First BanCorp FBP Form 10-Q filing Q1 FY2026

Item 1.

Financial Statements:

Consolidated

Statements

of

Financial

Condition

(Unaudited)

as

of

March

31,

2026

and

December 31, 2025

5

Consolidated Statements of Income (Unaudited) – Quarter

s

ended March 31,

2026 and 2025

6

Consolidated

Statements

of

Comprehensive

Income

(Unaudited)

–

Quarters

ended

March

31,

2026 and 2025

7

Consolidated

Statements

of

Cash

Flows

(Unaudited)

–

Quarters

ended

March

31,

2026

and

2025

8

Consolidated

Statements

of

Changes

in

Stockholders’

Equity

(Unaudited)

–

Quarters

ended

March 31, 2026 and 2025

9

Notes to Consolidated Financial Statements (Unaudited)

10

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 March

31, 2026.

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 March

31, 2026.

Period

Total Number of Shares

Purchased

Average Price

Paid per Share

Total Number of

Shares Purchased as

Part of Publicly

Announced Plans or

Programs

(1)

Approximate Dollar Value

of Shares that May Yet

be

Purchased Under the Plans

or Programs (in

thousands)

(1)

January 1, 2026 - January 31, 2026

53,933

$

20.52

53,625

$

187,200

February 1, 2026 - February 28, 2026

138,097

21.21

138,097

184,271

March 1, 2026 - March 31, 2026

2,442,261

20.72

2,217,470

138,300

Total

2,634,291

(2)

2,409,192

(1)

As of March 31,

2026, the Corporation was

authorized to purchase up

to $200 million of the

Corporation's common stock

under the program that

was publicly announced on

October 22,

Repurchases

under

the

program

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.

The stock

repurchase program

does not obligate

it to acquire

any specific

number of shares

and does

not have an

expiration date.

The stock

repurchase

program may

be modified,

suspended,

or terminated

at

any time

at

the Corporation’s

discretion.

During

the

first quarter

of 2026,

the Corporation

repurchased

approximately $50.0 million in common stock.

(2)

Includes 225,099 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 3.

Quantitative and Qualitative Disclosures About Market Risk

100

Item 4.

Controls and Procedures

100

PART

II. OTHER INFORMATION

Item 1.

Legal Proceedings

101

ITEM 5.

OTHER INFORMATION

During

the

quarter

ended

March

31,

2026,

none

of

the

Corporation’s

directors

or

officers

(as

defined

in

Rule

16a-1(f)

of

the

Exchange Act)

adopted

or

terminated

a “Rule 10b5-1 trading

arrangement” or

“non-Rule

10b5-1

trading arrangement,” as those

terms

are defined in Item 408 of Regulation S-K.

103

ITEM 6.

EXHIBITS

See the Exhibit Index below, which is incorporated by

reference herein:

EXHIBIT INDEX

Exhibit No.

Description

31.1

CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of

2002

32.2

CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of

2002

101.INS

Inline 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.SCH

Inline XBRL Taxonomy Extension Schema Document, filed herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document, filed herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith

101.DEF

Inline XBRL Taxonomy Extension Definitions Linkbase Document, filed herewith

104

The cover page of First BanCorp. Quarterly Report on Form 10-Q

for the quarter ended March 31, 2026, formatted in

Inline XBRL (included within the Exhibit 101 attachments)

104

ITEM 1.

LEGAL PROCEEDINGS

For

a

discussion

of

legal

proceedings,

see

Note

18

–

“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 2025 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

Report on Form 10-Q for

2025 Annual Report on Form 10-K.

Report on Form 10-K.

102

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

March 31, 2026,

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

March

31,

2026

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

Officer 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 the

most recent

quarter ended

March 31,

2026 that have

materially affected,

or are reasonably

likely

to materially affect, the Corporation’s

internal control over financial reporting.

101

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

18

–

“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 2025 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

Report on Form 10-Q for

2025 Annual Report on Form 10-K.

Report on Form 10-K.

102

Item 5.

Unregistered Sales of Equity Securities and Use of Proceeds

Other Information

102

102

Item 6.

Exhibits

103

3

Form 10-Q

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

.

“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

(“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

and volatility,

trade policies, 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

litigation or the

threat of litigation

or other dispute

resolutions,

including any adverse

settlements or judgments

against

the

Corporation,

and

the

potential

resulting

liabilities,

costs,

negative

publicity

or

other

reputational

harm;

and

the

effects of asserted and unasserted claims and the extent of

available insurance coverage;

• 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;

4

• general

competitive

factors

and

other

market

risks

as

well

as

the

implementation

of

existing

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 regarding

the implementation

of Puerto

Rico’s

debt restructuring

plan (“Plan

of Adjustment”

or “PoA”)

and the

revised fiscal plan for Puerto Rico, as certified on June

6, 2025 (the “2025 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 of 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 (“ESG”) matters, including

our climate-related initiatives and commitments,

as well as

the impact and potential cost to us of any policies, legislation, or initiatives in opposition

to our ESG policies;

• 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,

ongoing

conflicts

in

the

Middle

East,

such

as

the

war

in

Iran,

recent

conflicts

in

South

America,

the

possible

expansion

of

such

conflicts

in

surrounding

areas

and

potential

geopolitical

consequences,

and

the

threat

of

conflict

from

neighboring

countries

in

our

region),

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,

including

as

a

result

of

the

One

Big

Beautiful

Bill

Act,

signed

into

law

on

July

4,

2025,

the

reduction

in

staffing

at

U.S.

governmental agencies,

the effects of

U.S. federal government

shutdowns and political

impasses, and uncertainties

regarding

the U.S. debt ceiling and federal budget, 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

5

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

March 31, 2026

December 31, 2025

(In thousands, except for share information)

ASSETS

Cash and due from banks

$

549,199

$

657,149

Money market investments:

Time deposit with another financial institution

1,000

750

Other short-term investments

700

700

Total money market investments

1,700

1,450

Available-for-sale debt securities, at fair value (amortized cost of

$

5,022,891

as of March 31, 2026 and $

4,901,982

as of December 31, 2025; ACL of $

839

as of March 31, 2026 and $

763

as of December 31, 2025)

