treasury securities: Due within one year $ 100,140 $ - $ 1,528 $ - $ 98,612 0.74 U.S. government-sponsored entities' (“GSEs”) obligations: Due within one year 954,478 - 15,323 - 939,155 0.83 After 1 to 5 years 1,281,265 51 65,467 - 1,215,849 0.85 After 10 years 8,155 10 4 - 8,161 5.21 Puerto Rico government obligation: After 10 years (3) 3,008 - 1,091 350 1,567 - United States and Puerto Rico government obligations 2,347,046 61 83,413 350 2,263,344 0.85 Mortgage-backed securities (“MBS”): Residential MBS: Freddie Mac (“FHLMC”) certificates: Due within one year 2 - - - 2 4.04 After 1 to 5 years 14,626 - 435 - 14,191 2.06 After 5 to 10 years 131,333 - 8,652 - 122,681 1.54 After 10 years 922,868 34 135,996 - 786,906 1.40 1,068,829 34 145,083 - 923,780 1.43 Ginnie Mae (“GNMA”) certificates: Due within one year 1,493 - 13 - 1,480 2.77 After 1 to 5 years 9,137 - 396 - 8,741 0.70 After 5 to 10 years 60,779 7 3,846 - 56,940 1.91 After 10 years 155,215 428 17,212 - 138,431 2.75 226,624 435 21,467 - 205,592 2.44 Fannie Mae (“FNMA”) certificates: After 1 to 5 years 24,395 - 698 - 23,697 2.12 After 5 to 10 years 258,732 - 15,835 - 242,897 1.74 After 10 years 961,208 160 128,052 - 833,316 1.35 1,244,335 160 144,585 - 1,099,910 1.45 Collateralized mortgage obligations (“CMOs”) issued or guaranteed by the FHLMC, FNMA, and GNMA: After 10 years 251,397 3 46,471 - 204,929 1.49 Private label: After 5 to 10 years 2,528 - 727 7 1,794 7.39 After 10 years 3,817 - 1,121 169 2,527 6.60 6,345 - 1,848 176 4,321 6.92 Total Residential MBS 2,797,530 632 359,454 176 2,438,532 1.54 Commercial MBS: After 1 to 5 years 34,010 9 1,879 - 32,140 2.69 After 5 to 10 years 13,241 - 1,464 - 11,777 2.02 After 10 years 179,730 492 32,234 - 147,988 2.06 Total Commercial MBS 226,981 501 35,577 - 191,905 2.15 Total MBS 3,024,511 1,133 395,031 176 2,630,437 1.58 Other: Due within one year 500 - - - 500 2.34 After 1 to 5 years 500 - - - 500 2.34 1,000 - - - 1,000 2.34 Total available-for-sale debt securities $ 5,372,557 $ 1,194 $ 478,444 $ 526 $ 4,894,781 1.26 (1) Excludes accrued interest receivable on available-for-sale debt securities that totaled $ 9.5 million as of September 30, 2024 reported as part of accrued interest receivable on loans and investment securities in the consolidated statements of financial condition, and excluded from the estimate of credit losses. (2) Includes $ 475.1 million (amortized cost - $ 532.2 million) that was pledged at the FHLB as collateral for borrowings and letters of credit as well as $ 2.7 billion (amortized cost - $ 3.0 billion) pledged as collateral for the uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral. (3) Consists of a residential pass-through MBS issued by the Puerto Rico Housing Finance Authority (the “PRHFA”) that is collateralized by certain second mortgages originated under a program launched by the Puerto Rico government in 2010 and is in nonaccrual status based on the delinquency status of the underlying second mortgage loans collateral.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2023 Amortized cost (1) Gross Unrealized ACL Fair value (2) Weighted- Gains Losses average yield% (Dollars in thousands) U.S. Treasury securities: Due within one year $ 80,314 $ - $ 2,144 $ - $ 78,170 0.66 After 1 to 5 years 60,239 - 3,016 - 57,223 0.75 U.S. GSEs’ obligations: Due within one year 542,847 - 15,832 - 527,015 0.77 After 1 to 5 years 1,899,620 49 135,347 - 1,764,322 0.86 After 5 to 10 years 8,850 - 687 - 8,163 2.64 After 10 years 8,891 8 2 - 8,897 5.49 Puerto Rico government obligation: After 10 years (3) 3,156 - 1,346 395 1,415 - United States and Puerto Rico government obligations 2,603,917 57 158,374 395 2,445,205 0.85 MBS: Residential MBS: FHLMC certificates: After 1 to 5 years 19,561 - 868 - 18,693 2.06 After 5 to 10 years 153,308 - 12,721 - 140,587 1.55 After 10 years 991,060 15 161,197 - 829,878 1.41 1,163,929 15 174,786 - 989,158 1.44 GNMA certificates: Due within one year 254 - 3 - 251 3.27 After 1 to 5 years 16,882 - 872 - 16,010 1.19 After 5 to 10 years 27,916 8 2,247 - 25,677 1.62 After 10 years 206,254 87 22,786 - 183,555 2.57 251,306 95 25,908 - 225,493 2.38 FNMA certificates: After 1 to 5 years 32,489 - 1,423 - 31,066 2.11 After 5 to 10 years 293,492 - 23,146 - 270,346 1.70 After 10 years 1,047,298 83 156,344 - 891,037 1.37 1,373,279 83 180,913 - 1,192,449 1.46 CMOs issued or guaranteed by the FHLMC, FNMA, and GNMA: After 10 years 273,539 - 52,263 - 221,276 1.54 Private label: After 10 years 7,086 - 2,185 116 4,785 7.66 Total Residential MBS 3,069,139 193 436,055 116 2,633,161 1.55 Commercial MBS: After 1 to 5 years 45,022 - 6,898 - 38,124 2.17 After 5 to 10 years 22,386 - 2,685 - 19,701 2.16 After 10 years 122,830 - 29,037 - 93,793 1.36 Total Commercial MBS 190,238 - 38,620 - 151,618 1.64 Total MBS 3,259,377 193 474,675 116 2,784,779 1.55 Total available-for-sale debt securities $ 5,863,294 $ 250 $ 633,049 $ 511 $ 5,229,984 1.24 (1) Excludes accrued interest receivable on available-for-sale debt securities that totaled $ 10.6 million as of December 31, 2023 reported as part of accrued interest receivable on loans and investment securities in the consolidated statements of financial condition, and excluded from the estimate of credit losses. (2) Includes $ 477.9 million (amortized cost - $ 527.2 million) that was pledged at the FHLB as collateral for borrowings and letters of credit as well as $ 2.8 billion (amortized cost - $ 3.2 billion) pledged as collateral for the uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral. (3) Consists of a residential pass-through MBS issued by the PRHFA that is collateralized by certain second mortgages originated under a program launched by the Puerto Rico government in 2010 and is in nonaccrual status based on the delinquency status of the underlying second mortgage loans collateral.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) During the first nine months of 2024, the Corporation purchased approximately $ 44.1 million of Community Reinvestment Act qualified investments, which were classified as available-for-sale debt securities, and mainly consisted of commercial MBS. Maturities of available-for-sale debt securities are based on the period of final contractual maturity. Expected maturities might differ from contractual maturities because they may be subject to prepayments and/or call options. The weighted-average yield on available-for-sale debt securities is based on amortized cost and, therefore, does not give effect to changes in fair value. The net unrealized loss on available-for-sale debt securities is presented as part of accumulated other comprehensive loss in the consolidated statements of financial condition.

The following tables present the fair value and gross unrealized losses of the Corporation’s available-for-sale debt securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2024 and December 31, 2023. The tables also include debt securities for which an ACL was recorded.

As of September 30, 2024 Less than 12 months 12 months or more Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (In thousands) U.S. Treasury and U.S. GSEs’ obligations $ 1,828 $ 4 $ 2,247,894 $ 82,318 $ 2,249,722 $ 82,322 Puerto Rico government obligation - - 1,567 1,091 (1) 1,567 1,091 MBS: Residential MBS: FHLMC 2 - 921,769 145,083 921,771 145,083 GNMA 69 1 180,162 21,466 180,231 21,467 FNMA - - 1,090,120 144,585 1,090,120 144,585 CMOs issued or guaranteed by the FHLMC, FNMA, and GNMA - - 199,741 46,471 199,741 46,471 Private label - - 4,321 1,848 (1) 4,321 1,848 Commercial MBS 8,869 174 139,632 35,403 148,501 35,577 $ 10,768 $ 179 $ 4,785,206 $ 478,265 $ 4,795,974 $ 478,444 (1) Unrealized losses do not include the credit loss component recorded as part of the ACL. As of September 30, 2024, the PRHFA bond and private label MBS had an ACL of $ 0.3 million and $ 0.2 million, respectively. As of December 31, 2023 Less than 12 months 12 months or more Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (In thousands) U.S. Treasury and U.S. GSEs’ obligations $ 2,544 $ 2 $ 2,428,784 $ 157,026 $ 2,431,328 $ 157,028 Puerto Rico government obligation - - 1,415 1,346 (1) 1,415 1,346 MBS: Residential MBS: FHLMC 9 - 988,092 174,786 988,101 174,786 GNMA 12,257 100 202,390 25,808 214,647 25,908 FNMA - - 1,183,275 180,913 1,183,275 180,913 CMOs issued or guaranteed by the FHLMC, FNMA, and GNMA - - 221,276 52,263 221,276 52,263 Private label - - 4,785 2,185 (1) 4,785 2,185 Commercial MBS 11,370 18 140,248 38,602 151,618 38,620 $ 26,180 $ 120 $ 5,170,265 $ 632,929 $ 5,196,445 $ 633,049 (1) Unrealized losses do not include the credit loss component recorded as part of the ACL. As of December 31, 2023, the PRHFA bond and private label MBS had an ACL of $ 0.4 million and $ 0.1 million, respectively.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Assessment for Credit Losses Debt securities issued by U.S. government agencies, U.S. GSEs, and the U.S. Treasury, including notes and MBS, accounted for substantially all of the total available-for-sale portfolio as of September 30, 2024, and the Corporation expects no credit losses on these securities, given the explicit and implicit guarantees provided by the U.S. federal government. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because, as of September 30, 2024, the Corporation did not have the intent to sell these U.S. government and agencies debt securities and determined that it was likely that it will not be required to sell these securities before their anticipated recovery, the Corporation does not consider impairments on these securities to be credit related. The Corporation’s credit loss assessment was concentrated mainly on private label MBS and on Puerto Rico government debt securities, for which credit losses are evaluated on a quarterly basis. Private label MBS held as part of the Corporation’s available for sale portfolio consist of trust certificates issued by an unaffiliated party backed by fixed-rate, single-family residential mortgage loans in the U.S. mainland with original FICO scores over 700 and moderate loan-to-value ratios (under 80 %), as well as moderate delinquency levels. The interest rate on these private label MBS is variable, tied to 3-month CME Term Secured Overnight Financing Rate (“SOFR”) plus a tenor spread adjustment of 0.26161 % and the original spread limited to the weighted-average coupon of the underlying collateral. The Corporation determined the ACL for private label MBS based on a risk-adjusted discounted cash flow methodology that considers the structure and terms of the instruments. The Corporation utilized probability of default (“PDs”) and loss-given default (“LGDs”) that considered, among other things, historical payment performance, loan-to-value attributes, and relevant current and forward-looking macroeconomic variables, such as regional unemployment rates and the housing price index. Under this approach, expected cash flows (interest and principal) were discounted at the U.S. Treasury yield curve as of the reporting date. See Note 17 – “Fair Value ” for the significant assumptions used in the valuation of the private label MBS as of September 30, 2024 and December 31 2023.

For the residential pass-through MBS issued by the PRHFA held as part of the Corporation’s available-for-sale portfolio backed by second mortgage residential loans in Puerto Rico, the ACL was determined based on a discounted cash flow methodology that considered the structure and terms of the debt security. The expected cash flows were discounted at the U.S. Treasury yield curve plus a spread as of the reporting date and compared to the amortized cost. The Corporation utilized PDs and LGDs that considered, among other things, historical payment performance, loan-to-value attributes, and relevant current and forward-looking macroeconomic variables, such as regional unemployment rates, the housing price index, and expected recovery from the PRHFA guarantee. PRHFA, not the Puerto Rico government, provides a guarantee in the event of default and subsequent foreclosure of the properties underlying the second mortgage loans. In the event that the second mortgage loans default and the collateral is insufficient to satisfy the outstanding balance of this residential pass-through MBS, PRHFA’s ability to honor such guarantee will depend on, among other factors, its financial condition at the time such obligation becomes due and payable. Deterioration of the Puerto Rico economy or fiscal health of the PRHFA could impact the value of this security, resulting in additional losses to the Corporation.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The following tables present a roll-forward of the ACL on available-for-sale debt securities by major security type for the quarters and nine-month periods ended September 30, 2024 and 2023:

Quarter Ended September 30, 2024 2023 Private label MBS Puerto Rico Government Obligation Total Private label MBS Puerto Rico Government Obligation Total (In thousands) Beginning balance $ 163 $ 386 $ 549 $ 83 $ 350 $ 433 Provision for credit losses – (benefit) expense - ( 36 ) ( 36 ) - 32 32 Net recoveries 13 - 13 - - - ACL on available-for-sale debt securities $ 176 $ 350 $ 526 $ 83 $ 382 $ 465

Nine-Month Period Ended September 30, 2024 2023 Private label MBS Puerto Rico Government Obligations Total Private label MBS Puerto Rico Government Obligations Total (In thousands) Beginning balance $ 116 $ 395 $ 511 $ 83 $ 375 $ 458 Provision for credit losses - (benefit) expense - ( 45 ) ( 45 ) - 7 7 Net recoveries 60 - 60 - - - ACL on available-for-sale debt securities $ 176 $ 350 $ 526 $ 83 $ 382 $ 465

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Held-to-Maturity Debt Securities The amortized cost, gross unrecognized gains and losses, estimated fair value, ACL, weighted-average yield and contractual maturities of held-to-maturity debt securities as of September 30, 2024 and December 31, 2023 were as follows:

September 30, 2024 Amortized cost (1) (2) Gross Unrecognized Fair value Weighted- Gains Losses ACL average yield% (Dollars in thousands) Puerto Rico municipal bonds: Due within one year $ 2,131 $ 196 $ 10 $ 2,317 $ 9 5.62 After 1 to 5 years 61,119 2,471 457 63,133 662 7.81 After 5 to 10 years 13,121 679 229 13,571 189 6.42 After 10 years 15,755 - 170 15,585 259 8.80 Total Puerto Rico municipal bonds 92,126 3,346 866 94,606 1,119 7.73 MBS: Residential MBS: FHLMC certificates: After 5 to 10 years 13,084 - 250 12,834 - 3.03 After 10 years 17,281 - 448 16,833 - 4.31 30,365 - 698 29,667 - 3.76 GNMA certificates: After 10 years 14,313 - 432 13,881 - 3.31 FNMA certificates: After 10 years 62,754 - 1,545 61,209 - 4.18 CMOs issued or guaranteed by FHLMC, FNMA, and GNMA: After 10 years 26,420 - 914 25,506 - 3.49 Total Residential MBS 133,852 - 3,589 130,263 - 3.86 Commercial MBS: After 1 to 5 years 9,306 - 124 9,182 - 3.48 After 10 years 87,858 - 5,055 82,803 - 3.15 Total Commercial MBS 97,164 - 5,179 91,985 - 3.18 Total MBS 231,016 - 8,768 222,248 - 3.57 Total held-to-maturity debt securities $ 323,142 $ 3,346 $ 9,634 $ 316,854 $ 1,119 4.76 (1) Excludes accrued interest receivable on held-to-maturity debt securities that totaled $ 2.5 million as of September 30, 2024 reported as part of accrued interest receivable on loans and investment securities in the consolidated statements of financial condition, and excluded from the estimate of credit losses. (2) Includes $ 199.1 million (fair value - $ 194.3 million) that serves as collateral for the uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2023 Amortized cost (1) (2) Gross Unrecognized Fair value Weighted- Gains Losses ACL average yield% (Dollars in thousands) Puerto Rico municipal bonds: Due within one year $ 3,165 $ 8 $ 38 $ 3,135 $ 50 9.30 After 1 to 5 years 51,230 994 710 51,514 1,266 7.78 After 5 to 10 years 36,050 3,540 210 39,380 604 7.13 After 10 years 16,595 269 - 16,864 277 8.87 Total Puerto Rico municipal bonds 107,040 4,811 958 110,893 2,197 7.78 MBS: Residential MBS: FHLMC certificates: After 5 to 10 years 16,469 - 556 15,913 - 3.03 After 10 years 18,324 - 714 17,610 - 4.32 34,793 - 1,270 33,523 - 3.71 GNMA certificates: After 10 years 16,265 - 789 15,476 - 3.32 FNMA certificates: After 10 years 67,271 - 2,486 64,785 - 4.18 CMOs issued or guaranteed by FHLMC, FNMA, and GNMA: After 10 years 28,139 - 1,274 26,865 - 3.49 Total Residential MBS 146,468 - 5,819 140,649 - 3.84 Commercial MBS: After 1 to 5 years 9,444 - 297 9,147 - 3.48 After 10 years 91,226 - 5,783 85,443 - 3.15 Total Commercial MBS 100,670 - 6,080 94,590 - 3.18 Total MBS 247,138 - 11,899 235,239 - 3.57 Total held-to-maturity debt securities $ 354,178 $ 4,811 $ 12,857 $ 346,132 $ 2,197 4.84 (1) Excludes accrued interest receivable on held-to-maturity debt securities that totaled $ 4.8 million as of December 31, 2023 reported as part of accrued interest receivable on loans and investment securities in the consolidated statements of financial condition, and excluded from the estimate of credit losses. (2) Includes $ 126.6 million (fair value - $ 125.9 million) that serves as collateral for the uninsured portion of government deposits. The secured parties are not permitted to sell or repledge the collateral.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The following tables present the Corporation’s held-to-maturity debt securities’ fair value and gross unrecognized losses, aggregated by category and length of time that individual securities had been in a continuous unrecognized loss position, as of September 30, 2024 and December 31, 2023, including debt securities for which an ACL was recorded:

As of September 30, 2024 Less than 12 months 12 months or more Total Unrecognized Unrecognized Unrecognized Fair Value Losses Fair Value Losses Fair Value Losses (In thousands) Puerto Rico municipal bonds $ - $ - $ 43,997 $ 866 $ 43,997 $ 866 MBS: Residential MBS: FHLMC certificates - - 29,667 698 29,667 698 GNMA certificates - - 13,881 432 13,881 432 FNMA certificates - - 61,209 1,545 61,209 1,545 CMOs issued or guaranteed by FHLMC, FNMA, and GNMA - - 25,506 914 25,506 914 Commercial MBS - - 91,985 5,179 91,985 5,179 Total held-to-maturity debt securities $ - $ - $ 266,245 $ 9,634 $ 266,245 $ 9,634 As of December 31, 2023 Less than 12 months 12 months or more Total Unrecognized Unrecognized Unrecognized Fair Value Losses Fair Value Losses Fair Value Losses (In thousands) Puerto Rico municipal bonds $ - $ - $ 34,682 $ 958 $ 34,682 $ 958 MBS: Residential MBS: FHLMC certificates - - 33,523 1,270 33,523 1,270 GNMA certificates - - 15,476 789 15,476 789 FNMA certificates - - 64,785 2,486 64,785 2,486 CMOs issued or guaranteed by FHLMC, FNMA, and GNMA - - 26,865 1,274 26,865 1,274 Commercial MBS - - 94,590 6,080 94,590 6,080 Total held-to-maturity debt securities $ - $ - $ 269,921 $ 12,857 $ 269,921 $ 12,857

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Corporation classifies the held-to-maturity debt securities portfolio into the following major security types: MBS issued or guaranteed by GSEs and underlying collateral and Puerto Rico municipal bonds. The Corporation does not recognize an ACL for MBS issued or guaranteed by GSEs since they are highly rated by major rating agencies and have a long history of no credit losses. In the case of Puerto Rico municipal bonds, the Corporation determines the ACL based on the product of a cumulative PD and LGD, and the amortized cost basis of the bonds over their remaining expected life as described in Note 1 – “Nature of Business and Summary of Significant Accounting Policies,” to the audited financial statements included in the 2023 Annual Report on Form 10-K. The Corporation performs periodic credit quality reviews on these issuers. All of the Puerto Rico municipal bonds were current as to scheduled contractual payments as of September 30, 2024. The ACL of Puerto Rico municipal bonds decreased to $ 1.1 million as of September 30, 2024, from $ 2.2 million as of December 31, 2023, mostly related to updated financial information of a bond issuer received during the first quarter of 2024. The following tables present the activity in the ACL for held-to-maturity debt securities by major security type for the quarters and nine-month periods ended September 30, 2024 and 2023:

Puerto Rico Municipal Bonds Quarter Ended September 30, 2024 2023 (In thousands) Beginning balance $ 1,267 $ 8,401 Provision for credit losses – benefit ( 148 ) ( 6,151 ) ACL on held-to-maturity debt securities $ 1,119 $ 2,250

Puerto Rico Municipal Bonds Nine-Month Period Ended September 30, 2024 2023 (In thousands) Beginning Balance $ 2,197 $ 8,286 Provision for credit losses - benefit ( 1,078 ) ( 6,036 ) ACL on held-to-maturity debt securities $ 1,119 $ 2,250

Municipalities, which are covered instrumentalities under PROMESA, may be affected by the negative economic and other effects resulting from expense, revenue, or cash management measures taken by the Puerto Rico government to address its fiscal situation, or measures included in its fiscal plan or fiscal plans of other government entities. Given the inherent uncertainties about the fiscal situation of the Puerto Rico central government and the measures taken, or to be taken, by other government entities in response to economic and fiscal challenges, the Corporation cannot be certain whether future charges to the ACL on these securities will be required. From time to time, the Corporation has held-to-maturity securities with an original maturity of three months or less that are considered cash and cash equivalents and are classified as money market investments in the consolidated statements of financial condition. As of September 30, 2024 and December 31, 2023, the Corporation had no outstanding held-to-maturity securities that were classified as cash and cash equivalents.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Credit Quality Indicators: The held-to-maturity debt securities portfolio consisted of GSEs’ MBS, for which the Corporation expects no credit losses, and financing arrangements with Puerto Rico municipalities issued in bond form. The Puerto Rico municipal bonds are accounted for as securities but are underwritten as loans with features that are typically found in commercial loans. Accordingly, the Corporation monitors the credit quality of these municipal bonds through the use of internal credit-risk ratings, which are generally updated on a quarterly basis. The Corporation considers a municipal bond as a criticized asset if its risk rating is Special Mention, Substandard, Doubtful, or Loss. Puerto Rico municipal bonds that do not meet the criteria for classification as criticized assets are considered to be Pass-rated securities. For the definitions of the internal-credit ratings, see Note 3 – “Debt Securities,” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K. The Corporation periodically reviews its Puerto Rico municipal bonds to evaluate if they are properly classified, and to measure credit losses on these securities. The frequency of these reviews will depend on the amount of the aggregate outstanding debt, and the risk rating classification of the obligor. The Corporation has a Loan Review Group that reports directly to the Corporation’s Risk Management Committee and administratively to the Chief Risk Officer. The Loan Review Group performs annual comprehensive credit process reviews of the Bank’s commercial loan portfolios, including the above-mentioned Puerto Rico municipal bonds accounted for as held-to-maturity debt securities. The objective of these loan reviews is to assess accuracy of the Bank’s determination and maintenance of loan risk rating and its adherence to lending policies, practices and procedures. The monitoring performed by this group contributes to the assessment of compliance with credit policies and underwriting standards, the determination of the current level of credit risk, the evaluation of the effectiveness of the credit management process, and the identification of any deficiency that may arise in the credit- granting process. Based on its findings, the Loan Review Group recommends corrective actions, if necessary, that help in maintaining a sound credit process. The Loan Review Group reports the results of the credit process reviews to the Risk Management Committee. As of September 30, 2024 and December 31, 2023, all Puerto Rico municipal bonds classified as held-to-maturity were classified as Pass. No held-to-maturity debt securities were on nonaccrual status, 90 days past due and still accruing, or past due as of September 30, 2024 and December 31, 2023. A security is considered to be past due once it is 30 days contractually past due under the terms of the agreement.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTE 3 – LOANS HELD FOR INVESTMENT The following table provides information about the loan portfolio held for investment by portfolio segment and disaggregated by geographic locations as of the indicated dates:

As of September 30, As of December 31, 2024 2023 (In thousands) Puerto Rico and Virgin Islands region: Residential mortgage loans, mainly secured by first mortgages $ 2,327,678 $ 2,356,006 Construction loans 175,353 115,401 Commercial mortgage loans 1,797,333 1,790,637 Commercial and Industrial (“C&I”) loans 2,243,630 2,249,408 Consumer loans 3,733,741 3,651,770 Loans held for investment $ 10,277,735 $ 10,163,222 Florida region: Residential mortgage loans, mainly secured by first mortgages $ 492,469 $ 465,720 Construction loans 31,989 99,376 Commercial mortgage loans 674,547 526,446 C&I loans 961,683 924,824 Consumer loans 7,601 5,895 Loans held for investment $ 2,168,289 $ 2,022,261 Total: Residential mortgage loans, mainly secured by first mortgages $ 2,820,147 $ 2,821,726 Construction loans 207,342 214,777 Commercial mortgage loans 2,471,880 2,317,083 C&I loans (1) 3,205,313 3,174,232 Consumer loans 3,741,342 3,657,665 Loans held for investment (2) 12,446,024 12,185,483 ACL on loans and finance leases ( 246,996 ) ( 261,843 ) Loans held for investment, net $ 12,199,028 $ 11,923,640 (1) As of September 30, 2024 and December 31, 2023, includes $ 769.8 million and $ 787.5 million, respectively, of commercial loans that were secured by real estate and for which the primary source of repayment at origination was not dependent upon such real estate. (2) Includes accretable fair value net purchase discounts of $ 24.5 million and $ 24.7 million as of September 30, 2024 and December 31, 2023, respectively.

Various loans were assigned as collateral for borrowings, government deposits, time deposits accounts, and related unused commitments. The carrying value of loans pledged as collateral amounted to $ 5.5 billion and $ 4.6 billion as of September 30, 2024 and December 31, 2023, respectively. As of each of September 30, 2024 and December 31, 2023, loans pledged as collateral include $ 1.8 billion, that were pledged at the FHLB as collateral for borrowings and letters of credit; $ 3.4 billion pledged as collateral to secure borrowing capacity at the FED Discount Window, compared to $ 2.5 billion as of December 31, 2023; $ 144.0 million pledged to secure as collateral for the uninsured portion of government deposits, compared to $ 166.9 million as of December 31, 2023; and $ 120.8 million pledged to secure time deposits accounts, compared to $ 121.1 million as of December 31, 2023

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The Corporation’s aging of the loan portfolio held for investment, as well as information about nonaccrual loans with no ACL, by portfolio classes as of September 30, 2024 and December 31, 2023 are as follows:

As of September 30, 2024 Days Past Due and Accruing Current 30-59 60-89 90+ (1) (2) (3) Nonaccrual (4) Total loans held for investment Nonaccrual Loans with no ACL (5) (In thousands) Residential mortgage loans, mainly secured by first mortgages: FHA/VA government-guaranteed loans (1) (3) (6) $ 71,802 $ - $ 2,446 $ 20,209 $ - $ 94,457 $ - Conventional residential mortgage loans (2) (6) 2,656,795 - 29,454 7,712 31,729 2,725,690 1,571 Commercial loans: Construction loans 202,691 - - - 4,651 207,342 970 Commercial mortgage loans (2) (6) 2,458,046 1,381 47 910 11,496 2,471,880 6,764 C&I loans 3,173,300 5,362 813 7,476 18,362 3,205,313 1,525 Consumer loans: Auto loans 1,922,448 56,660 10,424 - 16,125 2,005,657 381 Finance leases 876,309 11,722 2,396 - 2,947 893,374 124 Personal loans 362,330 6,112 3,242 - 2,175 373,859 - Credit cards 303,551 5,273 4,136 7,303 - 320,263 - Other consumer loans 142,392 2,188 1,750 - 1,859 148,189 - Total loans held for investment $ 12,169,664 $ 88,698 $ 54,708 $ 43,610 $ 89,344 $ 12,446,024 $ 11,335 (1) It is the Corporation’s policy to report delinquent Federal Housing Authority (“FHA”)/U.S. Department of Veterans Affairs (“VA”) government-guaranteed residential mortgage loans as past-due loans 90 days and still accruing as opposed to nonaccrual loans. The Corporation continues accruing interest on these loans until they have passed the 15-month delinquency mark, taking into consideration the FHA interest curtailment process. These balances include $ 9.0 million of residential mortgage loans guaranteed by the FHA that were over 15 months delinquent as of September 30, 2024. (2) Includes purchased credit deteriorated (“PCD”) loans previously accounted for under ASC Subtopic 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans as “units of account” both at the time of adoption of the current expected credit loss (“CECL”) methodology on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans will continue to be excluded from nonaccrual loan statistics as long as the Corporation can reasonably estimate the timing and amount of cash flows expected to be collected on the loan pools. The portion of such loans contractually past due 90 days or more, amounting to $ 6.5 million as of September 30, 2024 ($ 5.6 million conventional residential mortgage loans and $ 0.9 million commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above. (3) Include rebooked loans, which were previously pooled into GNMA securities, amounting to $ 6.6 million as of September 30, 2024. Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability. (4) Nonaccrual loans in the Florida region amounted to $ 9.3 million as of September 30, 2024 primarily residential mortgage loans. (5) There were no nonaccrual loans with no ACL in the Florida region as of September 30, 2024. (6) According to the Corporation’s delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears on two or more monthly payments. FHA/VA government-guaranteed loans, conventional residential mortgage loans, and commercial mortgage loans past due 30-59 days, but less than two payments in arrears, as of September 30, 2024 amounted to $ 8.7 million, $ 60.6 million, and $ 2.1 million, respectively.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of December 31, 2023 Days Past Due and Accruing Current 30-59 60-89 90+ (1) (2) (3) Nonaccrual (4) Total loans held for investment Nonaccrual Loans with no ACL (5) (In thousands) Residential mortgage loans, mainly secured by first mortgages: FHA/VA government-guaranteed loans (1) (3) (6) $ 68,332 $ - $ 2,592 $ 29,312 $ - $ 100,236 $ - Conventional residential mortgage loans (2) (6) 2,644,344 - 33,878 11,029 32,239 2,721,490 1,742 Commercial loans: Construction loans 210,911 - - 2,297 1,569 214,777 972 Commercial mortgage loans (2) (6) 2,303,753 17 - 1,108 12,205 2,317,083 2,536 C&I loans 3,148,254 1,130 1,143 8,455 15,250 3,174,232 1,687 Consumer loans: Auto loans 1,846,652 60,283 13,753 - 15,568 1,936,256 4 Finance leases 837,881 13,786 1,861 - 3,287 856,815 12 Personal loans 370,746 5,873 2,815 - 1,841 381,275 - Credit cards 313,360 5,012 3,589 7,251 - 329,212 - Other consumer loans 147,278 3,084 1,997 - 1,748 154,107 - Total loans held for investment $ 11,891,511 $ 89,185 $ 61,628 $ 59,452 $ 83,707 $ 12,185,483 $ 6,953 (1) It is the Corporation’s policy to report delinquent FHA/VA government-guaranteed residential mortgage loans as past-due loans 90 days and still accruing as opposed to nonaccrual loans. The Corporation continues accruing interest on these loans until they have passed the 15-month delinquency mark, taking into consideration the FHA interest curtailment process. These balances include $ 15.4 million of residential mortgage loans guaranteed by the FHA that were over 15 months delinquent as of December 31, 2023. (2) Includes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation made the accounting policy election of maintaining pools of loans as “units of account” both at the time of adoption of CECL on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans will continue to be excluded from nonaccrual loan statistics as long as the Corporation can reasonably estimate the timing and amount of cash flows expected to be collected on the loan pools. The portion of such loans contractually past due 90 days or more, amounting to $ 8.3 million as of December 31, 2023 ($ 7.4 million conventional residential mortgage loans, and $ 0.9 million commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above. (3) Include rebooked loans, which were previously pooled into GNMA securities, amounting to $ 7.9 million as of December 31, 2023. Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria. For accounting purposes, these loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability. (4) Nonaccrual loans in the Florida region amounted to $ 8.0 million as of December 31, 2023, primarily nonaccrual residential mortgage loans and C&I loans. (5) There were no nonaccrual loans with no ACL in the Florida region as of December 31, 2023. (6) According to the Corporation’s delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears on two or more monthly payments. FHA/VA government-guaranteed loans, conventional residential mortgage loans, and commercial mortgage loans past due 30-59 days, but less than two payments in arrears, as of December 31, 2023 amounted to $ 8.2 million, $ 69.9 million, and $ 1.1 million, respectively.

When a loan is placed in nonaccrual status, any accrued but uncollected interest income is reversed and charged against interest income and the amortization of any net deferred fees is suspended. The amount of accrued interest reversed against interest income totaled $ 0.8 million and $ 2.3 million for the quarter and nine-month period ended September 30, 2024, respectively, compared to $ 0.9 million and $ 2.0 million for the same periods in 2023, respectively. For the quarter and nine-month period ended September 30, 2024, the cash interest income recognized on nonaccrual loans amounted to $ 0.5 million and $ 1.4 million, respectively, compared to $ 0.4 million and $ 1.4 million for the same periods in 2023, respectively. As of September 30, 2024, the recorded investment on residential mortgage loans collateralized by residential real estate property that were in the process of foreclosure amounted to $ 32.1 million, including $ 12.3 million of FHA/VA government-guaranteed mortgage loans, and $ 4.5 million of PCD loans acquired prior to the adoption, on January 1, 2020, of CECL. The Corporation commences the foreclosure process on residential real estate loans when a borrower becomes 120 days delinquent. Foreclosure procedures and timelines vary depending on whether the property is located in a judicial or non-judicial state. Occasionally, foreclosures may be delayed due to, among other reasons, mandatory mediations, bankruptcy, court delays, and title issues.

Credit Quality Indicators: The Corporation categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes non-homogeneous loans, such as commercial mortgage, C&I, and construction loans individually to classify the loans’ credit risk. The Corporation periodically reviews its commercial and construction loans to evaluate if they are properly classified. The frequency of these reviews will depend on the amount of the aggregate outstanding debt, and the risk rating classification of the obligor. In addition, during the renewal and annual review process of applicable credit facilities, the Corporation evaluates the corresponding loan grades. The Corporation uses the same definition for risk ratings as those described for Puerto Rico municipal bonds accounted for as held-to-maturity debt securities, as discussed in Note 3 – “Debt Securities,” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K. For residential mortgage and consumer loans, the Corporation evaluates credit quality based on its interest accrual status.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Based on the most recent analysis performed, the amortized cost of commercial and construction loans by portfolio classes and by origination year based on the internal credit-risk category as of September 30, 2024, the gross charge -offs for the nine-month period ended September 30, 2024 by portfolio classes and by origination year, and the amortized cost of commercial and construction loans by portfolio classes based on the internal credit-risk category as of December 31, 2023, were as follows:

As of September 30,2024 As of December 31, 2023 Puerto Rico and Virgin Islands Regions Term Loans Amortized Cost Basis by Origination Year (1) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 22,083 $ 94,800 $ 40,799 $ 7,553 $ - $ 2,406 $ - $ 167,641 $ 113,170 Criticized: Special Mention - - - - - - - - - Substandard - 3,061 3,224 - - 1,427 - 7,712 2,231 Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 22,083 $ 97,861 $ 44,023 $ 7,553 $ - $ 3,833 $ - $ 175,353 $ 115,401 Charge-offs on construction loans $ - $ - $ - $ - $ - $ - $ - $ - COMMERCIAL MORTGAGE Risk Ratings: Pass $ 129,145 $ 170,328 $ 393,259 $ 145,268 $ 314,723 $ 463,702 $ 5,359 $ 1,621,784 $ 1,618,404 Criticized: Special Mention - 3,744 4,232 - 30,168 110,684 - 148,828 146,626 Substandard 137 - - - - 26,584 - 26,721 25,607 Doubtful - - - - - - - - - Loss - - - - - - - - - Total commercial mortgage loans $ 129,282 $ 174,072 $ 397,491 $ 145,268 $ 344,891 $ 600,970 $ 5,359 $ 1,797,333 $ 1,790,637 Charge-offs on commercial mortgage loans $ - $ - $ - $ - $ - $ - $ - $ - C&I Risk Ratings: Pass $ 184,460 $ 397,957 $ 281,462 $ 127,753 $ 144,452 $ 307,136 $ 716,028 $ 2,159,248 $ 2,173,939 Criticized: Special Mention - 2,340 - 10,005 - 416 29,378 42,139 40,376 Substandard 192 - - 14,443 - 18,990 8,074 41,699 35,093 Doubtful - - - - - - 544 544 - Loss - - - - - - - - - Total C&I loans $ 184,652 $ 400,297 $ 281,462 $ 152,201 $ 144,452 $ 326,542 $ 754,024 $ 2,243,630 $ 2,249,408 Charge-offs on C&I loans $ - $ 106 $ 304 $ - $ - $ 1,190 $ 234 $ 1,834 (1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of September 30,2024 As of December 31, 2023 Term Loans Florida Region Amortized Cost Basis by Origination Year (1) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 5,197 $ 8,742 $ - $ - $ - $ - $ 18,050 $ 31,989 $ 99,376 Criticized: Special Mention - - - - - - - - - Substandard - - - - - - - - - Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 5,197 $ 8,742 $ - $ - $ - $ - $ 18,050 $ 31,989 $ 99,376 Charge-offs on construction loans $ - $ - $ - $ - $ - $ - $ - $ - COMMERCIAL MORTGAGE Risk Ratings: Pass $ 61,492 $ 28,790 $ 229,182 $ 105,293 $ 38,885 $ 173,516 $ 24,154 $ 661,312 $ 525,453 Criticized: Special Mention - - 12,242 - - - - 12,242 - Substandard - - - - 993 - - 993 993 Doubtful - - - - - - - - - Loss - - - - - - - - - Total commercial mortgage loans $ 61,492 $ 28,790 $ 241,424 $ 105,293 $ 39,878 $ 173,516 $ 24,154 $ 674,547 $ 526,446 Charge-offs on commercial mortgage loans $ - $ - $ - $ - $ - $ - $ - $ - C&I Risk Ratings: Pass $ 168,497 $ 162,047 $ 214,344 $ 162,951 $ 24,772 $ 100,414 $ 117,427 $ 950,452 $ 879,195 Criticized: Special Mention - - - - - 11,231 - 11,231 42,046 Substandard - - - - - - - - 3,583 Doubtful - - - - - - - - - Loss - - - - - - - - - Total C&I loans $ 168,497 $ 162,047 $ 214,344 $ 162,951 $ 24,772 $ 111,645 $ 117,427 $ 961,683 $ 924,824 Charge-offs on C&I loans $ - $ - $ - $ - $ - $ 48 $ 259 $ 307 (1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of September 30,2024 As of December 31, 2023 Term Loans Total Amortized Cost Basis by Origination Year (1) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) CONSTRUCTION Risk Ratings: Pass $ 27,280 $ 103,542 $ 40,799 $ 7,553 $ - $ 2,406 $ 18,050 $ 199,630 $ 212,546 Criticized: Special Mention - - - - - - - - - Substandard - 3,061 3,224 - - 1,427 - 7,712 2,231 Doubtful - - - - - - - - - Loss - - - - - - - - - Total construction loans $ 27,280 $ 106,603 $ 44,023 $ 7,553 $ - $ 3,833 $ 18,050 $ 207,342 $ 214,777 Charge-offs on construction loans $ - $ - $ - $ - $ - $ - $ - $ - COMMERCIAL MORTGAGE Risk Ratings: Pass $ 190,637 $ 199,118 $ 622,441 $ 250,561 $ 353,608 $ 637,218 $ 29,513 $ 2,283,096 $ 2,143,857 Criticized: Special Mention - 3,744 16,474 - 30,168 110,684 - 161,070 146,626 Substandard 137 - - - 993 26,584 - 27,714 26,600 Doubtful - - - - - - - - - Loss - - - - - - - - - Total commercial mortgage loans $ 190,774 $ 202,862 $ 638,915 $ 250,561 $ 384,769 $ 774,486 $ 29,513 $ 2,471,880 $ 2,317,083 Charge-offs on commercial mortgage loans $ - $ - $ - $ - $ - $ - $ - $ - C&I Risk Ratings: Pass $ 352,957 $ 560,004 $ 495,806 $ 290,704 $ 169,224 $ 407,550 $ 833,455 $ 3,109,700 $ 3,053,134 Criticized: Special Mention - 2,340 - 10,005 - 11,647 29,378 53,370 82,422 Substandard 192 - - 14,443 - 18,990 8,074 41,699 38,676 Doubtful - - - - - - 544 544 - Loss - - - - - - - - - Total C&I loans $ 353,149 $ 562,344 $ 495,806 $ 315,152 $ 169,224 $ 438,187 $ 871,451 $ 3,205,313 $ 3,174,232 Charge-offs on C&I loans $ - $ 106 $ 304 $ - $ - $ 1,238 $ 493 $ 2,141 (1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The following tables present the amortized cost of residential mortgage loans by portfolio classes and by origination year based on accrual status as of September 30, 2024, the gross charge -offs for the nine-month period ended September 30, 2024 by origination year, and the amortized cost of residential mortgage loans by portfolio classes based on accrual status as of December 31, 2023:

