Summary of FIRST BANCORP /PR/

Results of Operations and Financial Condition, Financial Statements and Exhibi

Item 2.02 Results of Operations and Financial Condition.

On October 30, 2009, First BanCorp. (the "Corporation") issued a press release announcing its unaudited results of operations for the third quarter ended September 30, 2009. 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 measure: (i) the calculation of net interest income, interest rate spread and net interest margin rate on a tax equivalent basis and excluding the unrealized 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 and (iv) the calculation of the Pre-tax, Pre-provision earnings. 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 the unrealized changes in the fair value 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")
(dollars in thousands)

                                                             Quarters Ended                                Nine-month period ended
                                         September 30,            June 30,           September 30,     September 30,     September 30,
                                             2009                   2009                 2008              2009              2008

Interest Income                       $        242,022       $        252,780       $     288,292     $     753,125     $     843,987
Unrealized loss (gain) on
derivative instruments                           1,485                 (3,465 )             1,574            (2,755 )             654
Interest income - excluding                    243,507                249,315             289,866           750,370           844,641
valuations
Tax-equivalent adjustment                       12,925                 13,933              17,859            41,306            40,702
Interest income - tax equivalent               256,432                263,248             307,725           791,676           885,343

Interest Expense                               112,889                121,766             143,671           371,380           440,302
Unrealized (loss) gain on
derivative instruments and
liabilities
measured at fair value                          (1,589 )               (1,069 )             5,887               202            11,092
Interest expense - excluding                   111,300                120,697             149,558           371,582           451,394
valuations

Net interest income                   $        129,133       $        131,014       $     144,621     $     381,745     $     403,685

Net interest income - excluding       $        132,207       $        128,618       $     140,308     $     378,788     $     393,247
valuations

Net interest income excluding
valuations
- on a tax-equivalent basis           $        145,132       $        142,551       $     158,167     $     420,094     $     433,949

Average Interest-Earning Assets       $     19,541,256       $     19,561,512       $  18,664,426     $  19,313,697     $  17,824,586

Average Interest-Bearing Liabilities  $     17,308,432       $     17,279,599       $  16,871,737     $  17,093,195     $  16,017,147

Average rate on interest-earning                  4.91                   5.18                6.14              5.21              6.32
assets                                                 %                      %                   %                 %                 %
Average rate on interest-earning
assets
- excluding valuations                            4.94 %                 5.11 %              6.18 %            5.19 %            6.33 %
Average rate on interest-earning
assets excluding
valuation - on a tax-equivalent basis             5.21 %                 5.40 %              6.56 %            5.48 %            6.63 %

Average rate on interest-bearing                  2.59                   2.83                3.39              2.90              3.67
liabilities                                            %                      %                   %                 %                 %
Average rate on interest-bearing
liabilities
- excluding valuations                            2.55 %                 2.80 %              3.53 %            2.91 %            3.76 %

Net interest spread                               2.32 %                 2.35 %              2.75 %            2.31 %            2.65 %
Net interest spread - excluding                   2.39                   2.31                2.65              2.28              2.57
valuations                                             %                      %                   %                 %                 %
Net interest spread excluding
valuations
- on a tax-equivalent basis                       2.66 %                 2.60 %              3.03 %            2.57 %            2.87 %

Net interest margin                               2.62 %                 2.69 %              3.08 %            2.64 %            3.03 %
Net interest margin - excluding                   2.68                   2.64                2.99              2.62              2.95
valuations                                             %                      %                   %                 %                 %
Net interest margin excluding
valuations
- on a tax-equivalent basis                       2.95 %                 2.92 %              3.37 %            2.91 %            3.25 %

The tangible common equity ratio and tangible book value per common share are non-GAAP measures generally used by financial analysts and investment bankers 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 for the periods ended September 30, 2009, June 30, 2009, and September 30, 2008, respectively.

                                                    September 30,       June 30,       September 30,
(In thousands)                                          2009              2009             2008

Total equity per consolidated financial statements $   1,698,843     $  1,840,686     $   1,441,272
Preferred equity                                        (927,374 )       (926,259 )        (550,100 )
Goodwill                                                 (28,098 )        (28,098 )         (28,098 )
Core deposit intangible                                  (17,297 )        (18,130 )         (24,894 )

Tangible common equity                             $     726,074     $    868,199     $     838,180


Total assets per consolidated financial statements $  20,081,185     $ 20,012,887     $  19,304,440
Goodwill                                                 (28,098 )        (28,098 )         (28,098 )
Core deposit intangible                                  (17,297 )        (18,130 )         (24,894 )

Tangible assets                                    $  20,035,790     $ 19,966,659     $  19,251,448
Common shares outstanding                                 92,543           92,546            92,510

Tangible common equity ratio                                3.62 %           4.35 %            4.35 %
Tangible book value per common share               $        7.85     $       9.38     $        9.06

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 U.S. generally accepted accounting principles, or 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 (SCAP), 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:

                                                 September 30,       June 30,      September 30,
(In thousands)                                        2009             2009             2008

Total equity per consolidated financial          $  1,698,843     $  1,840,686     $  1,441,272
statements
Qualifying preferred stock                           (927,374 )       (926,259 )       (550,100 )
Unrealized (gain) loss on available-for-sale          (73,095          (46,382           47,187
securities (1)                                                )                )
Disallowed deferred tax asset (2)                      (1,721 )       (172,187 )        (65,411 )
Goodwill                                              (28,098 )        (28,098 )        (28,098 )
Core deposit intangible                               (17,297 )        (18,130 )        (24,894 )
Cumulative change loss (gain) in fair value of
liabilities
accounted for under a fair value option                (1,647 )          2,604           (2,118 )
Other disallowed assets                                  (514 )           (347 )           (282 )
Tier 1 common equity                             $    649,097     $    651,887     $    817,556


Total risk-weighted assets                       $ 14,394,968     $ 13,785,093     $ 13,489,077

Tier 1 common equity to risk-weighted assets             4.51             4.73             6.06
ratio                                                         %                %                %

(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 $112 million of the Corporation's deferred tax assets at September 30, 2009 (June 30, 2009 - $49 million; September 30, 2008 - $50 million) were included without limitation . . .