4,668,697

4,554,032

Held-to-maturity debt securities, at amortized

cost, net of ACL of $

641

as of March 31, 2026 and $

733

as of December 31, 2025 (fair value of

$

253,485

as of March 31, 2026 and $

262,055

as of December 31, 2025)

256,881

264,563

Equity securities

46,432

44,753

Total investment securities

4,972,010

4,863,348

Loans held for investment, net of ACL of

$

245,060

as of March 31, 2026 and $

249,037

as of December 31, 2025

12,846,017

12,876,319

Mortgage loans held for sale, at lower of

cost or market

12,805

16,697

Total loans, net

12,858,822

12,893,016

Accrued interest receivable on loans and

investments

67,722

71,351

Premises and equipment, net

127,865

126,920

Other real estate owned (“OREO”)

6,344

7,522

Deferred tax asset, net

143,565

149,012

Goodwill

38,611

38,611

Other intangible assets

3,240

3,458

Other assets

317,027

321,055

Total assets

$

19,086,105

$

19,132,892

LIABILITIES

Non-interest-bearing deposits

$

5,554,751

$

5,549,416

Interest-bearing deposits

11,041,070

11,120,727

Total deposits

16,595,821

16,670,143

Short-term borrowings

90,000

Long-term borrowings

200,000

290,000

Accounts payable and other liabilities

233,045

205,884

Total liabilities

17,118,866

17,166,027

Commitments and contingencies (See

Note 18)

(nil)

(nil)

STOCKHOLDERS’ EQUITY

Common stock, $

0.10

par value,

2,000,000,000

shares authorized;

223,663,116

shares issued;

154,693,926

shares outstanding as of March 31, 2026

and

156,618,996

shares outstanding as of December

31, 2025

22,366

22,366

Additional paid-in capital

952,773

963,543

Retained earnings, includes legal surplus

reserve of $

262,534

as of each of March 31, 2026 and

December 31, 2025

2,325,256

2,268,011

Treasury stock (at cost),

68,969,190

shares as of March 31, 2026 and

67,044,120

shares as of December 31, 2025

(972,438)

(932,505)

Accumulated other comprehensive loss,

net of tax of $

7,986

as of each of March 31, 2026 and

December 31, 2025

(360,718)

(354,550)

Total stockholders’ equity

1,967,239

1,966,865

Total liabilities and stockholders’ equity

$

19,086,105

$

19,132,892

The accompanying notes are an integral part

of these statements.

6

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Quarter Ended March 31,

2026

2025

(In thousands, except per share information)

Interest and dividend income:

Loans

$

241,521

$

241,332

Investment securities

32,698

23,528

Money market investments and interest-bearing cash accounts

5,630

12,205

Total interest and dividend income

279,849

277,065

Interest expense:

Deposits

55,931

58,497

Short-term borrowings

58

76

Long-term borrowings

2,904

6,095

Total interest expense

58,893

64,668

Net interest income

220,956

212,397

Provision for credit losses - expense (benefit):

Loans and finance leases

17,170

24,837

Unfunded loan commitments

107

(63)

Debt securities

(4)

36

Provision for credit losses - expense

17,273

24,810

Net interest income after provision for credit losses

203,683

187,587

Non-interest income:

Service charges and fees on deposit accounts

9,932

9,640

Mortgage banking activities

4,043

3,177

Insurance commission income

5,944

5,805

Card and processing income

11,758

11,475

Other non-interest income

6,008

5,637

Total non-interest income

37,685

35,734

Non-interest expenses:

Employees’ compensation and benefits

65,299

62,137

Occupancy and equipment

22,063

22,630

Business promotion

3,555

3,278

Professional service fees

12,912

11,486

Taxes, other than income taxes

6,184

5,878

FDIC deposit insurance

2,058

2,236

Net gain on OREO operations

(937)

(1,129)

Credit and debit card processing expenses

7,327

5,110

Communications

2,288

2,245

Other non-interest expenses

6,356

9,151

Total non-interest expenses

127,105

123,022

Income before income taxes

114,263

100,299

Income tax expense

25,485

23,240

Net income

$

88,778

$

77,059

Net income attributable to common stockholders

$

88,778

$

77,059

Net income per common share:

Basic

$

0.57

$

0.47

Diluted

$

0.57

$

0.47

The accompanying notes are an integral part

of these statements.

7

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Quarter Ended March 31,

2026

2025

(In thousands)

Net income

$

88,778

$

77,059

Other comprehensive (loss) income, net of tax:

Available-for-sale debt securities:

Net unrealized holding (losses) gains on debt securities

(1)

(6,168)

84,061

Other comprehensive (loss) income for the period, net of tax

(6,168)

84,061

Total comprehensive income

$

82,610

$

161,120

(1)

Net unrealized holding (losses) gains 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.

8

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Quarter ended March 31,

2026

2025

(In thousands)

Cash flows from operating activities:

Net income

$

88,778

$

77,059

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization

4,066

4,453

Amortization of intangible assets

218

1,252

Provision for credit losses

17,273

24,810

Deferred income tax expense

5,448

2,010

Stock-based compensation

3,923

3,739

Unrealized gain on derivative instruments

(272)

(130)

Net gain on sales of loans and loans held for sale valuation

adjustments

(1,837)

(708)

Net amortization (accretion) of discounts, premiums, and

deferred loan fees and costs

127

(394)

Originations and purchases of loans held for sale

(36,749)

(44,824)

Sales and repayments of loans held for sale

42,998

46,192

Amortization of broker placement fees

191

160

Net (accretion) amortization of premiums and discounts on investment

securities

(4,155)

1,073

Decrease in accrued interest receivable

968

8,081

Decrease in accrued interest payable

(1,581)

(3,864)

Decrease (increase) in other assets

12,541

(240)

Decrease in other liabilities

(10,849)

(10,450)

Net cash provided by operating activities

121,088

108,219

Cash flows from investing activities:

Net repayments on loans held for investment

620

32,663

Proceeds from sales of loans held for investment

2,475

Proceeds from sales of repossessed assets

13,153

12,238

Purchases of available-for-sale debt securities

(767,685)

(12,264)