As of September 30,2024 As of December 31, 2023 Term Loans Amortized Cost Basis by Origination Year (1) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Florida Region: FHA/VA government-guaranteed loans Accrual Status: Performing $ - $ - $ - $ - $ - $ 684 $ - $ 684 $ 943 Non-Performing - - - - - - - - - Total FHA/VA government-guaranteed loans $ - $ - $ - $ - $ - $ 684 $ - $ 684 $ 943 Conventional residential mortgage loans Accrual Status: Performing $ 65,909 $ 86,443 $ 73,629 $ 41,979 $ 27,327 $ 187,250 $ - $ 482,537 $ 457,550 Non-Performing - - 1,056 - - 8,192 - 9,248 7,227 Total conventional residential mortgage loans $ 65,909 $ 86,443 $ 74,685 $ 41,979 $ 27,327 $ 195,442 $ - $ 491,785 $ 464,777 Total Accrual Status: Performing $ 65,909 $ 86,443 $ 73,629 $ 41,979 $ 27,327 $ 187,934 $ - $ 483,221 $ 458,493 Non-Performing - - 1,056 - - 8,192 - 9,248 7,227 Total residential mortgage loans $ 65,909 $ 86,443 $ 74,685 $ 41,979 $ 27,327 $ 196,126 $ - $ 492,469 $ 465,720 Charge-offs on residential mortgage loans $ - $ - $ - $ - $ - $ - $ - $ - (1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of September 30,2024 As of December 31, 2023 Term Loans Amortized Cost Basis by Origination Year (1) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Total: FHA/VA government-guaranteed loans Accrual Status: Performing $ - $ 765 $ 781 $ 1,278 $ 782 $ 90,851 $ - $ 94,457 $ 100,236 Non-Performing - - - - - - - - - Total FHA/VA government-guaranteed loans $ - $ 765 $ 781 $ 1,278 $ 782 $ 90,851 $ - $ 94,457 $ 100,236 Conventional residential mortgage loans Accrual Status: Performing $ 198,361 $ 254,307 $ 228,798 $ 106,078 $ 54,994 $ 1,851,423 $ - $ 2,693,961 $ 2,689,251 Non-Performing - - 1,124 - - 30,605 - 31,729 32,239 Total conventional residential mortgage loans $ 198,361 $ 254,307 $ 229,922 $ 106,078 $ 54,994 $ 1,882,028 $ - $ 2,725,690 $ 2,721,490 Total Accrual Status: Performing $ 198,361 $ 255,072 $ 229,579 $ 107,356 $ 55,776 $ 1,942,274 $ - $ 2,788,418 $ 2,789,487 Non-Performing - - 1,124 - - 30,605 - 31,729 32,239 Total residential mortgage loans $ 198,361 $ 255,072 $ 230,703 $ 107,356 $ 55,776 $ 1,972,879 $ - $ 2,820,147 $ 2,821,726 Charge-offs on residential mortgage loans $ - $ 2 $ - $ - $ 9 $ 1,417 $ - $ 1,428 (1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The following tables present the amortized cost of consumer loans by portfolio classes and by origination year based on accrual status as of September 30, 2024, the gross charge-offs for the nine-month period ended September 30, 2024 by portfolio classes and by origination year, and the amortized cost of consumer loans by portfolio classes based on accrual status as of December 31,2023:

As of September 30, 2024 As of December 31, 2023 Term Loans Amortized Cost Basis by Origination Year (1) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Puerto Rico and Virgin Islands Regions: Auto loans Accrual Status: Performing $ 481,347 $ 537,007 $ 432,448 $ 297,257 $ 130,203 $ 110,964 $ - $ 1,989,226 $ 1,919,583 Non-Performing 766 4,071 3,528 3,114 1,409 3,234 - 16,122 15,556 Total auto loans $ 482,113 $ 541,078 $ 435,976 $ 300,371 $ 131,612 $ 114,198 $ - $ 2,005,348 $ 1,935,139 Charge-offs on auto loans $ 660 $ 7,573 $ 7,602 $ 4,243 $ 1,364 $ 2,756 $ - $ 24,198 Finance leases Accrual Status: Performing $ 196,167 $ 278,082 $ 208,244 $ 122,051 $ 49,384 $ 36,499 $ - $ 890,427 $ 853,528 Non-Performing - 633 876 610 194 634 - 2,947 3,287 Total finance leases $ 196,167 $ 278,715 $ 209,120 $ 122,661 $ 49,578 $ 37,133 $ - $ 893,374 $ 856,815 Charge-offs on finance leases $ 44 $ 1,926 $ 2,609 $ 1,205 $ 281 $ 928 $ - $ 6,993 Personal loans Accrual Status: Performing $ 107,544 $ 128,563 $ 82,226 $ 20,363 $ 9,998 $ 21,049 $ - $ 369,743 $ 379,161 Non-Performing 108 822 846 165 76 158 - 2,175 1,841 Total personal loans $ 107,652 $ 129,385 $ 83,072 $ 20,528 $ 10,074 $ 21,207 $ - $ 371,918 $ 381,002 Charge-offs on personal loans $ 249 $ 5,712 $ 7,503 $ 1,683 $ 540 $ 1,527 $ - $ 17,214 Credit cards Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ 320,263 $ 320,263 $ 329,212 Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ 320,263 $ 320,263 $ 329,212 Charge-offs on credit cards $ - $ - $ - $ - $ - $ - $ 18,593 $ 18,593 Other consumer loans Accrual Status: Performing $ 53,663 $ 44,603 $ 19,600 $ 5,892 $ 4,017 $ 4,502 $ 8,735 $ 141,012 $ 147,913 Non-Performing 267 773 332 70 19 220 145 1,826 1,689 Total other consumer loans $ 53,930 $ 45,376 $ 19,932 $ 5,962 $ 4,036 $ 4,722 $ 8,880 $ 142,838 $ 149,602 Charge-offs on other consumer loans $ 685 $ 7,496 $ 3,870 $ 950 $ 234 $ 435 $ 486 $ 14,156 Total Accrual Status: Performing $ 838,721 $ 988,255 $ 742,518 $ 445,563 $ 193,602 $ 173,014 $ 328,998 $ 3,710,671 $ 3,629,397 Non-Performing 1,141 6,299 5,582 3,959 1,698 4,246 145 23,070 22,373 Total consumer loans $ 839,862 $ 994,554 $ 748,100 $ 449,522 $ 195,300 $ 177,260 $ 329,143 $ 3,733,741 $ 3,651,770 Charge-offs on total consumer loans $ 1,638 $ 22,707 $ 21,584 $ 8,081 $ 2,419 $ 5,646 $ 19,079 $ 81,154 (1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of September 30, 2024 As of December 31, 2023 Term Loans Amortized Cost Basis by Origination Year (1) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Florida Region: Auto loans Accrual Status: Performing $ - $ - $ - $ - $ - $ 306 $ - $ 306 $ 1,105 Non-Performing - - - - - 3 - 3 12 Total auto loans $ - $ - $ - $ - $ - $ 309 $ - $ 309 $ 1,117 Charge-offs on auto loans $ - $ - $ - $ - $ - $ 75 $ - $ 75 Finance leases Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ - $ - $ - Non-Performing - - - - - - - - - Total finance leases $ - $ - $ - $ - $ - $ - $ - $ - $ - Charge-offs on finance leases $ - $ - $ - $ - $ - $ - $ - $ - Personal loans Accrual Status: Performing $ 1,823 $ 47 $ - $ 71 $ - $ - $ - $ 1,941 $ 273 Non-Performing - - - - - - - - - Total personal loans $ 1,823 $ 47 $ - $ 71 $ - $ - $ - $ 1,941 $ 273 Charge-offs on personal loans $ - $ - $ - $ - $ - $ - $ - $ - Credit cards Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ - $ - $ - Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ - $ - $ - Charge-offs on credit cards $ - $ - $ - $ - $ - $ - $ - $ - Other consumer loans Accrual Status: Performing $ 897 $ 53 $ - $ 217 $ 317 $ 1,994 $ 1,840 $ 5,318 $ 4,446 Non-Performing - - - - - 17 16 33 59 Total other consumer loans $ 897 $ 53 $ - $ 217 $ 317 $ 2,011 $ 1,856 $ 5,351 $ 4,505 Charge-offs on other consumer loans $ - $ - $ - $ - $ - $ - $ - $ - Total Accrual Status: Performing $ 2,720 $ 100 $ - $ 288 $ 317 $ 2,300 $ 1,840 $ 7,565 $ 5,824 Non-Performing - - - - - 20 16 36 71 Total consumer loans $ 2,720 $ 100 $ - $ 288 $ 317 $ 2,320 $ 1,856 $ 7,601 $ 5,895 Charge-offs on total consumer loans $ - $ - $ - $ - $ - $ 75 $ - $ 75 (1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of September 30, 2024 As of December 31, 2023 Term Loans Amortized Cost Basis by Origination Year (1) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total Total (In thousands) Total: Auto loans Accrual Status: Performing $ 481,347 $ 537,007 $ 432,448 $ 297,257 $ 130,203 $ 111,270 $ - $ 1,989,532 $ 1,920,688 Non-Performing 766 4,071 3,528 3,114 1,409 3,237 - 16,125 15,568 Total auto loans $ 482,113 $ 541,078 $ 435,976 $ 300,371 $ 131,612 $ 114,507 $ - $ 2,005,657 $ 1,936,256 Charge-offs on auto loans $ 660 $ 7,573 $ 7,602 $ 4,243 $ 1,364 $ 2,831 $ - $ 24,273 Finance leases Accrual Status: Performing $ 196,167 $ 278,082 $ 208,244 $ 122,051 $ 49,384 $ 36,499 $ - $ 890,427 $ 853,528 Non-Performing - 633 876 610 194 634 - 2,947 3,287 Total finance leases $ 196,167 $ 278,715 $ 209,120 $ 122,661 $ 49,578 $ 37,133 $ - $ 893,374 $ 856,815 Charge-offs on finance leases $ 44 $ 1,926 $ 2,609 $ 1,205 $ 281 $ 928 $ - $ 6,993 Personal loans Accrual Status: Performing $ 109,367 $ 128,610 $ 82,226 $ 20,434 $ 9,998 $ 21,049 $ - $ 371,684 $ 379,434 Non-Performing 108 822 846 165 76 158 - 2,175 1,841 Total personal loans $ 109,475 $ 129,432 $ 83,072 $ 20,599 $ 10,074 $ 21,207 $ - $ 373,859 $ 381,275 Charge-offs on personal loans $ 249 $ 5,712 $ 7,503 $ 1,683 $ 540 $ 1,527 $ - $ 17,214 Credit cards Accrual Status: Performing $ - $ - $ - $ - $ - $ - $ 320,263 $ 320,263 $ 329,212 Non-Performing - - - - - - - - - Total credit cards $ - $ - $ - $ - $ - $ - $ 320,263 $ 320,263 $ 329,212 Charge-offs on credit cards $ - $ - $ - $ - $ - $ - $ 18,593 $ 18,593 Other consumer loans Accrual Status: Performing $ 54,560 $ 44,656 $ 19,600 $ 6,109 $ 4,334 $ 6,496 $ 10,575 $ 146,330 $ 152,359 Non-Performing 267 773 332 70 19 237 161 1,859 1,748 Total other consumer loans $ 54,827 $ 45,429 $ 19,932 $ 6,179 $ 4,353 $ 6,733 $ 10,736 $ 148,189 $ 154,107 Charge-offs on other consumer loans $ 685 $ 7,496 $ 3,870 $ 950 $ 234 $ 435 $ 486 $ 14,156 Total Accrual Status: Performing $ 841,441 $ 988,355 $ 742,518 $ 445,851 $ 193,919 $ 175,314 $ 330,838 $ 3,718,236 $ 3,635,221 Non-Performing 1,141 6,299 5,582 3,959 1,698 4,266 161 23,106 22,444 Total consumer loans $ 842,582 $ 994,654 $ 748,100 $ 449,810 $ 195,617 $ 179,580 $ 330,999 $ 3,741,342 $ 3,657,665 Charge-offs on total consumer loans $ 1,638 $ 22,707 $ 21,584 $ 8,081 $ 2,419 $ 5,721 $ 19,079 $ 81,229 (1) Excludes accrued interest receivable.

As of September 30, 2024 and December 31, 2023, the balance of revolving loans converted to term loans was no t material. Accrued interest receivable on loans totaled $ 55.1 million as of September 30, 2024 ($ 62.3 million as of December 31, 2023), was reported as part of accrued interest receivable on loans and investment securities in the consolidated statements of financial condition, and is excluded from the estimate of credit losses.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables present information about collateral dependent loans that were individually evaluated for purposes of determining the ACL as of September 30, 2024 and December 31, 2023 :

As of September 30, 2024 Collateral Dependent Loans - With Allowance Collateral Dependent Loans - With No Related Allowance Collateral Dependent Loans - Total Amortized Cost Related Allowance Amortized Cost Amortized Cost Related Allowance (In thousands) Residential mortgage loans: Conventional residential mortgage loans $ 23,450 $ 1,040 $ - $ 23,450 $ 1,040 Commercial loans: Construction loans 3,224 230 956 4,180 230 Commercial mortgage loans 5,019 133 42,347 47,366 133 C&I loans 13,348 1,330 6,527 19,875 1,330 Consumer loans: Personal loans 28 1 - 28 1 Other consumer loans 123 9 - 123 9 $ 45,192 $ 2,743 $ 49,830 $ 95,022 $ 2,743

As of December 31, 2023 Collateral Dependent Loans - With Allowance Collateral Dependent Loans - With No Related Allowance Collateral Dependent Loans - Total Amortized Cost Related Allowance Amortized Cost Amortized Cost Related Allowance (In thousands) Residential mortgage loans: Conventional residential mortgage loans $ 25,355 $ 1,732 $ - $ 25,355 $ 1,732 Commercial loans: Construction loans - - 956 956 - Commercial mortgage loans 4,454 135 40,683 45,137 135 C&I loans 9,390 1,563 6,780 16,170 1,563 Consumer loans: Personal loans 28 1 - 28 1 Other consumer loans 123 12 - 123 12 $ 39,350 $ 3,443 $ 48,419 $ 87,769 $ 3,443

The underlying collateral for residential mortgage and consumer collateral dependent loans consisted of single-family residential properties, and for commercial and construction loans consisted primarily of office buildings, multifamily residential properties, and retail establishments. The weighted-average loan-to-value coverage for collateral dependent loans as of September 30, 2024 was 72 %, compared to 65 % as of December 31, 2023, mainly related to the inflow to nonaccrual status of a $ 16.5 million commercial relationship in the Puerto Rico region in the food retail industry, with a loan-to-value over 100 %, classified as collateral dependent, partially offset by the sale of an $ 8.2 million nonaccrual C&I loan in the Puerto Rico region, which resulted in a $ 1.2 million charge- off that had been previously reserved.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Purchases and Sales of Loans In the ordinary course of business, the Corporation enters into securitization transactions and whole loan sales with GNMA and GSEs, such as FNMA and FHLMC. During the first nine months of 2024, loans pooled into GNMA MBS amounted to approximately $ 87.4 million, compared to $ 102.9 million, for the first nine months of 2023, for which the Corporation recognized a net gain on sale of $ 3.7 million and $ 2.2 million, respectively. Also, during the first nine months of 2024 and 2023, the Corporation sold approximately $ 25.8 million and $ 28.6 million, respectively, of performing residential mortgage loans to GSEs, for which the Corporation recognized a net gain on sale of $ 0.6 million and $ 0.7 million, respectively. The Corporation’s continuing involvement with the loans that it sells consists primarily of servicing the loans. In addition, the Corporation agrees to repurchase loans if it breaches any of the representations and warranties included in the sale agreement. These representations and warranties are consistent with the GSEs’ selling and servicing guidelines ( i.e. , ensuring that the mortgage was properly underwritten according to established guidelines). For loans pooled into GNMA MBS, the Corporation, as servicer, holds an option to repurchase individual delinquent loans issued on or after January 1, 2003, when certain delinquency criteria are met. This option gives the Corporation the unilateral ability, but not the obligation, to repurchase the delinquent loans at par without prior authorization from GNMA. Since the Corporation is considered to have regained effective control over the loans, it is required to recognize the loans and a corresponding repurchase liability regardless of its intent to repurchase the loans. As of September 30, 2024 and December 31, 2023, rebooked GNMA delinquent loans that were included in the residential mortgage loan portfolio amounted to $ 6.6 million and $ 7.9 million, respectively. During the first nine months of 2024 and 2023, the Corporation repurchased, pursuant to the aforementioned repurchase option, $ 1.7 million and $ 2.5 million, respectively, of loans previously pooled into GNMA MBS. The principal balance of these loans is fully guaranteed, and the risk of loss related to the repurchased loans is generally limited to the difference between the delinquent interest payment advanced to GNMA, which is computed at the loan’s interest rate, and the interest payments reimbursed by FHA, which are computed at a pre-determined debenture rate. Repurchases of GNMA loans allow the Corporation, among other things, to maintain acceptable delinquency rates on outstanding GNMA pools and remain as a seller and servicer in good standing with GNMA. Historically, losses on these repurchases of GNMA delinquent loans have been immaterial and no provision has been made at the time of sale. Loan sales to FNMA and FHLMC are without recourse in relation to the future performance of the loans. The Corporation’s risk of loss with respect to these loans is also minimal as these repurchased loans are generally performing loans with documentation deficiencies. During the first nine months of 2024, the Corporation purchased commercial loan participations in the Florida region totaling $ 178.2 million, which consisted of approximately $ 164.5 million in the C&I portfolio and $ 13.7 million in the commercial mortgage portfolio, compared to C&I loan participations purchased in the Florida region totaling $ 61.3 million during the same period of 2023. In addition, during the first nine months of 2024, the Corporation purchased commercial mortgage loan participations in the Puerto Rico region totaling $ 38.9 million. During the first nine months of 2024, the Corporation recognized a $ 10.0 million recovery associated with the bulk sale of fully charged-off consumer loans. There were no significant sales of loans during the first nine months of 2023, other than the sales of conforming residential mortgage loans mentioned above. In addition, during the first nine months of 2024, the Corporation sold the aforementioned $ 8.2 million nonaccrual C&I loan in the Puerto Rico region, net of a $ 1.2 million charge-off.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Loan Portfolio Concentration The Corporation’s primary lending area is Puerto Rico. The Corporation’s banking subsidiary, FirstBank, also lends in the USVI and the BVI markets and in the United States (principally in the state of Florida). Of the total gross loans held for investment portfolio of $ 12.4 billion as of September 30, 2024, credit risk concentration was approximately 80 % in Puerto Rico, 17 % in the U.S., and 3 % in the USVI and the BVI. As of September 30, 2024, the Corporation had $ 213.9 million outstanding in loans extended to the Puerto Rico government, its municipalities and public corporations, compared to $ 187.7 million as of December 31, 2023. As of September 30, 2024, approximately $ 132.2 million consisted of loans extended to municipalities in Puerto Rico that are general obligations supported by assigned property tax revenues, and $ 22.2 million of loans which are supported by one or more specific sources of municipal revenues. The vast majority of revenues of the municipalities included in the Corporation’s loan portfolio are independent of budgetary subsidies provided by the Puerto Rico central government. These municipalities are required by law to levy special property taxes in such amounts as are required to satisfy the payment of all of their respective general obligation bonds and notes. In addition to loans extended to municipalities, the Corporation’s exposure to the Puerto Rico government as of September 30, 2024 included $ 8.8 million in loans granted to an affiliate of the Puerto Rico Electric Power Authority (“PREPA”) and $ 50.7 million in loans to agencies or public corporations of the Puerto Rico government. In addition, as of September 30, 2024, the Corporation had $ 73.5 million in exposure to residential mortgage loans that are guaranteed by the PRHFA, a government instrumentality that has been designated as a covered entity under PROMESA, compared to $ 77.7 million as of December 31, 2023. Residential mortgage loans guaranteed by the PRHFA are secured by the underlying properties and the guarantees serve to cover shortfalls in collateral in the event of a borrower default. The Corporation also has credit exposure to USVI government entities. As of September 30, 2024, the Corporation had $ 48.4 million in loans to USVI government public corporations, compared to $ 90.5 million as of December 31, 2023. As of September 30, 2024, all loans were currently performing and up to date on principal and interest payments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Loss Mitigation Program for Borrowers Experiencing Financial Difficulty The Corporation provides assistance to its customers through a loss mitigation program. Depending upon the nature of a borrower’s financial condition, restructurings or loan modifications through this program are provided, as well as other restructurings of individual C&I, commercial mortgage, construction, and residential mortgage loans. The Corporation may also modify contractual terms to comply with regulations regarding the treatment of certain bankruptcy filings and discharge situations. The loan modifications granted to borrowers experiencing financial difficulty that are associated with payment delays typically include the following: - Forbearance plans – Payments of either interest and/or principal are deferred for a pre-established period of time, generally not exceeding six months in any given year. The deferred interest and/or principal is repaid as either a lump sum payment at maturity date or by extending the loan’s maturity date by the number of forbearance months granted. - Payment plans – Borrowers are allowed to pay the regular monthly payment plus the pre-established delinquent amounts during a period generally not exceeding six months. At the end of the payment plan, the borrower is required to resume making its regularly scheduled loan payments. - Trial modifications – These types of loan modifications are granted for residential mortgage loans. Borrower s continue making reduced monthly payments during the trial period, which is generally of up to six months. The reduced payments that are made by the borrower during the trial period will result in a payment delay with respect to the original contractual terms of the loan since the loan has not yet been contractually modified. After successful completion of the trial period, the mortgage loan is contractually modified. Modifications in the form of a reduction in interest rate, term extension, an other-than-insignificant payment delay, or any combination of these types of loan modifications that have occurred in the current reporting period for a borrower experiencing financial difficulty are disclosed in the tables below. Many factors are considered when evaluating whether there is an other-than- insignificant payment delay, such as the significance of the restructured payment amount relative to the unpaid principal balance or collateral value of the loan or the relative significance of the delay to the original loan terms. The below disclosures relate to loan modifications granted to borrowers experiencing financial difficulty in which there was a change in the timing and/or amount of contractual cash flows in the form of any of the aforementioned types of modifications, including restructurings that resulted in a more-than-insignificant payment delay. These disclosures exclude $ 0.5 million and $ 3.7 million in restructured residential mortgage loans that are government-guaranteed (e.g., FHA/VA loans) and were modified during the quarter and nine-month period ended September 30, 2024, respectively, compared to $ 0.9 million and $ 3.2 million, respectively, for the comparable periods in 2023.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The following tables present the amortized cost basis as of September 30, 2024 and 2023 of loans modified to borrowers experiencing financial difficulty during the quarters and nine-month periods ended September 30, 2024 and 2023, by portfolio classes and type of modification granted, and the percentage of these modified loans relative to the total period-end amortized cost basis of receivables in the portfolio class:

Quarter Ended September 30, 2024 Payment Delay Only Forbearance Payment Plan Trial Modification Interest Rate Reduction Term Extension Combination of Interest Rate Reduction and Term Extension Other Total Percentage of Total by Portfolio Classes (In thousands) Conventional residential mortgage loans $ - $ - $ 87 $ - $ - $ - $ - $ 87 0.00 % Construction loans - - - - 122 - - 122 0.06 % Commercial mortgage loans - - - - - - - - - C&I loans - - - 14 335 4,058 22 (1) 4,429 0.14 % Consumer loans: Auto loans - - - - 41 37 959 (1) 1,037 0.05 % Personal loans - - - - - 40 - 40 0.01 % Credit cards - - - 929 (2) - - - 929 0.29 % Other consumer loans - - - - 77 48 - 125 0.08 % Total modifications $ - $ - $ 87 $ 943 $ 575 $ 4,183 $ 981 $ 6,769

Quarter Ended September 30, 2023 Payment Delay Only Forbearance Payment Plan Trial Modification Interest Rate Reduction Term Extension Combination of Interest Rate Reduction and Term Extension Other Total Percentage of Total by Portfolio Classes (In thousands) Conventional residential mortgage loans $ - $ - $ 401 $ - $ - $ - $ - $ 401 0.01 % Construction loans - - - - - - - - - Commercial mortgage loans - - - - 2,225 - - 2,225 0.10 % C&I loans - - - 192 - - - 192 0.01 % Consumer loans: Auto loans - - - - 74 59 608 (1) 741 0.04 % Personal loans - - - - 67 87 - 154 0.04 % Credit cards - - - 368 (2) - - - 368 0.11 % Other consumer loans - - - - 54 4 4 (1) 62 0.04 % Total modifications $ - $ - $ 401 $ 560 $ 2,420 $ 150 $ 612 $ 4,143

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Nine-Month Period Ended September 30, 2024 Payment Delay Only Forbearance Payment Plan Trial Modification Interest Rate Reduction Term Extension Combination of Interest Rate Reduction and Term Extension Other Total Percentage of Total by Portfolio Classes (In thousands) Conventional residential mortgage loans $ - $ - $ 766 $ - $ 157 $ 58 $ - $ 981 0.04 % Construction loans - - - - 122 - - 122 0.06 % Commercial mortgage loans - - - - 115,703 - - 115,703 4.68 % C&I loans - - - 26 335 4,058 22 (1) 4,441 0.14 % Consumer loans: Auto loans - - - - 319 192 2,512 (1) 3,023 0.15 % Personal loans - - - - 13 127 - 140 0.04 % Credit cards - - - 1,935 (2) - - - 1,935 0.60 % Other consumer loans - - - - 335 185 32 (1) 552 0.37 % Total modifications $ - $ - $ 766 $ 1,961 $ 116,984 $ 4,620 $ 2,566 $ 126,897

Nine-Month Period Ended September 30, 2023 Payment Delay Only Forbearance Payment Plan Trial Modification Interest Rate Reduction Term Extension Combination of Interest Rate Reduction and Term Extension Other Total Percentage of Total by Portfolio Classes (In thousands) Conventional residential mortgage loans $ - $ - $ 610 $ - $ 687 $ 239 $ - $ 1,536 0.05 % Construction loans - - - - - - - - - Commercial mortgage loans - - - - 2,225 30,170 - 32,395 1.40 % C&I loans - - - 192 185 - - 377 0.01 % Consumer loans: Auto loans - - - - 234 153 1,511 (1) 1,898 0.10 % Personal loans - - - - 132 165 - 297 0.08 % Credit cards - - - 1,033 (2) - - - 1,033 0.32 % Other consumer loans - - - - 311 90 28 (1) 429 0.28 % Total modifications $ - $ - $ 610 $ 1,225 $ 3,774 $ 30,817 $ 1,539 $ 37,965 (1) Modification consists of court mandated reduction to 0% interest rate for remaining loan term to borrowers in bankruptcy proceedings unless dismissal occurs. (2) Modification consists of reduction in interest rate and revocation of revolving line privileges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables present by portfolio classes the financial effects of the modifications granted to borrowers experiencing financial difficulty, other than those associated to payment delay, during the quarters and nine-month periods ended September 30, 2024 and 2023. The financial effects of the modifications associated to payment delay were discussed above and, as such, were excluded from the tables below: Quarter Ended September 30, 2024 Combination of Interest Rate Reduction and Term Extension Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) (In thousands) Conventional residential mortgage loans - % - - % - Construction loans - % 208 - % - Commercial mortgage loans - % - - % - C&I loans 14.50 % 178 3.00 % 22 Consumer loans: Auto loans - % 24 3.04 % 26 Personal loans - % - 3.51 % 10 Credit cards 17.48 % - - % - Other consumer loans - % 26 2.30 % 21

Quarter Ended September 30, 2023 Combination of Interest Rate Reduction and Term Extension Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) (In thousands) Conventional residential mortgage loans - % - - % - Construction loans - % - - % - Commercial mortgage loans - % 13 - % - C&I loans 0.45 % - - % - Consumer loans: Auto loans - % 31 2.27 % 25 Personal loans - % 35 3.61 % 41 Credit cards 16.67 % - - % - Other consumer loans - % 22 2.00 % 10

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Nine-Month Period Ended September 30, 2024 Combination of Interest Rate Reduction and Term Extension Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) (In thousands) Conventional residential mortgage loans - % 69 1.80 % 106 Construction loans - % 208 - % - Commercial mortgage loans - % 96 - % - C&I loans 13.82 % 178 3.00 % 22 Consumer loans: Auto loans - % 27 2.62 % 29 Personal loans - % 25 3.09 % 16 Credit cards 17.21 % - - % - Other consumer loans - % 25 3.04 % 18

Nine-Month Period Ended September 30, 2023 Combination of Interest Rate Reduction and Term Extension Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) Weighted-Average Interest Rate Reduction (%) Weighted-Average Term Extension (in months) (In thousands) Conventional residential mortgage loans - % 105 2.95 % 105 Construction loans - % - - % - Commercial mortgage loans - % 13 0.25 % 64 C&I loans 0.45 % 72 - % - Consumer loans: Auto loans - % 27 3.10 % 28 Personal loans - % 35 4.29 % 33 Credit cards 16.27 % - - % - Other consumer loans - % 26 1.74 % 23

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables present by portfolio classes the performance of loans modified during the last twelve months ended September 30, 2024 and during the nine-month period ended September 30, 2023 that were granted to borrowers experiencing financial difficulty: Last Twelve Months Ended September 30, 2024 30-59 60-89 90+ Total Delinquency Current Total (In thousands) Conventional residential mortgage loans $ - $ - $ - $ - $ 1,611 $ 1,611 Construction loans - - - - 122 122 Commercial mortgage loans - - - - 115,703 115,703 C&I loans - - - - 4,441 4,441 Consumer loans: Auto loans 86 156 82 324 3,751 4,075 Personal loans - - - - 205 205 Credit cards 172 46 13 231 2,163 2,394 Other consumer loans 32 37 22 91 461 552 Total modifications $ 290 $ 239 $ 117 $ 646 $ 128,457 $ 129,103

Nine-Month Period Ended September 30, 2023 30-59 60-89 90+ Total Delinquency Current Total (In thousands) Conventional residential mortgage loans $ 71 $ - $ - $ 71 $ 1,465 $ 1,536 Construction loans - - - - - - Commercial mortgage loans - - - - 32,395 32,395 C&I loans - - - - 377 377 Consumer loans: Auto loans 22 - - 22 1,876 1,898 Personal loans 15 - - 15 282 297 Credit cards 149 35 - 184 849 1,033 Other consumer loans 34 17 15 66 363 429 Total modifications $ 291 $ 52 $ 15 $ 358 $ 37,607 $ 37,965

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTE 4 – ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES

The following tables present the activity in the ACL on loans and finance leases by portfolio segment for the indicated periods: Residential Mortgage Loans Construction Loans Commercial Mortgage C&I Loans Consumer Loans Total Quarter Ended September 30, 2024 (In thousands) ACL: Beginning balance $ 46,051 $ 5,646 $ 30,078 $ 34,448 $ 138,309 $ 254,532 Provision for credit losses - (benefit) expense ( 5,476 ) ( 1,659 ) ( 5,914 ) 1,138 28,381 16,470 Charge-offs ( 421 ) - - ( 1,350 ) ( 27,274 ) ( 29,045 ) Recoveries 497 11 41 210 4,280 5,039 Ending balance $ 40,651 $ 3,998 $ 24,205 $ 34,446 $ 143,696 $ 246,996

Residential Mortgage Loans Construction Loans Commercial Mortgage C&I Loans Consumer Loans Total Quarter Ended September 30, 2023 (In thousands) ACL: Beginning balance $ 60,514 $ 4,804 $ 42,427 $ 28,014 $ 131,299 $ 267,058 Provision for credit losses - (benefit) expense ( 3,349 ) ( 642 ) ( 1,344 ) 1,931 14,047 10,643 Charge-offs ( 499 ) ( 4 ) ( 1 ) ( 9 ) ( 19,746 ) ( 20,259 ) Recoveries 534 1,463 75 161 3,940 6,173 Ending balance $ 57,200 $ 5,621 $ 41,157 $ 30,097 $ 129,540 $ 263,615

Residential Mortgage Loans Construction Loans Commercial Mortgage C&I Loans Consumer Loans Total Nine-Month Period Ended September 30, 2024 (In thousands) ACL: Beginning balance $ 57,397 $ 5,605 $ 32,631 $ 33,190 $ 133,020 $ 261,843 Provision for credit losses - (benefit) expense ( 16,533 ) ( 1,642 ) ( 8,900 ) ( 2,890 ) 71,282 41,317 Charge-offs ( 1,428 ) - - ( 2,141 ) ( 81,229 ) ( 84,798 ) Recoveries 1,215 35 474 6,287 20,623 (1) 28,634 Ending balance $ 40,651 $ 3,998 $ 24,205 $ 34,446 $ 143,696 $ 246,996 (1) Includes recoveries totaling $ 10 .0 million associated with the bulk sale of fully charged-off consumer loans and finance leases.

Residential Mortgage Loans Construction Loans Commercial Mortgage C&I Loans Consumer Loans Total Nine-Month Period Ended September 30, 2023 (In thousands) ACL: Beginning balance $ 62,760 $ 2,308 $ 35,064 $ 32,906 $ 127,426 $ 260,464 Impact of adoption of ASU 2022-02 (1) 2,056 - - 7 53 2,116 Provision for credit losses - (benefit) expense ( 6,776 ) 1,420 5,901 3,278 43,846 47,669 Charge-offs ( 2,628 ) ( 42 ) ( 107 ) ( 6,477 ) ( 53,006 ) ( 62,260 ) Recoveries 1,788 1,935 299 383 11,221 15,626 Ending balance $ 57,200 $ 5,621 $ 41,157 $ 30,097 $ 129,540 $ 263,615 (1) Recognized as a result of the adoption of ASU 2022-02, for which the Corporation elected to discontinue the use of a discounted cash flow methodology for restructured accruing loans, which had a corresponding decrease, net of applicable taxes, in beginning retained earnings as of January 1, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Corporation estimates the ACL following the methodologies described in Note 1 – “Nature of Business and Summary of Significant Accounting Policies” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K, as updated by the information contained in this report, for each portfolio segment . The Corporation generally applies probability weights to the baseline and alternative downside economic scenarios to estimate the ACL with the baseline scenario carrying the highest weight. The scenarios that are chosen each quarter and the weighting given to each scenario for the different loan portfolio categories depend on a variety of factors including recent economic events, leading national and regional economic indicators, and industry trends. As of September 30, 2024 and December 31, 2023, the Corporation applied 100% probability to the baseline scenario for the commercial mortgage and construction loan portfolios since certain macroeconomic variables associated with commercial real estate property performance and the commercial real estate (“CRE”) price index, particularly in the Puerto Rico region, are expected to continue to perform in a more favorable manner than the alternative downside economic scenario. At least every other year, the Corporation reviews the credit models used in determining the ACL. Such exercise consists primarily in updating the model with recent historical losses and determining if other changes are required for purposes of estimating credit losses. During the first nine months of 2024, the Corporation completed the aforementioned review for the residential mortgage, auto loan, and finance lease portfolios, primarily for the Puerto Rico region. The residential mortgage loan portfolio, which has recently experienced a historically low level of credit losses, as a result of high collateral values in the Puerto Rico region, resulted in a lower required reserve level. For the auto loan and finance lease portfolios, historical loss trends were updated and resulted in an increase in the required reserve levels as the loss experience in such portfolios have been trending higher towards historical loss experience. As of September 30, 2024, the ACL for loans and finance leases was $ 247.0 million, a decrease of $ 14.8 million, from $ 261.8 million as of December 31, 2023. The ACL for residential mortgage loans decreased by $ 16.7 million, driven by the aforementioned updated historical loss experience used for determining the ACL estimate resulting in a downward revision of estimated loss severities and improvements in the long-term projections of the unemployment rate in the Puerto Rico region, partially offset by newly originated loans. The ACL for commercial and construction loans decreased by $ 8.8 million, mainly due to reserve releases associated with the improved financial condition of certain borrowers and an improvement on the economic outlook of certain macroeconomic variables, particularly variables associated with commercial real estate property performance and the forecasted CRE price index, partially offset by increased volume. Meanwhile, the ACL for consumer loans increased by $ 10.7 million driven by higher charge-off levels and loan portfolio growth, mainly in auto loans. Net charge-offs were $ 24.0 million and $ 56.2 million for the third quarter and first nine months of 2024, respectively, compared to $ 14.1 million and $ 46.6 million, respectively, for the same periods in 2023. The $ 9.9 million increase in net charge-offs for the third quarter of 2024 was driven by an increase in consumer loans and finance leases charge-offs across all major portfolio classes, a $ 1.4 million recovery recorded on a construction loan in the Puerto Rico region during the third quarter of 2023, and a $ 1.2 million charge- off recorded on the sale of a nonaccrual C&I loan in the Puerto Rico region in the third quarter of 2024. The $ 9.5 million increase in net charge-offs for the first nine months of 2024 was driven by the aforementioned increase in consumer loans and finance leases charge-offs, partially offset by the effect during the first nine months of 2024 of both the $ 10.0 million recovery associated with the bulk sale of fully charged-off consumer loans and finance leases and a $ 5.0 million recovery associated with a C&I loan in the Puerto Rico region, and a $ 6.2 million charge-off recorded on a C&I participated loan in the Florida region during the first nine months of 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The tables below present the ACL related to loans and finance leases and the carrying values of loans by portfolio segment as of September 30, 2024 and December 31, 2023: As of September 30, 2024 Residential Mortgage Loans Construction Loans Commercial Mortgage Loans C&I Loans Consumer Loans Total (Dollars in thousands) Total loans held for investment: Amortized cost of loans $ 2,820,147 $ 207,342 $ 2,471,880 $ 3,205,313 $ 3,741,342 $ 12,446,024 Allowance for credit losses 40,651 3,998 24,205 34,446 143,696 246,996 Allowance for credit losses to amortized cost 1.44 % 1.93 % 0.98 % 1.07 % 3.84 % 1.98 %

As of December 31, 2023 Residential Mortgage Loans Construction Loans Commercial Mortgage Loans C&I Loans Consumer Loans Total (Dollars in thousands) Total loans held for investment: Amortized cost of loans $ 2,821,726 $ 214,777 $ 2,317,083 $ 3,174,232 $ 3,657,665 $ 12,185,483 Allowance for credit losses 57,397 5,605 32,631 33,190 133,020 261,843 Allowance for credit losses to amortized cost 2.03 % 2.61 % 1.41 % 1.05 % 3.64 % 2.15 %

In addition, the Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, such as unfunded loan commitments and standby letters of credit for commercial and construction loans, unless the obligation is unconditionally cancellable by the Corporation. See Note 21 – “Regulatory Matters, Commitments and Contingencies” for information on off -balance sheet exposures as of September 30, 2024 and December 31, 2023. The Corporation estimates the ACL for these off-balance sheet exposures following the methodology described in Note 1 – “Nature of Business and Summary of Significant Accounting Policies” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K. As of September 30, 2024, the ACL for off-balance sheet credit exposures amounted to $ 3.5 million, compared to $ 4.6 million as of December 31, 2023. The decrease was driven by an improvement on the economic outlook of certain macroeconomic variables, particularly in variables associated with the CRE price index. The following table presents the activity in the ACL for unfunded loan commitments and standby letters of credit for the quarters and nine-month periods ended September 30, 2024 and 2023:

Quarter Ended Nine-Month Period Ended September 30, September 30, 2024 2023 2024 2023 (In thousands) Beginning balance $ 4,502 $ 4,889 $ 4,638 $ 4,273 Provision for credit losses - (benefit) expense ( 1,041 ) ( 128 ) ( 1,177 ) 488 Ending balance $ 3,461 $ 4,761 $ 3,461 $ 4,761

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 5 – OTHER REAL ESTATE OWNED (“OREO”)

The following table presents the OREO inventory as of the indicated dates: September 30, 2024 December 31, 2023 (In thousands) OREO balances, carrying value: Residential (1) $ 14,451 $ 20,261 Construction 1,125 1,601 Commercial (2) 3,754 10,807 Total $ 19,330 $ 32,669 (1) Excludes $ 7.2 million and $ 16.6 million as of September 30, 2024 and December 31, 2023, respectively, of foreclosures that met the conditions of ASC Subtopic 310-40 “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure,” and are presented as a receivable as part of other assets in the consolidated statements of financial condition. (2) Decrease was mainly associated with the sale of a $ 5.3 million commercial real estate OREO property in Puerto Rico during the first nine months of 2024 at a gain of $ 2.3 million.

