FIRST BANCORP /PR/ — Regulatory Filings 2011

May 11, 2011

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): May 6, 2011

FIRST BANCORP.

(Exact Name of Registrant as Specified in its Charter)

001-14793

(Commission File Number)

Puerto Rico	66-0561882
(State or Other Jurisdiction of Incorporation)	(I.R.S. Employer Identification No.)

1519 Ponce de Leon

San Juan, Puerto Rico 00908-0146

(Address of Principal Executive Offices) (Zip Code)

(787) 729 8200

(Registrant’s Telephone Number, including Area Code)

Not applicable

(Former name or former address, if changed since last report)

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

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

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

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

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

Item 2.02 Results of Operations and Financial Condition.

On May 6, 2011, First BanCorp. (the “Corporation”) issued a press release announcing its unaudited results of operations for the first quarter ended March 31, 2011. A copy of the press release is attached hereto as Exhibit 99.1 and is hereby incorporated herein by reference.

The Corporation has included in this release the following non-GAAP financial measures: (i) the calculation of net interest income, interest rate spread and net interest margin rate on a tax- equivalent basis and excluding changes in the fair value of derivative instruments and certain financial liabilities, (ii) the calculation of the tangible common equity ratio and the tangible book value per common share, (iii) the Tier 1 common equity to risk-weighted assets ratio, (iv) the adjusted pre-tax, pre-provision income, and (v) certain other financial measures adjusted to exclude the effect of loans transferred to held for sale resulting from the execution of an agreement providing for the strategic sale of loans. Investors should be aware that non-GAAP measures have inherent limitations and should be read only in conjunction with the Corporation’s consolidated financial data prepared in accordance with GAAP.

Net interest income, interest rate spread and net interest margin are reported on a tax-equivalent basis and excluding changes in the fair value (“valuations”) of derivative instruments and financial liabilities elected to be measured at fair value. The presentation of net interest income excluding valuations provides additional information about the Corporation’s net interest income and facilitates comparability and analysis. The changes in the fair value of derivative instruments and unrealized gains and losses on liabilities measured at fair value 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, as described in Exhibit A — Table 2 of the attached Press Release (included herein as Exhibit 99.1). Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at statutory rates. Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread and net interest margin on a fully tax-equivalent basis. This adjustment puts all earning assets, most notably tax-exempt securities and certain loans, on a common basis that facilitates comparison of results to results of peers.

The following table reconciles the non-GAAP financial measure “net interest income on a tax-equivalent basis and excluding fair value changes” with net interest income calculated and presented in accordance with GAAP. The table also reconciles the non-GAAP financial measures “net interest spread and margin on a tax-equivalent basis and excluding fair value changes” with net interest spread and margin calculated and presented in accordance with GAAP.

Reconciliation of GAAP Net Interest Margin and Spread to Non-GAAP Net Interest Margin and Spread on a Tax-Equivalent Basis and excluding fair value changes on derivative instruments and liabilities measured at fair value (“valuations”)