Proceeds from principal repayments and maturities of available-for-sale

debt securities

690,519

347,267

Proceeds from principal repayments of held-to-maturity debt securities

8,046

5,384

Additions to premises and equipment

(5,173)

(1,485)

Net (purchases) redemptions of equity securities

(1,699)

7,276

Net cash (used in) provided by investing activities

(62,219)

393,554

Cash flows from financing activities:

Net decrease in deposits

(79,866)

(49,685)

Repayments of long-term borrowings

(90,000)

(229,040)

Proceeds from short-term borrowings

90,000

Repurchase of outstanding common stock

(54,626)

(24,872)

Dividends paid on common stock

(32,077)

(29,316)

Net cash used in financing activities

(166,569)

(332,913)

Net (decrease) increase in cash and cash equivalents

(107,700)

168,860

Cash and cash equivalents at beginning of year

658,599

1,159,415

Cash and cash equivalents at end of year

$

550,899

$

1,328,275

Cash and cash equivalents include:

Cash and due from banks

$

549,199

$

1,327,075

Money market investments

1,700

1,200

$

550,899

$

1,328,275

The accompanying notes are an integral part of these statements.

9

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

EQUITY

(Unaudited)

Quarter Ended March 31,

2026

2025

(In thousands, except per share information)

Common Stock

$

22,366

$

22,366

Additional Paid-In Capital:

Balance at beginning of period

963,543

964,964

Stock-based compensation expense

3,923

3,739

Common stock reissued under stock-based compensation plan

(14,693)

(11,356)

Restricted stock forfeited

33

Balance at end of period

952,773

957,380

Retained Earnings:

Balance at beginning of period

2,268,011

2,038,812

Net income

88,778

77,059

Dividends on common stock ($

0.20

per share and $

0.18

per share for the quarters ended

March 31, 2026 and 2025, respectively)

(31,533)

(29,595)

Balance at end of period

2,325,256

2,086,276

Treasury Stock (at cost):

Balance at beginning of period

(932,505)

(790,350)

Common stock repurchases (See Note 10)

(54,626)

(25,158)

Common stock reissued under stock-based compensation plan

14,693

11,356

Restricted stock forfeited

(33)

Balance at end of period

(972,438)

(804,185)

Accumulated Other Comprehensive Loss, net of tax:

Balance at beginning of period

(354,550)

(566,556)

Other comprehensive (loss) income, net of tax

(6,168)

84,061

Balance at end of period

(360,718)

(482,495)

Total stockholders’ equity

$

1,967,239

$

1,779,342

The accompanying notes are an integral part of these statements.

10

FIRST BANCORP.

INDEX TO NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

PAGE

Note 1 –

Basis of Presentation and Significant Accounting Policies

11

Note 2 –

Debt Securities

12

Note 3 –

Loans Held for Investment

18

Note 4

–

Allowance for Credit Losses for Loans and Finance Leases

34

Note 5 –

Other Real Estate Owned (“OREO”)

36

Note 6 –

Deposits

37

Note 7 –

Borrowings

38

Note 8 –

Earnings per Common Share

39

Note 9 –

Stock-Based Compensation

40

Note 10 –

Stockholders’ Equity

43

Note 11 –

Accumulated Other Comprehensive Loss

45

Note 12 –

Employee Benefit Plans

46

Note 13 –

Income Taxes

47

Note 14

–

Fair Value

48

Note 15

–

Revenue from Contracts with Customers

52

Note 16 –

Segment Information

54

Note 17 –

Supplemental Statements

of Cash Flows Information

56

Note 18 –

Regulatory Matters, Commitments, and Contingencies

57

Note 19 –

First BanCorp. (Holding Company Only) Financial Information

59

11

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

ended

March

31,

2026

(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, 2025 (the “audited consolidated financial

statements”) included in the 2025 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 2025

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 ended March 31,

2026 are not necessarily

indicative of the results to

be expected for the entire

year.

Adoption of New Accounting Requirements

Standard

Description

Effective Date

Effect on the financial statements

ASU 2025-05, “Financial

Instruments – Credit Losses

(Topic 326): Measurement

of Credit Losses for

Accounts Receivable and

Contract Assets”

In July 2025, the FASB issued ASU 2025-

05, which provides a practical expedient for

current accounts receivable and current

contract assets accounted for pursuant to

ASC Topic 606. Such practical expedient, if

elected, allows an entity to assume that

current economic conditions as of the

reporting date remain unchanged over their

remaining lives.

Effective for annual reporting

periods beginning after December

15, 2025, and interim reporting

periods within those annual

reporting periods. Prospective

application is required.

Although ASU 2025-05 became

effective during the first quarter of

2026, the adoption of this ASU did

not have an impact on the

Corporation’s financial position or

results of operations, as the

Corporation did not elect the

practical expedient provided therein.

Recently Issued Accounting Standards Not Yet

Effective or Not Yet

Adopted

For 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 2025 Annual Report on Form 10-K.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

12

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 March 31, 2026 and

December 31, 2025 were as follows:

March 31, 2026

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

$

497,272

$

2

$

20

$

$

497,254

3.65

U.S. government-sponsored entities (“GSEs”) obligations:

Due within one year

455,779

9

6,614

449,174

0.98

After 1 to 5 years

381,229

11,614

369,615

2.08

After 5 to 10 years

14,995

130

14,865

4.75

After 10 years

6,298

35

6,263

3.95

Puerto Rico government obligation:

After 10 years

(3)

2,655

738

308

1,609

United States and Puerto Rico government obligations

1,358,228

11

19,151

308

1,338,780

2.32

Mortgage-backed securities (“MBS”):

Residential MBS:

U.S. Agencies MBS

2,408,684

1,360

259,497

2,150,547

1.89

U.S. Agencies collateralized mortgage

obligations (“CMOs”)

1,017,683

2,196

41,833

978,046

4.10

Private label MBS

4,847

1,203

531

3,113

5.95

Total Residential MBS

(4)

3,431,214

3,556

302,533

531

3,131,706

2.55

U.S. Agencies Commercial MBS

(4)