See Note 17 – “Fair Value” for information on subsequent measurement adjustments recorded on OREO properties reported as part of “Net gain on OREO operations” in the consolidated statements of income during the quarters and nine-month periods ended September 30, 2024 and 2023.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTE 6 – GOODWILL AND OTHER INTANGIBLES Goodwill Goodwill as of each of September 30, 2024 and December 31, 2023 amounted to $ 38.6 million. The Corporation’s policy is to assess goodwill and other intangibles for impairment on an annual basis during the fourth quarter of each year, and more frequently if events or circumstances lead management to believe that the values of goodwill or other intangibles may be impaired. During the fourth quarter of 2023, management performed a qualitative analysis of the carrying amount of each relevant reporting units’ goodwill and concluded that it is more-likely-than-not that the fair value of the reporting units exceeded their carrying value. This assessment involved identifying the inputs and assumptions that most affect fair value, including evaluating significant and relevant events impacting each reporting entity, and evaluating such factors to determine if a positive assertion can be made that it is more-likely- than-not that the fair value of the reporting units exceeded their carrying amount. As of December 31, 2023, the Corporation concluded that it is more-likely-than-not that the fair value of the reporting units exceeded their carrying value. The Corporation determined that there have been no significant events since the last annual assessment that could indicate potential goodwill impairment on reporting units for which the goodwill is allocated. As a result, no impairment charges for goodwill were recorded during the first nine months of 2024. There were no changes in the carrying amount of goodwill during the quarters and nine-month periods ended September 30, 2024 and 2023.

Other Intangible Assets The following table presents the gross amount and accumulated amortization of the Corporation’s intangible assets subject to amortization as of the indicated dates:

As of As of September 30, 2024 December 31, 2023 (Dollars in thousands) Core deposit intangible: Gross amount $ 87,544 $ 87,544 Accumulated amortization ( 79,284 ) ( 74,161 ) Net carrying amount $ 8,260 $ 13,383 Remaining amortization period (in years) 5.3 6.0

During the quarter and nine-month periods ended September 30, 2024, the Corporation recognized $ 1.4 million and $ 5.1 million, respectively, in amortization expense on its other intangibles subject to amortization, compared to $ 1.9 million and $ 5.9 million for the same periods in 2023, respectively The Corporation amortizes core deposit intangibles based on the projected useful lives of the related deposits. Core deposit intangibles are analyzed annually for impairment, or sooner if events and circumstances indicate possible impairment. Factors that may suggest impairment include customer attrition and run-off. Management is unaware of any events and/or circumstances that would indicate a possible impairment to the core deposit intangibles as of September 30, 2024. The estimated aggregate annual amortization expense related to core deposit intangibles for future periods was as follows as of September 30, 2024

:
(In thousands) Remaining 2024 $ 1,293 2025 3,509 2026 872 2027 872 2028 872 2029 and after 842

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 7 – NON-CONSOLIDATED VARIABLE INTEREST ENTITIES (“VIEs”) AND SERVICING ASSETS The Corporation transfers residential mortgage loans in sale or securitization transactions in which it has continuing involvement, including servicing responsibilities and guarantee arrangements. All such transfers have been accounted for as sales as required by applicable accounting guidance. When evaluating the need to consolidate counterparties to which the Corporation has transferred assets, or with which the Corporation has entered into other transactions, the Corporation first determines if the counterparty is an entity for which a variable interest exists. If no scope exception is applicable and a variable interest exists, the Corporation then evaluates whether it is the primary beneficiary of the VIE and whether the entity should be consolidated or not. Below is a summary of transactions with VIEs for which the Corporation has retained some level of continuing involvement: Trust-Preferred Securities (“TruPS”) In April 2004, FBP Statutory Trust I, a financing trust that is wholly owned by the Corporation, sold to institutional investors $ 100 million of its variable-rate TruPS. FBP Statutory Trust I used the proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $ 3.1 million of FBP Statutory Trust I variable-rate common securities, to purchase $ 103.1 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures. In September 2004, FBP Statutory Trust II, a financing trust that is wholly owned by the Corporation, sold to institutional investors $ 125 million of its variable-rate TruPS. FBP Statutory Trust II used the proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $ 3.9 million of FBP Statutory Trust II variable-rate common securities, to purchase $ 128.9 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures. The debentures, net of related issuance costs, are presented in the Corporation’s consolidated statements of financial condition as other long-term borrowings. These TruPS are variable-rate instruments indexed to 3- month CME Term SOFR plus a tenor spread adjustment of 0.26161 % and the original spread of 2.75 % for the FBP Statutory Trust I and 2.50 % for the FBP Statutory Trust II. The Junior Subordinated Deferrable Debentures mature on June 17, 2034, and September 20, 2034, respectively; however, under certain circumstances, the maturity of Junior Subordinated Deferrable Debentures may be shortened (such shortening would result in a mandatory redemption of the variable-rate TruPS). In September 2024, the Corporation redeemed $ 50.0 million, or 42 %, of outstanding TruPS issued by FBP Statutory Trust II (or $ 48.5 million after excluding the Corporation’s interest in the Trust of approximately $ 1.5 million) at a contractual call price of 100 % as part of the 2024 repurchase program, as further explained in Note 13 – “Stockholders’ Equity” to the unaudited consolidated financial statements herein. As of September 30, 2024 and December 31, 2023, these Junior Subordinated Deferrable Debentures amounted to $ 111.7 million and $ 161.7 million, respectively. The Corporation expects to execute the redemption of the remaining junior subordinated debentures through the end of the fourth quarter of 2025. Under the indentures of these instruments, the Corporation has the right, from time to time, and without causing an event of default, to defer payments of interest on the Junior Subordinated Deferrable Debentures by extending the interest payment period at any time and from time to time during the term of the subordinated debentures for up to twenty consecutive quarterly periods. As of September 30, 2024, the Corporation was current on all interest payments due on its subordinated debt.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Private Label MBS During 2004 and 2005, an unaffiliated party, referred to in this subsection as the seller, established a series of statutory trusts to effect the securitization of mortgage loans and the sale of trust certificates (“private label MBS”). The seller initially provided the servicing for a fee, which is senior to the obligations to pay private label MBS holders. The seller then entered into a sales agreement through which it sold and issued the private label MBS in favor of the Corporation’s banking subsidiary, FirstBank. Currently, the Bank is the sole owner of these private label MBS; the servicing of the underlying residential mortgages that generate the principal and interest cash flows is performed by another third party, which receives a servicing fee. These private label MBS are variable -rate securities indexed to 3-month CME Term SOFR plus a tenor spread adjustment of 0.26161 % and the original spread limited to the weighted-average coupon of the underlying collateral. The principal payments from the underlying loans are remitted to a paying agent (servicer), who then remits interest to the Bank. Interest income is shared to a certain extent with the FDIC, which has an interest only strip (“IO”) tied to the cash flows of the underlying loans and is entitled to receive the excess of the interest income less a servicing fee over the variable rate income that the Bank earns on the securities. The FDIC became the owner of the IO upon its intervention of the seller, a failed financial institution. No recourse agreement exists, and the Bank, as the sole holder of the securities, absorbs all risks from losses on non-accruing loans and repossessed collateral. As of September 30, 2024, the amortized cost and fair value of these private label MBS amounted to $ 6.3 million and $ 4.3 million, respectively, with a weighted-average yield of 6.92 %, which is included as part of the Corporation’s available -for-sale debt securities portfolio, compared to an amortized cost and fair value of $ 7.1 million and $ 4.8 million, respectively, with a weighted average yield of 7.66 % as of December 31, 2023. As described in Note 2 – “Debt Securities,” the ACL on these private label MBS amounted to $ 0.2 million as of September 30, 2024.

Servicing Assets, or Mortgage Servicing Rights (“MSRs”) The Corporation typically transfers first lien residential mortgage loans in conjunction with GNMA securitization transactions in which the loans are exchanged for cash or securities that are readily redeemed for cash proceeds and servicing rights. The securities issued through these transactions are guaranteed by GNMA and, under seller/servicer agreements, the Corporation is required to service the loans in accordance with the issuers’ servicing guidelines and standards. As of September 30, 2024, the Corporation serviced loans securitized through GNMA with a principal balance of $ 2.1 billion. Also, certain conventional conforming loans are sold to FNMA or FHLMC with servicing retained. The Corporation recognizes as separate assets the rights to service loans for others, whether those servicing assets are originated or purchased. MSRs are included as part of other assets in the consolidated statements of financial condition. The changes in MSRs are shown below for the indicated periods:

Quarter Ended September 30, Nine-Month Period Ended September 30, 2024 2023 2024 2023 (In thousands) Balance at beginning of period $ 25,952 $ 28,034 $ 26,941 $ 29,037 Capitalization of servicing assets 525 601 1,632 1,839 Amortization ( 1,060 ) ( 1,035 ) ( 3,135 ) ( 3,265 ) Temporary impairment recoveries - 7 - 12 Other (1) ( 14 ) ( 6 ) ( 35 ) ( 22 ) Balance at end of period $ 25,403 $ 27,601 $ 25,403 $ 27,601 (1) Mainly represents adjustments related to the repurchase of loans serviced for others.

Impairment charges are recognized through a valuation allowance for each individual stratum of servicing assets. The valuation allowance is adjusted to reflect the amount, if any, by which the cost basis of the servicing asset for a given stratum of loans being serviced exceeds its fair value. Any fair value in excess of the cost basis of the servicing asset for a given stratum is not recognized.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Changes in the impairment allowance were as follows for the indicated periods:

Quarter Ended September 30, Nine-Month Period Ended September 30, 2024 2023 2024 2023 (In thousands) Balance at beginning of period $ - $ 7 $ - $ 12 Temporary impairment recoveries - ( 7 ) - ( 12 ) Balance at end of period $ - $ - $ - $ -

The components of net servicing income, included as part of mortgage banking activities in the consolidated statements of income, are shown below for the indicated periods:

Quarter Ended September 30, Nine-Month Period Ended September 30, 2024 2023 2024 2023 (In thousands) Servicing fees $ 2,588 $ 2,606 $ 7,766 $ 7,984 Late charges and prepayment penalties 158 137 528 547 Other (1) ( 14 ) ( 6 ) ( 35 ) ( 22 ) Servicing income, gross 2,732 2,737 8,259 8,509 Amortization and impairment of servicing assets ( 1,060 ) ( 1,028 ) ( 3,135 ) ( 3,253 ) Servicing income, net $ 1,672 $ 1,709 $ 5,124 $ 5,256 (1) Mainly represents adjustments related to the repurchase of loans serviced for others.

The Corporation’s MSRs are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale of the related mortgages for the indicated periods ranged as follows:

Weighted Average Maximum Minimum Nine-Month Period Ended September 30, 2024 Constant prepayment rate: Government-guaranteed mortgage loans 6.8 % 17.1 % 3.2 % Conventional conforming mortgage loans 6.9 % 20.6 % 2.1 % Conventional non-conforming mortgage loans 6.0 % 7.6 % 3.0 % Discount rate: Government-guaranteed mortgage loans 11.5 % 11.5 % 11.5 % Conventional conforming mortgage loans 9.5 % 9.5 % 9.5 % Conventional non-conforming mortgage loans 11.5 % 12.5 % 11.0 % Nine-Month Period Ended September 30, 2023 Constant prepayment rate: Government-guaranteed mortgage loans 6.6 % 11.6 % 4.8 % Conventional conforming mortgage loans 7.4 % 16.0 % 3.8 % Conventional non-conforming mortgage loans 5.9 % 9.0 % 2.1 % Discount rate: Government-guaranteed mortgage loans 11.5 % 11.5 % 11.5 % Conventional conforming mortgage loans 9.5 % 9.5 % 9.5 % Conventional non-conforming mortgage loans 13.0 % 14.0 % 11.5 %

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The weighted averages of the key economic assumptions that the Corporation used in its valuation model and the sensitivity of the current fair value to immediate 10 % and 20 % adverse changes in those assumptions for mortgage loans were as follows as of the indicated dates:

September 30, 2024 December 31, 2023 (In thousands) Carrying amount of servicing assets $ 25,403 $ 26,941 Fair value $ 42,416 $ 45,244 Weighted-average expected life (in years) 7.71 7.79 Constant prepayment rate (weighted-average annual rate) 6.25 % 6.27 % Decrease in fair value due to 10% adverse change $ 847 $ 886 Decrease in fair value due to 20% adverse change $ 1,656 $ 1,731 Discount rate (weighted-average annual rate) 10.71 % 10.68 % Decrease in fair value due to 10% adverse change $ 1,784 $ 1,927 Decrease in fair value due to 20% adverse change $ 3,437 $ 3,712

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10 % variation in assumptions generally cannot be extrapolated because the relationship between the change in assumption and the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the MSR is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the sensitivities .

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTE 8 – DEPOSITS

The following table summarizes deposit balances as of the indicated dates: September 30, 2024 December 31, 2023 (In thousands) Type of account: Non-interest-bearing deposit accounts $ 5,275,733 $ 5,404,121 Interest-bearing checking accounts 3,909,255 3,937,945 Interest-bearing saving accounts 3,575,093 3,596,855 Time deposits 3,067,261 2,833,730 Brokered certificates of deposits (“CDs”) 520,048 783,334 Total $ 16,347,390 $ 16,555,985

The following table presents the remaining contractual maturities of time deposits, including brokered CDs, as of September 30, 2024: Total (In thousands) Three months or less $ 1,089,421 Over three months to six months 774,943 Over six months to one year 902,524 Over one year to two years 526,478 Over two years to three years 82,095 Over three years to four years 119,118 Over four years to five years 70,914 Over five years 21,816 Total $ 3,587,309

Total Puerto Rico and U.S. time deposits with balances of more than $250,000 amounted to $ 1.6 billion and $ 1.4 billion as of September 30, 2024 and December 31, 2023, respectively. This amount does not include brokered CDs that are generally participated out by brokers in shares of less than the FDIC insurance limit. As of each September 30, 2024 and December 31, 2023, unamortized broker placement fees amounted to $ 1.0 million, which are amortized over the contractual maturity of the brokered CDs under the interest method.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTE 9 – ADVANCES FROM THE FEDERAL HOME LOAN BANK (“FHLB”)

The following is a summary of the advances from the FHLB as of the indicated dates: September 30, 2024 December 31, 2023 (In thousands) Long-term Fixed -rate advances from the FHLB (1) $ 500,000 $ 500,000 (1) Weighted-average interest rate of 4.45 % as of each of September 30, 2024 and December 31, 2023, respectively.

Advances from the FHLB mature as follows as of the indicated date: September 30, 2024 (In thousands) Over three months to six months $ 180,000 Over six months to one year 30,000 Over one year to two years 90,000 Over three years to four years 200,000 Total (1) $ 500,000 (1) Average remaining term to maturity of 1.73 years.

NOTE 10 – OTHER LONG-TERM BORROWINGS Junior Subordinated Debentures Junior subordinated debentures, as of the indicated dates, consisted of:

(In thousands) September 30, 2024 December 31, 2023 Long-term floating rate junior subordinated debentures (FBP Statutory Trust I) (1) $ 43,143 $ 43,143 Long-term floating rate junior subordinated debentures (FBP Statutory Trust II) (2) 68,557 118,557 $ 111,700 $ 161,700 (1) Amount represents junior subordinated interest-bearing debentures due in 2034 with a floating interest rate of 2.75 % over 3-month CME Term SOFR plus a 0.26161 % tenor spread adjustment as of September 30, 2024 and December 31, 2023 ( 7.95 % as of September 30, 2024 and 8.39 % as of December 31, 2023). (2) Amount represents junior subordinated interest-bearing debentures due in 2034 with a floating interest rate of 2.50 % over 3-month CME Term SOFR plus a 0.26161 % tenor spread adjustment as of September 30, 2024 and December 31, 2023 ( 7.58 % as of September 30, 2024 and 8.13 % as of December 31, 2023).

See Note 7 – “Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets” and Note 13 – “Stockholders’ Equity” to the unaudited consolidated financial statements herein for additional information on junior subordinated debentures, including the $ 50.0 million redemption of outstanding TruPS issued by FBP Statutory Trust II.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTE 11 – EARNINGS PER COMMON . SHARE

The calculations of earnings per common share for the quarters and nine-month periods ended September 30, 2024 and 2023 are as follows: Quarter Ended Nine-Month Period Ended September 30, September 30, 2024 2023 2024 2023 (In thousands, except per share information) Net income attributable to common stockholders $ 73,727 $ 82,022 $ 223,023 $ 223,375 Weighted-Average Shares: Average common shares outstanding 163,059 176,358 165,041 178,486 Average potential dilutive common shares 813 604 689 658 Average common shares outstanding - assuming dilution 163,872 176,962 165,730 179,144 Earnings per common share: Basic $ 0.45 $ 0.47 $ 1.35 $ 1.25 Diluted $ 0.45 $ 0.46 $ 1.35 $ 1.25

Earnings per common share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares issued and outstanding. Basic weighted-average common shares outstanding exclude unvested shares of restricted stock that do not contain non-forfeitable dividend rights . Potential dilutive common shares consist of unvested shares of restricted stock and performance units (if any of the performance conditions are met as of the end of the reporting period) that do not contain non-forfeitable dividend or dividend equivalent rights using the treasury stock method. This method assumes that proceeds equal to the amount of compensation cost attributable to future services is used to repurchase shares on the open market at the average market price for the period. The difference between the number of potential dilutive shares issued and the shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted earnings per share. Unvested shares of restricted stock outstanding during the period that result in lower potentially dilutive shares issued than shares purchased under the treasury stock method are not included in the computation of dilutive earnings per share since their inclusion would have an antidilutive effect on earnings per share. There were no antidilutive shares of common stock during the quarters and nine-month periods ended September 30, 2024 and 2023.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTE 12 – STOCK-BASED . COMPENSATION

The First Bancorp Omnibus Incentive Plan (the “Omnibus Plan”), which is effective until May 24, 2026, provides for equity-based and non-equity-based compensation incentives (the “awards”). The Omnibus Plan authorizes the issuance of up to 14,169,807 shares of common stock, subject to adjustments for stock splits, reorganizations and other similar events. As of September 30, 2024, there were 2,581,774 authorized shares of common stock available for issuance under the Omnibus Plan. The Corporation’s Board of Directors, based on the recommendation of the Compensation and Benefits Committee of the Board, has the power and authority to determine those eligible to receive awards and to establish the terms and conditions of any awards, subject to various limits and vesting restrictions that apply to individual and aggregate awards. Restricted Stock Under the Omnibus Plan, the Corporation may grant restricted stock to plan participants, subject to forfeiture upon the occurrence of certain events until the dates specified in the participant’s award agreement. While the restricted stock is subject to forfeiture and does not contain non-forfeitable dividend rights, participants may exercise full voting rights with respect to the shares of restricted stock granted to them. The fair value of the shares of restricted stock granted was based on the market price of the Corporation’s common stock on the date of the respective grant. The shares of restricted stocks granted to employees are subject to the following vesting period: fifty percent ( 50 %) of those shares vest on the two-year anniversary of the grant date and the remaining 50 % vest on the three-year anniversary of the grant date. The shares of restricted stock granted to directors are generally subject to vesting on the one-year anniversary of the grant date.

The following table summarizes the restricted stock activity under the Omnibus Plan during the nine-month periods ended September 30, 2024 and 2023: Nine-Month Period Ended September 30, 2024 2023 Number of Weighted- Number of Weighted- shares of Average shares of Average restricted Grant Date restricted Grant Date stock Fair Value stock Fair Value Unvested shares outstanding at beginning of year 889,642 $ 12.30 938,491 $ 9.14 Granted (1) 413,516 17.49 519,794 12.06 Forfeited ( 7,156 ) 13.69 ( 58,454 ) 11.31 Vested ( 276,558 ) 12.36 ( 503,460 ) 6.27 Unvested shares outstanding at end of period 1,019,444 $ 14.38 896,371 $ 12.32 (1) For the nine-month period ended September 30, 2024, includes 16,448 shares of restricted stock awarded to independent directors and 397,068 shares of restricted stock awarded to employees, of which 84,122 shares were granted to retirement-eligible employees and thus charged to earnings as of the grant date. For the nine-month period ended September 30, 2023, includes 25,786 shares of restricted stock awarded to independent directors and 494,008 shares of restricted stock awarded to employees, of which 33,718 shares were granted to retirement-eligible employees and thus charged to earnings as of the grant date.

For the quarter and nine-month period ended September 30, 2024, the Corporation recognized $ 1.3 million and $ 5.0 million, respectively, of stock-based compensation expense related to restricted stock awards, compared to $ 1.3 million and $ 4.3 million for the same periods in 2023. As of September 30, 2024, there was $ 6.0 million of total unrecognized compensation cost related to unvested shares of restricted stock that the Corporation expects to recognize over a weighted-average period of 1.6 years.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Performance Units Under the Omnibus Plan, the Corporation may award performance units to participants, with each unit representing the value of one share of the Corporation’s common stock. These awards, which are granted to executives, do not contain non-forfeitable rights to dividend equivalent amounts and can only be settled in shares of the Corporation’s common stock. Performance units granted during the nine-month periods ended September 30, 2024 and 2023 vest on the third anniversary of the effective date of the award based on actual achievement of two performance metrics weighted equally: relative total shareholder return (“Relative TSR”), compared to companies that comprise the KBW Nasdaq Regional Banking Index, and the achievement of a tangible book value per share (“TBVPS”) goal, which is measured based upon the growth in the tangible book value during the performance cycle, adjusted for certain allowable non-recurring transactions. The participant may earn 50 % of their target opportunity for threshold level performance and up to 150 % of their target opportunity for maximum level performance, based on the individual achievement of each performance goal during a three-year performance cycle. Amounts between threshold, target and maximum performance will vest in a proportional amount. The following table summarizes the performance units activity under the Omnibus Plan during the nine-month periods ended September 30, 2024 and 2023:

Nine-Month Period Ended September 30, 2024 2023 Number Weighted- Number Weighted- of Average of Average Performance Grant Date Performance Grant Date Units Fair Value Units Fair Value Performance units at beginning of year 534,261 $ 12.25 791,923 $ 7.36 Additions (1) 165,487 18.39 216,876 12.24 Vested (2) ( 150,716 ) 11.26 ( 474,538 ) 4.08 Performance units at end of period 549,032 $ 14.37 534,261 $ 12.25 (1) Units granted during the nine-month periods ended September 30, 2024 and 2023 are based on the achievement of the Relative TSR and TBVPS performance goals during a three-year performance cycle beginning January 1, 2024 and January 1, 2023, respectively, and ending on December 31, 2026 and December 31, 2025, respectively. (2) Units vested during the nine-month periods ended September 30, 2024 and 2023 are related to performance units granted in 2021 and 2020, respectively, that met the pre-established target and were settled with shares of common stock reissued from treasury shares.

The fair value of the performance units awarded during the nine-month periods ended September 30, 2024 and 2023, that was based on the TBVPS goal component, was calculated based on the market price of the Corporation’s common stock on the respective date of the grant and assuming attainment of 100% of target opportunity. As of September 30, 2024, there have been no changes in management’s assessment of the probability that the pre-established TBVPS goal will be achieved; as such, no cumulative adjustment to compensation expense has been recognized. The fair value of the performance units awarded, that was based on the Relative TSR component, was calculated using a Monte Carlo simulation. Since the Relative TSR component is considered a market condition, the fair value of the portion of the award based on Relative TSR is not revised subsequent to grant date based on actual performance.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes the valuation assumptions used to calculate the fair value of the Relative TSR component of the performance units granted under the Omnibus Plan during the nine-month periods ended September 30, 2024 and 2023: Nine-Month Period Ended September 30, 2024 2023 Risk-free interest rate (1) 4.41 % 3.98 % Correlation coefficient 73.80 77.16 Expected dividend yield (2) - - Expected volatility (3) 34.65 41.37 Expected life (in years) 2.78 2.79 (1) Based on the yield on zero-coupon U.S. Treasury Separate Trading of Registered Interest and Principal of Securities as of the grant date for a period equal to the simulation term. (2) Assumes that dividends are reinvested at each ex-dividend date. (3) Calculated based on the historical volatility of the Corporation's stock price with a look-back period equal to the simulation term using daily stock prices.

For the quarter and nine-month period ended September 30, 2024, the Corporation recognized $ 0.7 million and $ 1.8 million, respectively, of stock-based compensation expense related to performance units, compared to $ 0.6 million and $ 1.6 million for the same periods in 2023. As of September 30, 2024, there was $ 4.2 million of total unrecognized compensation cost related to unvested performance units that the Corporation expects to recognize over a weighted-average period of 2.0 years. Shares withheld During the first nine months of 2024, the Corporation withheld 137,206 shares (first nine months of 2023 – 288,613 shares) of the restricted stock and performance units that vested during such period to cover the participants’ payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid in cash any fractional share of salary stock to which an officer was entitled. In the consolidated financial statements, the Corporation presents shares withheld for tax purposes as common stock repurchases.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 13 – STOCKHOLDERS’ EQUITY Repurchase Programs On July 24, 2023, the Corporation announced that its Board approved a stock repurchase program, under which the Corporation may repurchase up to $ 225 million of its outstanding common stock. Under this program, the Corporation repurchased 5,846,872 shares of common stock during the first nine months of 2024 through open market transactions at an average price of $ 17.10 for a total cost of approximately $ 100.0 million. As of September 30, 2024, the Corporation has remaining authorization to repurchase approximately $ 50.0 million of common stock under this stock repurchase program. Furthermore, on July 22, 2024, the Corporation announced that its Board of Directors approved a new repurchase program (“the 2024 repurchase program”), under which the Corporation may repurchase up to an additional $ 250 million that could include repurchases of common stock or junior subordinated debentures, which it expects to execute through the end of the fourth quarter of 2025. As of September 30, 2024, the Corporation has remaining authorization to repurchase approximately $ 200.0 million, under the 2024 repurchase program, after the $ 50.0 million redemption of junior subordinated debentures in September 2024, as further explained in Note 7 - “Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets.” Repurchases under these programs may be executed through open market purchases, accelerated share repurchases, privately negotiated transactions or plans, including plans complying with Rule 10b5-1 under the Exchange Act, redemption of junior subordinated debentures (in the case of the 2024 repurchase program), and will be conducted in accordance with applicable legal and regulatory requirements. The Corporation’s repurchase programs are subject to various factors, including the Corporation’s capital position, liquidity, financial performance and alternative uses of capital, stock trading price, and general market conditions. The Corporation’s repurchase programs do not obligate it to acquire any specific number of shares and do not have an expiration date. The repurchase programs may be modified, suspended, or terminated at any time at the Corporation’s discretion. Any repurchased shares of common stock are expected to be held as treasury shares. The Corporation’s holding company has no operations and depends on dividends, distributions and other payments from its subsidiaries to fund dividend payments, stock repurchases, and to fund all payments on its obligations, including debt obligations. Common Stock

The following table shows the change in shares of common stock outstanding for the quarters and nine-month periods ended September 30, 2024 and 2023: Total Number of Shares Quarter Ended Nine-Month Period Ended September 30, September 30, 2024 2023 2024 2023 Common stock outstanding, beginning balance 163,865,453 179,756,622 169,302,812 182,709,059 Common stock repurchased (1) ( 898 ) ( 5,393,236 ) ( 5,984,078 ) ( 9,258,611 ) Common stock reissued under stock-based compensation plan 14,947 23,903 564,232 994,332 Restricted stock forfeited ( 3,692 ) ( 963 ) ( 7,156 ) ( 58,454 ) Common stock outstanding, ending balance 163,875,810 174,386,326 163,875,810 174,386,326 (1) For the quarter and nine-month period ended September 30, 2024 includes 898 and 137,206 shares, respectively of common stock surrendered to cover plan participants' payroll and income taxes. For the quarter and nine-month period ended September 30, 2023 includes 778 and 288,613 shares of common stock surrendered to cover plan participants' payroll and income taxes.

For the quarter and nine-month period ended September 30, 2024, total cash dividends declared on shares of common stock amounted to $ 26.3 million ($ 0.16 per share) and $ 79.7 million ($ 0.48 per share), respectively, compared to $ 24.9 million ($ 0.14 per share) and $ 75.6 million ($ 0.42 per share), respectively, for the same periods of 2023. On October 30, 2024 , the Corporation’s Board of Directors declared a quarterly cash dividend of $ 0.16 per common share. The dividend is payable on December 13, 2024 to shareholders of record at the close of business on November 29, 2024 . The Corporation intends to continue to pay quarterly dividends on common stock. However, the Corporation’s common stock dividends, including the declaration, timing, and amount, remain subject to consideration and approval by the Corporation’s Board Directors at the relevant times.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Preferred Stock The Corporation has 50,000,000 authorized shares of preferred stock with a par value of $ 1.00 , subject to certain terms. This stock may be issued in series and the shares of each series have such rights and preferences as are fixed by the Corporation’s Board of Directors when authorizing the issuance of that particular series and are redeemable at the Corporation’s option. No shares of preferred stock were outstanding as of September 30, 2024 and December 31, 2023. Treasury Stock

The following table shows the change in shares of treasury stock for the quarters and nine-month periods ended September 30, 2024 and 2023: Total Number of Shares Quarter Ended Nine-Month Period Ended September 30, September 30, 2024 2023 2024 2023 Treasury stock, beginning balance 59,797,663 43,906,494 54,360,304 40,954,057 Common stock repurchased 898 5,393,236 5,984,078 9,258,611 Common stock reissued under stock-based compensation plan ( 14,947 ) ( 23,903 ) ( 564,232 ) ( 994,332 ) Restricted stock forfeited 3,692 963 7,156 58,454 Treasury stock, ending balance 59,787,306 49,276,790 59,787,306 49,276,790

FirstBank Statutory Reserve (Legal Surplus) The Puerto Rico Banking Law of 1933, as amended (the “Puerto Rico Banking Law”), requires that a minimum of 10 % of FirstBank’s net income for the year be transferred to a legal surplus reserve until such surplus equals the total of paid-in-capital on common and preferred stock. Amounts transferred to the legal surplus reserve from retained earnings are not available for distribution to the Corporation without the prior consent of the Puerto Rico Commissioner of Financial Institutions. The Puerto Rico Banking Law provides that, when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over receipts must be charged against the undistributed profits of the bank, and the balance, if any, must be charged against the legal surplus reserve, as a reduction thereof. If the legal surplus reserve is not sufficient to cover such balance in whole or in part, the outstanding amount must be charged against the capital account and the Bank cannot pay dividends until it can replenish the legal surplus reserve to an amount of at least 20% of the original capital contributed. FirstBank’s legal surplus reserve, included as part of retained earnings in the Corporation’s consolidated statements of financial condition, amounted to $ 199.6 million as of each of September 30, 2024 and December 31, 2023. There were no transfers to the legal surplus reserve during the first nine months of 2024.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 14 – ACCUMULATED OTHER COMPREHENSIVE LOSS The following table presents the changes in accumulated other comprehensive loss for the quarters and nine-month periods ended September 30, 2024 and 2023:

Changes in Accumulated Other Comprehensive Loss by Component (1) Quarter ended September 30, Nine-Month Period Ended September 30, 2024 2023 2024 2023 (In thousands) Net unrealized holding losses on available-for-sale debt securities: Beginning balance $ ( 645,057 ) $ ( 773,581 ) $ ( 640,552 ) $ ( 805,972 ) Other comprehensive income (loss) (2) 160,054 ( 78,976 ) 155,549 ( 46,585 ) Ending balance $ ( 485,003 ) $ ( 852,557 ) $ ( 485,003 ) $ ( 852,557 ) Adjustment of pension and postretirement benefit plans: Beginning balance $ 1,382 $ 1,194 $ 1,382 $ 1,194 Other comprehensive income (loss) - - - - Ending balance $ 1,382 $ 1,194 $ 1,382 $ 1,194 (1) All amounts presented are net of tax. (2) Net unrealized holding losses on available-for-sale debt securities have no tax effect because securities are either tax-exempt, held by an IBE, or have a full deferred tax asset valuation allowance.

NOTE 15 – EMPLOYEE BENEFIT PLANS The Corporation maintains two frozen qualified noncontributory defined benefit pension plans (the “Pension Plans”), and a related complementary post-retirement benefit plan (the “Postretirement Benefit Plan”) covering medical benefits and life insurance after retirement that it obtained in the Banco Santander Puerto Rico (“BSPR”) acquisition on September 1, 2020. One defined benefit pension plan covers substantially all of BSPR’s former employees who were active before January 1, 2007, while the other defined benefit pension plan covers personnel of an institution previously acquired by BSPR. Benefits are based on salary and years of service. The accrual of benefits under the Pension Plans is frozen to all participants.

The following table presents the components of net periodic (benefit) cost for the indicated periods:

Affected Line Item in the Consolidated Quarter Ended September 30, Nine-Month Period Ended September 30, Statements of Income 2024 2023 2024 2023 (In thousands) Net periodic (benefit) cost, pension plans: Interest cost Other expenses $ 900 $ 950 $ 2,702 $ 2,850 Expected return on plan assets Other expenses ( 1,017 ) ( 886 ) ( 3,053 ) ( 2,657 ) Net periodic (benefit) cost, pension plans ( 117 ) 64 ( 351 ) 193 Net periodic cost, postretirement plan Other expenses 17 7 49 19 Net periodic (benefit) cost $ ( 100 ) $ 71 $ ( 302 ) $ 212

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 16 – INCOME TAXES The Corporation is subject to Puerto Rico income tax on its income from all sources. Under the Puerto Rico Internal Revenue Code, as amended (the “PR Tax Code”), the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns. However, certain subsidiaries that are organized as limited liability companies with a partnership election are treated as pass-through entities for Puerto Rico tax purposes. Furthermore, the Corporation conducts business through certain entities that have special tax treatments, including doing business through an IBE unit of the Bank and through FirstBank Overseas Corporation, each of which are generally exempt from Puerto Rico income taxation under the International Banking Entity Act of Puerto Rico (“IBE Act”), and through a wholly-owned subsidiary that engages in certain Puerto Rico qualified investing and lending activities that have certain tax advantages under Act 60 of 2019. For the third quarter and first nine months of 2024, the Corporation recorded an income tax expense of $ 22.7 million and $ 72.2 million, respectively, compared to $ 27.0 million and $ 89.2 million, respectively, for the same periods of 2023. The decrease in income tax expense for the third quarter of 2024 was mainly due to lower pre-tax income and, to a lesser extent, a lower estimated effective tax rate due to increased business activities with preferential tax treatment under the PR Tax Code and a $ 0.4 million tax contingency accrual release in connection with the expiration of the statute of limitation on some uncertain tax positions. Meanwhile, the decrease in income tax expense for the first nine months of 2024 was driven by a lower estimated effective tax rate due to the aforementioned increased business activities with preferential tax treatment and, to a lesser extent, lower pre-tax income. The Corporation has maintained an effective tax rate lower than the Puerto Rico maximum statutory rate of 37.5 %. The Corporation’s estimated annual effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, was 23.7 % for the first nine months of 2024, compared to 28.2 % for the same period in 2023. Income tax expense also includes USVI income taxes, as well as applicable U.S. federal and state taxes. As a Puerto Rico corporation, FirstBank is treated as a foreign corporation for U.S. and USVI income tax purposes and is generally subject to U.S. and USVI income tax only on its income from sources within the U.S. and USVI or income effectively connected with the conduct of a trade or business in those jurisdictions. Such tax paid in the U.S. and USVI is also creditable against the Corporation’s Puerto Rico tax liability, subject to certain conditions and limitations. For the quarter and nine-month period ended September 30, 2024, FirstBank incurred current income tax expense of approximately $ 2.8 million and $ 7.7 million, respectively, related to its U.S. operations, compared to $ 2.8 million and $ 6.8 million, respectively, for the comparable periods in 2023.

As of September 30, 2024, the Corporation had a net deferred tax asset of $ 137.5 million, net of a valuation allowance of $ 121.6 million against the deferred tax asset, compared to a net deferred tax asset of $ 150.1 million, net of a valuation allowance of $ 139.2 million, as of December 31, 2023. The net deferred tax asset of the Corporation’s banking subsidiary, FirstBank, amounted to $ 137.5 million as of September 30, 2024, net of a valuation allowance of $ 93.4 million, compared to a net deferred tax asset of $ 150.1 million, net of a valuation allowance of $ 111.4 million, as of December 31, 2023. The decrease in the net deferred tax asset was mainly related to the usage of alternative minimum tax credits and the decrease in the ACL. Meanwhile, the decrease in the valuation allowance was related primarily to changes in the market value of available-for -sale debt securities which resulted in an equal change in the net deferred tax asset without impacting earnings. The Corporation maintains a full valuation allowance for its deferred tax assets associated with capital loss carryforwards, NOL carryforwards and unrealized losses of available-for-sale debt securities. See Note 22 – “Income Taxes,” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K for information on the tax treatment of net operating loss (“NOL”) carryforwards and dividend received deduction under the PR Tax Code and the limitation under Section 382 of the U.S. Internal Revenue Code.

The Corporation accounts for uncertain tax positions under the provisions of ASC Topic 740, “Income Taxes.” The Corporation’s policy is to report interest and penalties related to unrecognized tax positions in income tax expense. As of September 30, 2024, the Corporation had $ 0.4 million in uncertain tax positions acquired from BSPR, which includes $ 0.1 million of accrued interest and penalties, which, if recognized, would decrease the effective income tax rate in future periods. The amount of unrecognized tax benefits may increase or decrease in the future for various reasons, including adding amounts for current tax year positions, expiration of open income tax returns due to the statute of limitations, changes in management’s judgment about the level of uncertainty, the status of examinations, litigation and legislative activity, and the addition or elimination of uncertain tax positions. The statute of limitations under the PR Tax Code is four years after a tax return is due or filed, whichever is later; the statute of limitations for U.S. and USVI income tax purposes is three years after a tax return is due or filed, whichever is later. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Corporation’s liability for income taxes. Any such adjustment could be material to the results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. For U.S. and USVI income tax purposes, all tax years subsequent to 2020 remain open to examination. For Puerto Rico tax purposes, all tax years subsequent to 2018 remain open to examination.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 17 – FAIR VALUE Fair Value Measurement ASC Topic 820, “Fair Value Measurement,” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This guidance also establishes a fair value hierarchy for classifying assets and liabilities, which is based on whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. One of three levels of inputs may be used to measure fair value: Level 1 Valuations of Level 1 assets and liabilities are obtained from readily-available pricing sources for market transactions involving identical assets or liabilities in active markets. Level 2 Va luations of Level 2 assets and liabilities are based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Va luations of Level 3 assets and liabilities are based on unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined by using pricing models for which the determination of fair value requires significant management judgment as to the estimation. See Note 25 – “Fair Value,” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K for a description of the valuation methodologies used to measure financial instruments at fair value on a recurring basis. There were no transfers of assets and liabilities measured at fair value between Level 1 and Level 2 measurements during the quarters and nine-month periods ended September 30, 2024 and 2023.