	Quarter Ended — March 31, 2011	December 31, 2010		September 30, 2010		June 30, 2010		March 31, 2010
Net Interest Income (in thousands)
Interest Income - GAAP	$ 180,903	$	192,806	$	204,028	$	214,864	$ 220,988
Unrealized (gain) loss on
derivative instruments	(344	)	(903	)	938		487	744
Interest income excluding valuations	180,559		191,903		204,966		215,351	221,732
Tax-equivalent adjustment	2,313		4,494		6,778		7,222	9,912
Interest income on a tax-equivalent basis excluding valuations	182,872		196,397		211,744		222,573	231,644
Interest Expense - GAAP	74,624		80,758		90,326		95,802	104,125
Unrealized (loss) gain on
derivative instruments and liabilities measured at fair value	(598	)	(813	)	(526	)	3,896	(989	)
Interest expense excluding valuations	74,026		79,945		89,800		99,698	103,136
Net interest income - GAAP	$ 106,279	$	112,048	$	113,702	$	119,062	$ 116,863
Net interest income excluding valuations	$ 106,533	$	111,958	$	115,166	$	115,653	$ 118,596
Net interest income on a tax-equivalent basis excluding valuations	$ 108,846	$	116,452	$	121,944	$	122,875	$ 128,508
Average Balances (in thousands)
Loans and leases	$ 11,672,619	$	12,185,511	$	12,443,055	$	13,025,808	$ 13,569,467
Total securities and other short-term investments	3,611,313		3,863,532		4,640,055		5,485,934	5,526,589
Average Interest-Earning Assets	$ 15,283,932	$	16,049,043	$	17,083,110	$	18,511,742	$ 19,096,056
Average Interest-Bearing Liabilities	$ 13,494,702	$	14,036,776	$	15,002,168	$	16,378,022	$ 16,910,781
Average Yield/Rate
Average yield on interest-earning assets - GAAP	4.80	%	4.77	%	4.74	%	4.66 %	4.69	%
Average rate on interest-bearing liabilities - GAAP	2.24	%	2.28	%	2.39	%	2.35 %	2.50	%
Net interest spread - GAAP	2.56	%	2.49	%	2.35	%	2.31 %	2.19	%
Net interest margin - GAAP	2.82	%	2.77	%	2.64	%	2.58 %	2.48	%
Average yield on interest-earning assets excluding valuations	4.79	%	4.74	%	4.76	%	4.66 %	4.71	%
Average rate on interest-bearing liabilities excluding valuations	2.22	%	2.26	%	2.37	%	2.44 %	2.47	%
Net interest spread excluding valuations	2.57	%	2.48	%	2.39	%	2.22 %	2.24	%
Net interest margin excluding valuations	2.83	%	2.77	%	2.67	%	2.51 %	2.52	%
Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations	4.85	%	4.86	%	4.92	%	4.82 %	4.92	%
Average rate on interest-bearing liabilities excluding valuations	2.22	%	2.26	%	2.37	%	2.44 %	2.47	%
Net interest spread on a tax-equivalent basis and excluding valuations	2.63	%	2.60	%	2.55	%	2.38 %	2.45	%
Net interest margin on a tax-equivalent basis and excluding valuations	2.89	%	2.88	%	2.83	%	2.66 %	2.73	%

The tangible common equity ratio and tangible book value per common share are non-GAAP measures generally used by the financial community to evaluate capital adequacy. Tangible common equity is total equity less preferred equity, goodwill and core deposit intangibles. Tangible assets are total assets less goodwill and core deposit intangibles. Management and many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method of accounting for mergers and acquisitions. Neither tangible common equity nor tangible assets, or 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.

The following table is a reconciliation of the Corporation’s tangible common equity and tangible assets:

Tangible Common Equity

(In thousands, except ratios and per share information)	March 31,	December 31,		September 30,		June 30,		March 31,
	2011	2010		2010		2010		2010
Tangible Equity:
Total equity - GAAP	$ 1,027,269	$	1,057,959	$	1,321,979	$	1,438,289	$	1,488,543
Preferred equity	(426,724	)	(425,009	)	(411,876	)	(930,830	)	(929,660	)
Goodwill	(28,098	)	(28,098	)	(28,098	)	(28,098	)	(28,098	)
Core deposit intangible	(13,454	)	(14,043	)	(14,673	)	(15,303	)	(15,934	)
Tangible common equity	$ 558,993	$	590,809	$	867,332	$	464,058	$	514,851
Tangible Assets:
Total assets - GAAP	$ 15,104,090	$	15,593,077	$	16,678,879	$	18,116,023	$	18,850,964
Goodwill	(28,098	)	(28,098	)	(28,098	)	(28,098	)	(28,098	)
Core deposit intangible	(13,454	)	(14,043	)	(14,673	)	(15,303	)	(15,934	)
Tangible assets	$ 15,062,538	$	15,550,936	$	16,636,108	$	18,072,622	$	18,806,932
Common shares outstanding	21,304		21,304		21,304		6,169		6,169
Tangible common equity ratio	3.71	%	3.80	%	5.21	%	2.57	%	2.74	%
Tangible book value per common share	$ 26.24	$	27.73	$	40.71	$	75.22	$	83.45

The Tier 1 common equity to risk-weighted assets ratio is calculated by dividing (a) tier 1 capital less non-common elements including qualifying perpetual preferred stock and qualifying trust preferred securities by (b) risk-weighted assets, which assets are calculated in accordance with applicable bank regulatory requirements. The Tier 1 common equity ratio is not required by GAAP or on a recurring basis by applicable bank regulatory requirements. However, this ratio was used by the Federal Reserve in connection with its stress test administered to the 19 largest U.S. bank holding companies under the Supervisory Capital Assessment Program, the results of which were announced on May 7, 2009. Management is currently monitoring this ratio, along with the other ratios discussed above, in evaluating the Corporation’s capital levels and believes that, at this time, the ratio may be of interest to investors.