233,449

299

35,537

198,211

2.42

Total MBS

3,664,663

3,855

338,070

531

3,329,917

2.54

Total available-for-sale debt securities

$

5,022,891

$

3,866

$

357,221

$

839

$

4,668,697

2.48

December 31, 2025

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

$

497,159

$

183

$

$

$

497,342

3.85

U.S. GSEs’ obligations:

Due within one year

402,352

17

4,659

397,710

0.92

After 1 to 5 years

500,025

5

16,114

483,916

1.45

After 5 to 10 years

14,996

11

14,985

4.75

After 10 years

6,547

46

6,501

3.97

Puerto Rico government obligation:

After 10 years

(3)

2,700

762

318

1,620

United States and Puerto Rico government obligations

1,423,779

205

21,592

318

1,402,074

2.18

MBS:

Residential MBS:

U.S. Agencies MBS

2,401,704

2,360

256,589

2,147,475

1.80

U.S. Agencies CMOs

833,330

4,123

39,299

798,154

3.95

Private label MBS

5,072

1,361

445

3,266

5.92

Total Residential MBS

(4)

3,240,106

6,483

297,249

445

2,948,895

2.36

U.S Agencies Commercial MBS

(4)

238,097

508

35,542

203,063

2.42

Total MBS

3,478,203

6,991

332,791

445

3,151,958

2.36

Total available-for-sale debt securities

$

4,901,982

$

7,196

$

354,383

$

763

$

4,554,032

2.31

(1)

Excludes accrued

interest receivable

on available-for-sale

debt securities

that totaled

$

11.4

million and

$

9.4

million as

of March

31, 2026

and December

31, 2025,

respectively,

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 $

226.4

million (amortized cost - $

247.2

million) and $

230.2

million (amortized cost - $

251.0

million) as of March 31,

2026 and December 31, 2025,

respectively, that was

pledged at the FHLB as

collateral for

borrowings and letters of credit, as well as $

2.4

billion (amortized cost - $

2.6

billion) and $

2.5

billion (amortized cost - $

2.7

billion) as of March 31, 2026 and December 31, 2025, respectively,

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 ("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.

(4)

The weighted-average remaining

contractual life of

residential MBS and

commercial MBS was

16.9

years and

28.8

years, respectively,

as of March

31, 2026, compared

to

16.3

years and

29.1

years, respectively,

as of

December 31, 2025.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

13

During

the first

quarter of

2026,

the Corporation

purchased

approximately

$

807.6

million

in available-for-sale

debt

securities, of

which $

437.0

million were

U.S. agencies’

residential MBS

and debentures

with an

average yield

of

4.57

%; and

$

370.6

million were

U.S. Treasury securities with an average yield

of

3.65

%.

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 March 31, 2026 and December 31, 2025. The tables also include debt securities for

which an ACL was recorded.

As of March 31, 2026

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

$

484,473

$

874

$

673,704

$

17,539

$

1,158,177

$

18,413

Puerto Rico government obligation

1,609

738

(1)

1,609

738

MBS:

Residential MBS:

U.S. Agencies MBS

275,950

1,221

1,770,602

258,276

2,046,552

259,497

U.S. Agencies CMOs

423,478

1,895

163,247

39,938

586,725

41,833

Private label

3,113

1,203

(1)

3,113

1,203

U.S. Agencies Commercial MBS

10,570

58

136,084

35,479

146,654

35,537

$

1,194,471

$

4,048

$

2,748,359

$

353,173

$

3,942,830

$

357,221

(1)

Unrealized losses do not include the credit loss component recorded

as part of the ACL. As of March 31, 2026, the

PRHFA bond and private label MBS

had an ACL of $

0.3

million and

$

0.5

million, respectively.

As of December 31, 2025

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

$

91,584

$

100

$

796,505

$

20,730

$

888,089

$

20,830

Puerto Rico government obligation

1,620

762

(1)

1,620

762

MBS:

Residential MBS:

U.S. Agencies MBS

52,599

148

1,851,881

256,441

1,904,480

256,589

U.S. Agencies CMOs

74,773

402

170,490

38,897

245,263

39,299

Private label

3,266

1,361

(1)

3,266

1,361

U.S. Agencies Commercial MBS

2,810

150

138,412

35,392

141,222

35,542

$

221,766

$

800

$

2,962,174

$

353,583

$

3,183,940

$

354,383

(1)

Unrealized losses do

not include the credit

loss component recorded

as part of the

ACL. As of December

31, 2025, the PRHFA

bond and private

label MBS had an

ACL of $

0.3

million

and $0.5 million, respectively.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

14

Assessment for Credit Losses

The Corporation

expects no

credit losses on

debt securities

issued by

U.S. government

agencies, U.S.

GSEs and

the U.S. Treasury

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 March 31, 2026, the Corporation did not have the

intent to sell these

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 the Puerto Rico

government debt security,

for which credit losses are evaluated

on a

quarterly basis.

The following

table presents

a roll-forward

of the ACL

on available-for-sale

debt securities

by major

security type

for the quarters

ended March 31, 2026 and 2025:

Quarter Ended March 31,

2026

2025

Private label

MBS

Puerto Rico

Government

Obligation

Total

Private label

MBS

Puerto Rico

Government

Obligation

Total

(In thousands)

Beginning balance

$

445

$

318

$

763

$

176

$

345

$

521

Provision for credit losses – expense (benefit)

98

(10)

88

(5)

(5)

Net charge-offs

(12)

(12)

ACL on available-for-sale debt securities

$

531

$

308

$

839

$

176

$

340

$

516

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

15

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 March 31, 2026 and

December 31, 2025 were as follows:

March 31, 2026

Amortized cost

(1) (2)

Gross Unrecognized

Fair value

Weighted-

Gains

Losses

ACL

average yield%

(Dollars in thousands)

Government bonds:

Due within one year

$

1,071

$

20

$

2

$

1,089

$

2

4.75

After 1 to 5 years

53,409

1,858

146

55,121

364

6.85

After 5 to 10 years

10,438

665

147

10,956

87

4.49

After 10 years

14,870

96

14,966

188

7.13

Total government bonds

79,788

2,639

295

82,132

641

6.57

MBS:

Residential MBS:

U.S. Agencies MBS

86,675

3,064

83,611

4.00

U.S. Agencies CMOs

21,146

541

20,605

3.40

Total Residential MBS

(3)

107,821

3,605

104,216

3.89

U.S. Agencies Commercial MBS

(3)

69,913

2,776

67,137

2.14

Total MBS

177,734

6,381

171,353

3.20

Total held-to-maturity debt securities

$

257,522

$

2,639

$

6,676

$

253,485

$

641

4.24

December 31, 2025

Amortized cost

(1) (2)

Gross Unrecognized

Fair value

Weighted-

Gains

Losses

ACL

average yield%

(Dollars in thousands)

Government bonds:

Due within one year

$

1,044

$

42

$

3

$

1,083

$

2

4.94

After 1 to 5 years

54,611

1,921

131

56,401

437

7.05

After 5 to 10 years

10,376

653

159

10,870

95

4.78

After 10 years

14,870

22

6

14,886

199

7.46

Total government bonds

80,901

2,638

299

83,240

733

6.81

MBS:

Residential MBS:

U.S. Agencies MBS

89,798

2,245

87,553

3.99

U.S. Agencies CMOs

21,653

392

21,261

3.40

Total Residential MBS

(3)

111,451

2,637

108,814

3.87

U.S. Agencies Commercial MBS

(3)

72,944

2,943

70,001

2.13

Total MBS

184,395

5,580

178,815

3.19

Total held-to-maturity debt securities

$

265,296

$

2,638

$

5,879

$

262,055

$

733

4.29

(1)

Excludes accrued interest receivable on held-to-maturity debt securities that totaled $

1.8

million and $

3.2

million as of March 31, 2026 and December 31, 2025, respectively, 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 $

136.9

million (fair

value - $

135.1

million) and $

153.0

million (fair

value - $

150.9

million) as of

March 31,

2026 and December

31, 2025, respectively,

that serves as

collateral for

the uninsured portion

of

government deposits. The secured parties are not permitted to sell or repledge the collateral.

(3)

The weighted-average remaining contractual

life of residential MBS

and commercial MBS was

20.9

years and

11.6

years, respectively, as

of March 31,

2026, compared to

21.0

years and

11.9

years, respectively, as

of

December 31,

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

16

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 March

31, 2026 and December 31, 2025, including debt securities for which

an ACL was recorded:

As of March 31, 2026

Less than 12 months

12 months or more

Total

Unrecognized

Unrecognized

Unrecognized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

(In thousands)

Government bonds

$

$

$

16,663

$

295

$

16,663

$

295

MBS:

Residential MBS:

U.S. Agencies MBS

13,948

224

69,663

2,840

83,611

3,064

U.S. Agencies CMOs

20,605

541

20,605

541

U.S. Agencies Commercial MBS

67,137

2,776

67,137

2,776

Total held-to-maturity debt securities

$

13,948

$

224

$

174,068

$

6,452

$

188,016

$

6,676

As of December 31, 2025

Less than 12 months

12 months or more

Total

Unrecognized

Unrecognized

Unrecognized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

(In thousands)

Government bonds

$

$

$

21,460

$

299

$

21,460

$

299

MBS:

Residential MBS:

U.S Agencies MBS

87,553

2,245

87,553

2,245

U.S. Agencies CMOs

21,261

392

21,261

392

U.S. Agencies Commercial MBS

70,001

2,943

70,001

2,943

Total held-to-maturity debt securities

$

$

$

200,275

$

5,879

$

200,275

$

5,879

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

government

bonds,

primarily

consisting

of

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

government bonds,

the Corporation

determines the

ACL based

on the

product of

a

cumulative probability

of default

and loss-given

default, 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 2025 Annual Report on Form 10-K.

The

following

table

presents

the

activity

in

the

ACL

for

held-to-maturity

debt

securities

by

major

security

type

for

the

quarters

ended March 31, 2026 and 2025:

Government Bonds

Quarter Ended March 31,

2026

2025

(In thousands)

Beginning balance

$

733

$

802

Provision for credit losses - (benefit) expense

(92)

41

ACL on held-to-maturity debt securities

$

641

$

843

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

17

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 the

government issued

in bond form

,

which 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

government

bonds through

the use

of internal

credit-risk ratings,

which

are generally

updated

on a

quarterly

basis. The

Corporation

considers

a government

bond as

a criticized

asset if

its risk

rating

is Special

Mention,

Substandard,

Doubtful, or

Loss. Government

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 2

— “Debt Securities,”

to the audited

financial statements included

in the 2025

Annual Report on

Form 10-K.

The Corporation’s

Loan Review Group

reports to the Risk

Management Committee

and administratively to

the Chief Risk Officer.

It

performs

annual

reviews

of

the

Bank’s

commercial

loan

portfolios,

including

the

above-mentioned

government

bonds.

These

reviews assess

the accuracy

of loan

risk ratings

and compliance

with lending

policies and

procedures.

The monitoring

performed by

this

group

helps

evaluate

credit

risk,

adherence

to

underwriting

standards,

and

the

effectiveness

of

credit

management,

while

identifying any

deficiencies. Based on

its findings,

it recommends corrective

actions, as needed.

Results of the

credit process reviews

are reported to the Risk Management Committee.

As of March 31, 2026 and December 31, 2025, all government 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 March 31, 2026

and

December

31,

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)

18

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 March 31,

As of December 31,

2026

2025

(In thousands)

Puerto Rico and Virgin Islands region:

Residential mortgage loans, mainly secured by first mortgages

$

2,378,388

$

2,377,604

Construction loans

192,977

263,640

Commercial mortgage loans

1,826,549

1,763,927

Commercial and Industrial (“C&I”) loans

2,494,701

2,519,002

Consumer loans

3,653,100

3,703,019

Loans held for investment

$

10,545,715

$

10,627,192

Florida region:

Residential mortgage loans, mainly secured by first mortgages

$

536,510

$

530,698

Construction loans

2,290

1,928

Commercial mortgage loans

800,564

790,325

C&I loans

1,200,142

1,169,356

Consumer loans

5,856

5,857

Loans held for investment

$

2,545,362

$

2,498,164

Total:

Residential mortgage loans, mainly secured by first mortgages

$

2,914,898

$

2,908,302

Construction loans

195,267

265,568

Commercial mortgage loans

2,627,113

2,554,252

C&I loans

(1)

3,694,843

3,688,358

Consumer loans

3,658,956

3,708,876

Loans held for investment

(2)

13,091,077

13,125,356

ACL on loans and finance leases

(245,060)

(249,037)

Loans held for investment, net

$

12,846,017

$

12,876,319

(1)

As of March 31, 2026 and

December 31, 2025, includes $

871.1

million and $

887.5

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 $

17.8

million and $

18.4

million as of March 31, 2026 and December 31, 2025, respectively.