Assets and liabilities measured at fair value on a recurring basis are summarized below as of September 30, 2024 and December 31, 2023: As of September 30, 2024 As of December 31, 2023 Fair Value Measurements Using Fair Value Measurements Using Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (In thousands) Assets: Debt securities available for sale: U.S. Treasury securities $ 98,612 $ - $ - $ 98,612 $ 135,393 $ - $ - $ 135,393 Noncallable U.S. agencies debt securities - 700,299 - 700,299 - 433,437 - 433,437 Callable U.S. agencies debt securities - 1,462,866 - 1,462,866 - 1,874,960 - 1,874,960 MBS - 2,626,116 4,321 (1) 2,630,437 - 2,779,994 4,785 (1) 2,784,779 Puerto Rico government obligation - - 1,567 1,567 - - 1,415 1,415 Other investments - - 1,000 1,000 - - - - Equity securities 5,012 - - 5,012 4,893 - - 4,893 Derivative assets - 322 - 322 - 341 - 341 Liabilities: Derivative liabilities - 392 - 392 - 317 - 317 (1) Related to private label MBS.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The table below presents a reconciliation of the beginning and ending balances of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters and nine-month periods ended September 30, 2024 and 2023: Quarter Ended September 30, Nine-Month Period Ended September 30, 2024 2023 2024 2023 Level 3 Instruments Only Securities Available for Sale (1) Securities Available for Sale (1) Securities Available for Sale (1) Securities Available for Sale (1) (In thousands) Beginning balance $ 7,099 $ 7,357 $ 6,200 $ 8,495 Total gains (losses): Included in other comprehensive income (loss) (unrealized) 178 ( 722 ) 592 ( 903 ) Included in earnings (unrealized) (2) 36 ( 32 ) 45 ( 7 ) Purchases - - 1,000 - Principal repayments and amortization (3) ( 425 ) ( 237 ) ( 949 ) ( 1,219 ) Ending balance $ 6,888 $ 6,366 $ 6,888 $ 6,366 _______ (1) Amounts mostly related to private label MBS. (2) Changes in unrealized gains (losses) included in earnings were recognized within provision for credit losses – expense and relate to assets still held as of the reporting date. (3) For the nine-month period ended September 30, 2023 includes a $ 0.5 million repayment of a matured debt security.

The tables below present quantitative information for significant assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of September 30, 2024 and December 31, 2023: September 30, 2024 Fair Value Valuation Technique Unobservable Input Range Weighted Average Minimum Maximum (Dollars in thousands) Available-for-sale debt securities: Private label MBS $ 4,321 Discounted cash flows Discount rate 15.7 % 15.7 % 15.7 % Prepayment rate 0.0 % 4.6 % 3.0 % Projected cumulative loss rate 1.1 % 4.6 % 3.8 % Puerto Rico government obligation $ 1,567 Discounted cash flows Discount rate 12.1 % 12.1 % 12.1 % Projected cumulative loss rate 23.8 % 23.8 % 23.8 %

December 31, 2023 Fair Value Valuation Technique Unobservable Input Range Weighted Average Minimum Maximum (Dollars in thousands) Available-for-sale debt securities: Private label MBS $ 4,785 Discounted cash flows Discount rate 16.1 % 16.1 % 16.1 % Prepayment rate 0.0 % 6.9 % 3.7 % Projected cumulative loss rate 0.1 % 10.9 % 4.2 % Puerto Rico government obligation $ 1,415 Discounted cash flows Discount rate 14.1 % 14.1 % 14.1 % Projected cumulative loss rate 25.8 % 25.8 % 25.8 %

Information about Sensitivity to Changes in Significant Unobservable Inputs Private label MBS: The significant unobservable inputs in the valuation include probability of default, the loss severity assumption, and prepayment rates. Shifts in those inputs would result in different fair value measurements. Increases in the probability of default, loss severity assumptions, and prepayment rates in isolation would generally result in an adverse effect on the fair value of the instruments. The Corporation modeled meaningful and possible shifts of each input to assess the effect on the fair value estimation. Puerto Rico Government Obligation: The significant unobservable input used in the fair value measurement is the assumed loss rate of the underlying residential mortgage loans that collateralize a pass-through MBS guaranteed by the PRHFA. A significant increase (decrease) in the assumed rate would lead to a (lower) higher fair value estimate. See Note 2 – “Debt Securities” for information on the methodology used to calculate the fair value of these debt securities.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Additionally, fair value is used on a non-recurring basis to evaluate certain assets in accordance with GAAP.

For the quarter and nine-month period ended September 30, 2024, the Corporation recorded losses or valuation adjustments for assets recognized at fair value on a non-recurring basis and still held at September 30, 2024, as shown in the following table: Carrying value as of September 30, 2024 Related to losses recorded for the Quarter Ended September 30, 2024 Related to losses recorded for the Nine-Month Period Ended September 30, 2024 Losses recorded for the Quarter Ended September 30, 2024 Losses recorded for the Nine-Month Period Ended September 30, 2024 (In thousands) Level 3: Loans receivable (1) $ 5,910 $ 22,204 $ ( 386 ) $ ( 1,441 ) OREO (2) 752 1,437 ( 33 ) ( 108 ) (1) Consists mainly of collateral dependent commercial and construction loans. The Corporation generally measured losses based on the fair value of the collateral. The Corporation derived the fair values from external appraisals that took into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g., absorption rates), which are not market observable. The haircuts applied on appraisals were of 4 % for the nine-month period ended September 30, 2024. (2) The Corporation derived the fair values from appraisals that took into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g., absorption rates and net operating income of income producing properties), which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio. The haircuts applied ranged from 2 % to 44 % for the quarter and nine-month period ended September 30, 2024.

For the quarter and nine-month period ended September 30, 2023, the Corporation recorded losses or valuation adjustments for assets recognized at fair value on a non-recurring basis and still held at September 30, 2023, as shown in the following table: Carrying value as of September 30, 2023 Related to (losses) gains recorded for the Quarter Ended September 30, 2023 Related to losses recorded for the Nine-Month Period Ended September 30, 2023 (Losses) gains recorded for the Quarter Ended September 30, 2023 Losses recorded for the Nine-Month Period Ended September 30, 2023 (In thousands) Level 3: Loans receivable (1) $ 16,655 $ 24,933 $ ( 2,495 ) $ ( 9,234 ) OREO (2) 1,085 2,124 ( 169 ) ( 205 ) Level 2: Loans held for sale (3) $ 8,961 $ 8,961 $ 16 $ ( 57 ) (1) Consists mainly of collateral dependent commercial and construction loans. The Corporation generally measured losses based on the fair value of the collateral. The Corporation derived the fair values from external appraisals that took into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g., absorption rates), which are not market observable. The haircuts applied on appraisals ranged from 1 % to 22 % for the nine-month period ended September 30, 2023. (2) The Corporation derived the fair values from appraisals that took into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g., absorption rates and net operating income of income producing properties), which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio. The haircuts applied ranged from 2 % to 27 % for the quarter and nine-month period ended September 30, 2023. (3) The Corporation derived the fair value of these loans based on published secondary market prices of MBS with similar characteristics.

See Note 25 – “Fair Value,” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K for qualitative information regarding the fair value measurements for Level 3 financial instruments measured at fair value on a nonrecurring basis.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables present the carrying value, estimated fair value and estimated fair value level of the hierarchy of financial instruments as of September 30, 2024 and December 31, 2023: Total Carrying Amount in Statement of Financial Condition as of September 30, 2024 Fair Value Estimate as of September 30, 2024 Level 1 Level 2 Level 3 (In thousands) Assets: Cash and due from banks and money market investments (amortized cost) $ 685,371 $ 685,371 $ 685,371 $ - $ - Available-for-sale debt securities (fair value) 4,894,781 4,894,781 98,612 4,789,281 6,888 Held-to-maturity debt securities: Held-to-maturity debt securities (amortized cost) 323,142 Less: ACL on held-to-maturity debt securities ( 1,119 ) Held-to-maturity debt securities, net of ACL $ 322,023 316,854 - 222,248 94,606 Equity securities (amortized cost) 47,420 47,420 - 47,420 (1) - Other equity securities (fair value) 5,012 5,012 5,012 - - Loans held for sale (lower of cost or market) 12,641 12,729 - 12,729 - Loans held for investment: Loans held for investment (amortized cost) 12,446,024 Less: ACL for loans and finance leases ( 246,996 ) Loans held for investment, net of ACL $ 12,199,028 12,100,106 - - 12,100,106 MSRs (amortized cost) 25,403 42,416 - - 42,416 Derivative assets (fair value) (2) 322 322 - 322 - Liabilities: Deposits (amortized cost) $ 16,347,390 $ 16,358,466 $ - $ 16,358,466 $ - Long-term advances from the FHLB (amortized cost) 500,000 503,960 - 503,960 - Other long-term borrowings (amortized cost) 111,700 113,088 - - 113,088 Derivative liabilities (fair value) (2) 392 392 - 392 - (1) Includes FHLB stock with a carrying value of $ 34.0 million, which is considered restricted. (2) Includes interest rate swap agreements, interest rate caps, forward contracts, interest rate lock commitments, and forward loan sales commitments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Total Carrying Amount in Statement of Financial Condition as of December 31, 2023 Fair Value Estimate as of December 31, 2023 Level 1 Level 2 Level 3 (In thousands) Assets: Cash and due from banks and money market investments (amortized cost) $ 663,164 $ 663,164 $ 663,164 $ - $ - Available-for-sale debt securities (fair value) 5,229,984 5,229,984 135,393 5,088,391 6,200 Held-to-maturity debt securities: Held-to-maturity debt securities (amortized cost) 354,178 Less: ACL on held-to-maturity debt securities ( 2,197 ) Held-to-maturity debt securities, net of ACL $ 351,981 346,132 - 235,239 110,893 Equity securities (amortized cost) 44,782 44,782 - 44,782 (1) - Other equity securities (fair value) 4,893 4,893 4,893 - - Loans held for sale (lower of cost or market) 7,368 7,476 - 7,476 - Loans held for investment: Loans held for investment (amortized cost) 12,185,483 Less: ACL for loans and finance leases ( 261,843 ) Loans held for investment, net of ACL $ 11,923,640 11,762,855 - - 11,762,855 MSRs (amortized cost) 26,941 45,244 - - 45,244 Derivative assets (fair value) (2) 341 341 - 341 - Liabilities: Deposits (amortized cost) $ 16,555,985 $ 16,565,435 $ - $ 16,565,435 $ - Long-term advances from the FHLB (amortized cost) 500,000 500,522 - 500,522 - Other long-term borrowings (amortized cost) 161,700 159,999 - - 159,999 Derivative liabilities (fair value) (2) 317 317 - 317 - (1) Includes FHLB stock with a carrying value of $ 34.6 million, which is considered restricted. (2) Includes interest rate swap agreements, interest rate caps, forward contracts and interest rate lock commitments.

The short-term nature of certain assets and liabilities result in their carrying value approximating fair value. These include cash and cash due from banks and other short-term assets, such as FHLB stock. Certain assets, the most significant being premises and equipment, goodwill and other intangible assets, are not considered financial instruments and are not included above. Accordingly, this fair value information is not intended to, and does not, represent the Corporation’s underlying value. Many of these assets and liabilities that are subject to the disclosure requirements are not actively traded, requiring management to estimate fair values. These estimates necessarily involve the use of assumptions and judgment about a wide variety of factors, including but not limited to, relevancy of market prices of comparable instruments, expected future cash flows, and appropriate discount rates.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 18 – REVENUE FROM CONTRACTS WITH CUSTOMERS Revenue Recognition In accordance with ASC Topic 606, “Revenue from Contracts with Customers” (“ASC Topic 606”), revenues are recognized when control of promised goods or services is transferred to customers and in an amount that reflects the consideration to which the Corporation expects to be entitled in exchange for those goods or services. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Corporation assesses the goods or services that are promised within each contract, identifies the respective performance obligations, and assesses whether each promised good or service is distinct. The Corporation then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Disaggregation of Revenue The following tables summarize the Corporation’s revenue, which includes net interest income on financial instruments that is outside of ASC Topic 606 and non-interest income, disaggregated by type of service and business segment for the quarters and nine- month periods ended September 30, 2024 and 2023:

Quarter ended September 30, 2024 Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Treasury and Investments United States Operations Virgin Islands Operations Total (In thousands) Net interest income (loss) (1) $ 13,590 $ 146,585 $ 19,932 $ ( 1,634 ) $ 19,007 $ 4,584 $ 202,064 Service charges and fees on deposit accounts - 5,226 3,556 - 149 753 9,684 Insurance commission income - 2,824 - - 75 104 3,003 Card and processing income - 10,851 10 - 10 897 11,768 Other service charges and fees 55 979 842 - 698 157 2,731 Not in scope of ASC Topic 606 (1) 3,353 1,334 306 238 19 66 5,316 Total non-interest income 3,408 21,214 4,714 238 951 1,977 32,502 Total Revenue (Loss) $ 16,998 $ 167,799 $ 24,646 $ ( 1,396 ) $ 19,958 $ 6,561 $ 234,566

Quarter ended September 30, 2023 Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Treasury and Investments United States Operations Virgin Islands Operations Total (In thousands) Net interest income (loss) (1) $ 18,279 $ 147,066 $ 13,212 $ ( 4,055 ) $ 19,749 $ 5,477 $ 199,728 Service charges and fees on deposit accounts - 5,286 3,406 - 155 705 9,552 Insurance commission income - 2,596 - - 68 126 2,790 Card and processing income - 9,982 24 - 23 812 10,841 Other service charges and fees 50 1,262 853 - 615 163 2,943 Not in scope of ASC Topic 606 (1) 2,971 1,044 185 ( 3 ) ( 14 ) ( 13 ) 4,170 Total non-interest income (loss) 3,021 20,170 4,468 ( 3 ) 847 1,793 30,296 Total Revenue (Loss) $ 21,300 $ 167,236 $ 17,680 $ ( 4,058 ) $ 20,596 $ 7,270 $ 230,024

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) Nine-Month Period Ended September 30, 2024 Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Treasury and Investments United States Operations Virgin Islands Operations Total (In thousands) Net interest income loss (1) $ 43,745 $ 446,801 $ 49,787 $ ( 13,017 ) $ 56,139 $ 14,757 $ 598,212 Service charges and fees on deposit accounts - 15,761 10,584 - 452 2,274 29,071 Insurance commission income - 10,621 - - 161 514 11,296 Card and processing income - 31,561 52 - 119 2,871 34,603 Other service charges and fees 154 2,995 2,736 - 1,932 451 8,268 Not in scope of ASC Topic 606 (1) 9,934 4,145 659 419 22 106 15,285 Total non-interest income 10,088 65,083 14,031 419 2,686 6,216 98,523 Total Revenue (Loss) $ 53,833 $ 511,884 $ 63,818 $ ( 12,598 ) $ 58,825 $ 20,973 $ 696,735

Nine-Month Period Ended September 30, 2023 Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Treasury and Investments United States Operations Virgin Islands Operations Total (In thousands) Net interest income (loss) (1) $ 61,427 $ 427,407 $ 41,085 $ ( 7,502 ) $ 60,369 $ 17,642 $ 600,428 Service charges and fees on deposit accounts - 15,859 9,886 - 492 2,143 28,380 Insurance commission income - 9,700 - - 175 509 10,384 Card and processing income - 30,035 74 - 103 2,682 32,894 Other service charges and fees 244 3,922 2,801 - 1,858 714 9,539 Not in scope of ASC Topic 606 (1) 8,913 2,909 4,027 1,837 221 ( 19 ) 17,888 Total non-interest income 9,157 62,425 16,788 1,837 2,849 6,029 99,085 Total Revenue (Loss) $ 70,584 $ 489,832 $ 57,873 $ ( 5,665 ) $ 63,218 $ 23,671 $ 699,513 (1) Most of the Corporation’s revenue is not within the scope of ASC Topic 606. The guidance explicitly excludes net interest income from financial assets and liabilities, as well as other non-interest income from loans, leases, investment securities and derivative financial instruments. For the nine-month period ended September 30, 2024, revenue not within the scope of ASC Topic 606 includes $ 1.5 million in insurance proceeds, of which $ 0.8 million was received in the third quarter related to a 2020 outstanding insurance claim. For the nine-month period ended September 30, 2023, revenue not within the scope of ASC Topic 606 includes a $ 3.6 million gain recognized from a legal settlement and a $ 1.6 million gain on the repurchase of $ 21.4 million in junior subordinated debentures.

For the quarters and nine-month periods ended September 30, 2024 and 2023, most of the Corporation’s revenue within the scope of ASC Topic 606 was related to performance obligations satisfied at a point in time. See Note 26 – “Revenue from Contracts with Customers,” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K for a discussion of major revenue streams under the scope of ASC Topic 606.

Contract Balances As of September 30, 2024 and December 31, 2023, there were no contract assets recorded on the Corporation’s consolidated financial statements. Moreover, the balances of contract liabilities as of such dates were not significant. Other The Corporation also did not have any material contract acquisition costs and did not make any significant judgments or estimates in recognizing revenue for financial reporting purposes.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 19 – SEGMENT INFORMATION Based upon the Corporation’s organizational structure and the information provided to the Chief Executive Officer and management, the operating segments are based primarily on the Corporation’s lines of business for its operations in Puerto Rico, the Corporation’s principal market, and by geographic areas for its operations outside of Puerto Rico. As of September 30, 2024, the Corporation had six reportable segments: Mortgage Banking; Consumer (Retail) Banking; Commercial and Corporate Banking; Treasury and Investments; United States Operations; and Virgin Islands Operations. Management determined the reportable segments based on the internal structure used to evaluate performance and to assess where to allocate resources. Other factors, such as the Corporation’s organizational chart, nature of the products, distribution channels, and the economic characteristics of the products, were also considered in the determination of the reportable segments. The Mortgage Banking segment consists of the origination, sale, and servicing of a variety of residential mortgage loans. The Mortgage Banking segment also acquires and sells mortgages in the secondary markets. The Consumer (Retail) Banking segment consists of the Corporation’s consumer lending and deposit -taking activities conducted mainly through its branch network and loan centers. The Commercial and Corporate Banking segment consists of the Corporation’s lending and other services for large customers represented by specialized and middle-market clients and the government sector. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, and floor plan financings, as well as other products, such as cash management and business management services. The Treasury and Investments segment is responsible for the Corporation’s investment portfolio and treasury functions that are executed to manage and enhance liquidity. This segment lends funds to the Commercial and Corporate Banking, the Mortgage Banking, the Consumer (Retail) Banking, and the United States Operations segments to finance their lending activities and borrows from those segments. The Consumer (Retail) Banking segment also lends funds to other segments. The interest rates charged or credited by the Treasury and Investments and the Consumer (Retail) Banking segments are allocated based on market rates. The difference between the allocated interest income or expense and the Corporation’s actual net interest income from centralized management of funding costs is reported in the Treasury and Investments segment. The United States Operations segment consists of all banking activities conducted by FirstBank in the United States mainland, including commercial and consumer banking services. The Virgin Islands Operations segment consists of all banking activities conducted by the Corporation in the USVI and the BVI, including commercial and consumer banking services. The accounting policies of the segments are the same as those referred to in Note 1 – “Nature of Business and Summary of Significant Accounting Policies,” to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K. The Corporation evaluates the performance of the segments based on net interest income, the provision for credit losses, non- interest income and direct non-interest expenses. The segments are also evaluated based on the average volume of their interest- earning assets less the ACL.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables present information about the reportable segments for the indicated periods: Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Banking Treasury and Investments United States Operations Virgin Islands Operations Total (In thousands) Quarter ended September 30, 2024: Interest income $ 31,997 $ 96,478 $ 74,065 $ 28,099 $ 37,049 $ 6,987 $ 274,675 Net (charge) credit for transfer of funds ( 18,407 ) 93,854 ( 54,133 ) ( 18,687 ) ( 2,627 ) - - Interest expense - ( 43,747 ) - ( 11,046 ) ( 15,415 ) ( 2,403 ) ( 72,611 ) Net interest income (loss) 13,590 146,585 19,932 ( 1,634 ) 19,007 4,584 202,064 Provision for credit losses - (benefit) expense ( 4,982 ) 28,003 ( 6,524 ) ( 36 ) ( 1,010 ) ( 206 ) 15,245 Non-interest income 3,408 21,214 4,714 238 951 1,977 32,502 Direct non-interest expenses 5,983 44,984 10,659 1,039 9,242 7,005 78,912 Segment income (loss) $ 15,997 $ 94,812 $ 20,511 $ ( 2,399 ) $ 11,726 $ ( 238 ) $ 140,409 Average earning assets $ 2,128,619 $ 3,516,590 $ 4,041,142 $ 5,790,707 $ 2,172,677 $ 386,687 $ 18,036,422

Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Banking Treasury and Investments United States Operations Virgin Islands Operations Total (In thousands) Quarter ended September 30, 2023: Interest income $ 31,208 $ 90,976 $ 68,138 $ 32,146 $ 33,560 $ 7,377 $ 263,405 Net (charge) credit for transfer of funds ( 12,929 ) 96,836 ( 54,926 ) ( 27,817 ) ( 1,164 ) - - Interest expense - ( 40,746 ) - ( 8,384 ) ( 12,647 ) ( 1,900 ) ( 63,677 ) Net interest income (loss) 18,279 147,066 13,212 ( 4,055 ) 19,749 5,477 199,728 Provision for credit losses - (benefit) expense ( 3,288 ) 13,707 ( 7,235 ) 32 873 307 4,396 Non-interest income (loss) 3,021 20,170 4,468 ( 3 ) 847 1,793 30,296 Direct non-interest expenses 5,201 43,431 9,658 958 8,535 6,647 74,430 Segment income (loss) $ 19,387 $ 110,098 $ 15,257 $ ( 5,048 ) $ 11,188 $ 316 $ 151,198 Average earning assets $ 2,127,641 $ 3,336,158 $ 3,769,370 $ 6,382,276 $ 2,041,662 $ 406,499 $ 18,063,606

Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Banking Treasury and Investments United States Operations Virgin Islands Operations Total (In thousands) Nine-Month Period Ended September 30, 2024 Interest income $ 94,886 $ 286,412 $ 219,091 $ 85,069 $ 108,227 $ 21,740 $ 815,425 Net (charge) credit for transfer of funds ( 51,141 ) 289,577 ( 169,304 ) ( 61,979 ) ( 7,153 ) - - Interest expense - ( 129,188 ) - ( 36,107 ) ( 44,935 ) ( 6,983 ) ( 217,213 ) Net interest income (loss) 43,745 446,801 49,787 ( 13,017 ) 56,139 14,757 598,212 Provision for credit losses - (benefit) expense ( 15,036 ) 69,497 ( 10,610 ) ( 45 ) ( 4,452 ) ( 337 ) 39,017 Non-interest income 10,088 65,083 14,031 419 2,686 6,216 98,523 Direct non-interest expenses 18,988 132,317 29,353 3,094 27,444 20,618 231,814 Segment income (loss) $ 49,881 $ 310,070 $ 45,075 $ ( 15,647 ) $ 35,833 $ 692 $ 425,904 Average earnings assets $ 2,123,814 $ 3,492,399 $ 4,036,197 $ 5,844,335 $ 2,126,742 $ 406,248 $ 18,029,735

Mortgage Banking Consumer (Retail) Banking Commercial and Corporate Banking Treasury and Investments United States Operations Virgin Islands Operations Total (In thousands) Nine-Month Period Ended September 30, 2023 Interest income $ 94,720 $ 261,139 $ 195,837 $ 89,140 $ 96,772 $ 20,397 $ 758,005 Net (charge) credit for transfer of funds ( 33,293 ) 260,715 ( 154,752 ) ( 70,095 ) ( 2,575 ) - - Interest expense - ( 94,447 ) - ( 26,547 ) ( 33,828 ) ( 2,755 ) ( 157,577 ) Net interest income (loss) 61,427 427,407 41,085 ( 7,502 ) 60,369 17,642 600,428 Provision for credit losses - (benefit) expense ( 7,623 ) 42,600 ( 2,096 ) 7 9,545 ( 305 ) 42,128 Non-interest income 9,157 62,425 16,788 1,837 2,849 6,029 99,085 Direct non-interest expenses 15,821 126,872 28,363 2,828 25,341 20,203 219,428 Segment income (loss) $ 62,386 $ 320,360 $ 31,606 $ ( 8,500 ) $ 28,332 $ 3,773 $ 437,957 Average earnings assets $ 2,147,521 $ 3,251,286 $ 3,751,359 $ 6,321,540 $ 2,049,281 $ 381,655 $ 17,902,642

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals for the indicated periods: Quarter Ended September 30, Nine-Month Period Ended September 30, 2024 2023 2024 2023 (In thousands) Net income: Total income for segments $ 140,409 $ 151,198 $ 425,904 $ 437,957 Other operating expenses (1) 44,023 42,208 130,726 125,395 Income before income taxes 96,386 108,990 295,178 312,562 Income tax expense 22,659 26,968 72,155 89,187 Total consolidated net income $ 73,727 $ 82,022 $ 223,023 $ 223,375 Average assets: Total average earning assets for segments $ 18,036,422 $ 18,063,606 $ 18,029,735 $ 17,902,642 Average non-earning assets 846,952 832,374 845,662 845,837 Total consolidated average assets $ 18,883,374 $ 18,895,980 $ 18,875,397 $ 18,748,479 (1) Expenses pertaining to corporate administrative functions that support the operating segment, but are not specifically attributable to or managed by any segment, are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

NOTE 20 – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION Supplemental statement of cash flows information is as follows for the indicated periods:

Nine-Month Period Ended September 30, 2024 2024 2023 (In thousands) Cash paid for: Interest $ 206,895 $ 143,792 Income tax 68,322 88,258 Operating cash flow from operating leases 12,994 12,939 Non-cash investing and financing activities: Additions to OREO 7,635 14,951 Additions to auto and other repossessed assets 45,266 48,245 Capitalization of servicing assets 1,632 1,839 Loan securitizations 85,893 100,735 Loans held for investment transferred to held for sale 118 3,255 Loans held for sale transferred to held for investment - 3,265 Right-of-use assets obtained in exchange for operating lease liabilities, net of lease terminations 8,943 3,042 Payable related to unsettled common stock repurchases - 1,310 Redemption of investment in FBP Statutory Trust II 1,500 662

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 21 – REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES Regulatory Matters The Corporation and FirstBank are each subject to various regulatory capital requirements imposed by the U.S. federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Corporation’s financial statements and activities. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s and FirstBank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgments and adjustment by the regulators with respect to minimum capital requirements, components, risk weightings, and other factors. As of September 30, 2024 and December 31, 2023, the Corporation and FirstBank exceeded the minimum regulatory capital ratios for capital adequacy purposes and FirstBank exceeded the minimum regulatory capital ratios to be considered a well-capitalized institution under the regulatory framework for prompt corrective action. As of September 30, 2024, management does not believe that any condition has changed or event has occurred that would have changed the institution’s status. The Corporation and FirstBank compute risk-weighted assets using the standardized approach required by the U.S. Basel III capital rules (“Basel III rules”). The Basel III rules require the Corporation to maintain an additional capital conservation buffer of 2.5 % on certain regulatory capital ratios to avoid limitations on both (i) capital distributions ( e.g. , repurchases of capital instruments, dividends and interest payments on capital instruments) and (ii) discretionary bonus payments to executive officers and heads of major business lines. As part of its response to the impact of COVID-19, on March 31, 2020, the federal banking agencies issued an interim final rule that provided the option to temporarily delay the effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule provides that, at the election of a qualified banking organization, the day one impact to retained earnings plus 25 % of the change in the ACL (as defined in the final rule) from January 1, 2020 to December 31, 2021 will be delayed for two years and phased-in at 25 % per year beginning on January 1, 2022 over a three-year period, resulting in a total transition period of five years. Accordingly, as of September 30, 2024, the capital measures of the Corporation and the Bank included $ 48.6 million associated with the CECL day one impact to retained earnings plus 25 % of the increase in the ACL (as defined in the interim final rule) from January 1, 2020 to December 31, 2021, and $ 16.2 million remains excluded to be phased-in on January 1, 2025.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) The regulatory capital position of the Corporation and FirstBank as of September 30, 2024 and December 31, 2023, which reflects the delay in the full effect of CECL on regulatory capital, were as follows:

Regulatory Requirements Actual For Capital Adequacy Purposes To be Well -Capitalized Thresholds Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of September 30, 2024 Total Capital (to Risk-Weighted Assets) First BanCorp. $ 2,399,483 18.25 % $ 1,051,684 8.0 % N/A N/A FirstBank $ 2,367,463 18.01 % $ 1,051,456 8.0 % $ 1,314,320 10.0 % CET1 Capital (to Risk-Weighted Assets) First BanCorp. $ 2,126,527 16.18 % $ 591,572 4.5 % N/A N/A FirstBank $ 2,102,892 16.00 % $ 591,444 4.5 % $ 854,308 6.5 % Tier I Capital (to Risk-Weighted Assets) First BanCorp. $ 2,126,527 16.18 % $ 788,763 6.0 % N/A N/A FirstBank $ 2,202,892 16.76 % $ 788,592 6.0 % $ 1,051,456 8.0 % Leverage ratio First BanCorp. $ 2,126,527 10.96 % $ 775,896 4.0 % N/A N/A FirstBank $ 2,202,892 11.36 % $ 775,647 4.0 % $ 969,558 5.0 % As of December 31, 2023 Total Capital (to Risk-Weighted Assets) First BanCorp. $ 2,403,319 18.57 % $ 1,035,589 8.0 % N/A N/A FirstBank $ 2,376,003 18.36 % $ 1,035,406 8.0 % $ 1,294,257 10.0 % CET1 Capital (to Risk-Weighted Assets) First BanCorp. $ 2,084,432 16.10 % $ 528,519 4.5 % N/A N/A % FirstBank $ 2,113,995 16.33 % $ 582,416 4.5 % $ 841,267 6.5 % Tier I Capital (to Risk-Weighted Assets) First BanCorp. $ 2,084,432 16.10 % $ 776,692 6.0 % N/A N/A FirstBank $ 2,213,995 17.11 % $ 776,554 6.0 % $ 1,035,406 8.0 % Leverage ratio First BanCorp. $ 2,084,432 10.78 % $ 773,615 4.0 % N/A N/A FirstBank $ 2,213,995 11.45 % $ 773,345 4.0 % $ 966,682 5.0 %

Commitments The Corporation enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments may include commitments to extend credit and standby letters of credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since certain commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause. As of September 30, 2024, commitments to extend credit amounted to approximately $ 2.1 billion, of which $ 0.8 billion relates to retail credit card loans. In addition, commercial and financial standby letters of credit as of September 30, 2024 amounted to approximately $ 67.5 million.

Contingencies As of September 30, 2024, First BanCorp. and its subsidiaries were defendants in various legal proceedings, claims and other loss contingencies arising in the ordinary course of business. On at least a quarterly basis, the Corporation assesses its liabilities and contingencies in connection with threatened and outstanding legal proceedings, claims and other loss contingencies utilizing the latest information available. For legal proceedings, claims and other loss contingencies where it is both probable that the Corporation will incur a loss and the amount can be reasonably estimated, the Corporation establishes an accrual for the loss. Once established, the accrual is adjusted as appropriate to reflect any relevant developments. For legal proceedings, claims and other loss contingencies where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Any estimate involves significant judgment, given the varying stages of the proceedings (including the fact that some of them are currently in preliminary stages), the existence in some of the current proceedings of multiple defendants whose share of liability has yet to be determined, the numerous unresolved issues in the proceedings, and the inherent uncertainty of the various potential outcomes of such proceedings. Accordingly, the Corporation’s estimate will change from time to time, and actual losses may be more or less than the current estimate. While the final outcome of legal proceedings, claims, and other loss contingencies is inherently uncertain, based on information currently available, management believes that the final disposition of the Corporation’s legal proceedings, claims and other loss contingencies, to the extent not previously provided for, will not have a material adverse effect on the Corporation’s consolidated financial position as a whole. If management believes that, based on available information, it is at least reasonably possible that a material loss (or material loss in excess of any accrual) will be incurred in connection with any legal contingencies, the Corporation discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as appropriate, if such an estimate can be made, or discloses that an estimate cannot be made. Based on the Corporation’s assessment as of September 30, 2024, no such disclosures were necessary. In 2023, the FDIC issued a final rule to impose a special assessment to recover certain estimated losses to the Deposit Insurance Fund (“DIF”) arising from the closures of Silicon Valley Bank and Signature Bank. The estimated losses will be recovered through quarterly special assessments collected from certain insured depository institutions, including the Bank, and collection began during the quarter ended June 30, 2024. In connection with updates made by the FDIC to the initial estimated losses to the DIF, the Corporation recorded charges of $ 1.1 million during the nine-month period ended September 30, 2024 in the consolidated statements of income as part of “FDIC deposit insurance” expenses. As of September 30, 2024, the Corporation’s total estimated FDIC special assessment amounted to $ 7.4 million, of which $ 1.6 million has been paid. The Corporation continues to monitor the FDIC’s estimated loss to the DIF, which could affect the amount of its accrued liability.

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) NOTE 22 – FIRST BANCORP. (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

The following condensed financial information presents the financial position of First BanCorp. at the holding company level only as of September 30, 2024 and December 31, 2023, and the results of its operations for the quarters and nine-month periods ended September 30, 2024 and 2023: Statements of Financial Condition As of September 30, As of December 31, 2024 2023 (In thousands) Assets Cash and due from banks $ 11,384 $ 11,452 Other investment securities 1,275 825 Investment in First Bank Puerto Rico, at equity 1,777,250 1,627,172 Investment in First Bank Insurance Agency, at equity 23,425 18,376 Investment in FBP Statutory Trust I 1,289 1,289 Investment in FBP Statutory Trust II (1) 2,061 3,561 Dividends receivable 9 713 Other assets 649 476 Total assets $ 1,817,342 $ 1,663,864 Liabilities and Stockholders’ Equity Liabilities: Long-term borrowings (1) $ 111,700 $ 161,700 Accounts payable and other liabilities 4,757 4,555 Total liabilities 116,457 166,255 Stockholders’ equity 1,700,885 1,497,609 Total liabilities and stockholders’ equity $ 1,817,342 $ 1,663,864 (1) In September 2024, the Corporation redeemed $ 50.0 million, or 42 %, of outstanding TruPS issued by FBP Statutory Trust II (or $ 48.5 million after excluding the Corporation’s interest in the Trust of approximately $ 1.5 million), as part of the 2024 repurchase program, as further explained in Note 7 - “Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets” and Note 13 - “Stockholders' Equity.”

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Statements of Income Quarter Ended Nine-Month Period Ended September 30, September 30, 2024 2023 2024 2023 (In thousands) Income Interest income on money market investments $ 49 $ 77 $ 199 $ 187 Dividend income from banking subsidiaries 78,704 82,178 240,853 239,980 Dividend income from nonbanking subsidiaries - - - 12,000 Gain on early extinguishment of debt - - - 1,605 Other income 97 101 298 304 Total income 78,850 82,356 241,350 254,076 Expense Interest expense on long-term borrowings 3,235 3,345 9,921 10,135 Other non-interest expenses 398 452 1,300 1,324 Total expense 3,633 3,797 11,221 11,459 Income before income taxes and equity in undistributed earnings of subsidiaries 75,217 78,559 230,129 242,617 Income tax expense - - 1 1 Equity in undistributed earnings of subsidiaries (distributions in excess of earnings) ( 1,490 ) 3,463 ( 7,105 ) ( 19,241 ) Net income $ 73,727 $ 82,022 $ 223,023 $ 223,375 Other comprehensive income (loss), net of tax 160,054 ( 78,976 ) 155,549 ( 46,585 ) Comprehensive income $ 233,781 $ 3,046 $ 378,572 $ 176,790

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (“MD&A”)

The following MD&A relates to the accompanying unaudited consolidated financial statements of First BanCorp. (the “Corporation,” “we,” “us,” “our,” or “First BanCorp.”) and should be read in conjunction with such financial statements and the notes

thereto, and our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report on Form 10- K”). This section also presents certain financial measures that are not based on generally accepted accounting principles in the United States of America (“GAAP”). See “Non-GAAP Financial Measures and Reconciliations” below for information about why non- GAAP financial measures are presented, reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures, and references to non-GAAP financial measures reconciliations presented in other sections.

EXECUTIVE SUMMARY

First BanCorp. is a diversified financial holding company headquartered in San Juan, Puerto Rico, offering a full range of financial products to consumers and commercial customers through various subsidiaries. First BanCorp. is the holding company of FirstBank

Puerto Rico (“FirstBank” or the “Bank”) and FirstBank Insurance Agency. Through its wholly -owned subsidiaries, the Corporation operates in Puerto Rico, the United States Virgin Islands (“USVI”), the British Virgin Islands (“BVI”), and the state of Florida, concentrating on commercial banking, residential mortgage loans, credit cards, personal loans, small loans, auto loans and leases, and insurance agency activities.

Recent Developments

Economy and Market Update

In light of the progress on inflation and a slower than expected growth in the labor market during August 2024, on September 18, 2024 and November 11, 2024, the Federal Reserve (the “FED”) decided to lower the target range for the federal funds rate by 50 basis

points (“bps”) and 25 bps, respectively. Nevertheless, recent indicators suggest that the U.S. economy has continued to expand at a solid pace. Nonfarm payrolls for the month of September 2024 added 254,000 jobs and the unemployment rate fell to 4.1%. Gross Domestic Product (“GDP”) rose at a seasonally adjusted annual rate of 2.8% in the third quarter of 2024, slightly below estimates which were expecting a 3% growth.

The Corporation maintained positive credit performance and stable deposit trends and made good progress on its capital deployment strategy. The U.S. and Puerto Rico economy remain on solid footing driven by positive labor market trends and increased business activity. This environment continues to support credit demand and has enabled the Corporation to have its strongest quarter of commercial loan originations for the year thus far. The Corporation remains focused on expanding existing relationships, building loan pipeline, and adopting new platforms to enable future growth for the remainder of 2024 and for 2025.

The market expectations are for the FED to continue lowering rates and the federal funds rate is expected to be at 4.4% at the end of this year and at 3.4% at the end of 2025. The Corporation expects the net interest margin to remain flat for the fourth quarter of 2024 but to improve for 2025. The Corporation expects the downward repricing of the commercial variable-rate portfolio to be compensated by the repricing of the cash flows from the lower yielding investment portfolio, the redeployment of cash inflows from repayments of investment securities into loans or higher yielding securities, and the repricing of deposits. In addition, the replacement of higher cost of funding such as brokered certificates of deposit (“CDs”) and junior subordinated debentures with lower cost of funding is expected to improve the net interest margin as well.

Repurchase of Trust -Preferred Securities (“TruPS”)

In September 2024, the Corporation redeemed $50.0 million, or 42%, of outstanding TruPS issued by FBP Statutory Trust II (or $48.5 million after excluding the Corporation’s interest in the Trust of approximately $1.5 million) at a contractual call price of 100%.

The redemption was part of the repurchase program approved in the third quarter of 2024 under which the Corporation may repurchase up to $250 million of common stock or junior subordinated debentures, which it expects to execute through the end of the fourth quarter of 2025. As of September 30, 2024, the Corporation has remaining authorization of approximately $250.0 million in combination with the remaining availability under the 2023 stock repurchase program.

CRITICAL ACCOUNTING POLICIES AND PRACTICES

The accounting principles of the Corporation and the methods of applying these principles conform to GAAP. In preparing the consolidated financial statements, management is required to make estimates, assumptions, and judgments that affect the amounts recorded for assets, liabilities and contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Note 1 of the Notes to Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K, as supplemented by this Quarterly Report on Form 10-Q, including this MD&A, describes the significant accounting policies we used in our consolidated financial statements.