The following table reconciles stockholders’ equity (GAAP) to Tier 1 common equity:

Tier 1 Common Equity to Risk-Weighted Assets

(Dollars in thousands)	As of — March 31,	December 31,		September 30,		June 30,		March 31,
	2011	2010		2010		2010		2010
Tier 1 Common Equity:
Total equity - GAAP	$ 1,027,269	$	1,057,959	$	1,321,979	$	1,438,289	$	1,488,543
Qualifying preferred stock	(426,724	)	(425,009	)	(411,876	)	(930,830	)	(929,660	)
Unrealized gain on available-for-sale securities (1)	(15,453	)	(17,736	)	(30,295	)	(63,311	)	(22,948	)
Disallowed deferred tax asset (2)	(981	)	(815	)	(43,552	)	(38,078	)	(40,522	)
Goodwill	(28,098	)	(28,098	)	(28,098	)	(28,098	)	(28,098	)
Core deposit intangible	(13,454	)	(14,043	)	(14,673	)	(15,303	)	(15,934	)
Cumulative change gain in fair value of liabilities
accounted for under a fair value option	(2,156	)	(2,185	)	(2,654	)	(3,170	)	(951	)
Other disallowed assets	(881	)	(226	)	(636	)	(66	)	(24	)
Tier 1 common equity	$ 539,522	$	569,847	$	790,195	$	359,433	$	450,406
Total risk-weighted assets	$ 11,183,518	$	11,372,856	$	11,930,854	$	12,570,330	$	13,402,979
Tier 1 common equity to risk-weighted assets ratio	4.82	%	5.01	%	6.62	%	2.86	%	3.36	%
1- Tier 1 capital excludes net unrealized gains (losses) on available-for-sale debt securities and net unrealized gains on available-for-sale
equity securities with readily determinable fair values, in accordance with regulatory risk-based capital guidelines. In arriving at
Tier 1 capital, institutions are required to deduct net unrealized losses on available-for-sale equity securities with readily determinable
fair values, net of tax.
2- Approximately $12 million of the Corporation's deferred tax assets at March 31, 2011 (December 31, 2010 - $13 million; September 30, 2010 - $64 million
June 30, 2010 - $71 million; March 31, 2010 - $69 million) were included without limitation in regulatory capital pursuant to the risk-based capital guidelines,
while approximately $1 million of such assets at March 31, 2011 (December 31, 2010 - $0.8 million; September 30, 2010 - $44 million; June 30, 2010 - $38 million;
March 31, 2010 - $41 million) exceeded the limitation imposed by these guidelines and, as "disallowed deferred tax assets," were deducted in arriving at Tier 1 capital.
According to regulatory capital guidelines, the deferred tax assets that are dependent upon future taxable income are limited for
inclusion in Tier 1 capital to the lesser of: (i) the amount of such deferred tax asset that the entity expects to realize within one year of
the calendar quarter end-date, based on its projected future taxable income for that year, or (ii) 10% of the amount of the entity's
Tier 1 capital. Approximately $5 million of the Corporation's other net deferred tax liability at March 31, 2011 (December 31, 2010 - $5 million;
September 30, 2010 - $7 million; June 30, 2010 - $12 million; March 31, 2010 - $5 million) represented primarily the deferred tax effects of unrealized gains and losses on
available-for-sale debt securities, which are permitted to be excluded prior to deriving the amount of net deferred tax assets subject to limitation under the guidelines.

One non-GAAP performance metric that management believes is useful in analyzing underlying performance trends, particularly in times of economic stress, is adjusted pre-tax, pre-provision income. Adjusted pre-tax, pre-provision income, as defined by management, represents net (loss) income excluding income tax expense (benefit), the provision for loan and lease losses, gains on sale and OTTI of investment securities, as well as certain items identified as unusual, non-recurring or non-operating.

From time to time, revenue and expenses are impacted by items judged by management to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that management believes them to be nonrecurring. These items result from factors originating outside the Corporation such as regulatory actions/assessments, and may result from unusual management decisions, such as the early extinguishment of debt.