Various

loans were

assigned as

collateral for

borrowings, government

deposits, certain

time deposits

accounts, and

related unused

commitments. The carrying

value of loans pledged

as collateral amounted

to $

5.7

billion as of each

of March 31,

2026 and December

31, 2025. As

of each of

March 31, 2026

and December 31,

2025, loans pledged

as collateral include

$

2.1

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

as

of

each

of

March

31,

2026

and

December

31,

2025;

$

125.3

million

pledged

to

secure

as

collateral

for

the

uninsured

portion

of government

deposits

as of

March 31,

2026,

compared to

$

126.1

million as

of December

31, 2025;

and $

107.6

million pledged to secure certain time deposits accounts as of March 31, 2026,

compared to $

111.2

million as of December 31, 2025

.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

19

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 March 31, 2026 and December 31, 2025 are as follows:

As of March 31, 2026

Days Past Due and Accruing

Current

(1)

30-59

60-89

90+

(2) (3) (4)

Nonaccrual

(5)

Total loans held

for investment

Nonaccrual Loans

with no ACL

(6)

(In thousands)

Residential mortgage loans, mainly secured by first mortgages:

FHA/VA government-guaranteed

loans

(1)

(2) (4)

$

70,773

$

$

2,034

$

15,532

$

$

88,339

$

Conventional residential mortgage loans

(1) (3) (5)

2,767,996

24,963

5,529

28,071

2,826,559

Commercial loans:

Construction loans

189,786

67

5,414

195,267

956

Commercial mortgage loans

(1) (3)

2,617,658

1,265

208

540

7,442

2,627,113

4,558

C&I loans

(5)

3,665,543

636

316

1,248

27,100

3,694,843

12,447

Consumer loans:

Auto loans

1,962,478

42,189

6,778

12,483

2,023,928

942

Finance leases

861,882

13,141

2,544

4,235

881,802

143

Personal loans

323,143

4,125

2,119

1,517

330,904

Credit cards

267,401

4,205

2,725

6,033

280,364

Other consumer loans

137,204

1,875

1,397

1,482

141,958

Total loans held for investment

$

12,863,864

$

67,436

$

43,084

$

28,949

$

87,744

$

13,091,077

$

19,046

(1)

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. Federal Housing Authority (“FHA”)/U.S. Department of

Veterans Affairs (“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 March 31, 2026 amounted to

$

7.4

million, $

54.4

million, and $

1.2

million, respectively.

(2)

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 $

3.9

million of residential mortgage loans guaranteed by

the FHA that were over 15 months delinquent as of March 31, 2026.

(3)

Includes purchased

credit deteriorated

(“PCD”) loans

previously accounted

for under

ASC Subtopic

310-30 for

which the

Corporation elected

to treat

pools of

these loans

as single

assets both

at the

time of

adoption of

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 $

4.2

million as of March

31, 2026 ($

3.7

million conventional residential mortgage loans and $

0.5

million commercial mortgage loans), is presented in the loans past due 90 days or more and still accruing category in the table above.

(4)

Included rebooked loans, which were previously

pooled into Government National Mortgage Association

(“GNMA”) securities, amounting to $

6.7

million as of March 31, 2026.

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.

(5)

Nonaccrual loans in the Florida region amounted to $

11.8

million as of March 31, 2026, of which $

11.3

million were residential mortgage loans and $

0.5

million were C&I loans.

(6)

There were

no

nonaccrual loans with no ACL in the Florida region as of March 31, 2026.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

20

As of December 31, 2025

Days Past Due and Accruing

Current

(1)

30-59

60-89

90+

(2) (3) (4)

Nonaccrual

(5)

Total loans held

for investment

Nonaccrual

Loans with no

ACL

(6)

(In thousands)

Residential mortgage loans, mainly secured by first mortgages:

FHA/VA government-guaranteed

loans

(1)

(2) (4)

$

70,781

$

$

2,163

$

15,776

$

$

88,720

$

Conventional residential mortgage loans

(1) (3) (5)

2,758,359

25,985

6,069

29,169

2,819,582

Commercial loans:

Construction loans

260,032

5,536

265,568

956

Commercial mortgage loans

(1) (3)

2,544,283

141

513

933

8,382

2,554,252

952

C&I loans

(5)

3,653,509

1,514

2,563

2,730

28,042

3,688,358

13,752

Consumer loans:

Auto loans

1,952,600

63,085

12,661

14,665

2,043,011

631

Finance leases

871,810

14,049

2,670

3,510

892,039

100

Personal loans

325,474

5,185

2,705

1,792

335,156

Credit cards

278,938

4,479

3,266

6,405

293,088

Other consumer loans

140,117

2,157

1,841

1,467

145,582

Total loans held for investment

$

12,855,903

$

90,610

$

54,367

$

31,913

$

92,563

$

13,125,356

$

16,391

(1)

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, 2025 amounted to

$

8.7

million, $

59.1

million, and $

0.8

million,

respectively.

(2)

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 $

4.1

million of residential mortgage

loans

guaranteed by the FHA that were over 15 months delinquent as of December 31, 2025.

(3)

Includes PCD loans previously accounted for under ASC Subtopic 310-30 for which the Corporation elected to treat pools of these loans as single assets 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

$

4.8

million as of December

31, 2025 ($

3.9

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.

(4)

Include rebooked loans,

which were previously

pooled into GNMA

securities, amounting to

$

6.7

million as of

December 31, 2025.

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.

(5)

Nonaccrual loans in the Florida region amounted to $

11.3

million as of December 31, 2025, of which $

11.1

million were residential mortgage loans and $

0.2

million was a C&I loan.