Not all significant accounting policies require management to make difficult, subjective or complex judgments. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of uncertainty and have had or are

reasonably likely to have a material impact on the Corporation’s financial condition and results of operations. The Corporation’s critical accounting estimates that are particularly susceptible to significant changes include, but are not limited to, the following: (i)
the allowance for credit losses (“ACL”); (ii) valuation of financial instruments; and (iii) income taxes. For more information regarding valuation of financial instruments and income tax policies, assumptions, and judgments, see “Critical Accounting Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” in the 2023 Annual Report on Form 10-K. The “Risk Management – Credit Risk Management” section of this MD&A details the policies, assumptions, and judgments related to the ACL. Actual results could differ from estimates and assumptions if different outcomes or conditions prevail.

Overview of Results of Operations

The Corporation’s results of operations depend primarily on its net interest income, which is the difference between the interest income earned on its interest-earning assets, including investment securities and loans, and the interest expense incurred on its interest-bearing liabilities, including deposits and borrowings. Net interest income is affected by various factors, including the following: (i) the interest rate environment; (ii) the volumes, mix, and composition of interest-earning assets, and interest-bearing liabilities; and (iii) the repricing characteristics of these assets and liabilities. The Corporation ’s results of operations also depend on the provision for credit losses, non-interest expenses (such as personnel, occupancy, professional service fees, the FDIC insurance premium, and other costs), non-interest income (mainly service charges and fees on deposits, cards and processing income, and insurance income), gains (losses) on mortgage banking activities, and income taxes.

For the quarter and nine-month period ended September 30, 2024, the Corporation had net income of $73.7 million ($0.45 per diluted common share) and $223.0 million ($1.35 per diluted common share), respectively, compared to $82.0 million ($0.46 per diluted common share) and $223.4 million ($1.25 per diluted common share), respectively, for the comparable periods in 2023. Other relevant selected financial indicators for the periods presented are included below:| | | | | Quarter Ended September 30, | | | Nine-Month Period Ended September 30, | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | 2024 | | 2023 | | 2024 | | 2023 | |
| Key Performance Indicator: | | (1) | | | | | | | | | |
| Return on Average Assets | | (2) | | 1.55 | % | 1.72 | % | 1.57 | % | 1.59 | % |
| Return on Average Common Equity | | | (3) | 18.31 | | 20.70 | | 19.52 | | 19.00 | |
| Efficiency Ratio | (4) | | | 52.41 | | 50.71 | | 52.03 | | 49.29 | |

The key drivers of the Corporation’s GAAP financial results for the quarter ended September 30, 2024, compared to the third quarter of 2023, include the following:

●Net interest income for the quarter ended September 30, 2024 increased by $2.4 million to $202.1 million, compared to $199.7 million for the third quarter of 2023, driven by higher interest income on loans as a result of a change in asset mix resulting from the deployment of cash flows from lower-yielding investment securities to fund loan growth, partially offset by an increase in interest expense due to higher rates paid on interest-bearing deposits given the higher interest rate environment and change in deposit mix. See “Results of Operations – Net Interest Income” below for additional information.

●The provision for credit losses on loans, finance leases, unfunded loan commitments and debt securities for the quarter ended September 30, 2024 was $15.2 million, compared to $4.4 million for the third quarter of 2023 . The increase in the provision expense was driven by a $14.4 million increase in the provision for the consumer loan and finance lease portfolios due to higher charge-off levels.

Net charge-offs totaled $24.0 million for the quarter ended September 30, 2024, or 0.78% of average loans on an annualized basis, compared to $14.1 million, or an annualized 0.48% of average loans, for the third quarter of 2023. The increase in net charge-offs was mainly due to an increase in consumer loans and finance leases net charge -offs. See “Results of Operations – Provision for Credit Losses” and “Risk Management” below for analyses of the ACL and non-performing assets and related ratios.

●Non-interest income for the quarter ended September 30, 2024 increased by $2.2 million, reflecting, among other things, $0.8 million in insurance proceeds received in the third quarter of 2024 and an increase in revenues from mortgage banking activities mainly due to a $0.8 million increase in the net realized gain on sales of residential mortgage loans in the secondary market.

●Non-interest expenses for the quarter ended September 30, 2024 increased by $6.3 million to $122.9 million, reflecting, among other things, a $2.5 million increase in employees’ compensation and benefits expenses driven by annual salary merit increases, a $1.5 million increase in professional services fees driven by information technology infrastructure enhancements, a $1.8 million increase in charges for operational and fraud losses, and a $0.8 million decrease in net gains on other real estate owned (“OREO”) operations. See “Results of Operations – Non-Interest Expenses” below for additional information.

●Income tax expense decreased to $22.7 million for the third quarter of 2024, compared to $27.0 million for the same period in 2023, driven by lower pre-tax income and a lower estimated effective tax rate due to increased business activities with

preferential tax treatment under the PR Tax Code. The Corporation’s estimated effective tax rate, excluding entities with pretax losses from which a tax benefit cannot be recognized and discrete items, decreased to 23.7% for the first nine months of 2024, compared to 28.2% for the same period of 2023. See “Income Taxes” below and Note 16 – “Income Taxes,” to the unaudited consolidated financial statements herein for additional information.

●As of September 30, 2024, total assets were approximately $18.9 billion, a decrease of $50.4 million from December 31, 2023, primarily related to repayments of investment securities, partially offset by an increase in total loans and cash and cash equivalents.

●As of September 30, 2024, total liabilities were $17.2 billion, a decrease of $253.6 million from December 31, 2023, which includes an increase in core deposits, which was more than offset by a decrease in brokered CDs and the redemption of outstanding TruPS issued by FBP Statutory Trust II. See “Risk Management – Liquidity Risk” below for additional information about the Corporation’s funding sources and strategy.

●The Bank’s primary sources of funding are consumer and commercial core deposits, which exclude government deposits and

brokered CDs. As of September 30, 2024, these core deposits, amounting to $12.7 billion, funded 67.18% of total assets.
Excluding fully collateralized government deposits, estimated uninsured deposits amounted to $4.6 billion as of September 30, 2024. In addition to approximately $1.8 billion in cash and free high-quality liquid assets, the Bank maintains borrowing capacity at the FHLB and the FED’s Discount Window. As of September 30, 2024, the Corporation had approximately $2.6 billion available for funding under the FED’s Discount Window and $964.7 million available for additional borrowing capacity on FHLB lines of credit based on collateral pledged at these entities. In the aggregate, as of September 30, 2024, the Corporation had $6.1 billion, or 131% of estimated uninsured deposits (excluding fully collateralized government deposits), available to meet liquidity needs. See “Risk Management – Liquidity Risk” below for additional information about the Corporation’s funding sources and strategy.

●As of September 30, 2024, the Corporation’s total stockholders’ equity was $1.7 billion, an increase of $203.3 million from December 31, 2023. The increase was driven by net income generated in the first nine months of 2024 and a $155.5 million

increase in the fair value of available-for-sale debt securities recorded as part of accumulated other comprehensive loss in the consolidated statements of financial condition, partially offset by $100.0 million in common stock repurchases under the 2023 stock repurchase program and common stock dividends declared in the first nine months of 2024 totaling $79.7 million or $0.48 per common share. The Corporation’s CET1 capital, tier 1 capital, total capital, and leverage ratios were 16.18%, 16.18%, 18.25%, and 10.96%, respectively, as of September 30, 2024, compared to CET1 capital, tier 1 capital, total capital, and leverage ratios of 16.10%, 16.10%, 18.57%, and 10.78%, respectively, as of December 31, 2023. See “Risk Management – Capital” below for additional information.

●Total loan production, including purchases, refinancings, renewals, and draws from existing revolving and non-revolving commitments, increased by $4.8 million to $1.3 billion for the quarter ended September 30, 2024, as compared to the third quarter of 2023, driven by a higher volume of commercial and construction loan originations. See “Results of Operations – Loan Production” below for additional information.

●Total non-performing assets were $119.1 million as of September 30, 2024, a decrease of $6.8 million, from December 31, 2023, driven by a $13.3 million decrease in the OREO portfolio balance in the Puerto Rico region, mainly attributable to the

sale of a $5.3 million commercial real estate OREO property and sales of residential OREO properties. This variance is net of a $5.6 million increase in total nonaccrual loans held for investment mainly due to the inflow of a $16.5 million commercial relationship in the food retail industry in the Puerto Rico region, partially offset by the sale of an $8.2 million nonaccrual C&I loan in the Puerto Rico region, that resulted in a $1.2 million charge -off that had been previously reserved. See “Risk Management – Nonaccrual Loans and Non-Performing Assets” below for additional information.

●Adversely classified commercial and construction loans increased by $10.2 million to $77.7 million as of September 30,

2024, compared to December 31, 2023, also driven by the aforementioned inflow to nonaccrual status of a $16.5 million commercial relationship in the Puerto Rico region and the downgrade of a $5.1 million commercial mortgage loan in the Puerto Rico region , partially offset by the aforementioned sale and charge -off of an $8.2 million nonaccrual C&I loan in the Puerto Rico region.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

The Corporation has included in this Quarterly Report on Form 10-Q the following financial measures that are not recognized under GAAP, which are referred to as non-GAAP financial measures:

Net Interest Income, Interest Rate Spread, and Net Interest Margin, Excluding Valuations , and on a Tax -Equivalent Basis

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 of the periods presented. 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 taxequivalent basis. This adjustment puts all earning assets, most notably tax-exempt securities and tax-exempt loans, on a common basis that facilitates comparison of results to the results of peers.

See “Results of Operations – Net Interest Income” below, for the table that reconciles net interest income in accordance with GAAP to the non-GAAP financial measure of net interest income, excluding valuations, and on a tax-equivalent basis for the indicated periods. The table also reconciles net interest spread and net interest margin on a GAAP basis to these items excluding valuations, and on a tax-equivalent basis.

Tangible Common Equity Ratio and Tangible Book Value Per Common Share

The tangible common equity ratio and tangible book value per common share are non-GAAP financial measures that management believes are generally used by the financial community to evaluate capital adequacy. Tangible common equity is total common equity

less goodwill and other intangibles. Similarly, tangible assets are total assets less goodwill and other intangibles. Tangible common equity ratio is tangible common equity divided by tangible assets. Tangible book value per common share is tangible assets divided by the number of common shares outstanding. Management uses and believes that many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with other 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 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.

See “Risk Management – Capital” below for the table that reconciles the Corporation’s total equity and total assets in accordance with GAAP to the tangible common equity and tangible assets figures used to calculate the non-GAAP financial measures of tangible common equity ratio and tangible book value per common share.

Adjusted Net Income, Adjusted Non-Interest Income, and Adjusted Non-Interest Expenses

To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation uses, and believes that investors benefit from disclosure of, non-GAAP financial measures that reflect adjustments to net income, non-interest income and non-interest expenses to exclude items that management believes are not reflective of core operating performance (“Special Items”).
The financial results for the quarters ended September 30, 2024 and 2023 did not include any significant Special Items. The financial results for the nine-month periods ended September 30, 2024 and 2023 included the following Special Items:

Nine-Month Period Ended September 30, 2024

-Charges of $1.1 million ($0.7 million after-tax, calculated based on the statutory tax rate of 37.5%) were recorded in the ninemonth period ended September 30, 2024, respectively, to increase the initial estimated FDIC special assessment resulting

from the FDIC’s updates related to the loss estimate in connection with losses to the Deposit Insurance Fund associated with protecting uninsured deposits following the failures of certain financial institutions during the first half of 2023. The aforementioned charges increased the estimated FDIC special assessment to a total of $7.4 million, which was the revised estimated loss reflected in the FDIC invoice for the first quarterly collection period with a payment date of June 28, 2024.
The FDIC special assessment is reflected in the consolidated statements of income as part of “FDIC deposit insurance” expenses.

Nine-Month Period Ended September 30, 2023

-A $3.6 million ($2.3 million after-tax, calculated based on the statutory tax rate of 37.5%) gain recognized from a legal settlement reflected in the consolidated statements of income as part of “other non-interest income.”

-A $1.6 million gain on the repurchase of $21.4 million in junior subordinated debentures reflected in the consolidated

statements of income as “Gain on early extinguishment of debt.” The junior subordinated debentures are reflected in the consolidated statements of financial condition as “Other long-term borrowings.” The purchase price equated to 92.5% of the $21.4 million par value of the trust preferred securities. The 7.5% discount resulted in the gain of $1.6 million. The gain, realized at the holding company level, had no effect on the income tax expense in 2023.

Adjusted Net Income – The following table reconciles for the nine-month periods ended September 30, 2024 and 2023, net income to adjusted net income, a non-GAAP financial measure that excludes the Special Items identified above.

Nine-Month Period Ended September 30,

20242023| (In thousands) | | | | | |
| --- | --- | --- | --- | --- | --- |
| Net income, as reported (GAAP) | | $ | 223,023 | $ | 223,375 |
| Adjustments: | | | | | |
| FDIC special assessment expense | | | 1,099 | | - |
| Gain recognized from a legal settlement | | | - | | (3,600) |
| Gain on early extinguishment of debt | | | - | | (1,605) |
| Income tax impact of adjustments | (1) | | (412) | | 1,350 |
| Adjusted net income (Non-GAAP) | | $ | 223,710 | $ | 219,520 |

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the excess of interest earned by First BanCorp. on its interest-earning assets over the interest incurred on its interest-bearing liabilities. First BanCorp.’s net interest income is subject to interest rate risk due to the repricing and maturity

mismatch of the Corporation’s assets and liabilities. In addition, variable sources of interest income, such as loan fees, periodic dividends, and collection of interest in nonaccrual loans, can fluctuate from period to period. Net interest income for the quarter and nine-month period ended September 30, 2024 was $202.1 million and $598.2 million, respectively, compared to $199.7 million and $600.4 million for the comparable periods in 2023, respectively. On a tax-equivalent basis and excluding the changes in the fair value of derivative instruments, net interest income for the quarter and nine-month period ended September 30, 2024 was $206.6 million and $612.4 million, respectively, compared to $204.4 million and $617.0 million for the comparable periods in 2023, respectively.

The following tables include a detailed analysis of net interest income for the indicated periods. Part I presents average volumes (based on the average daily balance) and rates on an adjusted tax-equivalent basis and Part II presents, also on an adjusted taxequivalent basis, the extent to which changes in interest rates and changes in the volume of interest-related assets and liabilities have affected the Corporation’s net interest income. For each category of interest-earning assets and interest-bearing liabilities, the tables provide information on changes in (i) volume (changes in volume multiplied by prior period rates), and (ii) rate (changes in rate multiplied by prior period volumes). The Corporation has allocated rate-volume variances (changes in rate multiplied by changes in volume) to either the changes in volume or the changes in rate based upon the effect of each factor on the combined totals.

Net interest income on an adjusted tax-equivalent basis and excluding the changes in the fair value of derivative instruments is a non-GAAP financial measure. For the definition of this non-GAAP financial measure, refer to the discussion in “Non-GAAP Financial Measures and Reconciliations” above.

Part I| | | Average volume | | | Interest income | (1)/ expense | | Average rate | (1) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter ended September 30, | | 2024 | 2023 | | 2024 | 2023 | 2024 | | 2023 |
| (Dollars in thousands) | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | |
| Money market and other short-term investments | | $645,398 | $ | 807,883$ | 8,782 | $10,956 | | 5.40% | 5.38% |
| Government obligations | (2) | 2,520,133 | 2,817,646 | | 8,458 | 9,415 | | 1.33% | 1.33% |
| MBS | | 3,290,547 | 3,650,737 | | 13,830 | 15,677 | | 1.67% | 1.70% |
| FHLB stock | | 33,985 | | 34,666 | 804 | | 768 | 9.39% | 8.79% |
| Other investments | | 19,726 | | 14,294 | 73 | | 61 | 1.47% | 1.69% |
| Total investments | (3) | 6,509,789 | 7,325,226 | | 31,947 | 36,877 | | 1.95% | 2.00% |
| Residential mortgage loans | | 2,816,343 | 2,800,675 | | 41,505 | 39,640 | | 5.85% | 5.62% |
| Construction loans | | 195,001 | | 183,507 | 4,417 | 4,937 | | 8.99% | 10.67% |
| C&I and commercial mortgage loans | | 5,616,658 | 5,261,849 | | 102,768 | 93,711 | | 7.26% | 7.07% |
| Finance leases | | 885,807 | | 808,480 | 17,290 | 15,802 | | 7.74% | 7.75% |
| Consumer loans | | 2,840,870 | 2,728,945 | | 81,281 | 77,125 | | 11.35% | 11.21% |
| Total loans | (4)(5) | 12,354,679 | 11,783,456 | | 247,261 | 231,215 | | 7.94% | 7.78% |
| Total interest-earning assets | | $18,864,468 | $19,108,682 | $ | 279,208 | $268,092 | | 5.87% | 5.57% |
| Interest-bearing liabilities: | | | | | | | | | |
| Time deposits | | $3,057,918 | $2,708,297 | $ | 27,768 | $19,852 | | 3.60% | 2.91% |
| Brokered CDs | | 600,319 | | 318,831 | 7,656 | 3,830 | | 5.06% | 4.77% |
| Other interest-bearing deposits | | 7,429,163 | 7,956,856 | | 28,280 | 30,616 | | 1.51% | 1.53% |
| Securities sold under agreements to repurchase | | | - | 26,254 | - | | 359 | -% | 5.43% |
| Advances from the FHLB | | 500,000 | | 500,000 | 5,672 | 5,675 | | 4.50% | 4.50% |
| Other borrowings | | 155,722 | | 161,700 | 3,235 | 3,345 | | 8.24% | 8.21% |
| Total interest-bearing liabilities | | $11,743,122 | $11,671,938 | $ | 72,611 | $63,677 | | 2.45% | 2.16% |
| Net interest income on a tax-equivalent basis and excludingvaluations - non-GAAP | | | | $ | 206,597 | $204,415 | | | |
| Interest rate spread | | | | | | | | 3.42% | 3.41% |
| Net interest margin | | | | | | | | 4.34% | 4.24% |

Part I| | | | Average volume | | Interest income | (1) | / expense | Average rate | (1) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Nine-Month Period Ended September 30, | | 2024 | | 2023 | 2024 | | 2023 | 2024 | 2023 |
| (Dollars in thousands) | | | | | | | | | |
| Interest-earning assets: | | | | | | | | | |
| Money market and other short-term investments | | $ | 615,679$ | 611,308 | $ | 25,096$ | | 23,4865.43 | %5.14% |
| Government obligations | (2) | 2,607,706 | | 2,878,603 | | 26,458 | | 31,1531.35 | %1.45% |
| MBS | | 3,366,866 | | 3,756,654 | | 43,407 | | 52,1601.72 | %1.86% |
| FHLB stock | | | 34,217 | 37,234 | | 2,476 | | 1,9699.64 | %7.07% |
| Other investments | | | 17,978 | 13,729 | | 383 | | 2582.84 | %2.51% |
| Total investments | (3) | 6,642,446 | | 7,297,528 | | 97,820 | 109,026 | 1.96 | %2.00% |
| Residential mortgage loans | | 2,811,447 | | 2,814,667 | | 122,664 | 119,298 | 5.81 | %5.67% |
| Construction loans | | | 219,601 | 159,914 | | 13,909 | | 10,5168.44 | %8.79% |
| C&I and commercial mortgage loans | | 5,550,259 | | 5,207,216 | | 302,761 | 268,886 | 7.27 | %6.90% |
| Finance leases | | | 874,508 | 771,366 | | 51,672 | | 44,3257.87 | %7.68% |
| Consumer loans | | 2,822,909 | | 2,679,261 | | 240,809 | 222,531 | 11.36 | %11.10% |
| Total loans | (4)(5) | 12,278,724 | | 11,632,424 | | 731,815 | 665,556 | 7.94 | %7.65% |
| Total interest-earning assets | | $18,921,170 | $ | 18,929,952 | $ | 829,635$ | 774,582 | 5.84 | %5.47% |
| Interest-bearing liabilities: | | | | | | | | | |
| Time deposits | | $2,984,413 | $ | 2,522,061 | $ | 78,766$ | | 46,3013.52 | %2.45% |
| Brokered CDs | | | 675,226 | 273,586 | | 25,926 | | 9,1785.11 | %4.49% |
| Other interest-bearing deposits | | 7,497,046 | | 7,674,759 | | 85,708 | | 70,3081.52 | %1.22% |
| Securities sold under agreements to repurchase | | | - | 72,648 | | - | | 2,756 | -%5.07% |
| Advances from the FHLB | | | 500,000 | 553,993 | | 16,892 | | 18,8994.50 | %4.56% |
| Other borrowings | | | 159,693 | 174,307 | | 9,921 | | 10,1358.28 | %7.77% |
| Total interest-bearing liabilities | | $11,816,378 | $ | 11,271,354 | $ | 217,213$ | 157,577 | 2.45 | %1.87% |
| Net interest income on a tax-equivalent basis and excluding | | | | | | | | | |
| valuations - non-GAAP | | | | | $ | 612,422$ | 617,005 | | |
| Interest rate spread | | | | | | | | 3.39 | %3.60% |
| Net interest margin | | | | | | | | 4.31 | %4.36% |

(1)On an adjusted tax-equivalent basis. The Corporation estimated the adjusted tax-equivalent yield by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate of 37.5% and adding to it the cost of interest-bearing liabilities. The tax-equivalent adjustment recognizes the income tax savings when comparing taxable and tax-exempt assets.
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. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. The Corporation excludes changes in the fair value of derivatives from interest income because the changes in valuation do not affect interest received. See "Non-GAAP Financial Measures and Reconciliations" above.

(2)Government obligations include debt issued by government-sponsored agencies.

(3)Unrealized gains and losses on available-for-sale debt securities are excluded from the average volumes.

(4)Average loan balances include the average of nonaccrual loans.

(5)Interest income on loans includes $3.2 million and $2.9 million for the quarters ended September 30, 2024 and 2023, respectively, and $9.5 million and $8.9 million for the nine-month periods ended September 30, 2024 and 2023, respectively, of income from prepayment penalties and late fees related to the Corporation’s loan portfolio.

Part IIQuarter Ended September 30,Nine-Month Period Ended September 30,

2024 Compared to 20232024 Compared to 2023

Variance due to:Variance due to:

VolumeRateTotalVolumeRateTotal| Interest income on interest-earning assets: | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Money market and other short-term investments | $(2,207) | $ | 33$ | (2,174)$ | 170$ | 1,440 | $1,610 |
| Government obligations | (996) | | 39 | (957) | (2,822) | (1,873) | (4,695) |
| MBS | (1,520) | | (327) | (1,847) | (5,185) | (3,568) | (8,753) |
| FHLB stock | (16) | | 52 | 36 | (189) | 696 | 507 |
| Other investments | 22 | | (10) | 12 | 87 | 38 | 125 |
| Total investments | (4,717) | | (213) | (4,930) | (7,939) | (3,267) | (11,206) |
| Residential mortgage loans | 223 | | 1,642 | 1,865 | (138) | 3,504 | 3,366 |
| Construction loans | 285 | | (805) | (520) | 3,853 | (460) | 3,393 |
| C&I and commercial mortgage loans | 6,442 | | 2,615 | 9,057 | 18,261 | 15,614 | 33,875 |
| Finance leases | 1,511 | | (23) | 1,488 | 6,053 | 1,294 | 7,347 |
| Consumer loans | 3,193 | | 963 | 4,156 | 12,138 | 6,140 | 18,278 |
| Total loans | 11,654 | | 4,392 | 16,046 | 40,167 | 26,092 | 66,259 |
| Total interest income | $6,937 | $ | 4,179$ | 11,116$ | 32,228$ | 22,825$ | 55,053 |
| Interest expense on interest-bearing liabilities: | | | | | | | |
| Time deposits | $2,778 | $ | 5,138$ | 7,916$ | 9,605$ | 22,860$ | 32,465 |
| Brokered CDs | 3,576 | | 250 | 3,826 | 15,205 | 1,543 | 16,748 |
| Other interest-bearing deposits | (2,011) | | (325) | (2,336) | (1,829) | 17,229 | 15,400 |
| Securities sold under agreements to repurchase | (359) | | - | (359) | (2,756) | - | (2,756) |
| Advances from the FHLB | | - | (3) | (3) | (1,821) | (186) | (2,007) |
| Other borrowings | (125) | | 15 | (110) | (879) | 665 | (214) |
| Total interest expense | 3,859 | | 5,075 | 8,934 | 17,525 | 42,111 | 59,636 |
| Change in net interest income | $3,078 | $ | (896)$ | 2,182$ | 14,703$ | (19,286)$ | (4,583) |

Portions of the Corporation’s interest-earning assets, mostly investments in obligations of some U.S. government agencies and U.S.
government-sponsored entities (“GSEs”), generate interest that is exempt from income tax, principally in Puerto Rico. Also, interest

and gains on sales of investments held by the Corporation’s international banking entities (“IBEs”) are tax-exempt under Puerto Rico tax law (see Note 16 – “Income Taxes” to the unaudited consolidated financial statements herein for additional information).
Management believes that the presentation of interest income on an adjusted tax-equivalent basis facilitates the comparison of all interest data related to these assets. The Corporation estimated the tax equivalent yield by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate (37.5%) and adding to it the average cost of interest-bearing liabilities. The computation considers the interest expense disallowance required by Puerto Rico tax law.

Management believes that the presentation of net interest income, excluding the effects of the changes in the fair value of the derivative instruments (“valuations”), provides additional information about the Corporation’s net interest income and facilitates comparability and analysis from period to period. The changes in the fair value of the derivative instruments have no effect on interest earned on interest-earning assets.

The following table reconciles net interest income in accordance with GAAP to net interest income, excluding valuations, and net interest income on an adjusted tax-equivalent basis for the indicated periods. The table also reconciles net interest spread and net interest margin on a GAAP basis to these items excluding valuations, and on an adjusted tax-equivalent basis:

Quarter EndedNine-Month Period Ended

September 30,September 30,

2024202320242023| (Dollars in thousands) | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Interest income - GAAP | | $274,675 | $ | 263,405 | $815,425 | $ | 758,005 |
| Unrealized loss (gain) on derivative instruments | | | 5 | (3) | | 3 | - |
| Interest income excluding valuations - non-GAAP | | 274,680 | | 263,402 | 815,428 | | 758,005 |
| Tax-equivalent adjustment | | 4,528 | | 4,690 | 14,207 | | 16,577 |
| Interest income on a tax-equivalent basis and excluding valuations - non-GAAP | | $279,208 | $ | 268,092 | $829,635 | $ | 774,582 |
| Interest expense - GAAP | | $72,611 | $ | 63,677 | $217,213 | $ | 157,577 |
| Net interest income - GAAP | | $202,064 | $ | 199,728 | $598,212 | $ | 600,428 |
| Net interest income excluding valuations - non-GAAP | | $202,069 | $ | 199,725 | $598,215 | $ | 600,428 |
| Net interest income on a tax-equivalent basis and excluding valuations - non-GAAP | | $206,597 | $ | 204,415 | $612,422 | $ | 617,005 |
| Average Balances | | | | | | | |
| Loans and leases | | $12,354,679 | $11,783,456 | | $12,278,724 | $11,632,424 | |
| Total securities, other short-term investments and interest-bearing cash balances | | 6,509,789 | 7,325,226 | | 6,642,446 | 7,297,528 | |
| Average Interest-Earning Assets | | $18,864,468 | $19,108,682 | | $18,921,170 | $18,929,952 | |
| Average Interest-Bearing Liabilities | | $11,743,122 | $11,671,938 | | $11,816,378 | $11,271,354 | |
| Average Assets | (1) | $18,883,374 | $18,895,980 | | $18,875,397 | $18,748,479 | |
| Average Non-Interest-Bearing Deposits | | $5,341,589 | $5,621,233 | | $5,333,838 | $5,861,680 | |
| Average Yield/Rate | | | | | | | |
| Average yield on interest-earning assets - GAAP | | 5.78% | | 5.47% | 5.74% | | 5.35% |
| Average rate on interest-bearing liabilities - GAAP | | 2.45% | | 2.16% | 2.45% | | 1.87% |
| Net interest spread - GAAP | | 3.33% | | 3.31% | 3.29% | | 3.48% |
| Net interest margin - GAAP | | 4.25% | | 4.15% | 4.21% | | 4.24% |
| Average yield on interest-earning assets excluding valuations - non-GAAP | | 5.78% | | 5.47% | 5.74% | | 5.35% |
| Average rate on interest-bearing liabilities | | 2.45% | | 2.16% | 2.45% | | 1.87% |
| Net interest spread excluding valuations - non-GAAP | | 3.33% | | 3.31% | 3.29% | | 3.48% |
| Net interest margin excluding valuations - non-GAAP | | 4.25% | | 4.15% | 4.21% | | 4.24% |
| Average yield on interest-earning assets on a tax-equivalent basis and excluding | | | | | | | |
| valuations - non-GAAP | | 5.87% | | 5.57% | 5.84% | | 5.47% |
| Average rate on interest-bearing liabilities | | 2.45% | | 2.16% | 2.45% | | 1.87% |
| Net interest spread on a tax-equivalent basis and excluding valuations - non-GAAP | | 3.42% | | 3.41% | 3.39% | | 3.60% |
| Net interest margin on a tax-equivalent basis and excluding valuations - non-GAAP | | 4.34% | | 4.24% | 4.31% | | 4.36% |

Net interest income amounted to $202.1 million for the quarter ended September 30, 2024, an increase of $2.4 million, when compared to $199.7 million for the same period in 2023. The $2.4 million increase in net interest income was primarily due to:

●A $15.8 million increase in interest income on loans, including:

-An $8.3 million increase in interest income on commercial and construction loans, driven by a $6.6 million increase

associated with a $366.3 million increase in the average balance, and a $2.9 million increase related to the effect of higher market interest rates on the upward repricing of variable-rate loans and on new loan originations. These variances were partially offset by interest income of $1.2 million recognized in the third quarter of 2023 due to the collection of a previously charged-off construction loan in the Puerto Rico region.

As of September 30, 2024, the interest rate on approximately 54% of the Corporation’s commercial and construction loans was tied to variable rates, with 33% based upon SOFR of 3 months or less, 12% based upon the Prime rate index, and 9% based on other indexes.

-A $5.6 million increase in interest income on consumer loans and finance leases, primarily associated with a $189.3 million increase in the average balance of this portfolio, mainly auto loans and finance leases.

Partially offset by:

●An $8.9 million increase in interest expense on interest-bearing liabilities, including :

-A $7.9 million increase in interest expense on time deposits, excluding brokered CDs, of which $5.1 million was related to higher rates on renewals, associated with the overall higher interest rate environment, and $2.8 million was driven by a $349.6 million increase in the average balance. The average cost of time deposits in the third quarter of 2024, excluding brokered CDs, increased 69 bps to 3.60% when compared to the same period in 2023.

-A $3.8 million increase in interest expense on brokered CDs, driven by a $281.5 million increase in the average balance.

Partially offset by:

-A $2.3 million decrease in interest expense on interest-bearing checking and saving accounts, driven by a $527.7 million decrease in the average balance.

●A $4.5 million decrease in interest income from total investments, consisting of a $2.4 million decrease in interest income from debt securities, mainly associated with a $657.7 million decrease in the average balance, and a $2.1 million decrease in interest income from interest-bearing cash balances, primarily cash balances deposited at the FED, driven by a $162.5 million decrease in the average balance.

Net interest margin for the third quarter of 2024 was 4.25%, compared to 4.15% for the same period in 2023. The increase in the net interest margin was driven by a change in asset mix resulting from the deployment of cash flows from lower-yielding investment securities to fund loan growth as well as the effect of the higher interest rate environment on commercial and consumer loans yields.
These variances were partially offset by the higher cost of funds associated with the higher interest rate environment combined with a change in deposit mix reflecting a continued migration from non-interest-bearing and other low-cost deposits to higher-cost deposits.

Net interest income amounted to $598.2 million for the nine-month period ended September 30, 2024, a decrease of $2.2 million, when compared to $600.4 million for same period in 2023. The $2.2 million decrease in net interest income was primarily due to:

●A $59.6 million increase in interest expense on interest-bearing liabilities, consisting of:

-A $32.5 million increase in interest expense on time deposits, excluding brokered CDs, of which $22.9 million was

related to higher rates in the first nine months of 2024 on new issuances and renewals , also associated with the higher interest rate environment , and $9.6 million was driven by a $462.4 million increase in the average balance. The average cost of time deposits for the first nine months of 2024, excluding brokered CDs, increased 107 bps to 3.52% as compared to 2.45% for the same period in 2023.

-A $16.7 million increase in interest expense on brokered CDs, driven by a $401.6 million increase in the average balance.

-A $15.4 million increase in interest expense on interest-bearing checking and saving accounts, also related to the overall

higher interest rate environment. The average cost of interest-bearing checking and saving accounts increased by 30 bps to 1.52% for the first nine months of 2024 as compared to 1.22% for the same period in 2023, mostly driven by government deposits in the Puerto Rico region. Excluding government deposits, the average cost of interest-bearing checking and savings accounts for the first nine months of 2024 was 0.75%, compared to 0.69% for the same period in 2023.

Partially offset by:

-A $5.0 million decrease in interest expense on borrowings, mainly due to a $2.8 million decrease on short-term repurchase agreements since they were not used as a funding source in the first nine months of 2024, and a $2.0 million decrease on advances from the FHLB, mainly associated with a $54.0 million decrease in the average balance.

●A $6.7 million decrease in interest income from total investments, mainly due to a $9.0 million net decrease in interest income from debt securities, mainly associated with a $660.7 million decrease in the average balance, partially offset by a $1.6 million increase in interest income from interest-bearing cash balances, which consisted primarily of cash balances deposited at the FED, due to the effect of higher market interest rates.

Partially offset by:

●A $64.1 million increase in interest income on loans, including:

-A $35.1 million increase in interest income on commercial and construction loans, driven by a $23.1 million increase associated with a $402.7 million increase in the average balance, and a $12.0 million increase related to the effect of higher market interest rates on the upward repricing of variable-rate loans and on new loan originations.

-A $25.6 million increase in interest income on consumer loans and finance leases, primarily due to a $246.8 million increase in the average balance of this portfolio, mainly auto loans and finance leases.

Net interest margin for the nine-month period ended September 30, 2024 was 4.21%, compared to 4.24% for the same period in 2023. The decrease in the net interest margin was driven by the higher cost of funds associated with the higher interest rate

environment combined with a change in deposit mix reflecting a continued migration from non-interest-bearing and other low-cost deposits to higher-cost deposits, as well as the increase in balance of brokered CDs. These variances were partially offset by a change in asset mix resulting from the deployment of cash flows from lower-yielding investment securities to fund loan growth as well as the effect of the higher interest rate environment on commercial and consumer loans yields.

Provision for Credit Losses

The provision for credit losses consists of provisions for credit losses on loans and finance leases, unfunded loan commitments, as well as the debt securities portfolio. The principal changes in the provision for credit losses by main categories follow:

Provision for credit losses for loans and finance leases

The provision for credit losses for loans and finance leases was $16.5 million for the third quarter of 2024, compared to $10.6 million for the third quarter of 2023. The variances by major portfolio category were as follows:

●Provision for credit losses for the consumer loan and finance lease portfolios was an expense of $28.4 million for the third quarter of 2024, compared to an expense of $14.0 million for the third quarter of 2023. The increase in provision expense was driven by higher charge-off levels in these portfolios.

●Provision for credit losses for the commercial and construction loan portfolios was a net benefit of $6.4 million for the third quarter of 2024, compared to a net benefit of $0.1 million for the third quarter of 2023. The net benefit recorded during the third quarter of 2024 was associated with the improved financial condition of certain borrowers and, to a lesser extent, an improvement on the economic outlook of certain macroeconomic variables, particularly variables associated with commercial real estate property performance and the forecasted commercial real estate (“CRE”) price index.

●Provision for credit losses for the residential mortgage loan portfolio was a net benefit of $5.5 million for the third quarter of 2024, compared to a net benefit of $3.3 million for the third quarter of 2023. The net benefit recorded during the third quarter of 2024 was driven by a higher benefit associated with updated macroeconomic variables, mainly in the long-term projection of the unemployment rate in the Puerto Rico region.

The provision for credit losses for loans and finance leases was $41.3 million for the first nine months of 2024, compared to $47.7 million for the same period of 2023. The variances by major portfolio category were as follows:

●Provision for credit losses for the commercial and construction loan portfolios was a net benefit of $13.4 million for the first nine months of 2024, compared to an expense of $10.6 million for the same period of 2023. The net benefit recorded during

the first nine months of 2024 was driven by the aforementioned improved financial condition of certain borrowers, a recovery of $5.0 million associated with a C&I loan in the Puerto Rico region, and $1.2 million in recoveries of two commercial loans in the Florida region, partially offset by increased volume. Meanwhile, the expense recorded during the first nine months of 2023 was mainly due to a deterioration in the forecasted CRE price index, a $6.2 million charge associated with a nonaccrual participated C&I loan in the Florida region associated with the power generation industry, the aforementioned incremental reserve associated with the inflow to nonaccrual status of a $9.5 million C&I loan in the Puerto Rico region and, to a lesser extent, portfolio growth.

●Provision for credit losses for the residential mortgage loan portfolio was a net benefit of $16.6 million for the first nine months of 2024, compared to a net benefit of $6.8 million for the same period of 2023. The increase in net benefit recorded during the first nine months of 2024 was driven by updated historical loss experience used for determining the ACL estimate resulting in a downward revision of estimated loss severities and lower required reserve levels as further explained in Note 3 – “Loans Held for Investment” to the unaudited consolidated financial statements herein, and the aforementioned updated macroeconomic variables, partially offset by newly originated loans.

●Provision for credit losses for the consumer loan and finance lease portfolios was an expense of $71.3 million for the first nine months of 2024, compared to an expense of $43.9 million for the same period of 2023. The increase in provision expense was driven by higher charge -off levels in these portfolios and increases in portfolio volumes, partially offset by a $10.0 million recovery associated with the bulk sale of fully charged -off loans recorded during the first nine months of 2024.

Provision for credit losses for unfunded loan commitments

The provision for credit losses for unfunded commercial and construction loan commitments and standby letters of credit for the third quarter and the first nine months of 2024 was a net benefit of $1.0 million and $1.1 million, respectively, compared to a net benefit of $0.1 million and an expense of $0.5 million, for the same periods in 2023, respectively. The net benefit recorded during the third quarter and first nine months of 2024 was driven by an improvement on the economic outlook of certain macroeconomic variables, particularly in variables associated with the CRE price index.

Provision for credit losses for held-to-maturity and available-for-sale debt securities

The provision for credit losses for held-to-maturity debt securities was a net benefit of $0.1 million and a net benefit of $1.1 million for the third quarter and first nine months of 2024, respectively, compared to a net benefit of $6.2 million and $6.0 million, respectively, for the same periods in 2023. The net benefit recorded during the third quarter and first nine months of 2023 was driven by the refinancing of a $46.5 million municipal bond into a shorter-term commercial loan structure and, to a lesser extent, a reduction in qualitative reserves driven by updated financial information of certain bond issuers received during the third quarter of 2023.

The provision for credit losses for available-for-sale debt securities for the third quarter and first nine months of 2024 was a net benefit of $36 thousand and a net benefit of $45 thousand, respectively, compared to an expense of $32 thousand and $7 thousand, respectively, for the same periods in 2023.

Non-Interest Income

Non-interest income amounted to $32.5 million for the third quarter of 2024, compared to $30.3 million for the same period in 2023. The $2.2 million increase in non-interest income was primarily due to:

●A $0.9 million increase in card and processing income, mainly in merchant-related fees and interchange income due to higher transactional volumes.

●A $0.6 million increase in other non-interest income, driven by $0.8 million in insurance proceeds received in the third quarter of 2024 related to a 2020 outstanding insurance claim.

●A $0.4 million increase in revenues from mortgage banking activities, driven by a $0.8 million increase in the net realized gain on sales of residential mortgage loans in the secondary market due to higher margins, partially offset by a $0.3 million decrease in the fair value of to-be-announced (“TBA”) forward contracts. During the third quarters of 2024 and 2023, net realized gains of $1.7 million and $0.9 million, respectively, were recognized as a result of GNMA securitization transactions and whole loan sales to U.S. GSEs amounting to $38.2 million and $42.3 million, respectively.