The following table reconciles (loss) income before income taxes (GAAP) to adjusted pre-tax, pre-provision income:

Pre-Tax, Pre-Provision Income
(Dollars in thousands)	Quarter Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
	2011		2010		2010		2010		2010
Loss before income taxes	$ (24,834	)	$ (158,016	)	$ (76,196	)	$ (86,817	)	$ (100,138	)
Add: Provision for loan and lease losses	88,732		196,347		120,482		146,793		170,965
Less: Net (gain) loss on sale and OTTI of investment securities	(19,341	)	620		(48,281	)	(24,237	)	(30,764	)
Less: gain on sale of FirstBank Insurance VI	(2,845	)	-		-		-		-
Add: Loss on early extinguishment of repurchase agreements	-		-		47,405		-		-
Adjusted Pre-tax, pre-provision income (1)	$ 41,712		$ 38,951		$ 43,410		$ 35,739		$ 40,063
Change from most recent prior quarter - amount	$ 2,761		$ (4,459	)	$ 7,671		$ (4,324	)	$ (22,846	)
Change from most recent prior quarter - percent	7.1	%	-10.3	%	21.5	%	-10.8	%	-36.3	%
(1) See Basis of Presentation for definition.

To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation provides additional measures of net income (loss), net income (loss) per diluted share, provision for loan and lease losses, provision for loan and lease losses to net charge-offs, net charge-offs, and net charge-offs to average loans to exclude the impact of the transfer of $447 million of loans to held for sale. In connection with the transfer, the Corporation charged-off $165.1 million and recognized an additional provision for loan and lease losses of $102.9 million in the fourth quarter of 2010. Management believes that these non-GAAP measures enhance the ability of analysts and investors to analyze trends in the Corporation’s business and to better understand the performance of the Corporation. In addition, the Corporation may utilize these non-GAAP financial measures as a guide in its budgeting and long-term planning process. Any analysis of these non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP. A reconciliation of these non-GAAP measures with the most directly comparable financial measures calculated in accordance with GAAP follows:

	Net Loss and Loss per share (Non-GAAP to GAAP reconciliation)
	Quarter ended
(In thousands, except per share information)	December 31, 2010
			Net Loss attributable
	Net Loss		to common stockholders (diluted)		Per Share (diluted)
Net loss, net loss attributable to common stockholders and loss per share, excluding
special items (Non-GAAP)	$ (148,498	)	$ (166,933	)	$ (7.84	)
Special items:
Loans transferred to held for sale (1)	(102,938	)	(102,938	)	(4.83	)
Net Income (loss) and earnings (loss) per share (GAAP)	$ (251,436	)	$ (269,871	)	$ (12.67	)
1- In the fourth quarter 2010, the Corporation recorded a charge of $102.9 million to the provision for loan and lease losses associated with $447 million of loans transferred to held for sale.

	Provision for Loan and Lease Losses, Net Charge-Offs, Provision for Loans and Lease Losses to Net Charge-Offs, and Net Charge-Offs to Average Loans (Non-GAAP to GAAP reconciliation)
	Quarter ended
(In thousands, except per share information)	December 31, 2010
	Provision for Loan
	and Lease Losses	Net Charge-Offs
Provision for loan and lease losses and net charge-offs, excluding
special items (Non-GAAP)	$ 93,409	$ 86,791
Special items:
Loans transferred to held for sale (1)	102,938	165,057
Provision for loan and lease losses and net charge-offs (GAAP)	$ 196,347	$ 251,848
Provision for loan and lease losses to net charge-offs, excluding special items (Non-GAAP)	107.63 %
Provision for loan and lease losses to net charge-offs (GAAP)	77.96 %
Net charge-offs to average loans, excluding special items (Non-GAAP)	2.96 %
Net charge-offs to average loans (GAAP)	8.27 %
1- In the fourth quarter 2010, the Corporation recorded a charge of $102.9 million to the provision for loan and lease losses and charge-offs of
$165.1 million associated with $447 million of loans transferred to held for sale.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release dated May 6, 2011 - First BanCorp Reports Financial Results for the First Quarter Ended March 31, 2011

SIGNATURE

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

Date: May 11, 2011
By:	/s/ Orlando Be rges
Name:	Orlando Berges
Title:	Executive Vice President and
	Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Press Release dated May 6, 2011 - First BanCorp Reports Financial Results for the First Quarter Ended March 31, 2011