Non-interest income for the nine-month period ended September 30, 2024 amounted to $98.5 million, compared to $99.1 million for the same period in 2023. Non-interest income for the nine-month period ended September 30, 2023 included the following Special

Items: the $3.6 million gain recognized from a legal settlement, included as part of “other non-interest income,” and the $1.6 million gain on the repurchase of $21.4 million in junior subordinated debentures, reported as “gain on early extinguishment of debt.” See “Non-GAAP Financial Measures and Reconciliations” above for additional information. On a non-GAAP basis, excluding the effect of these Special Items, adjusted non-interest income increased by $4.6 million primarily due to:

●A $1.7 million increase in card and processing income, mainly in merchant-related fees and interchange income due to higher transactional volumes.

●A $1.0 million increase in revenues from mortgage banking activities, driven by a $1.4 million increase in the net realized gain on sales of residential mortgage loans in the secondary market due to higher margins. During the first nine months of 2024 and 2023, net realized gains of $4.3 million and $2.9 million, respectively, were recognized as a result of GNMA securitization transactions and whole loan sales to U.S. GSEs amounting to $113.2 million and $131.5 million, respectively.

●A $0.9 million increase in insurance commission income, mainly related to higher contingent commissions.

●The aforementioned $0.8 million in insurance proceeds received in the third quarter of 2024, included as part of “other non-interest income.”

Non-Interest Expenses

Non-interest expenses for the quarter ended September 30, 2024 amounted to $122.9 million, compared to $116.6 million for the same period in 2023. The efficiency ratio for the third quarter of 2024 was 52.41%, compared to 50.71% for the third quarter of 2023.
The $6.3 million increase was primarily due to:

●A $2.5 million increase in employees’ compensation and benefits expenses, driven by annual salary merit increases.

●A $1.5 million increase in professional service fees, due to increases of $1.0 million in consulting fees driven by information technology infrastructure enhancements and $0.5 million in outsourced technology service fees.

●A $0.9 million increase in other non-interest expenses, mainly due to a $1.8 million increase in charges for operational and fraud losses, partially offset by decreases of $0.4 million in amortization of intangible assets (mainly from core deposit intangible assets related to savings accounts from the Banco Santander Puerto Rico acquisition, which were fully amortized in 2024), $0.3 million in insurance fees, and $0.2 million in net periodic cost of pension plans.

●A $0.8 million decrease in net gains on OREO operations, driven by a decrease in net realized gains on sales of residential OREO properties in the Puerto Rico region.

Non-interest expenses for the nine-month period ended September 30, 2024 amounted to $362.5 million, compared to $344.8 million for the same period in 2023. The efficiency ratio for the first nine months of 2024 was 52.03%, compared to 49.29% for the

first nine months of 2023. Non-interest expenses for the nine-month period ended September 30, 2024 include the $1.1 million additional FDIC special assessment expense. See “Non-GAAP Financial Measures and Reconciliations” above for additional information. On a non-GAAP basis, excluding the effect of this Special Item, adjusted non-interest expenses increased by $16.6 million primarily due to:

●An $8.8 million increase in employees’ compensation and benefits expenses, driven by annual salary merit increases and increases in stock-based compensation expense, matching contributions to the employees’ retirement plan and medical insurance premium costs.

●A $3.1 million increase in professional service fees, mainly due to a $2.4 million increase in consulting fees driven by information technology infrastructure enhancements.

●A $1.8 million increase in credit and debit card processing fees, driven by higher transactional volumes.

●A $1.6 million increase in occupancy and equipment expenses, mainly related to an increase in maintenance charges, partially offset by a decrease in depreciation charges.

●A $1.6 million increase in other non-interest expenses, mainly due to a $2.8 million increase in charges for operational and fraud losses, partially offset by decreases of $0.8 million in amortization of intangible assets due to the aforementioned core deposit intangible assets which were fully amortized in 2024, and $0.5 million in net periodic cost of pension plans.

Income Taxes

For the third quarter and first nine months of 2024, the Corporation recorded an income tax expense of $22.7 million and $72.2 million, respectively, compared to $27.0 million and $89.2 million, respectively, for the same periods in 2023. The decrease in income tax expense for the third quarter of 2024 was mainly due to lower pre-tax income and, to a lesser extent, a lower estimated effective tax rate due to increased business activities with preferential tax treatment under the PR Tax Code and a $0.4 million tax contingency accrual release in connection with the expiration of the statute of limitation on some uncertain tax positions. Meanwhile, the decrease in income tax expense for the first nine months of 2024 was driven by a lower estimated effective tax rate due to the aforementioned increased business activities with preferential tax treatment and, to a lesser extent, lower pre-tax income.

The Corporation’s annual estimated effective tax rate, excluding entities with pre-tax losses from which a tax benefit cannot be recognized and discrete items, was 23.7% for the first nine months of 2024, compared to 28.2% for the same period in 2023. The estimated effective tax rate of the Corporation is impacted by, among other things, the composition and source of its taxable income.
See Note 16 – “Income Taxes, ” to the unaudited consolidated financial statements herein for additional information.

million, as of December 31, 2023. The decrease in the net deferred tax asset was mainly related to the usage of alternative minimum tax credits and the decrease in the ACL. Meanwhile, the decrease in the valuation allowance was related primarily to changes in the market value of available -for-sale debt securities which resulted in an equal change in the net deferred tax asset without impacting earnings.

Assets

The Corporation’s total assets were $18.9 billion as of September 30, 2024, a decrease of $50.4 million from December 31, 2023, primarily related to repayments of investment securities, partially offset by an increase in total loans and cash and cash equivalents.

Loans Receivable, including Loans Held for Sale

As of September 30, 2024, the Corporation’s total loan portfolio before the ACL amounted to $12.5 billion, an increase of $265.8 million compared to December 31, 2023. In terms of geography, the growth consisted of increases of $162.9 million in the Puerto Rico region and $146.0 million in the Florida region, partially offset by a decrease of $43.1 million in the Virgin Islands region. On a portfolio basis, the growth consisted of increases of $178.4 million in commercial and construction loans, $83.7 million in consumer loans, primarily auto loans and finance leases, and $3.7 million in residential mortgage loans.

As of September 30, 2024, the Corporation’s loans held-for-investment portfolio was comprised of commercial and construction loans (48%), consumer and finance leases (29%), and residential real estate loans (23%). Of the total gross loan portfolio held for investment of $12.4 billion as of September 30, 2024, the Corporation had credit risk concentration of approximately 80% in the Puerto Rico region, 17% in the United States region (mainly in the state of Florida), and 3% in the Virgin Islands region, as shown in the following table:| As of September 30, 2024 | Puerto Rico | Virgin Islands | | United States | | Total |
| --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | | | | | | |
| Residential mortgage loans | $2,168,590 | $159,088 | $ | 492,469 | $ | 2,820,147 |
| Construction loans | 173,352 | | 2,001 | 31,989 | | 207,342 |
| Commercial mortgage loans | 1,728,552 | 68,781 | | 674,547 | | 2,471,880 |
| C&I loans | 2,161,688 | 81,942 | | 961,683 | | 3,205,313 |
| Total commercial loans | 4,063,592 | 152,724 | | 1,668,219 | | 5,884,535 |
| Consumer loans and finance leases | 3,663,990 | 69,751 | | 7,601 | | 3,741,342 |
| Total loans held for investment, gross | $9,896,172 | $381,563 | $ | 2,168,289 | $12,446,024 | |
| Loans held for sale | 12,641 | | - | | - | 12,641 |
| Total loans, gross | $9,908,813 | $381,563 | $ | 2,168,289 | $12,458,665 | |

As of December 31, 2023Puerto RicoVirgin IslandsUnited StatesTotal| (In thousands) | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Residential mortgage loans | $2,187,875 | $ | 168,131 | $465,720 | $ | 2,821,726 |
| Construction loans | 111,664 | | 3,737 | 99,376 | | 214,777 |
| Commercial mortgage loans | 1,725,325 | | 65,312 | 526,446 | | 2,317,083 |
| C&I loans | 2,130,368 | | 119,040 | 924,824 | | 3,174,232 |
| Total commercial loans | 3,967,357 | | 188,089 | 1,550,646 | | 5,706,092 |
| Consumer loans and finance leases | 3,583,272 | | 68,498 | | 5,895 | 3,657,665 |
| Total loans held for investment, gross | $9,738,504 | $ | 424,718 | $2,022,261 | $ | 12,185,483 |
| Loans held for sale | | 7,368 | - | | - | 7,368 |
| Total loans, gross | $9,745,872 | $ | 424,718 | $2,022,261 | $ | 12,192,851 |

Residential Real Estate Loans

As of September 30, 2024, the Corporation’s total residential mortgage loan portfolio, including loans held for sale, increased by $3.7 million compared to the balance as of December 31, 2023. The increase in the residential mortgage loan portfolio reflects an increase of $26.7 million in the Florida region, partially offset by decreases of $14.0 million in the Puerto Rico region and $9.0 million in the Virgin Islands region. The increase was driven by the volume of new loan originations kept on the balance sheet, which more than offset repayments. Approximately 48% of the $254.5 million residential mortgage loan originations in the Puerto Rico region during the first nine monthsof 2024 consisted of conforming loans, compared to 52% of the $243.2 million originated for the first nine monthsof 2023.

As of September 30, 2024, the majority of the Corporation’s outstanding balance of residential mortgage loans in the Puerto Rico and the Virgin Islands regions consisted of fixed-rate loans that traditionally carry higher yields than residential mortgage loans in the Florida region. In the Florida region, approximately 35% of the residential mortgage loan portfolio consisted of hybrid adjustable-rate mortgages. In accordance with the Corporation’s underwriting guidelines, residential mortgage loans are primarily fully documented loans, and the Corporation does not originate negative amortization loans.

Commercial and Construction Loans

As of September 30, 2024, the Corporation’s commercial and construction loans portfolio increased by $178.4 million, as compared to the balance as of December 31, 2023. The growth included an increase of $117.6 million in the Florida region, reflecting, among

other things, the effect of the origination of various commercial and construction relationships, each in excess of $10 million, of which $109.3 million are related to six C&I relationships and $52.3 million are related to three commercial mortgage relationships. These variances were partially offset by payoffs and paydowns of four C&I relationships totaling $56.6 million and lower utilization of C&I lines of credit.

The Puerto Rico region also grew by $96.2 million, when compared to the balance as of December 31, 2023. This increase was driven by a $61.7 million increase in construction loans; the origination of two commercial relationships with an aggregate balance of $72.4 million; higher utilization of C&I lines of credit; and the origination of two loans to municipalities with an aggregate balance of $27.7 million. These variances were partially offset by multiple payoffs and paydowns, including the payoffs of three commercial and construction relationships totaling $47.5 million and the sale of an $8.2 million nonaccrual C&I loan, net of a $1.2 million charge -off.

In the Virgin Islands region, commercial and construction loans decreased by $35.4 million, as compared to the balance as of December 31, 2023, mainly associated with a $42.6 million repayment of a government line of credit.

See “Risk Management – Exposure to Puerto Rico Government” and “Risk Management – Exposure to USVI Government” below for information on the Corporation’s credit exposure to PR and USVI government entities.

As of September 30, 2024, the Corporation’s total commercial mortgage loan exposure amounted to $2.5 billion, or 20% of the total loan portfolio. In terms of geography, $1.7 billion of the exposure was in the Puerto Rico region, $0.7 billion of the exposure was

in the Florida region, and $0.1 billion of the exposure was in the Virgin Islands region. The $1.7 billion exposure in the Puerto Rico region was comprised mainly of 41% in the retail industry, 26% in office real estate, and 21% in the hotel industry. The $0.7 billion exposure in the Florida region was comprised mainly of 33% in the retail industry, 23% in the hotel industry, and 8% in office real estate. Of the Corporation’s total commercial mortgage loan exposure of $2.5 billion, $400.2 million matures within the next 12 months and has a weighted-average interest rate of approximately 6.17%. Commercial mortgage loan exposure in the office real estate industry, which matures within the next 12 months, amounted to $108.1 million and has a weighted-average interest rate of approximately 6.22%.

As of September 30, 2024 and December 31, 2023, the Corporation’s total exposure to shared national credit (“SNC”) loans (including unused commitments) amounted to $1.3 billion and $1.2 billion, respectively. As of September 30, 2024, approximately $385.3 million of the SNC exposure is related to the portfolio in the Puerto Rico region and $870.3 million is related to the portfolio in the Florida region.

Consumer Loans and Finance Leases

As of September 30, 2024, the Corporation’s consumer loans and finance leases portfolio increased by $83.7 million to $3.7 billion, mainly in the Puerto Rico region, reflecting growth of $69.4 million and $36.6 million in the auto loan and finance lease portfolios, respectively, partially offset by decreases in the remaining portfolio classes.

Loan Production

First BanCorp. relies primarily on its retail network of branches to originate residential and consumer loans. The Corporation may supplement its residential mortgage originations with wholesale servicing released mortgage loan purchases from mortgage bankers.
The Corporation manages its construction and commercial loan originations through centralized units and most of its originations come from existing customers, as well as through referrals and direct solicitations. Auto loans and finance leases originations rely primarily on relationships with auto dealers and dedicated sales professionals who serve selected locations to facilitate originations.

The following table provides a breakdown of First BanCorp.’s loan production, including purchases, refinancings, renewals and draws from existing revolving and non-revolving commitments by geographic segment, for the indicated periods:

Quarter Ended September 30,Nine-Month Period Ended September 30,

2024202320242023| Puerto Rico: | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Residential mortgage | $ | 94,258 | $ | 93,237 | $ | 254,525 | $ | 243,202 |
| Construction | | 33,898 | | 36,758 | | 108,008 | | 94,025 |
| Commercial mortgage | | 63,646 | | 25,763 | | 165,400 | | 122,454 |
| C&I | | 419,673 | | 452,889 | | 1,162,239 | | 1,267,866 |
| Consumer | | 406,448 | | 452,264 | | 1,204,999 | | 1,318,950 |
| Total loan production | $ | 1,017,923 | $ | 1,060,911 | $ | 2,895,171 | $ | 3,046,497 |

Virgin Islands:
Residential mortgage	$	791	$	1,320	$	2,913	$	3,089
Construction		131		-		293		6
Commercial mortgage		6,949		112		7,372		3,971
C&I		18,447		21,545		41,907		96,159
Consumer		9,995		9,581		26,788		31,189
Total loan production	$	36,313	$	32,558	$	79,273	$	134,414

Florida:
Residential mortgage	$	21,864	$	35,295	$	69,849	$	76,114
Construction		10,510		9,585		31,165		34,817
Commercial mortgage		30,539		33,357		108,472		63,883
C&I		184,936		125,947		576,189		342,812
Consumer		530		187		3,957		1,216
Total loan production	$	248,379	$	204,371	$	789,632	$	518,842

Total:
Residential mortgage	$	116,913	$	129,852	$	327,287	$	322,405
Construction		44,539		46,343		139,466		128,848
Commercial mortgage		101,134		59,232		281,244		190,308
C&I		623,056		600,381		1,780,335		1,706,837
Consumer		416,973		462,032		1,235,744		1,351,355
Total loan production	$	1,302,615	$	1,297,840	$	3,764,076	$	3,699,753

Commercial and construction loan originations (excluding government loans) for the quarter and nine-month period ended September 30, 2024 increased by $102.8 million in the third quarter of 2024, as compared to the same period in 2023, mainly due to increases of $57.1 million in the Florida region and $39.9 million in the Puerto Rico region. For the first nine monthsof 2024, the increase of $259.8 million was mainly due to an increase of $274.3 million in the Florida region. The growth in the Florida region for the first nine monthsof 2024 includes the effect of the origination of ten C&I relationships, each in excess of $10 million, with an aggregate balance of $193.7 million, increased utilization of C&I lines of credit, and an increase in the commercial mortgage loan portfolio of $44.6 million.

Government loan originations for the quarter and nine-month period ended September 30, 2024 amounted to $45.1 million and $83.9 million, respectively, compared to $85.1 million and $168.7 million, respectively, for the comparable periods in 2023. The decrease for the first nine months of 2024 was mainly related to the refinancing of a $46.5 million municipal bond into a commercial loan in the Puerto Rico region for the first nine months of 2023 and lower line of credit utilization in the Virgin Islands region.

Originations of auto loans (including finance leases) for the quarter and nine-month period ended September 30, 2024 amounted to $238.8 million and $700.8 million, respectively, compared to $259.2 million and $754.6 million, respectively, for the comparable

periods in 2023. The decrease in the third quarter and first nine months of 2024, as compared with the same periods in 2023, was mainly in the Puerto Rico region. Other consumer loan originations, other than credit cards, for the quarter and nine-month period ended September 30, 2024 amounted to $60.9 million and $185.4 million, respectively, compared to $79.5 million and $229.0 million, respectively, for the comparable periods in 2023. Most of the decrease in other consumer loan originations for the third quarter and first nine monthsof 2024, as compared with the same periods in 2023, was in the Puerto Rico region. The utilization activity on the outstanding credit card portfolio for the quarter and nine-month period ended September 30, 2024 amounted to $117.2 million and $349.5 million, respectively, compared to $123.4 million and $367.8 million, respectively, for the comparable periods in 2023.

Investment Activities

As part of its liquidity, revenue diversification, and interest rate risk management strategies, First BanCorp. maintains a debt securities portfolio classified as available for sale or held to maturity.

The Corporation’s total available-for-sale debt securities portfolio as of September 30, 2024 amounted to $4.9 billion, a $335.2 million decrease from December 31, 2023. The decrease was driven by repayments of approximately $274.3 million of U.S. agencies

MBS and debentures, and repayments of $255.9 million associated to matured securities . These variances were partially offset by a $155.5 million increase in fair value attributable to changes in market interest rates and $44.1 million in purchases of Community Reinvestment Act qualified debt securities, mainly commercial MBS, during the first nine months of 2024. As of September 30, 2024, the Corporation had a net unrealized loss on available-for-sale debt securities of $477.3 million. This net unrealized loss is attributable to instruments on books carrying a lower interest rate than market rates. The Corporation expects that this unrealized loss will reverse over time and it is likely that it will not be required to sell the securities before their anticipated recovery. The Corporation expects the portfolio will continue to decrease and the accumulated other comprehensive loss will decrease accordingly, excluding the impact of market interest rates. As of September 30, 2024, approximately $480 million and $350 million in cash inflows, which are expected to be received during the remainder of 2024 and in the first quarter of 2025, respectively, from contractual maturities of the available-forsale debt securities portfolio, are expected to be redeployed to fund loan growth, reinvested into higher-yielding securities, or used to repay maturing brokered CDs.

As of September 30, 2024, substantially all of the Corporation’s available-for-sale debt securities portfolio was invested in U.S.
government and agencies debentures and fixed-rate GSEs’ MBS. In addition, as of September 30, 2024, the Corporation held a bond

issued by the Puerto Rico Housing Finance Authority (“PRHFA”), classified as available for sale, specifically a residential passthrough MBS in the aggregate amount of $3.0 million (fair value - $1.6 million). This residential pass-through MBS issued by the PRHFA is collateralized by certain second mortgages originated under a program launched by the Puerto Rico government in 2010 and had an unrealized loss of $1.4 million as of September 30, 2024, of which $0.3 million is due to credit deterioration. During 2021, the Corporation placed this instrument in nonaccrual status based on the delinquency status of the underlying second mortgage loans collateral.

Held-to-maturity debt securities include fixed-rate GSEs’ MBS with a carrying value of $231.0 million (fair value of $222.2 million) as of September 30, 2024, compared to $247.1 million as of December 31, 2023. Held-to-maturity debt securities also include

financing arrangements with Puerto Rico municipalities issued in bond form, which the Corporation accounts for as securities, but which were underwritten as loans with features that are typically found in commercial loans. Puerto Rico municipal bonds typically are not issued in bearer form, are not registered with the SEC, and are not rated by external credit agencies. These bonds have seniority to the payment of operating costs and expenses of the municipality and, in most cases, are supported by assigned property tax revenues. As of September 30, 2024, approximately 57% of the Corporation’s municipal bonds consisted of obligations issued by three of the largest municipalities in Puerto Rico. The municipalities are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and loans. As of September 30, 2024, the Corporation’s held-to-maturity debt securities portfolio, before the ACL, decreased to $323.1 million, compared to $354.2 million as of December 31, 2023, driven by repayments of approximately $16.6 million of U.S. agencies MBS and $15.9 million of Puerto Rico municipal bonds.

See “Risk Management – Exposure to Puerto Rico Government” below for information and details about the Corporation’s total direct exposure to the Puerto Rico government, including municipalities, and “Risk Management – Credit Risk Management” below and Note 2 – “Debt Securities” to the unaudited consolidated financial statements herein for the ACL of the exposure to Puerto Rico municipal bonds.

The following table presents the carrying values of investments as of the indicated dates:

September 30, 2024December 31, 2023| (In thousands) | | | | |
| --- | --- | --- | --- | --- |
| Money market investments | $ | 1,343 | $ | 1,239 |
| Available-for-sale debt securities, at fair value: | | | | |
| U.S. government and agencies obligations | | 2,261,777 | | 2,443,790 |
| Puerto Rico government obligations | | 1,567 | | 1,415 |
| Residential | | 2,438,532 | | 2,633,161 |
| Commercial | | 191,905 | | 151,618 |
| Other | | 1,000 | | - |
| Total available-for-sale debt securities, at fair value | | 4,894,781 | | 5,229,984 |
| Held-to-maturity debt securities, at amortized cost: | | | | |
| Residential | | 133,852 | | 146,468 |
| Commercial | | 97,164 | | 100,670 |
| Puerto Rico municipal bonds | | 92,126 | | 107,040 |
| ACL for held-to-maturity Puerto Rico municipal bonds | | (1,119) | | (2,197) |
| Total held-to-maturity debt securities | | 322,023 | | 351,981 |
| Equity securities, including $34.0 million and $34.6 million of FHLB stock | | | | |
| as of September 30, 2024 and December 31, 2023 | | 52,432 | | 49,675 |
| Total money market investments and investment securities | $ | 5,270,579 | $ | 5,632,879 |

The carrying values of debt securities as of September 30, 2024 by contractual maturity (excluding MBS), are shown below:| | Carrying Amount | | Weighted-Average Yield % | |
| --- | --- | --- | --- | --- |
| (Dollars in thousands) | | | | |
| U.S. government and agencies obligations: | | | | |
| Due within one year | $ | 1,037,767 | | 0.82 |
| Due after one year through five years | | 1,215,849 | | 0.85 |
| Due after ten years | | 8,161 | | 5.21 |
| | | 2,261,777 | | 0.85 |
| Puerto Rico government and municipalities obligations: | | | | |
| Due within one year | | 2,131 | | 5.62 |
| Due after one year through five years | | 61,119 | | 7.81 |
| Due after five years through ten years | | 13,121 | | 6.42 |
| Due after ten years | | 17,322 | | 7.39 |
| | | 93,693 | | 7.48 |
| Other | | 1,000 | | 2.34 |
| MBS | | 2,861,453 | | 1.72 |
| ACL on held-to-maturity debt securities | | (1,119) | | - |
| Total debt securities | $ | 5,216,804 | | 1.46 |

Net interest income in future periods could be affected by prepayments of MBS. Any acceleration in the prepayments of MBS purchased at a premiumwould lower yields on these securities, since the amortization of premiums paid upon acquisition would

accelerate. Conversely, acceleration of the prepayments of MBS would increase yields on securities purchased at a discount, since the accretion of the discount would accelerate. These risks are directly linked to future period market interest rate fluctuations. Net interest income in future periods might also be affected by the Corporation’s investment in callable securities. As of September 30, 2024, the Corporation had approximately $1.5 billion in callable debt securities (U.S. agencies debt securities) with an average yield of 0.81% of which approximately 62% were purchased at a discount and 2% at a premium. See “Risk Management” below for further analysis of the effects of changing interest rates on the Corporation’s net interest income and the Corporation’s interest rate risk management strategies. Also, refer to Note 2 – “Debt Securities” to the unaudited consolidated financial statements herein for additional information regarding the Corporation’s debt securities portfolio.

RISK MANAGEMENT

General

Risks are inherent in virtually all aspects of the Corporation’s business activities and operations. Consequently, effective risk management is fundamental to the success of the Corporation. The primary goals of risk management are to ensure that the Corporation’s risk-taking activities are consistent with the Corporation’s objectives and risk tolerance, and that there is an appropriate balance between risks and rewards to maximize stockholder value.

The Corporation has in place a risk management framework to monitor, evaluate and manage the principal risks assumed in conducting its activities. First BanCorp.’s business is subject to eleven broad categories of risks: (i) liquidity risk; (ii) interest rate risk;
(iii) market risk; (iv) credit risk; (v) operational risk; (vi) legal and regulatory risk; (vii) reputational risk; (viii) model risk; (ix) capital risk; (x) strategic risk; and (xi) information technology risk. First BanCorp. has adopted policies and procedures designed to identify and manage the risks to which the Corporation is exposed.

The Corporation’s risk management policies are described below, as well as in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the 2023 Annual Report on Form 10-K.

Liquidity Risk

Liquidity risk involves the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet liquidity needs and accommodate fluctuations in asset and liability levels due to changes in the Corporation’s business operations or unanticipated events.

The Corporation manages liquidity at two levels. The first is the liquidity of the parent company, or First Bancorp., which is the holding company that owns the banking and non-banking subsidiaries. The second is the liquidity of the banking subsidiary, FirstBank.

The Asset and Liability Committee of the Corporation’s Board of Directors is responsible for overseeing management’s establishment of the Corporation’s liquidity policy, as well as approving operating and contingency procedures and monitoring liquidity on an ongoing basis. The Management’s Investment and Asset Liability Committee (“MIALCO”), which reports to the Board’s Asset and Liability Committee, uses measures of liquidity developed by management that involve the use of several assumptions to review the Corporation’s liquidity position on a monthly basis. The MIALCO oversees liquidity management, interest rate risk, market risk, and other related matters.

The MIALCO is composed of senior management officers, including the Chief Executive Officer, the Chief Financial Officer, the Chief Risk Officer, the Corporate Strategic and Business Development Director, the Business Group Director, the Treasury and

Investments Risk Manager, the Financial Planning and Asset and Liability Management (“ALM”) Director, and the Treasurer. The Treasury and Investments Division is responsible for planning and executing the Corporation’s funding activities and strategy, monitoring liquidity availability on a daily basis, and reviewing liquidity measures on a weekly basis. The Financial Planning and ALM Division is responsible for estimating the liquidity gap.

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To ensure adequate liquidity through the full range of potential operating environments and market conditions, the Corporation conducts its liquidity management and business activities in a manner that is intended to preserve and enhance funding stability, flexibility, and diversity. Key components of this operating strategy include a strong focus on the continued development of customer-based funding, the maintenance of direct relationships with wholesale market funding providers, and the maintenance of the ability to liquidate certain assets when, and if, requirements warrant.

The Corporation develops and maintains contingency funding plans. These plans evaluate the Corporation’s liquidity position under various operating circumstances and are designed to help ensure that the Corporation will be able to operate through periods

of stress when access to normal sources of funds is constrained. The plans project funding requirements during a potential period of stress, specify and quantify sources of liquidity, outline actions and procedures for effectively managing liquidity through a period of stress, and define roles and responsibilities for the Corporation’s employees. Under the contingency funding plans, the Corporation stresses the balance sheet and the liquidity position to critical levels that mimic difficulties in generating funds or even maintaining the current funding position of the Corporation and the Bank and are designed to help ensure the ability of the Corporation and the Bank to honor their respective commitments. The Corporation has established liquidity triggers that the MIALCO monitors in order to maintain the ordinary funding of the banking business. The MIALCO has developed contingency funding plans for the following three scenarios: a credit rating downgrade, an economic cycle downturn event, and a concentration event. The Board’s Asset and Liability Committee reviews and approves these plans on an annual basis.

Liquidity Risk Management

The Corporation manages its liquidity in a proactive manner and in an effort to maintain a sound liquidity position. It uses multiple measures to monitor its liquidity position, including core liquidity, basic liquidity, and time-based reserve measures. Cash and cash

equivalents amounted to $685.4 million as of September 30, 2024, compared to $663.2 million as of December 31, 2023. When adding $1.8 billion of free high-quality liquid securities that could be liquidated or pledged within one day (which includes assets such as U.S. government and GSEs obligations), the total core liquidity amounted to $2.5 billion as of September 30, 2024, or 13.32% of total assets, compared to $2.8 billion, or 14.93% of total assets as of December 31, 2023.

In addition to the aforementioned $1.8 billion in cash and free high quality liquid assets, the Corporation had $964.7 million available for credit with the FHLB based on the value of loan collateral pledged with the FHLB. As such, the basic liquidity ratio (which adds such available secured lines of credit to the core liquidity) was approximately 18.43% of total assets as of September 30, 2024, compared to 19.82% of total assets as of December 31, 2023.

Further, the Corporation also maintains borrowing capacity at the FED Discount Window and had approximately $2.6 billion available for funding under the FED’s Borrower-in-Custody (“BIC”) Program as of September 30, 2024 as an additional source of liquidity. Total loans pledged to the FED BIC Program amounted to $3.4 billion as of September 30, 2024. The Corporation also does not rely on uncommitted inter-bank lines of credit (federal funds lines) to fund its operations. In the aggregate, as of September 30, 2024, the Corporation had $6.1 billion available to meet liquidity needs, or 131% of estimated uninsured deposits, excluding fully collateralized government deposits.

Liquidity at the Bank level is highly dependent on bank deposits, which fund 86.9% of the Bank’s assets (or 84.1% excluding brokered CDs). In addition, as further discussed below, the Corporation maintains a diversified base of readily available wholesale funding sources, including advances from the FHLB through pledged borrowing capacity, securities sold under agreements to repurchase, and access to brokered CDs. Funding through wholesale funding may continue to increase the overall cost of funding for the Corporation and adversely affect the net interest margin.

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Commitments to extend credit and standby letters of credit

As a provider of financial services, the Corporation routinely enters into commitments with off-balance sheet risk to meet the financial needs of its customers. These financial instruments may include loan commitments and standby letters of credit. These

commitments are subject to the same credit policies and approval processes used for on-balance sheet instruments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statements of financial condition. As of September 30, 2024, the Corporation’s commitments to extend credit amounted to approximately $2.1 billion. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since certain commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. There have been no significant or unexpected draws on existing commitments. In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause.

The following table summarizes commitments to extend credit and standby letters of credit as of the indicated dates:

September 30, 2024December 31, 2023| Commitments to extend credit: | | | | |
| --- | --- | --- | --- | --- |
| Construction undisbursed funds | $ | 250,597 | $ | 234,974 |
| Unused credit card lines | | 795,338 | | 882,486 |
| Unused personal lines of credit | | 37,869 | | 38,956 |
| Commercial lines of credit | | 1,026,159 | | 862,963 |

Letters of credit:
Commercial letters of credit	48,507	69,543
Standby letters of credit	18,968	8,313

The Corporation engages in the ordinary course of business in other financial transactions that are not recorded on the balance sheet or may be recorded on the balance sheet in amounts that are different from the full contract or notional amount of the transaction and, thus, affect the Corporation’s liquidity position. These transactions are designed to (i) meet the financial needs of customers, (ii) manage the Corporation’s credit, market and liquidity risks, (iii) diversify the Corporation’s funding sources, and (iv)
optimize capital.

In addition to the aforementioned off-balance sheet debt obligations and unfunded commitments to extend credit, the Corporation has obligations and commitments to make future payments under contracts, amounting to approximately $4.3 billion as of September 30, 2024. Our material cash requirements comprise primarily of contractual obligations to make future payments related to time deposits, long-term borrowings, and operating lease obligations.Wealso have other contractual cash obligations related to

certain binding agreements we have entered into for services including outsourcing of technology services, security, advertising and other services which are not material to our liquidity needs.Wecurrently anticipate that our available funds, credit facilities, and cash flows from operations will be sufficient to meet our operational cash needs and support loan growth and capital plan execution for the foreseeable future.

Off-balance sheet transactions are continuously monitored to consider their potential impact to our liquidity position and changes are applied to the balance between sources and uses of funds, as deemed appropriate, to maintain a sound liquidity position.

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Sources of Funding

The Corporation utilizes different sources of funding to help ensure that adequate levels of liquidity are available when needed.
Diversification of funding sources is of great importance to protect the Corporation’s liquidity from market disruptions. The principal sources of short-term funding are deposits, including brokered CDs. Additional funding is provided by securities sold under agreements to repurchase and lines of credit with the FHLB. In addition, the Corporation also maintains as additional sources borrowing capacity at the FED’s BIC Program , as discussed above.

The Asset and Liability Committee reviews credit availability on a regular basis. The Corporation may also sell mortgage loans as a supplementary source of funding and obtain long-term funding through the issuance of notes and long-term brokered CDs.

While liquidity is an ongoing challenge for all financial institutions, management believes that the Corporation’s available borrowing capacity and efforts to grow core deposits will be adequate to provide the necessary funding for the Corporation’s business plans in the next 12 months and beyond.

Retail and commercial core deposits –The Corporation’s deposit products include regular saving accounts, demand deposit accounts, money market accounts, and retail CDs. As of September 30, 2024 and December 31, 2023 the Corporation’s core deposits,

which exclude government deposits and brokered CDs, totaled $12.7 billion and $12.6 billion, respectively. The $69.2 million increase in such deposits consisted of increases of $58.8 million in the Florida region and $40.2 million in the Puerto Rico region, partially offset by a $29.8 million decrease in the Virgin Islands region. This increase includes a $198.2 million increase in time deposits.

Government deposits (fully collateralized)– As of September 30, 2024, the Corporation had $2.7 billion of Puerto Rico public sector deposits ($2.5 billion in transactional accounts and $150.1 million in time deposits), relatively unchanged compared to the

balance as of December 31, 2023. Government deposits are insured by the FDIC up to the applicable limits and the uninsured portions are fully collateralized. Approximately 22% of the public sector deposits as of September 30, 2024 were from municipalities and municipal agencies in Puerto Rico and 78% were from public corporations, the central government and its agencies, and U.S. federal government agencies in Puerto Rico.

In addition, as of September 30, 2024, the Corporation had $443.9 million of government deposits in the Virgin Islands region, as compared to $449.4 million as of December 31, 2023, and $19.2 million in the Florida region as compared to $10.2 million as of December 31, 2023.

The uninsured portions of government deposits were collateralized by securities and loans with an amortized cost of $3.3 billion and $3.5 billion as of September 30, 2024 and December 31, 2023, respectively, and an estimated market value of $3.1 billion as of each of such periods. In addition to securities and loans, as of each of September 30, 2024 and December 31,2023, the Corporation used $175.0 million in letters of credit issued by the FHLB as pledges for a portion of public deposits in the Virgin Islands.

Estimate of Uninsured Deposits –As of September 30, 2024 and December 31, 2023, the estimated amounts of uninsured deposits

totaled $7.6 billion and $7.4 billion, respectively, generally representing the portion of deposits that exceed the FDIC insurance limit of $250,000 and amounts in any other uninsured deposit account. As of September 30, 2024 and December 31, 2023, the uninsured portion of fully collateralized government deposits amounted to $2.9 billion and $3.0 billion, respectively. Excluding fully collateralized government deposits, the estimated amounts of uninsured deposits amounted to $4.6 billion, which represent 29.25% of total deposits (excluding brokered CDs), as of September 30, 2024, compared to $4.4 billion, or 28.13%, as of December 31, 2023.

The amount of uninsured deposits is calculated based on the same methodologies and assumptions used for our bank regulatory reporting requirements adjusted for cash held by wholly-owned subsidiaries at the Bank.

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The following table presents by contractual maturities the amount of U.S. time deposits in excess of FDIC insurance limits (over $250,000) and other time deposits that are otherwise uninsured as of September 30, 2024:

3 months or3 months to6 months to (In thousands)less6 months1 yearOver 1 yearTotal U.S. time deposits in excess of FDIC insurance limits$400,953$322,432$223,200$143,931$1,090,516 Other uninsured time deposits$18,400$11,720$16,134$2,133$48,387

Brokered CDs– Total brokered CDs decreased by $263.3 million to $520.0 million as of September 30, 2024, compared to $783.3 million as of December 31, 2023. The decline reflects maturing brokered CDs amounting to $540.5 million with an all-in cost of 5.43% that were paid off during the first nine months of 2024, partially offset by $277.2 million of new issuances with original average maturities of approximately 2 years and an all-in cost of 4.91%.

The average remaining term to maturity of the brokered CDs outstanding as of September 30, 2024 was approximately 1.2 years.

The future use of brokered CDs will depend on multiple factors including excess liquidity at each of the regions, future cash needs and any tax implications. Also, depending on lending or other investment opportunities available, cash inflows from repayments of investment securities may be used as well to repay brokered CDs. Brokered CDs are insured by the FDIC up to regulatory limits and can be obtained faster than regular retail deposits.

The following table presents the remaining contractual maturities and weighted-average interest rates of brokered CDs as of September 30, 2024:| (In thousands) | | | |
| --- | --- | --- | --- |
| Three months or less | $ | 173,980 | 5.15 |
| Over three months to six months | | 35,698 | 4.79 |
| Over six months to one year | | 100,287 | 4.86 |
| Over one year to two years | | 121,687 | 4.65 |
| Over two years to three years | | 15,328 | 4.13 |
| Over three years to four years | | 30,280 | 4.03 |
| Over four years to five years | | 27,342 | 4.44 |
| Over five years | | 15,446 | 4.61 |
| Total | $ | 520,048 | 4.80 |

Refer to “Net Interest Income” above for information about average balances of interest-bearing deposits and the average interest rate paid on such deposits for the quarters and nine-month periods ended September 30, 2024 and 2023.

Securities sold under agreements to repurchase –From time to time, the Corporation enters into repurchase agreements as an additional source of funding. As of September 30, 2024 and December 31, 2023, there were no outstanding repurchase agreements.

When the Corporation enters into repurchase agreements, as is the case with derivative contracts, the Corporation is required to pledge cash or qualifying securities to meet margin requirements. To the extent that the value of securities previously pledged as collateral declines due to changes in interest rates, a liquidity crisis or any other factor, the Corporation is required to deposit additional cash or securities to meet its margin requirements, thereby adversely affecting its liquidity. Given the quality of the collateral pledged, the Corporation has not experienced margin calls from counterparties arising from credit-quality-related writedowns in valuations.

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Advances from the FHLB –The Bank is a member of the FHLB system and obtains advances to fund its operations under a collateral agreement with the FHLB that requires the Bank to maintain qualifying mortgages and/or investments as collateral for

advances taken. As of each of September 30, 2024 and December 31, 2023, the outstanding balance of long-term fixed-rate FHLB advances was $500.0 million. Of the $500.0 million in FHLB advances as of September 30, 2024, $400.0 million were pledged with investment securities and $100.0 million were pledged with mortgage loans. As of September 30, 2024, the Corporation had $964.7 million available for additional credit on FHLB lines of credit based on collateral pledged at the FHLB of New York.

The following table presents the remaining contractual maturities and weighted-average interest rates of advances from the FHLB as of September 30, 2024:| | | | Weighted-average | |
| --- | --- | --- | --- | --- |
| | | Total | interest rate % | |
| (In thousands) | | | | |
| Over three months to six months | $ | 180,000 | | 4.60 |
| Over six months to one year | | 30,000 | | 4.83 |
| Over one year to two years | | 90,000 | | 4.49 |
| Over three years to four years | | 200,000 | | 4.25 |
| Total(1) | $ | 500,000 | | 4.45 |

(1) Average remaining term to maturity of 1.73 years.

Trust-Preferred Securities –In 2004, FBP Statutory Trusts I and II, statutory trusts that are wholly-owned by the Corporation and not consolidated in the Corporation’s financial statements, sold to institutional investors variable-rate TruPS and used the proceeds of

these issuances, together with the proceeds of the purchases by the Corporation of variable rate common securities, to purchase junior subordinated deferrable debentures. The subordinated debentures are presented in the Corporation’s consolidated statements of financial condition as other long-term borrowings. Under the indentures, the Corporation has the right, from time to time, and without causing an event of default, to defer payments of interest on the Junior Subordinated Deferrable Debentures by extending the interest payment period at any time and from time to time during the term of the subordinated debentures for up to twenty consecutive quarterly periods.

as part of the 2024 repurchase program. As of September 30, 2024 and December 31, 2023, the Corporation had junior subordinated debentures outstanding in the aggregate amount of $111.7 million and $161.7 million, respectively, with maturity dates ranging from June 17, 2034 through September 20, 2034. As of September 30, 2024, the Corporation was current on all interest payments due on its subordinated debt. See Note 10 – “Other Long-Term Borrowings” and Note 7 – “Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets” to the unaudited consolidated financial statements herein for additional information. Also, see Note 13 – “Stockholders’ Equity” to the unaudited consolidated financial statements herein for additional details of capital actions that include the approval of a 2024 repurchase program of $250 million that could include repurchases of common stock or junior subordinated debentures.

Other Sources of Funds and Liquidity- The Corporation’s principal uses of funds are for the origination of loans, the repayment of maturing deposits and borrowings, and deposits withdrawals. Over the years, in connection with its mortgage banking activities, the Corporation has invested in technology and personnel to enhance the Corporation’s secondary mortgage market capabilities.

These enhanced capabilities improve the Corporation’s liquidity profile as they allow the Corporation to derive liquidity, if needed, from the sale of mortgage loans in the secondary market. The U.S. (including Puerto Rico) secondary mortgage market is still highly

liquid, in large part because of the sale of mortgages through guarantee programs of the Federal Housing Authority (“FHA”), U.S.
Department of Veterans Affairs (“VA”), U.S. Department of Housing and Urban Development (“HUD”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corp. (“FHLMC”). During the first nine months of 2024, loans pooled into Government National Mortgage Association (“GNMA”) MBS amounted to approximately $87.4 million. Also, during the first nine months of 2024, the Corporation sold approximately $25.8 million of performing residential mortgage loans to FNMA.

The FED Discount Window is a cost-efficient source of short-term funding for the Corporation in highly-volatile market conditions. As previously mentioned, as of September 30, 2024, the Corporation had approximately $2.6 billion fully available for funding under the FED’s Discount Window based on collateral pledged at the FED.

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Effect of Credit Ratings on Access to Liquidity

The Corporation’s liquidity is contingent upon its ability to obtain deposits and other external sources of funding to finance its operations. The Corporation’s current credit ratings and any downgrade in credit ratings can hinder the Corporation’s access to new forms of external funding and/or cause external funding to be more expensive, which could, in turn, adversely affect its results of operations. Also, changes in credit ratings may further affect the fair value of unsecured derivatives whose value takes into account the Corporation’s own credit risk.

The Corporation does not have any outstanding debt or derivative agreements that would be affected by credit rating downgrades.
Furthermore, given the Corporation’s non-reliance on corporate debt or other instruments directly linked in terms of pricing or volume to credit ratings, the liquidity of the Corporation has not been affected in any material way by downgrades. The Corporation’s ability to access new non-deposit sources of funding, however, could be adversely affected by credit downgrades.

As of the date hereof, the Corporation’s credit as a long-term issuer is rated BB+ by S&P and BB by Fitch. As of the date hereof, FirstBank’s credit ratings as a long -term issuer are BB+ by S&P and Fitch, one notch below the minimum BBB- level required to be considered investment grade. The Corporation’s credit ratings are dependent on a number of factors, both quantitative and qualitative, and are subject to change at any time. The disclosure of credit ratings is not a recommendation to buy, sell or hold the Corporation’s securities. Each rating should be evaluated independently of any other rating.

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Cash Flows

Cash and cash equivalents were $685.4 million as of September 30, 2024, an increase of $22.2 million when compared to December 31, 2023. The following discussion highlights the major activities and transactions that affected the Corporation’s cash flows during the first nine months of 2024 and 2023:

Cash Flows from Operating Activities

First BanCorp.’s operating assets and liabilities vary significantly in the normal course of business due to the amount and timing of cash flows. Management believes that cash flows from operations, available cash balances, and the Corporation’s ability to generate cash through short and long-term borrowings will be sufficient to fund the Corporation’s operating liquidity needs for the foreseeable future.

For the first nine months of September 30, 2024 and 2023, net cash provided by operating activities was $307.3 million and $283.7 million, respectively. Net cash generated from operating activities was higher than reported net income largely as a result of adjustments for non-cash items such as depreciation and amortization, deferred income tax expense and the provision for credit losses, as well as cash generated from sales and repayments of loans held for sale.

Cash Flows from Investing Activities

The Corporation’s investing activities primarily relate to originating loans to be held for investment, as well as purchasing, selling, and repaying available-for-sale and held-to-maturity debt securities. For the nine -month period ended September 30, 2024 , net cash

provided by investing activities was $213.8 million, primarily due to repayments of U.S. agencies MBS, U.S. agencies debentures, and Puerto Rico municipal bonds; proceeds from sales of repossessed assets; and proceeds from sales of loans, driven by the bulk sale of fully charged-off consumer loans during the first quarter of 2024 and the sale of an $8.2 million nonaccrual C&I loan; partially offset by net disbursements on loans held for investment and purchases of Community Reinvestment Act qualified debt securities during the first nine months of 2024.

For the nine-month period ended September 30, 2023, net cash provided by investing activities was $17.5 million, primarily due to repayments of U.S. agencies MBS, U.S. agencies debentures, and Puerto Rico municipal bonds; and proceeds from sales of repossessed assets; partially offset by net disbursements on loans held for investment.

Cash Flows from Financing Activities

The Corporation’s financing activities primarily include the receipt of deposits and the issuance of brokered CDs, the issuance of and payments on long-term debt, the issuance of equity instruments, return of capital, and activities related to its short-term funding.
For the nine-month period ended September 30, 2024, net cash used in financing activities was $498.9 million, mainly reflecting a decrease in total deposits, capital returned to stockholders and the redemption of junior subordinated debentures in September 2024, as further explained in Note 7 – “Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets”.

For the nine -month period ended September 30, 2023, net cash used in financing activities was $196.8 million, mainly reflecting a $269.9 million net decrease in borrowings and $200.8 million of capital returned to stockholders, partially offset by a $275.8 million net increase in deposits.

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Capital

As of September 30, 2024, the Corporation’s stockholders’ equity was $1.7 billion, an increase of $203.3 million from December 31, 2023. The increase was driven by net income generated in the first nine months of 2024 and a $155.5 million increase in the fair value of available-for-sale debt securities recorded as part of accumulated other comprehensive loss in the consolidated statements of financial condition, partially offset by $100.0 million in common stock repurchases under the 2023 stock repurchase program, and common stock dividends declared in the first nine months of 2024 totaling $79.7 million or $0.48 per common share.

On October 30, 2024, the Corporation’s Board declared a quarterly cash dividend of $0.16 per common share. The dividend is payable on December 13, 2024 to shareholders of record at the close of business on November 29, 2024. The Corporation intends to continue to pay quarterly dividends on common stock. However, the Corporation’s common stock dividends, including the declaration, timing and amount, remain subject to the consideration and approval by the Corporation’s Board at the relevant times.

On July 24, 2023, the Corporation announced that its Board of Directors approved a stock repurchase program, under which the Corporation may repurchase up to $225 million of its outstanding common stock, which commenced in the fourth quarter of 2023.

During the first nine months of 2024, the Corporation repurchased approximately 5.8 million shares of common stock for a total cost of $100.0 million. Furthermore, on July 22, 2024, the Corporation announced that its Board of Directors approved a new repurchase program, under which the Corporation may repurchase up to an additional $250 million that could include repurchases of common stock or junior subordinated debentures, which it expects to execute through the end of the fourth quarter of 2025. As of September 30, 2024, the Corporation has remaining authorization of approximately $250.0 million under both repurchase programs after the $50.0 million redemption of junior subordinated debentures in September 2024, as further explained above. For more information, see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds,” of this Quarterly Report on Form 10-Q.

Repurchases under the programs may be executed through open market purchases, accelerated share repurchases, privately negotiated transactions or plans, including plans complying with Rule 10b5-1 under the Exchange Act, and/or redemption of junior subordinated debentures, and will be conducted in accordance with applicable legal and regulatory requirements. The Corporation’s repurchase programs are subject to various factors, including the Corporation’s capital position, liquidity, financial performance and alternative uses of capital, stock trading price, and general market conditions. The Corporation’s repurchase programs do not obligate it to acquire any specific number of shares and do not have an expiration date. The repurchase programs may be modified, suspended, or terminated at any time at the Corporation’s discretion. The Corporation’s holding company has no operations and depends on dividends, distributions and other payments from its subsidiaries to fund dividend payments, stock repurchases, and to fund all payments on its obligations, including debt obligations.

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 common equity less goodwill and other intangible assets. Tangible assets are total assets less the previously mentioned intangible assets. See “Non-GAAP Financial Measures and Reconciliations” above for additional information.

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The following table is a reconciliation of the Corporation’s tangible common equity and tangible assets, non-GAAP financial measures, to total equity and total assets, respectively, as of September 30, 2024 and December 31, 2023, respectively:| | September 30, 2024 | | December 31, 2023 | |
| --- | --- | --- | --- | --- |
| (In thousands, except ratios and per share information) | | | | |
| Total common equity - GAAP | $ | 1,700,885 | $ | 1,497,609 |
| Goodwill | | (38,611) | | (38,611) |
| Other intangible assets | | (8,260) | | (13,383) |
| Tangible common equity - non-GAAP | $ | 1,654,014 | $ | 1,445,615 |
| Total assets - GAAP | $ | 18,859,170 | $ | 18,909,549 |
| Goodwill | | (38,611) | | (38,611) |
| Other intangible assets | | (8,260) | | (13,383) |
| Tangible assets - non -GAAP | $ | 18,812,299 | $ | 18,857,555 |
| Common shares outstanding | | 163,876 | | 169,303 |
| Tangible common equity ratio - non-GAAP | | 8.79% | | 7.67% |
| Tangible book value per common share - non-GAAP | $ | 10.09 | $ | 8.54 |

See Note 21 – “Regulatory Matters, Commitments and Contingencies” to the unaudited consolidated financial statements herein for the regulatory capital positions of the Corporation and FirstBank as of September 30, 2024 and December 31, 2023, respectively.

The Puerto Rico Banking Law of 1933, as amended (the “Puerto Rico Banking Law”), requires that a minimum of 10% of FirstBank’s net income for the year be transferred to a legal surplus reserve until such surplus equals the total of paid-in-capital on

common and preferred stock. Amounts transferred to the legal surplus reserve from retained earnings are not available for distribution to the Corporation without the prior consent of the Puerto Rico Commissioner of Financial Institutions. The Puerto Rico Banking Law provides that, when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over receipts must be charged against the undistributed profits of the bank, and the balance, if any, must be charged against the legal surplus reserve, as a reduction thereof. If the legal surplus reserve is not sufficient to cover such balance in whole or in part, the outstanding amount must be charged against the capital account and the Bank cannot pay dividends until it can replenish the legal surplus reserve to an amount of at least 20% of the original capital contributed. FirstBank’s legal surplus reserve, included as part of retained earnings in the Corporation’s consolidated statements of financial condition, amounted to $199.6 million as of each of September 30, 2024 and December 31, 2023, respectively. There were no transfers to the legal surplus reserve during the first nine months of 2024.

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Interest Rate Risk Management

First BanCorp manages its asset/liability position to limit the effects of changes in interest rates on net interest income and to maintain stability of profitability under varying interest rate scenarios. The MIALCO oversees interest rate risk and monitors, among other things, current and expected conditions in global financial markets, competition and prevailing rates in the local deposit market, liquidity, loan originations pipeline, securities market values, recent or proposed changes to the investment portfolio, alternative funding sources and related costs, hedging and the possible purchase of derivatives such as swaps and caps, and any tax or regulatory issues which may be pertinent to these areas. The MIALCO approves funding decisions in light of the Corporation’s overall strategies and objectives.

On at least a quarterly basis, the Corporation performs a consolidated net interest income simulation analysis to estimate the potential change in future earnings from projected changes in interest rates. These simulations are carried out over a one-to-five-year

time horizon. The rate scenarios considered in these simulations reflect gradual upward or downward interest rate movements in the yield curve, for gradual (ramp) parallel shifts in the yield curve of 200 and 300 bps during a twelve-month period, or immediate upward or downward changes in interest rate movements of 200 bps, for interest rate shock scenarios. The Corporation carries out the simulations in two ways:

(1)Using a static balance sheet, as the Corporation had on the simulation date, and (2)Using a dynamic balance sheet based on recent patterns and current strategies.

The balance sheet is divided into groups of assets and liabilities by maturity or repricing structure and their corresponding interest yields and costs. As interest rates rise or fall, these simulations incorporate expected future lending rates, current and expected future funding sources and costs, the possible exercise of options, changes in prepayment rates, deposit decay and other factors, which may be important in projecting net interest income.

The Corporation uses a simulation model to project future movements in the Corporation’s balance sheet and income statement.
The starting point of the projections corresponds to the actual values on the balance sheet on the simulation date. These simulations

are highly complex and are based on many assumptions that are intended to reflect the general behavior of the balance sheet components over the modeled periods. It is unlikely that actual events will match these assumptions in all cases. For this reason, the results of these forward-looking computations are only approximations of the sensitivity of net interest income to changes in market interest rates. Several benchmark and market rate curves were used in the modeling process, primarily, SOFR curve, Prime Rate, U.S.
Treasury yield curve, FHLB rates, brokered CDs rates, and repurchase agreements rates.

As of September 30, 2024, the Corporation forecasted the 12-month net interest income assuming September 30, 2024 interest rate curves remain constant. Then, net interest income was estimated under rising and falling rates scenarios. For the rising rate scenario, a

gradual (ramp) and immediate (shock) parallel upward shift of the yield curve is assumed during the first twelve months (the “+300 ramp”, “+200 ramp” and “+200 shock” scenarios). Conversely, for the falling rate scenario, a gradual (ramp) and immediate (shock)
parallel downward shift of the yield curve is assumed during the first twelve months (the “-300 ramp”, “-200 ramp” and “-200 shock” scenarios).

The SOFR curve for September 30, 2024, as compared with December 31, 2023, reflects a decrease of 74 bps on average in the short-term sector of the curve, or between one to twelve months; a decrease of 55 bps in the medium-term sector of the curve, or between 2 to 5 years; and a decrease of 13 bps in the long-term sector of the curve, or over 5-year maturities. A similar change in market rates was observed in the Constant Maturity Treasury yield curve with a decrease of 76 bps in the short-term sector and a decrease of 42 bps in the medium-term sector. However, the long-term sector of the curve remains practically unchanged.

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The following table presents the results of the static simulations as of September 30,2024 and December 31, 2023. Consistent with prior years, these exclude non-cash changes in the fair value of derivatives:

Net Interest Income Risk

(% Change Projected for the next 12 months)

September 30, 2024December 31, 2023 Gradual Change in Interest Rates:
+ 300 bps ramp2.55%1.08% + 200 bps ramp1.71%0.73% - 300 bps ramp-4.15%-3.09% - 200 bps ramp-2.70%-2.02% Immediate Change in Interest Rates:

200 bps shock4.90%2.45% - 200 bps shock-7.45%-5.67%

The Corporation continues to manage its balance sheet structure to control and limit the overall interest rate risk by managing its asset composition while maintaining a sound liquidity position. See “Risk Management – Liquidity Risk Management” above for liquidity ratios.

As of September 30, 2024, and December 31, 2023, the net interest income simulations show that the Corporation continues to have an asset sensitive position for the next twelve months under a static balance sheet simulation.

Under gradual rising and falling rate scenarios, the net interest income simulation shows an increase in interest rate sensitivity, when compared with December 31, 2023, due to lower sensitivity in the liabilities side as a result of updated assumptions. Deposit betas and repricing lags were modified for some deposit categories to reflect current behavior and expectations under current and projected interest rate scenarios. Also, the sensitivity in the liabilities side was impacted by higher cost shorter term brokered CDs that are either being repriced at lower rates or are not being renewed.

Under the static simulation, the Corporation assumes that maturing instruments are replaced with similar instruments at the repricing rate upon maturity. The Corporation’s results may vary significantly from the ones presented above under alternative balance sheet compositions, such as a dynamic balance sheet scenario which, for example, would assume that cash flows from the investment securities portfolio and loan repayments will be redeployed into higher yielding alternatives.

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Credit Risk Management

First BanCorp. is subject to credit risk mainly with respect to its portfolio of loans receivable and off-balance-sheet instruments, principally loan commitments. Loans receivable represents loans that First BanCorp. holds for investment and, therefore, First

BanCorp. is at risk for the term of the loan. Loan commitments represent commitments to extend credit, subject to specific conditions, for specific amounts and maturities. These commitments may expose the Corporation to credit risk and are subject to the same review and approval process as for loans made by the Bank. See “Risk Management – Liquidity Risk” and “Risk Management – Capital” above for further details. The Corporation manages its credit risk through its credit policy, underwriting, monitoring of loan concentrations and related credit quality, counterparty credit risk, economic and market conditions, and legislative or regulatory mandates. The Corporation also performs independent loan review and quality control procedures, statistical analysis, comprehensive financial analysis, established management committees, and employs proactive collection and loss mitigation efforts. Furthermore, personnel performing structured loan workout functions are responsible for mitigating defaults and minimizing losses upon default within each region and for each business segment. In the case of the C&I, commercial mortgage and construction loan portfolios, the Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO. In addition to the management of the resolution process for problem loans, the SAG oversees collection efforts for all loans to prevent migration to the nonaccrual and/or adversely classified status. The SAG utilizes relationship officers, collection specialists and attorneys.

The Corporation may also have risk of default in the securities portfolio. The securities held by the Corporation are principally fixed-rate U.S. agencies MBS and U.S. Treasury and agencies securities. Thus, a substantial portion of these instruments is backed by mortgages, a guarantee of a U.S. GSE or the full faith and credit of the U.S. government.

Management, consisting of the Corporation’s Chief Risk Officer, Commercial Credit Risk Officer, Retail Credit Risk Officer, Chief Credit Officer, and other senior executives, has the primary responsibility for setting strategies to achieve the Corporation’s credit risk goals and objectives. Management has documented these goals and objectives in the Corporation’s Credit Policy.

Allowance for Credit Losses and Non-Performing Assets

Allowance for Credit Losses for Loans and Finance Leases

The ACL for loans and finance leases represents the estimate of the level of reserves appropriate to absorb expected credit losses over the estimated life of the loans. The amount of the allowance is determined using relevant available information, from internal and

external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience is a significant input for the estimation of expected credit losses, as well as adjustments to historical loss information made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term. Additionally, the Corporation’s assessment involves evaluating key factors, which include credit and macroeconomic indicators, such as changes in unemployment rates, property values, and other relevant factors to account for current and forecasted market conditions that are likely to cause estimated credit losses over the life of the loans to differ from historical credit losses. Such factors are subject to regular review and may change to reflect updated performance trends and expectations, particularly in times of severe stress. The process includes judgments and quantitative elements that may be subject to significant change. Further, the Corporation periodically considers the need for qualitative reserves to the ACL. Qualitative adjustments may be related to and include, but are not limited to, factors such as the following: (i) management’s assessment of economic forecasts used in the model and how those forecasts align with management’s overall evaluation of current and expected economic conditions; (ii) organization specific risks such as credit concentrations, collateral specific risks, nature and size of the portfolio and external factors that may ultimately impact credit quality, and (iii) other limitations associated with factors such as changes in underwriting and loan resolution strategies, among others. The ACL for loans and finance leases is reviewed at least on a quarterly basis as part of the Corporation’s continued evaluation of its asset quality.

The Corporation generally applies probability weights to the baseline and alternative downside economic scenarios to estimate the ACL with the baseline scenario carrying the highest weight. The scenarios that are chosen each quarter and the weighting given to

each scenario for the different loan portfolio categories depend on a variety of factors including recent economic events, leading national and regional economic indicators, and industry trends. As of September 30, 2024 and December 31, 2023, the Corporation applied 100% probability to the baseline scenario for the commercial mortgage and construction loan portfolios since certain macroeconomic variables associated with commercial real estate property performance and the CRE price index, particularly in the Puerto Rico region, are expected to continue to perform in a more favorable manner than the alternative downside economic scenario.
The economic scenarios used in the ACL determination contained assumptions related to economic uncertainties associated with geopolitical instability, the CRE price index, unemployment rate, inflation levels, and expected future interest rate adjustments in the Federal Reserve Board’s funds rate.

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As of September 30, 2024, the Corporation’s ACL model considered the following assumptions for key economic variables in the probability-weighted economic scenarios:

●CRE price index at the national level with an average projected contraction of 4.00% for the remainder of 2024 and an average projected appreciation of 0.92% for the year 2025, compared to an average projected contraction of 6.24% for the remainder of 2024 and an average projected appreciation of 2.01% for the year 2025 as of December 31, 2023.

●Regional Home Price Index forecast in Puerto Rico (purchase only prices) is projected to remain relatively flat for the remainder of 2024, while for the year 2025 shows a deterioration of 1.48%, when compared to the same period projection as of December 31, 2023. For the Florida region, the Home Price Index forecast shows an improvement of 8.50% and 7.05% for the remainder of 2024 and for the year 2025, respectively, when compared to the same period as of December 31, 2023.

●Average regional unemployment rate in Puerto Rico is forecasted at 6.07% for the remainder of 2024 and 6.30% for the year 2025, compared to 7.68% for the remainder of 2024 and 8.08% for the year 2025 as of December 31, 2023. For the Florida and the U.S. mainland, average unemployment rate is forecasted at 3.94% and 4.45%, respectively, for the remainder of 2024, and 4.51% and 4.96%, respectively, for the year 2025, compared to 4.51% and 4.94%, respectively, for the remainder of 2024, and 4.12% and 4.52%, respectively, for the year 2025 as of December 31, 2023.

●Annualized change in GDP in the U.S. mainland of 1.69% for the remainder of 2024 and 1.04% for the year 2025, compared to 0.53% for the remainder of 2024 and 1.64% for the year 2025 as of December 31, 2023.

It is difficult to estimate how potential changes in one factor or input might affect the overall ACL because management considers a wide variety of factors and inputs in estimating the ACL. Changes in the factors and inputs considered may not occur at the same rate

and may not be consistent across all geographies or product types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in others. However, to demonstrate the sensitivity of credit loss estimates to macroeconomic forecasts as of September 30, 2024, management compared the modeled estimates under the probabilityweighted economic scenarios against a more adverse scenario. Such scenario incorporates an additional adverse scenario and decreases the weight applied to the baseline scenario. Under this more adverse scenario, as an example, average unemployment rate for the Puerto Rico region increases to 6.33% for the remainder of 2024, compared to 6.07% for the same period on the probabilityweighted economic scenario projections.

To demonstrate the sensitivity to key economic parameters used in the calculation of the ACL at September 30, 2024, management calculated the difference between the quantitative ACL and this more adverse scenario. Excluding consideration of qualitative

adjustments, this sensitivity analysis would result in a hypothetical increase in the ACL of approximately $40 million at September 30, 2024. This analysis relates only to the modeled credit loss estimates and is not intended to estimate changes in the overall ACL as it does not reflect any potential changes in other adjustments to the qualitative calculation, which would also be influenced by the judgment management applies to the modeled lifetime loss estimates to reflect the uncertainty and imprecision of these estimates based on current circumstances and conditions. Recognizing that forecasts of macroeconomic conditions are inherently uncertain, particularly in light of recent economic conditions and challenges, which continue to evolve, management believes that its process to consider the available information and associated risks and uncertainties is appropriately governed and that its estimates of expected credit losses were reasonable and appropriate for the period ended September 30, 2024.

As of September 30, 2024, the ACL for loans and finance leases was $247.0 million, or 1.98% of total loans, a decrease of $14.8 million, from $261.8 million, or 2.15% of total loans, as of December 31, 2023. The ACL for residential mortgage loans decreased by

$16.7 million, driven by updated historical loss experience used for determining the ACL estimate resulting in a downward revision of estimated loss severities and improvements in the long-term projections of the unemployment rate in the Puerto Rico region, partially offset by newly originated loans. The ACL for commercial and construction loans decreased by $8.8 million, mainly due to reserve releases associated with the improved financial condition of certain borrowers and an improvement on the economic outlook of certain macroeconomic variables, particularly variables associated with commercial real estate property performance and the forecasted CRE price index, particularly in the Puerto Rico region, partially offset by increased volume.

Meanwhile, the ACL for consumer loans increased by $10.7 million driven by higher charge-off levels and loan portfolio growth, mainly in auto loans.

The ratio of the ACL for loans and finance leases to total loans held for investment decreased to 1.98% as of September 30, 2024, compared to 2.15% as of December 31, 2023. An explanation for the change for each portfolio follows:

●The ACL to total loans ratio for the residential mortgage loan portfolio decreased from 2.03% as of December 31, 2023 to 1.44% as of September 30, 2024, mainly due to the aforementioned updated historical loss experience and improvements in the long-term projections of the unemployment rate, partially offset by the aforementioned newly originated loans.

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●The ACL to total loans ratio for the construction loan portfolio decreased from 2.61% as of December 31, 2023 to 1.93% as of September 30, 2024, mainly due to an improvement on the economic outlook of certain macroeconomic variables associated with commercial real estate property performance and the CRE price index.

●The ACL to total loans ratio for the commercial mortgage loan portfolio decreased from 1.41% as of December 31, 2023 to 0.98% as of September 30, 2024, driven by the aforementioned reserve releases associated with the improved financial condition of certain borrowers and an improvement on the economic outlook of certain macroeconomic variables associated with commercial real estate property performance and the CRE price index.

●The ACL to total loans ratio for the C&I loan portfolio remained relatively flat at 1.07% as of September 30, 2024, compared to 1.05% as of December 31, 2023.

●The ACL to total loans ratio for the consumer loan portfolio increased from 3.64% as of December 31, 2023 to 3.84% as of September 30, 2024, driven by increases in charge-off levels.

The ratio of the total ACL for loans and finance leases to nonaccrual loans held for investment was 276.46% as of September 30, 2024, compared to 312.81% as of December 31, 2023.

See “Results of Operations - Provision for Credit Losses” and Note 4 – “Allowance for Credit Losses for Loans and Finance Leases” above for additional information.| | Quarter Ended September 30, | | | Nine-Month Period Ended September 30, | | |
| --- | --- | --- | --- | --- | --- | --- |
| | 2024 | | 2023 | 2024 | | 2023 |
| (Dollars in thousands) | | | | | | |
| ACL for loans and finance leases, beginning of year | $254,532 | $ | 267,058 | $261,843 | $ | 260,464 |
| Impact of adoption of ASU 2022-02 | | - | - | | - | 2,116 |
| Provision for credit losses - (benefit) expense: | | | | | | |
| Residential mortgage | | (5,476) | (3,349) | (16,533) | | (6,776) |
| Construction | | (1,659) | (642) | | (1,642) | 1,420 |
| Commercial mortgage | | (5,914) | (1,344) | | (8,900) | 5,901 |
| C&I | | 1,138 | 1,931 | | (2,890) | 3,278 |
| Consumer and finance leases | | 28,381 | 14,047 | | 71,282 | 43,846 |
| Total provision for credit losses - expense | | 16,470 | 10,643 | | 41,317 | 47,669 |
| Charge-offs: | | | | | | |
| Residential mortgage | | (421) | (499) | | (1,428) | (2,628) |
| Construction | | - | (4) | | - | (42) |
| Commercial mortgage | | - | (1) | | - | (107) |
| C&I | | (1,350) | (9) | | (2,141) | (6,477) |
| Consumer and finance leases | (27,274) | | (19,746) | (81,229) | | (53,006) |
| Total charge offs | (29,045) | | (20,259) | (84,798) | | (62,260) |
| Recoveries: | | | | | | |
| Residential mortgage | | 497 | 534 | | 1,215 | 1,788 |
| Construction | | 11 | 1,463 | | 35 | 1,935 |
| Commercial mortgage | | 41 | 75 | | 474 | 299 |
| C&I | | 210 | 161 | | 6,287 | 383 |
| Consumer and finance leases | | 4,280 | 3,940 | | 20,623(1) | 11,221 |
| Total recoveries | | 5,039 | 6,173 | | 28,634(1) | 15,626 |
| Net charge-offs | (24,006) | | (14,086) | (56,164) | | (46,634) |

ACL for loans and finance leases, end of period	$	263,615$	246,996$	263,615
ACL for loans and finance leases to period-end total loans held for investment	1.98%	2.21%	1.98%	2.21%
Net charge-offs (annualized) to average loans outstanding during the period	0.78%	0.48%	0.61%(2)	0.54%
Provision for credit losses - expense for loans and finance leases to net charge-offs duringthe period	0.69x	0.76x	0.74x	1.02x

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The following tables set forth information concerning the composition of the Corporation's loan portfolio and related ACL by loan category, and the percentage of loan balances in each category to the total of such loans as of the indicated dates:| As of September 30, 2024 | Residential | | | Commercial | | | Consumer and | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars in thousands) | MortgageLoans | ConstructionLoans | | MortgageLoans | C&I Loans | | FinanceLeases | | Total | |
| Total loans held for investment: | | | | | | | | | | |
| Amortized cost of loans | $2,820,147 | $207,342 | | $2,471,880 | $3,205,313 | | $3,741,342 | $ | 12,446,024 | |
| Percent of loans in each category to total loans | 23 | % | 2% | 20 | % | 26% | | 29% | 100 | % |
| Allowance for credit losses | $40,651 | $ | 3,998 | $24,205 | $ | 34,446 | $143,696 | $ | 246,996 | |
| Allowance for credit losses to amortized cost | 1.44 | % | 1.93% | 0.98 | % | 1.07% | 3.84 | % | 1.98 | % |

As of December 31, 2023	Residential			Commercial
(Dollars in thousands)	MortgageLoans	Construction	Loans	MortgageLoans	C&I Loans		Finance LeasesConsumer and		Total
Total loans held for investment:
Amortized cost of loans	$2,821,726	$	214,777	$2,317,083	$	3,174,232	$3,657,665	$	12,185,483
Percent of loans in each category to total loansAllowance for credit losses	$57,397	23%$	5,6052%	$32,631	19%$	33,19026%	$133,020	30%$	261,843100%
Allowance for credit losses to amortized cost	2.03	%	2.61%	1.41	%	1.05%	3.64	%	2.15%

Allowance for Credit Losses for Unfunded Loan Commitments

The Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk as a result of a contractual obligation to extend credit, such as pursuant to unfunded loan commitments and standby letters of credit for commercial and construction loans, unless the obligation is unconditionally cancellable by the Corporation. The ACL for off-balance sheet credit exposures is adjusted as a provision for credit loss expense. As of September 30, 2024, the ACL for off-balance sheet credit exposures decreased by $1.1 million to $3.5 million, when compared to December 31, 2023, driven by an improvement on the economic outlook of certain macroeconomic variables, particularly in variables associated with the CRE price index.

Allowance for Credit Losses for Held-to-Maturity Debt Securities

As of September 30, 2024, the ACL for held-to-maturity securities portfolio was entirely related to financing arrangements with Puerto Rico municipalities issued in bond form, which the Corporation accounts for as securities, but which were underwritten as loans with features that are typically found in commercial loans. As of September 30, 2024, the ACL for held-to-maturity debt securities was $1.1 million, compared to $2.2 million as of December 31, 2023. The decrease was driven by improvements in the underlying updated financial information of a Puerto Rico municipal bond issuer.

Allowance for Credit Losses for Available -for-Sale Debt Securities

The ACL for available-for-sale debt securities, which is associated with private label MBS and a residential pass-through MBS issued by the PRHFA, was $0.5 million as of each of September 30, 2024 and December 31, 2023.

Nonaccrual Loans and Non-Performing Assets

Total non-performing assets consist of nonaccrual loans (generally loans held for investment or loans held for sale for which the recognition of interest income was discontinued when the loan became 90 days past due or earlier if the full and timely collection of

interest or principal is uncertain), foreclosed real estate and other repossessed properties, and non-performing investment securities, if any. When a loan is placed in nonaccrual status, any interest previously recognized and not collected is reversed and charged against interest income. Cash payments received are recognized when collected in accordance with the contractual terms of the loans. The principal portion of the payment is used to reduce the principal balance of the loan, whereas the interest portion is recognized on a cash basis (when collected). However, when management believes that the ultimate collectability of principal is in doubt, the interest portion is applied to the outstanding principal. The risk exposure of this portfolio is diversified as to individual borrowers and industries, among other factors. In addition, a large portion is secured with real estate collateral.

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Nonaccrual Loans Policy

Residential Real Estate Loans— The Corporation generally classifies real estate loans in nonaccrual status when it has not received interest and principal for a period of 90 days or more.

Commercial and Construction Loans— The Corporation classifies commercial loans (including commercial real estate and construction loans) in nonaccrual status when it has not received interest and principal for a period of 90 days or more or when it does not expect to collect all of the principal or interest due to deterioration in the financial condition of the borrower.

Finance Leases— The Corporation classifies finance leases in nonaccrual status when it has not received interest and principal for a period of 90 days or more.

Consumer Loans— The Corporation classifies consumer loans in nonaccrual status when it has not received interest and principal for a period of 90 days or more. Credit card loans continue to accrue finance charges and fees until charged-off at 180 days delinquent.

Purchased Credit Deteriorated Loans (“PCD”)— For PCD loans, the nonaccrual status is determined in the same manner as for other loans, except for PCD loans that prior to the adoption of CECL were classified as purchased credit impaired (“PCI”) loans and

accounted for under ASC Subtopic 310-30, “Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC Subtopic 310-30”). As allowed by CECL, the Corporation elected to maintain pools of loans accounted for under ASC Subtopic 310-30 as “units of accounts,” conceptually treating each pool as a single asset. Regarding interest income recognition, the prospective transition approach for PCD loans was applied at a pool level, which froze the effective interest rate of the pools as of January 1, 2020. According to regulatory guidance, the determination of nonaccrual or accrual status for PCD loans with respect to which the Corporation has made a policy election to maintain previously existing pools upon adoption of CECL should be made at the pool level, not the individual asset level. In addition, the guidance provides that the Corporation can continue accruing interest and not report the PCD loans as being in nonaccrual status if the following criteria are met: (i) the Corporation can reasonably estimate the timing and amounts of cash flows expected to be collected; and (ii) the Corporation did not acquire the asset primarily for the rewards of ownership of the underlying collateral, such as the use in operations or improving the collateral for resale. Thus, the Corporation continues to exclude these pools of PCD loans from nonaccrual loan statistics.

Loans Past-Due 90 Days and Still Accruing— These are accruing loans that are contractually delinquent 90 days or more. These

past-due loans are either current as to interest but delinquent as to the payment of principal (i.e., well secured and in process of collection) or are insured or guaranteed under applicable FHA, VA, or other government-guaranteed programs for residential mortgage loans. Furthermore, as required by instructions in regulatory reports, loans past due 90 days and still accruing include loans previously pooled into GNMA securities for which the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria (e.g., borrowers fail to make any payment for three consecutive months). For accounting purposes, these GNMA loans subject to the repurchase option are required to be reflected in the financial statements with an offsetting liability. In addition, loans past due 90 days and still accruing include PCD loans, as mentioned above, and credit cards that continue accruing interest until charged-off at 180 days.

Other Real Estate Owned

OREO acquired in settlement of loans is carried at fair value less estimated costs to sell the real estate acquired. Appraisals are obtained periodically, generally on an annual basis.

Other Repossessed Property

The other repossessed property category generally includes repossessed autos acquired in settlement of loans. Repossessed autos are recorded at the lower of cost or estimated fair value.

Other Non-Performing Assets

This category consists of a residential pass-through MBS issued by the PRHFA placed in non-performing status in the second quarter of 2021 based on the delinquency status of the underlying second mortgage loans.

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The following table shows non-performing assets by geographic segment as of the indicated dates:| | | | September 30, 2024 | | December 31, 2023 | |
| --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | | | | | | |
| Puerto Rico: | | | | | | |
| Nonaccrual loans held for investment: | | | | | | |
| Residential mortgage | | | $ | 16,047 | $ | 18,324 |
| Construction | | | | 3,687 | | 595 |
| Commercial mortgage | | | | 2,734 | | 3,106 |
| C&I | | | | 17,131 | | 13,414 |
| Consumer and finance leases | | | | 22,763 | | 21,954 |
| Total nonaccrual loans held for investment | | | | 62,362 | | 57,393 |
| OREO | | | | 15,715 | | 28,382 |
| Other repossessed property | | | | 8,655 | | 7,857 |
| Other assets | | | | 1,567 | | 1,415 |
| Total non-performing assets | | | $ | 88,299 | $ | 95,047 |
| Past due loans 90 days and still accruing | | | $ | 40,458 | $ | 53,308 |
| Virgin Islands:Nonaccrual loans held for investment: | | | | | | |
| Residential mortgage | | | $ | 6,434 | $ | 6,688 |
| Construction | | | | 964 | | 974 |
| Commercial mortgage | | | | 8,762 | | 9,099 |
| C&I | | | | 1,231 | | 1,169 |
| Consumer | | | | 307 | | 419 |
| Total nonaccrual loans held for investment | | | | 17,698 | | 18,349 |
| OREO | | | | 3,615 | | 4,287 |
| Other repossessed property | | | | 186 | | 252 |
| Total non-performing assets | | | $ | 21,499 | $ | 22,888 |
| Past due loans 90 days and still accruing | | | $ | 3,152 | $ | 6,005 |
| United States:Nonaccrual loans held for investment: | | | | | | |
| Residential mortgage | | | $ | 9,248 | $ | 7,227 |
| C&I | | | | - | | 667 |
| Consumer | | | | 36 | | 71 |
| Total nonaccrual loans held for investment | | | | 9,284 | | 7,965 |
| Other repossessed property | | | | 3 | | 6 |
| Total non-performing assets | | | $ | 9,287 | $ | 7,971 |
| Past due loans 90 days and still accruing | | | $ | - | $ | 139 |
| TotalNonaccrual loans held for investment: | | | | | | |
| Residential mortgage | | | $ | 31,729 | $ | 32,239 |
| Construction | | | | 4,651 | | 1,569 |
| Commercial mortgage | | | | 11,496 | | 12,205 |
| C&I | | | | 18,362 | | 15,250 |
| Consumer and finance leases | | | | 23,106 | | 22,444 |
| Total nonaccrual loans held for investment | | | | 89,344 | | 83,707 |
| OREO | | | | 19,330 | | 32,669 |
| Other repossessed property | | | | 8,844 | | 8,115 |
| Other assets | (1) | | | 1,567 | | 1,415 |
| Total non-performing assets | | | $ | 119,085 | $ | 125,906 |
| Past due loans 90 days and still accruing | | (2) (3) (4) | $ | 43,610 | $ | 59,452 |
| Non-performing assets to total assetsNonaccrual loans held for investment to total loans held for investment | | | | 0.63%0.72% | | 0.67%0.69% |
| ACL for loans and finance leasesACL for loans and finance leases to total nonaccrual loans held for investment | | | | 246,996276.46% | | 261,843312.81% |
| ACL for loans and finance leases to total nonaccrual loans held for investment, excluding residential real estate loans | | | | 428.70% | | 508.75% |

the time of adoption of CECL on January 1, 2020 and on an ongoing basis for credit loss measurement. These loans will continue to be excluded from nonaccrual loan statistics as long as the Corporation can reasonably estimate the timing and amount of cash flows expected to be collected on the loan pools. The portion of such loans contractually past due 90 days or more amounted to $6.5 million and $8.3 million as of September 30, 2024 and December 31, 2023, respectively.
(3)Includes FHA/VA government-guaranteed residential mortgage as loans past-due 90 days and still accruing as opposed to nonaccrual loans. The Corporation continues accruing interest on these loans until they have passed the 15 months delinquency mark, taking into consideration the FHA interest curtailment process. These balances include $9.0 million and $15.4 million of FHA government guaranteed residential mortgage loans that were over 15 months delinquent as of September 30, 2024 and December 31, 2023, respectively.
(4)These includes rebooked loans, which were previously pooled into GNMA securities, amounting to $6.6 million and $7.9 million as of September 30, 2024 and December 31, 2023, respectively.
Under the GNMA program, the Corporation has the option but not the obligation to repurchase loans that meet GNMA’s specified delinquency criteria. For accounting purposes, the loans subject to the repurchase option are required to be reflected on the financial statements with an offsetting liability.

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Total non-performing assets decreased by $6.8 million to $119.1 million as of September 30, 2024, compared to $125.9 million as of December 31, 2023. The decrease in non-performing assets was driven by a $13.3 million decrease in the OREO portfolio balance in the Puerto Rico region, mainly attributable to the sale of a $5.3 million commercial real estate OREO property and sales of residential OREO properties, partially offset by a $5.6 million increase in total nonaccrual loans held for investment.

Total nonaccrual loans were $89.3 million as of September 30, 2024. This represents a net increase of $5.6 million from $83.7 million as of December 31, 2023, mainly in commercial and construction loans, driven by the inflow of a $16.5 million commercial relationship in the Puerto Rico region in the food retail industry, partially offset by the sale of an $8.2 million nonaccrual C&I loan in the Puerto Rico region. The sale resulted in a $1.2 million charge -off that had been previously reserved.

The following tables present the activity of commercial and construction nonaccrual loans held for investment for the indicated periods:

Commercial

ConstructionMortgageC&ITotal| Quarter Ended September 30, 2024 | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Beginning balance | $ | 4,742$ | 11,736 | $ | 27,661 | $ | 44,139 |
| Plus: | | | | | | | |
| Additions to nonaccrual | | - | 100 | | 902 | | 1,002 |
| Less: | | | | | | | |
| Nonaccrual loans charge-offs | | - | - | | (1,350) | | (1,350) |
| Loan collections | | (91) | (340) | | (651) | | (1,082) |
| Nonaccrual loans sold, net of charge-offs | | - | - | | (8,200) | | (8,200) |
| Ending balance | $ | 4,651$ | 11,496 | $ | 18,362 | $ | 34,509 |

Commercial

ConstructionMortgageC&ITotal| Quarter Ended September 30, 2023 | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Beginning balance | $ | 1,677$ | 21,536 | $ | 9,194 | $ | 32,407 |
| Plus: | | | | | | | |
| Additions to nonaccrual | | - | 522 | | 10,569 | | 11,091 |
| Less: | | | | | | | |
| Loans returned to accrual status | | - | - | | (199) | | (199) |
| Nonaccrual loans transferred to OREO | | - | - | | (547) | | (547) |
| Nonaccrual loans charge-offs | | - | (1) | | (9) | | (10) |
| Loan collections | | (37) | (425) | | (199) | | (661) |
| Ending balance | $ | 1,640$ | 21,632 | $ | 18,809 | $ | 42,081 |

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Commercial

ConstructionMortgageC&ITotal| Nine-Month Period Ended September 30, 2024 | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Beginning balance | $ | 1,569 | $ | 12,205 | $ | 15,250 | $ | 29,024 |
| Plus: | | | | | | | | |
| Additions to nonaccrual | | 3,300 | | 107 | | 26,743 | | 30,150 |
| Less: | | | | | | | | |
| Loans returned to accrual status | | (35) | | (77) | | (9,226)(1) | | (9,338) |
| Nonaccrual loans transferred to OREO | | (48) | | - | | (684) | | (732) |
| Nonaccrual loans charge-offs | | - | | - | | (2,141) | | (2,141) |
| Loan collections | | (135) | | (739) | | (3,380) | | (4,254) |
| Nonaccrual loans sold, net of charge-offs | | - | | - | | (8,200) | | (8,200) |
| Ending balance | $ | 4,651 | $ | 11,496 | $ | 18,362 | $ | 34,509 |

(1)Mainly related to the restoration to accrual status of a participated C&I loan in the Florida region associated with the power generation industry that entered in nonaccrual status during the first quarter of 2024.

Commercial

ConstructionMortgageC&ITotal| Nine-Month Period Ended September 30, 2023 | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Beginning balance | $ | 2,208$ | 22,319 | $ | 7,830 | $ | 32,357 |
| Plus: | | | | | | | |
| Additions to nonaccrual | | 127 | 1,505 | | 20,730 | | 22,362 |
| Less: | | | | | | | |
| Loans returned to accrual status | | - | (361) | | (725) | | (1,086) |
| Nonaccrual loans transferred to OREO | | (332) | (223) | | (730) | | (1,285) |
| Nonaccrual loans charge-offs | | - | (107) | | (6,477) | | (6,584) |
| Loan collections | | (363) | (1,507) | | (1,819) | | (3,689) |
| Reclassification | | - | 6 | | - | | 6 |
| Ending balance | $ | 1,640$ | 21,632 | $ | 18,809 | $ | 42,081 |

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The following table presents the activity of residential nonaccrual loans held for investment for the indicated periods:

Quarter Ended September 30,Nine-Month Period Ended September 30,

2024202320242023 (In thousands)
Beginning balance$31,396$33,252$32,239$42,772| Plus: | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Additions to nonaccrual | | 4,678 | | 4,510 | | 12,671 | | 9,600 |
| Less: | | | | | | | | |
| Loans returned to accrual status | | (2,692) | | (3,788) | | (7,662) | | (10,439) |
| Nonaccrual loans transferred to OREO | | (477) | | (984) | | (1,624) | | (5,243) |
| Nonaccrual loans charge-offs | | (2) | | (83) | | (280) | | (704) |
| Loan collections | | (1,174) | | (961) | | (3,615) | | (4,034) |
| Reclassification | | - | | - | | - | | (6) |
| Ending balance | $ | 31,729 | $ | 31,946 | $ | 31,729 | $ | 31,946 |

The amount of nonaccrual consumer loans, including finance leases, increased by $0.7 million to $23.1 million as of September 30, 2024, compared to $22.4 million as of December 31, 2023. The increase was mainly reflected in the auto loan portfolio. The inflows of nonaccrual consumer loans during the first nine months of 2024 amounted to $86.6 million, compared to inflows of $63.2 million for the same period in 2023.

As of September 30, 2024, approximately $24.3 million of the loans placed in nonaccrual status, mainly commercial and residential mortgage loans, were current, or had delinquencies of less than 90 days in their interest payments. Collections on nonaccrual loans are being recorded on a cash basis through earnings, or on a cost-recovery basis, as conditions warrant.

During the nine-month period ended September 30, 2024, interest income of approximately $0.6 million related to nonaccrual loans with a carrying value of $30.9 million as of September 30, 2024, mainly nonaccrual commercial and construction loans, was applied against the related principal balances under the cost-recovery method.

Total loans in early delinquency (i.e., 30-89 days past due loans, as defined in regulatory reporting instructions) amounted to $143.4 million as of September 30, 2024, a decrease of $7.4 million, compared to $150.8 million as of December 31, 2023. The variances by major portfolio categories are as follows:

●Consumer loans in early delinquency decreased by $8.1 million to $103.9 million, mainly reflected in the auto loan portfolio.

●Residential mortgage loans in early delinquency decreased by $4.6 million to $31.9 million.

Partially offset by:

●Commercial and construction loans in early delinquency increased by $5.3 million to $7.6 million, mainly due to certain commercial loans that matured and are in the process of renewal but for which the Corporation continues to receive interest and principal payments from the borrowers.

In addition, the Corporation provides homeownership preservation assistance to its customers through a loss mitigation program.
Depending upon the nature of a borrower’s financial condition, restructurings or loan modifications through this program are provided, as well as other modifications of individual C&I, commercial mortgage, construction, and residential mortgage loans. For the quarter and nine-month period ended September 30, 2024, loans modified to borrowers experiencing financial difficulty had an amortized cost basis of $6.8 million and $126.9 million, respectively. The modifications for the first nine months of 2024 include $110.7 million related to a commercial mortgage relationship that had been previously reported as a troubled debt restructuring under ASC 310-40 and was performing according to modified terms. See Note 3 – “Loans Held for Investment” to the unaudited consolidated financial statements herein for additional information and statistics about the Corporation’s modified loans.

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The OREO portfolio, which is part of non-performing assets, amounted to $19.3 million as of September 30, 2024 and $32.7 million as of December 31, 2023. The following tables show the composition of the OREO portfolio as of September 30, 2024 and December 31, 2023, as well as the activity of the OREO portfolio by geographic area during the nine-month period endedSeptember 30, 2024:

OREO Composition by Region| | | | As of September 30, 2024 | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | Puerto Rico | | Virgin Islands | | Florida | Consolidated | |
| Residential | $ | 13,646$ | | 805$ | | -$ | 14,451 |
| Construction | | 1,125 | | - | | - | 1,125 |
| Commercial | | 944 | | 2,810 | | - | 3,754 |
| | $ | 15,715$ | | 3,615$ | | -$ | 19,330 |

			As of December 31, 2023
(In thousands)	Puerto Rico		Virgin Islands		Florida	Consolidated
Residential	$	18,809$		1,452$		-$	20,261
Construction		1,576		25		-	1,601
Commercial		7,997		2,810		-	10,807

$28,382$4,287$-$32,669

OREO Activity by Region| | | Nine-Month Period Ended September 30, 2024 | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | Puerto Rico | | Virgin Islands | | Florida | Consolidated | |
| Beginning Balance | $ | 28,382 | $ | 4,287$ | | -$ | 32,669 |
| Additions | | 7,568 | | - | | 67 | 7,635 |
| Sales | | (18,747) | | (639) | | (67) | (19,453) |
| Subsequent measurement adjustments | | (227) | | (33) | | - | (260) |
| Other adjustments | | (1,261) | | - | | - | (1,261) |
| Ending Balance | $ | 15,715 | $ | 3,615$ | | -$ | 19,330 |

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Net Charge-offs and Total Credit Losses

Net charge-offs totaled $24.0 million for the third quarter of 2024, or 0.78% of average loans on an annualized basis, compared to $14.1 million, or an annualized 0.48% of average loans, for the third quarter of 2023. For the nine-month period ended September 30, 2024, net charge-offs totaled $56.2 million, or an annualized 0.61% of average loans, compared to $46.6 million, or an annualized 0.54% of average loans, for the same period in 2023.Net charge-offs for the nine-month period ended September 30, 2024 include a $10.0 million recovery associated with the bulk sale of fully charged-off consumer loans and finance leases, which reduced by 11 basis points the ratio of total net charge-offs to average loans for such period.

Consumer loans and finance leases net charge-offs for the third quarter of 2024 were $23.0 million, or an annualized 2.47% of related average loans, compared to net charge-offs of $15.8 million, or an annualized 1.79% of related average loans, for the third

quarter of 2023. Net charge-offs of consumer loans and finance leases for the nine-month period ended September 30, 2024 were $60.6 million, or 2.19% of related average loans, compared to net charge-offs of $41.8 million, or an annualized 1.61% of related average loans, for the same period in 2023. The increase for the third quarter and first nine months of 2024 was driven by an increase in charge-offs across all major portfolio classes, which have been trending higher towards historical loss experience, partially offset by the aforementioned recovery associated with the aforementioned bulk sale, which reduced by 36 basis points the ratio of consumer loans and finance leases net charge-offs to related average loans for the first nine months of 2024.

Construction loans net recoveries for the third quarter of 2024 were $11 thousand, or an annualized 0.02% of related average loans, compared to net recoveries of $1.4 million, or an annualized 3.18% of related average loans, for the same period in 2023. Construction

loans net recoveries for the nine-month period ended September 30, 2024 were $35 thousand, or an annualized 0.02% of related average loans, compared to net recoveries of $1.9 million, or an annualized 1.58% of related average loans, for the same period in 2023. The net recoveries for the third quarter and first nine months of 2023 included a $1.4 million recovery recorded on a construction loan in the Puerto Rico region.

C&I loans net charge-offs for the third quarter of 2024 were $1.1 million, or an annualized 0.14% of related average loans, compared to net recoveries of $0.2 million, or an annualized 0.02% of related average loans, for the third quarter of 2023. C&I loans

net recoveries for the nine-month period ended September 30, 2024 were $4.1 million, or an annualized 0.17% of related average loans, compared to net charge-offs of $6.1 million, or an annualized 0.28% of related average loans, for the same period in 2023. The results for the third quarter and first nine months of 2024 include the aforementioned $1.2 million charge-off recorded on the sale of a nonaccrual C&I loan in the Puerto Rico region. The results for the first nine months of 2024 also include a $5.0 million recovery associated with a C&I loan in the Puerto Rico region and a $0.8 million recovery associated with a C&I loan in the Florida region.
Meanwhile, the net charge-offs for the first nine months of 2023 include a $6.2 million charge-off recorded on a participated C&I loan in the Florida region associated with the power generation industry.

Commercial mortgage loans net recoveries for the third quarter were $41 thousand, or an annualized 0.01% of related average loans, compared to net recoveries of $0.1 million, or an annualized 0.01% of related average loans, for the third quarter of 2023.
Commercial mortgage loans net recoveries for the nine-month period ended September 30, 2024 were $0.5 million, or an annualized 0.03% of related average loans, compared to net recoveries of $0.2 million, or an annualized 0.01% of related average loans, for the same period in 2023. The net recoveries for the first nine months of 2024 include a $0.4 million recovery recorded on a commercial real estate loan in the Florida region.

The following table presents annualized net (recoveries) charge -offs to average loans held-in-portfolio for the indicated periods:| | Quarter Ended September 30, | | Nine-Month Period Ended September 30, | | |
| --- | --- | --- | --- | --- | --- |
| | 2024 | 2023 | 2024 | | 2023 |
| Residential mortgage | (0.01)% | (0.01)% | 0.01 | % | 0.04% |

Construction(0.02)%(3.18)%(0.02)%(1.58)%

Commercial mortgage(0.01)%(0.01)%(0.03)%(0.01)%

C&I0.14%(0.02)%(0.17)%0.28%| Consumer and finance leases | 2.47% | 1.79% | 2.19%(1) | 1.61% |
| --- | --- | --- | --- | --- |
| Total loans | 0.78% | 0.48% | 0.61%(1) | 0.54% |

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The following table presents annualized net (recoveries) charge -offs to average loans held in various portfolios by geographic segment for the indicated periods:| | Quarter Ended September 30, | | Nine-Month Period Ended September 30, | | |
| --- | --- | --- | --- | --- | --- |
| | 2024 | 2023 | 2024 | | 2023 |
| PUERTO RICO: | | | | | |
| Residential mortgage | (0.01)% | -% | 0.01% | | 0.06% |
| Construction | -% | (7.30)% | -% | | (4.32)% |
| Commercial mortgage | -% | (0.01)% | -% | | -% |
| C&I | 0.21% | (0.03)% | (0.22)% | | -% |
| Consumer and finance leases | 2.46% | 1.78% | 2.17% | (1) | 1.61% |
| Total loans | 0.96% | 0.59% | 0.76% | (1) | 0.58% |

VIRGIN ISLANDS: Residential mortgage-%(0.12)%-%-% Construction-%0.42%-%-% Commercial mortgage(0.23)%(0.21)%(0.22)%(0.02)% Consumer and finance leases3.48%2.15%3.23%0.33% Total loans0.57%0.26%0.50%0.05%

FLORIDA: Residential mortgage-%(0.01)%-%(0.02)% Construction(0.16)%(0.05)%(0.07)%(0.05)% Commercial mortgage-%-%(0.08)%(0.03)% C&I-%(0.01)%(0.08)%0.88% Consumer and finance leases(1.48)%(0.16)%(1.61)%(0.37)% Total loans(0.01)%(0.01)%(0.07)%0.39%

(1)The recovery associated with the aforementioned bulk sale reduced the ratios of consumer loans and finance leases and total net charge-offs to related average loans for the nine-month period ended September 30, 2024 by 37 basis points and 14 basis points, respectively.

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The following table presents information about the OREO inventory and related gains and losses for the indicated periods:

Quarter ended September 30,Nine-Month Period Ended September 30,

2024202320242023| OREO balances, carrying value: | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| Residential | $ | 14,451$ | 20,740 | $ | 14,451$ | 20,740 |
| Construction | | 1,125 | 1,861 | | 1,125 | 1,861 |
| Commercial | | 3,754 | 5,962 | | 3,754 | 5,962 |
| Total | $ | 19,330$ | 28,563 | $ | 19,330$ | 28,563 |

OREO activity (number of properties):
Beginning property inventory	222	320	277	344
Properties acquired	26	36	75	139
Properties disposed	(51)	(75)	(155)	(202)
Ending property inventory	197	281	197	281

Average holding period (in days)
Residential	501	464	501	464
Construction	2,491	2,302	2,491	2,302
Commercial	3,992	2,598	3,992	2,598
Total average holding period (in days)	1,295	1,029	1,295	1,029

Market adjustments and (gains) losses on sale:
Residential	$	(1,543)$	(2,577)	$	(5,287)$	(7,620)
Construction		(49)	(52)		(68)	(99)
Commercial		(246)	(41)		(2,468)	26
Total net gain		(1,838)	(2,670)		(7,823)	(7,693)
Other OREO operations expenses		499	517		1,423	1,560
Net Gain on OREO operations	$	(1,339)$	(2,153)	$	(6,400)$	(6,133)

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Operational Risk

The Corporation faces ongoing and emerging risk and regulatory pressure related to the activities that surround the delivery of banking and financial products. Coupled with external influences, such as market conditions, security risks, and legal risks, the potential for operational and reputational loss has increased. To mitigate and control operational risk, the Corporation has developed, and continues to enhance, specific internal controls, policies and procedures that are designed to identify and manage operational risk at appropriate levels throughout the organization. The purpose of these mechanisms is to provide reasonable assurance that the Corporation’s business operations are functioning within the policies and limits established by management.

The Corporation classifies operational risk into two major categories: business-specific and corporate-wide affecting all business lines. For business specific risks, Enterprise Risk Management works with the various business units to ensure consistency in policies,

processes and assessments. With respect to corporate-wide risks, such as information security, business recovery, and legal and compliance, the Corporation has specialized groups, such as the Legal Department, Information Security, Corporate Compliance, Operations and Enterprise Risk Management. These groups assist the lines of business in the development and implementation of risk management practices specific to the needs of the business groups.

Legal and Compliance Risk

Legal and compliance risk includes the risk of noncompliance with applicable legal and regulatory requirements, the risk of adverse legal judgments against the Corporation, and the risk that a counterparty’s performance obligations will be unenforceable. The

Corporation is subject to extensive regulation in the different jurisdictions in which it conducts its business, and this regulatory scrutiny has been significantly increasing over the years. The Corporation has established, and continues to enhance, procedures that are designed to ensure compliance with all applicable statutory, regulatory and any other legal requirements. The Corporation has a Compliance Director who reports to the Chief Risk Officer and is responsible for the oversight of regulatory compliance and implementation of an enterprise-wide compliance risk assessment process. The Compliance division has officer roles in each major business area with direct reporting responsibilities to the Corporate Compliance Group.

Concentration Risk

The Corporation conducts its operations in a geographically concentrated area, as its main market is Puerto Rico. Of the total gross loan portfolio held for investment of $12.4 billion as of September 30, 2024, the Corporation had credit risk of approximately 80% in the Puerto Rico region, 17% in the United States region, and 3% in the Virgin Islands region.

Update on the Puerto Rico Fiscal and Economic Situation

A significant portion of the Corporation’s business activities and credit exposure is concentrated in the Commonwealth of Puerto Rico, which has experienced economic and fiscal distress over the last decade. See “Risk Management — Exposure to Puerto Rico Government” below. Since declaring bankruptcy and benefitting from the enactment of the federal Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”) in 2016, the Government of Puerto Rico has made progress on fiscal matters primarily by restructuring a large portion of its outstanding public debt and identifying funding sources for its underfunded pension system.

Economic Indicators

On March 18, 2024, the Puerto Rico Planning Board (“PRPB”) published an analysis of the Puerto Rico’s economy during fiscal year 2023, as well as a short-term forecast for fiscal years 2024 and 2025. According to the preliminary estimates issued by the PRPB, Puerto Rico’s real gross national product (“GNP”) grew by 0.7% in fiscal year 2023, the third consecutive year with a positive yearover-year variance. The main drivers behind growth in fiscal year 2023 were personal consumption expenditures and fixed investments in both construction, and machinery and equipment. The PRPB also revised previously published real GNP growth estimates for fiscal years 2022 and 2021 from 3.7% to 3.8% and from 0.9% to 1.4%, respectively.

There are other indicators that gauge economic activity and are published with greater frequency, for example, the Economic Development Bank for Puerto Rico’s Economic Activity Index (“EDB-EAI”). Although not a direct measure of Puerto Rico’s real GNP, the EDB-EAI is correlated to Puerto Rico’s real GNP. For August 2024, estimates showed that the EDB-EAI stood at 126.9, down 0.8% on a year-over-year basis. Over the 12-month period ended August 31, 2024, the EDB-EAI averaged 126.5, 1.0% above the comparable figure a year earlier.

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Labor market trends remain positive. Data published by the Bureau of Labor Statistics showed that non-farm payrolls in September 2024 in Puerto Rico increased by 1.6% when compared to September 2023, primarily driven by payrolls in the private sector as these increased by 2.2% from the comparable figure a year earlier. Key industries driving private-sector payroll growth include Leisure & Hospitality with a year-over-year increase of 6.5% and Construction with a positive variance of 5.0%. The unemployment rate continued to trend in the right direction to a record-low level of 5.5% in September 2024.

Fiscal Plan

On June 5, 2024, the PROMESA oversight board certified the 2024 Fiscal Plan for Puerto Rico (the “2024 Fiscal Plan”), updated with the most recent data and projections for revenues and expenses, and renewed roadmap for Puerto Rico to achieve fiscal responsibility. The 2024 Fiscal Plan is made up of four parts: (i) progress made in stabilizing government finances, (ii) Puerto Rico’s current financial conditions and risks, (iii) details of the actions required to achieve fiscal responsibility and adequate access to credit markets, and (iv) description of the actions the PROMESA oversight board and the Government must take to complete PROMESA’s mandate.

The 2024 Fiscal Plan outlines eight areas of focus to achieve long-term fiscal responsibility: (i) improved economic and revenue forecasting, (ii) adoption of budget best practices, (iii) comprehensive capital delivery program, (iv) improved management of

education resources, (v) improved government service delivery and labor relations, (vi) outcome-based, data-driven, and controlled healthcare spending, (vii) improved, transparent financial reporting, and (viii) optimized municipal fiscal management. Success in these areas, which aim to address the most crucial financial management challenges that Puerto Rico faces, is critical for Puerto Rico to fully recover from bankruptcy and to fulfill the mandate of PROMESA to achieve fiscal responsibility.

As the debt restructurings come to an end, a significant portion of the uncertainty that has plagued the economy over the past ten years has faded away. To generate revenues that are resilient even when the unprecedented influx of federal funding subsides, fiscal

stability alone will not suffice. The 2024 Fiscal Plan describes an effort to develop an integrated plan that will serve as a roadmap to unlock future growth. While that plan is developed, the PROMESA oversight board and the Government will continue to support specific priorities through a first wave of economic growth initiatives that aim to address the most crucial challenges that Puerto Rico faces. The list of focus areas outlined in the 2024 Fiscal Plan to promote economic growth include: (i) integrated framework for economic growth, (ii) human capital, focused on robust, highly-skilled, and health workforce, (iii) economic strategies, focused on improved ease of doing business, (iv) economic policies, focused on reforms of Puerto Rico’s tax system, and (v) infrastructure, focused on reduced cost and increased reliability of energy, transportation, and internet connectivity.

Similar to previous fiscal plans, the 2024 Fiscal Plan includes an updated macroeconomic forecast reflecting the impact of fiscal and structural measures, natural disasters, COVID-19, and federal funding in response to natural disasters and the pandemic on the baseline economic trajectory. The 2024 Fiscal Plan projects Puerto Rico GNP growth in fiscal year 2024 to be 1.0%, followed by declines of 0.8% and 0.1% in fiscal year 2025 and fiscal year 2026, respectively. On average, Puerto Rico’s GNP is projected to grow approximately 0.4% between fiscal year 2023 and fiscal year 2026. Contrary to previous fiscal plans where Puerto Rico’s population was projected to decline, the 2024 Fiscal Plan includes a stable population projection through 2029 mainly due to the offset between a negative natural population decline and positive net migration. Specifically, the revised fiscal plan projections contemplate a net inflow of over 20,000 people annually through 2029, compared to an average of less than 5,000 people in the 2023 fiscal plan.

The 2024 Fiscal Plan projects that approximately $54.5 billion in total disaster relief funding, from federal and private sources, will be disbursed as part of the reconstruction efforts over a span of 9 years (fiscal years 2024 through 2035). These funds will benefit individuals, the public (e.g., reconstruction of major infrastructure, roads, and schools), and will cover part of Puerto Rico’s share of the cost of disaster relief funding. Also, the 2024 Fiscal Plan projects the $5.9 billion in remaining COVID-19 relief funds to be deployed in fiscal years 2024 and 2025. Additionally, the 2024 Fiscal Plan continues to account for $2.1 billion in federal funds to Puerto Rico from the Bipartisan Infrastructure Law directed towards improving Puerto Rico’s infrastructure over fiscal years 2024 through 2026. Overall, Puerto Rico’s economic growth is highly dependent on the Government’s ability to efficiently deploy these federal funds.

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Debt Restructuring

Over 80% of Puerto Rico’s outstanding debt has been restructured to date. On March 15, 2022, the Plan of Adjustment of the central government’s debt became effective through the exchange of more than $33 billion of existing bonds and other claims into approximately $7 billion of new bonds, saving Puerto Rico more than $50 billion in debt payments to creditors. Also, the restructurings of the Puerto Rico Sales Tax Financing Corporation (“COFINA”), the Highways and Transportation Authority (“HTA”), and the Puerto Rico Aqueducts and Sewers Authority (“PRASA”) are expected to yield savings of approximately $17.5 billion, $3.0 billion, and $400 million, respectively, in future debt service payments. The main restructuring pending is that of the Puerto Rico Electric Power Authority (“PREPA”). All PREPA plan confirmation and bond-related litigation is currently stayed until November 13, 2024, pursuant to a Court order dated October 7, 2024, as the mediation team continues to participate in multiple discussions with the PROMESA oversight board, certain mediation parties and additional parties who filed objections to conformation of the PREPA plan of adjustment.

Other Developments

Notable progress continues to be made as part of the ongoing efforts of prioritizing the restoration, improvement, and modernization of Puerto Rico’s infrastructure, particularly in the aftermath of Hurricane Maria in 2017. During the 12-month period

ended August 31, 2024, over $3.4 billion in disaster relief funds were disbursed through the Federal Emergency Management Agency (“FEMA”) Public Assistance program and the HUD Community Development Block Grant (“CDBG”) program, an 11% increase when compared to the same period in 2023. These funds will continue to play a key role in supporting Puerto Rico’s economic stability and are expected to have a positive impact on the Island’s infrastructure. For example, approximately 86% of the projects that FEMA has obligated to address damage caused by Hurricane Maria have resources to reinforce their infrastructure, among other hazard mitigation measures, that will prepare these facilities for future weather events. As of October 10, 2024, over 3,411 projects had already been completed under FEMA’s Public Assistance programs while over 20,600 projects were active across different stages of execution for a total cost of $11.5 billion, equivalent to approximately 32% of the agency’s $36.0 billion obligation, according to the Central Office for Recovery, Reconstruction and Resiliency (“COR3”).

After more than five years since the confirmation of the COFINA plan of adjustment, on October 30, 2024, the Court granted the PROMESA oversight board’s request for entry of an order closing the COFINA Title III case, making it the first closed bankruptcy case since the enactment of PROMESA.

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Exposure to Puerto Rico Government

As of September 30, 2024, the Corporation had $309.0 million of direct exposure to the Puerto Rico government, its municipalities and public corporations, compared to $297.9 million as of December 31, 2023. The $11.1 million increase was mainly due to the

origination of two loans to municipalities, with an aggregate balance of $27.7 million, that are supported by assigned property tax revenues and $15.5 million in disbursements on two construction loans to an agency and a public corporation, partially offset by multiple repayments. As of September 30, 2024, approximately $195.6 million of the exposure consisted of loans and obligations of municipalities in Puerto Rico that are supported by assigned property tax revenues and for which, in most cases, the good faith, credit and unlimited taxing power of the applicable municipality have been pledged to their repayment, and $50.9 million consisted of loans and obligations which are supported by one or more specific sources of municipal revenues. Approximately 72% of the Corporation’s exposure to Puerto Rico municipalities consisted primarily of senior priority loans and obligations concentrated in four of the largest municipalities in Puerto Rico. The municipalities are required by law to levy special property taxes in such amounts as are required for the payment of all of their respective general obligation bonds and notes. In addition to municipalities, the total direct exposure also included $8.8 million in a loan extended to an affiliate of PREPA, $50.7 million in loans to agencies or public corporations of the Puerto Rico government , and obligations of the Puerto Rico government, specifically a residential pass-through MBS issued by the PRHFA, at an amortized cost of $3.0 million as part of its available-for-sale debt securities portfolio (fair value of $1.6 million as of September 30, 2024).

The following table details the Corporation’s total direct exposure to Puerto Rico government obligations according to their maturities:| | | As of September 30,2024 | | | |
| --- | --- | --- | --- | --- | --- |
| | Investment | | | | |
| | Portfolio | | | | Total |
| | (Amortized cost) | | Loans | | Exposure |
| (In thousands) | | | | | |
| Puerto Rico Housing Finance Authority: | | | | | |
| After 10 years | $ | 3,008$ | | -$ | 3,008 |
| Total Puerto Rico Housing Finance Authority | | 3,008 | | - | 3,008 |
| Agencies and public corporation of the Puerto Rico government: | | | | | |
| After 1 to 5 years | | - | 28,303 | | 28,303 |
| After 5 to 10 years | | - | 22,363 | | 22,363 |
| Total agencies and public corporation of the Puerto Rico government | | - | 50,666 | | 50,666 |
| Affiliate of the Puerto Rico Electric Power Authority: | | | | | |
| After 1 to 5 years | | - | 8,819 | | 8,819 |
| Total Puerto Rico government affiliate | | - | 8,819 | | 8,819 |
| Total Puerto Rico public corporations and government affiliate | | - | 59,485 | | 59,485 |
| Municipalities: | | | | | |
| Due within one year | | 2,131 | 26,337 | | 28,468 |
| After 1 to 5 years | | 61,119 | 39,220 | | 100,339 |
| After 5 to 10 years | | 13,121 | 88,818 | | 101,939 |
| After 10 years | | 15,755 | | - | 15,755 |
| Total Municipalities | | 92,126 | 154,375 | | 246,501 |
| Total Direct Government Exposure | $ | 95,134$ | 213,860 | $ | 308,994 |

In addition, as of September 30, 2024, the Corporation had $73.5 million in exposure to residential mortgage loans that are guaranteed by the PRHFA, a governmental instrumentality that has been designated as a covered entity under PROMESA (December 31, 2023 – $77.7 million). Residential mortgage loans guaranteed by the PRHFA are secured by the underlying properties and the guarantees serve to cover shortfalls in collateral in the event of a borrower default. The Puerto Rico government guarantees up to $75 million of the principal for all loans under the mortgage loan insurance program. According to the most recently released audited financial statements of the PRHFA, as of June 30, 2023, the PRHFA’s mortgage loans insurance program covered loans in an aggregate amount of approximately $388 million. The regulations adopted by the PRHFA require the establishment of adequate reserves to guarantee the solvency of the mortgage loans insurance program. As of June 30, 2023, the most recent date as of which information is available, the PRHFA had a liability of approximately $1.3 million as an estimate of the losses inherent in the portfolio.

As of each of September 30, 2024 and December 31, 2023, the Corporation had $2.7 billion of public sector deposits in Puerto Rico. Approximately 22% of the public sector deposits as of September 30, 2024 were from municipalities and municipal agencies in Puerto Rico and 78% were from public corporations, the Puerto Rico central government and agencies, and U.S. federal government agencies in Puerto Rico.

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Exposure to USVI Government

The Corporation has operations in the USVI and has credit exposure to USVI government entities.

For many years, the USVI has been experiencing several fiscal and economic challenges that have deteriorated the overall financial and economic conditions in the area. On June 17, 2024, the United States Bureau of Economic Analysis (the “BEA”) released its

estimates of GDP for 2022. According to the BEA, the USVI’s real GDP decreased 1.3% in 2022 after increasing 3.7% in 2021. The decrease in real GDP reflected declines in exports, private fixed investment, government spending, and personal consumption expenditures. These negative variances were partly offset by an increase in inventory investment, while imports, a subtraction item in the calculation of GDP, decreased.

Over the past three years, the USVI has been recovering from the adverse impact caused by COVID-19 and has continued to make progress on its rebuilding efforts related to Hurricanes Irma and Maria, which occurred in September 2017. According to data published by FEMA, over $5.5 billion in disaster recovery funds had been disbursed through August 2024 and nearly $11 billion were remaining obligated funds pending to be disbursed. Moreover, labor market trends remain stable with non-farm payrolls during the third quarter of 2024 slightly down by 0.4% and 0.8% on a quarter -over-quarter and year-over-year basis, respectively.

On December 14, 2023, Fitch Ratings announced that it withdrew the ratings of the U.S. Virgin Islands Water and Power Authority (“WAPA”) primarily due to limited availability of the authority’s operating and financial information from public sources or from WAPA’s management.

Finally, PROMESA does not apply to the USVI and, as such, there is currently no federal legislation permitting the restructuring of the debts of the USVI and its public corporations and instrumentalities. To the extent that the fiscal condition of the USVI government deteriorates again, the U.S. Congress or the government of the USVI may enact legislation allowing for the restructuring of the financial obligations of the USVI government entities or imposing a stay on creditor remedies, including by making PROMESA applicable to the USVI.

As of September 30, 2024 and December 31, 2023, the Corporation had $48.4 million and $90.5 million, respectively, in loans to USVI public corporations, of which $15.0 million and $57.2 million, respectively, were fully collateralized by cash balances held at the Bank. As of September 30, 2024, all loans were currently performing and up to date on principal and interest payments.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding market risk to which the Corporation is exposed, see the information contained in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management” in this Quarterly Report on Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

First BanCorp.’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of First BanCorp.’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of

September 30, 2024, the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective as of September 30, 2024 and provide reasonable assurance that the information required to be disclosed by the Corporation in reports that the Corporation files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and reported to the Corporation’s management, including the Chief Executive Office and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Internal Control over Financial Reporting

There were no changes to the Corporation’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during our most recent quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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PART II - OTHER INFORMATION

In accordance with the instructions to Part II of Form 10-Q, the other specified items in this part have been omitted because they are not applicable, or the information has been previously reported.

ITEM 1. LEGAL PROCEEDINGS

For a discussion of legal proceedings, see Note 21 – “Regulatory Matters, Commitments and Contingencies,” to the unaudited consolidated financial statements herein, which is incorporated by reference in this Part II, Item 1.

ITEM 1A. RISK FACTORS

The Corporation’s business, operating results and/or the market price of our common stock may be significantly affected by a number of factors. A detailed discussion of certain risk factors that could affect the Corporation’s future operations, financial condition or results for

future periods is set forth in Part I, Item 1A, “Risk Factors,” in the 2023 Annual Report on Form 10-K. These risk factors, and others, could cause actual results to differ materially from historical results or the results contemplated by the forward-looking statements contained in this report. Also, refer to the discussion in “Forward-Looking Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Quarterly Report on Form 10-Q for additional information that may supplement or update the discussion of risk factors in the 2023 Annual Report on Form 10-K.

Other than as described below, there have been no material changes from those risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” in the 2023 Annual Report on Form 10-K.

The volatility in the financial services industry, including failures or rumored failures of other depository institutions, and actions taken by governmental agencies to stabilize the financial system, could result in, among other things, bank deposit runoffs,

liquidity constraints, and increased regulatory requirements and costs.

The closure and placement into receivership with the FDIC of certain large U.S. regional banks with assets over $100 billion in March and May 2023, and adverse developments affecting other banks, resulted in heightened levels of market volatility and consequently

negatively impacted customer confidence in the safety and soundness of financial institutions. These developments resulted in certain regional banks experiencing higher than normal deposit outflows and an elevated level of competition for available deposits in the market.
The impact of market volatility from the adverse developments in the banking industry, along with continued elevated interest rates on our business and related financial results, will depend on future developments, which are highly uncertain and difficult to predict.

In the aftermath of these recent bank failures, the banking agencies have increased regulatory requirements and costs that may impact capital ratios or the FDIC deposit insurance premium. For example, in 2023, the FDIC issued a final rule to impose a special assessment to

recover certain estimated losses to the Deposit Insurance Fund (“DIF”) arising from the closures of Silicon Valley Bank and Signature Bank. The estimated losses will be recovered through quarterly special assessments collected from certain insured depository institutions, including the Bank, and collection began during the quarter ended June 30, 2024. In connection with updates made by the FDIC to the initial estimated losses to the DIF, the Corporation recorded charges of $1.1 million during the nine-month period ended September 30, 2024 in the consolidated statements of income as part of “FDIC deposit insurance” expenses. As of September 30, 2024, the estimated FDIC special assessment amounted to $7.4 million, of which $1.6 million has been paid. The Corporation continues to monitor the FDIC’s estimated loss to the DIF, which could affect the amount of its accrued liability.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Corporation did not have any unregistered sales of equity securities during the quarter ended September 30, 2024.

Issuer Purchases of Equity Securities

The following table provides information in relation to the Corporation’s purchases of its common stock during the quarter ended September 30, 2024.

Total Number ofApproximate Dollar Value

Shares Purchased asof Shares that May Yet be

Part of PubliclyPurchased Under the Plans Total Number of SharesAverage PriceAnnounced Plans oror Programs (in

PeriodPurchasedPaid per SharePrograms (1)thousands) (1)| July 1, 2024 - July 31, 2024 | -$ | - | -$ | 300,000 |
| --- | --- | --- | --- | --- |
| August 1, 2024 - August 31, 2024 | - | - | - | 300,000 |
| September 1, 2024 - September 30, 2024 | 898 | 21.17 | - | 250,000 |
| Total | 898(2) | | - | |

(1)As of September 30, 2024, the Corporation was authorized to purchase up to $225 million of the Corporation’s common stock under the program that was publicly announced on July 24, 2023, of which $175 million had been utilized. In addition, the Corporation was authorized to purchase up to $250 million that could include repurchases of common stock or junior

subordinated debentures under the program that was publicly announced on July 22, 2024. During the third quarter of 2024, the Corporation redeemed $50.0 million of junior subordinated debentures under the $250 million repurchase program, as further explained in Note 7 - “Non-Consolidated Variable Interest Entities (“VIEs”) and Servicing Assets. The remaining $250.0 million in the table represents the remaining amount authorized under both repurchase programs. The Corporation’s repurchase programs do not obligate it to acquire any specific number of shares and do not have an expiration date. The repurchase programs may be modified, suspended, or terminated at any time at the Corporation's discretion. Under the stock repurchase program, shares may be repurchased through open market purchases, accelerated share repurchases and/or privately negotiated transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.
(2)Consists of 898 shares of common stock acquired by the Corporation to cover minimum tax withholding obligations upon the vesting of equity-based awards. The Corporation intends to continue to satisfy statutory tax withholding obligations in connection with the vesting of outstanding restricted stock and performance units through the withholding of shares.

ITEM 5. OTHER INFORMATION

During the quarter ended September 30, 2024, none of the Corporation’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act)adoptedorterminateda “Rule 10b5-1 trading arrangement” or“non-Rule10b5-1trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.

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ITEM 6. EXHIBITS

See the Exhibit Index below, which is incorporated by reference herein:

EXHIBIT INDEX

Exhibit No.Description

31.1CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INSInline XBRL Instance Document, filed herewith. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document, filed herewith 101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith 101.LABInline XBRL Taxonomy Extension Label Linkbase Document, filed herewith 101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith 101.DEFInline XBRL Taxonomy Extension Definitions Linkbase Document, filed herewith 104The cover page of First BanCorp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL (included within the Exhibit 101 attachments)

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SIGNATURES

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

First BanCorp. Registrant

Date: November 8, 2024By: /s/ Aurelio Alemán Aurelio Alemán President and Chief Executive Officer

Date: November 8, 2024By: /s/ Orlando Berges Orlando Berges Executive Vice President and Chief Financial Officer

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