(6)

There were

no

nonaccrual loans with no ACL in the Florida region as of December 31, 2025.

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 $

0.7

million and $

0.9

million for the

quarters ended March

31, 2026 and

2025, respectively.

For the quarters

ended March 31,

2026 and 2025, interest income recognized on nonaccrual loans amounted

to $

0.7

million, compared to $

0.4

million, respectively.

As of

March 31,

2026, the

recorded investment

on residential

mortgage loans

collateralized by

residential real

estate property

that

were in

the process

of foreclosure

amounted

to $

23.2

million,

including

$

6.2

million of

FHA/VA

government-guaranteed

mortgage

loans, and

$

3.0

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

after

120

days of

delinquency

have passed.

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

government

bonds

accounted

for

as

held-to-maturity

debt

securities,

as

discussed

in

Note

2

“Debt

Securities,”

to the audited consolidated financial statements included in the 2025

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)

21

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 March

31, 2026, the gross charge

-offs for the quarter

ended March 31,

2026

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, 2025, were

as follows:

As of March 31, 2026

As of

December 31,

2025

Puerto Rico and Virgin Islands Region

Term Loans

Amortized Cost Basis by Origination Year

(1)

2026

2025

2024

2023

2022

Prior

Revolving

Loans

Amortized

Cost Basis

Total

Total

(In thousands)

CONSTRUCTION

Risk Ratings:

Pass

$

$

18,221

$

101,993

$

60,062

$

3,409

$

3,878

$

$

187,563

$

258,104

Criticized:

Substandard

4,201

1,213

5,414

5,536

Total construction loans

$

$

18,221

$

101,993

$

64,263

$

3,409

$

5,091

$

$

192,977

$

263,640

Charge-offs on construction loans

$

$

$

$

$

$

$

$

COMMERCIAL MORTGAGE

Risk Ratings:

Pass

$

52,412

$

210,368

$

303,036

$

215,899

$

326,291

$

688,276

$

8,466

$

1,804,748

$

1,741,159

Criticized:

Special Mention

269

3,271

3,540

3,588

Substandard

63

448

3,001

14,749

18,261

19,180

Total commercial mortgage loans

$

52,412

$

210,700

$

303,036

$

219,618

$

329,292

$

703,025

$

8,466

$

1,826,549

$

1,763,927

Charge-offs on commercial mortgage loans

$

$

$

$

$

$

562

$

$

562

C&I

Risk Ratings:

Pass

$

24,068

$

468,181

$

249,028

$

279,784

$

238,446

$

330,870

$

835,993

$

2,426,370

$

2,440,152

Criticized:

Special Mention

1,647

33,030

34,677

40,643

Substandard

1,740

7

762

105

28,975

2,065

33,654

38,207

Total C&I loans

$

24,068

$

469,921

$

249,035

$

282,193

$

238,551

$

359,845

$

871,088

$

2,494,701

$

2,519,002

Charge-offs on C&I loans

$

$

$

38

$

35

$

$

11

$

306

$

390

(1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

22

As of March 31, 2026

As of

December 31,

2025

Term Loans

Florida Region

Amortized Cost Basis by Origination Year

(1)

2026

2025

2024

2023

2022

Prior

Revolving

Loans

Amortized

Cost Basis

Total

Total

(In thousands)

CONSTRUCTION

Risk Ratings:

Pass

$

$

1,614

$

676

$

$

$

$

$

2,290

$

1,928

Total construction loans

$

$

1,614

$

676

$

$

$

$

$

2,290

$

1,928

Charge-offs on construction loans

$

$

$

$

$

$

$

$

COMMERCIAL MORTGAGE

Risk Ratings:

Pass

$

19,443

$

172,849

$

75,268

$

25,876

$

195,926

$

261,144

$

31,834

$

782,340

$

771,997

Criticized:

Substandard

17,407

817

18,224

18,328

Total commercial mortgage loans

$

19,443

$

172,849

$

75,268

$

25,876

$

213,333

$

261,961

$

31,834

$

800,564

$

790,325

Charge-offs on commercial mortgage loans

$

$

$

$

$

$

$

$

C&I

Risk Ratings:

Pass

$

14,929

$

227,076

$

272,917

$

174,151

$

131,876

$

148,113

$

215,749

$

1,184,811

$

1,154,271

Criticized:

Special Mention

10,884

3,968

14,852

14,898

Substandard

181

298

479

187

Total C&I loans

$

14,929

$

227,076

$

283,801

$

174,151

$

131,876

$

148,294

$

220,015

$

1,200,142

$

1,169,356

Charge-offs on C&I loans

$

$

$

$

$

$

$

$

(1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

23

As of March 31, 2026

As of

December 31,

2025

Term Loans

Total

Amortized Cost Basis by Origination Year (1)

2026

2025

2024

2023

2022

Prior

Revolving

Loans

Amortized

Cost Basis

Total

Total

(In thousands)

CONSTRUCTION

Risk Ratings:

Pass

$

$

19,835

$

102,669

$

60,062

$

3,409

$

3,878

$

$

189,853

$

260,032

Criticized:

Substandard

4,201

1,213

5,414

5,536

Total construction loans

$

$

19,835

$

102,669

$

64,263

$

3,409

$

5,091

$

$

195,267

$

265,568

Charge-offs on construction loans

$

$

$

$

$

$

$

$

COMMERCIAL MORTGAGE

Risk Ratings:

Pass

$

71,855

$

383,217

$

378,304

$

241,775

$

522,217

$

949,420

$

40,300

$

2,587,088

$

2,513,156

Criticized:

Special Mention

269

3,271

3,540

3,588

Substandard

63

448

20,408

15,566

36,485

37,508

Total commercial mortgage loans

$

71,855

$

383,549

$

378,304

$

245,494

$

542,625

$

964,986

$

40,300

$

2,627,113

$

2,554,252

Charge-offs on commercial mortgage loans

$

$

$

$

$

$

562

$

$

562

C&I

Risk Ratings:

Pass

$

38,997

$

695,257

$

521,945

$

453,935

$

370,322

$

478,983

$

1,051,742

$

3,611,181

$

3,594,423

Criticized:

Special Mention

10,884

1,647

36,998

49,529

55,541

Substandard

1,740

7

762

105

29,156

2,363

34,133

38,394

Total C&I loans

$

38,997

$

696,997

$

532,836

$

456,344

$

370,427

$

508,139

$

1,091,103

$

3,694,843

$

3,688,358

Charge-offs on C&I loans

$

$

$

38

$

35

$

$

11

$

306

$

390

(1) Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

24

The following

tables present the

amortized cost of

residential mortgage

loans by portfolio

classes and by

origination year

based on

accrual status as of March 31, 2026,

the gross charge-offs for

the quarter ended March 31, 2026 by

origination year, and the

amortized

cost of residential mortgage loans by portfolio classes based on accrual

status as of December 31, 2025:

As of March 31, 2026

As of

December 31,

2025

Term Loans

Amortized Cost Basis by Origination Year

(1)

2026

2025

2024

2023

2022

Prior

Revolving

Loans

Amortized

Cost Basis

Total

Total

(In thousands)

Puerto Rico and Virgin Islands Region:

FHA/VA government-guaranteed loans

Accrual Status:

Performing

$

$

87

$

242

$

1,115

$

1,107

$

84,456

$

$

87,007

$

87,635

Total FHA/VA

government-guaranteed loans

$

$

87

$

242

$

1,115

$

1,107

$

84,456

$

$

87,007

$

87,635

Conventional residential mortgage loans

Accrual Status:

Performing

$

52,607

$

238,810

$

177,607

$

153,731

$

141,017

$

1,510,811

$

$

2,274,583

$

2,271,925

Non-Performing

39

328

16,431

16,798

18,044

Total conventional residential mortgage loans

$

52,607

$

238,849

$

177,607

$

153,731

$

141,345

$

1,527,242

$

$

2,291,381

$

2,289,969

Total

Accrual Status:

Performing

$

52,607

$

238,897

$

177,849

$

154,846

$

142,124

$

1,595,267

$

$

2,361,590

$

2,359,560

Non-Performing

39

328

16,431

16,798

18,044

Total residential mortgage loans

$

52,607

$

238,936

$

177,849

$

154,846

$

142,452

$

1,611,698

$

$

2,378,388

$

2,377,604

Charge-offs on residential mortgage loans

$

$

$

$

1

$

$

125

$

$

126

(1)

Excludes accrued interest receivable.

As of March 31, 2026

As of

December 31,

2025

Term Loans

Amortized Cost Basis by Origination Year

(1)

2026

2025

2024

2023

2022

Prior

Revolving

Loans

Amortized

Cost Basis

Total

Total

(In thousands)

Florida Region:

FHA/VA government-guaranteed loans

Accrual Status:

Performing

$

$

$

$

$

$

1,332

$

$

1,332

$

1,085

Total FHA/VA

government-guaranteed loans

$

$

$

$

$

$

1,332

$

$

1,332

$

1,085

Conventional residential mortgage loans

Accrual Status:

Performing

$

19,073

$

72,055

$

82,184

$

72,788

$

61,636

$

216,169

$

$

523,905

$

518,488

Non-Performing

1,814

2,442

7,017

11,273

11,125

Total conventional residential mortgage loans

$

19,073

$

72,055

$

82,184

$

74,602

$

64,078

$

223,186

$

$

535,178

$

529,613

Total

Accrual Status:

Performing

$

19,073

$

72,055

$

82,184

$

72,788

$

61,636

$

217,501

$

$

525,237

$

519,573

Non-Performing

1,814

2,442

7,017

11,273

11,125

Total residential mortgage loans

$

19,073

$

72,055

$

82,184

$

74,602

$

64,078

$

224,518

$

$

536,510

$

530,698

Charge-offs on residential mortgage loans

$

$

$

$

$

$

4

$

$

4

(1)

Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

25

As of March 31, 2026

As of

December 31,

2025

Term Loans

Amortized Cost Basis by Origination Year

(1)

2026

2025

2024

2023

2022

Prior

Revolving

Loans

Amortized

Cost Basis

Total

Total

(In thousands)

Total:

FHA/VA government-guaranteed loans

Accrual Status:

Performing

$

$

87

$

242

$

1,115

$

1,107

$

85,788

$

$

88,339

$

88,720

Total FHA/VA

government-guaranteed loans

$

$

87

$

242

$

1,115

$

1,107

$

85,788

$

$

88,339

$

88,720

Conventional residential mortgage loans

Accrual Status:

Performing

$

71,680

$

310,865

$

259,791

$

226,519

$

202,653

$

1,726,980

$

$

2,798,488

$

2,790,413

Non-Performing

39

1,814

2,770

23,448

28,071

29,169

Total conventional residential mortgage loans

$

71,680

$

310,904

$

259,791

$

228,333

$

205,423

$

1,750,428

$

$

2,826,559

$

2,819,582

Total

Accrual Status:

Performing

$

71,680

$

310,952

$

260,033

$

227,634

$

203,760

$

1,812,768

$

$

2,886,827

$

2,879,133

Non-Performing

39

1,814

2,770

23,448

28,071

29,169

Total residential mortgage loans

$

71,680

$

310,991

$

260,033

$

229,448

$

206,530

$

1,836,216

$

$

2,914,898

$

2,908,302

Charge-offs on residential mortgage loans

$

$

$

$

1

$

$

129

$

$

130

(1)

Excludes accrued interest receivable.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

26

The

following

tables present

the

amortized

cost

of

consumer

loans

by

portfolio

classes

and

by origination

year

based on

accrual

status as of

March 31,

2026, the

gross charge-offs

for the quarter

ended March

31, 2026 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, 2025:

As of March 31, 2026

As of

December 31,

2025

Term Loans

Total

Amortized Cost Basis by Origination Year

(1)

2026

2025

2024

2023

2022

Prior

Revolving

Loans

Amortized

Cost Basis

Total

Total

(In thousands)

Auto loans

Accrual Status:

Performing

$

144,722

$

558,732

$

478,783

$

352,065

$

257,925

$

219,218

$

$

2,011,445

$

2,028,346

Non-Performing

1,144

2,116

2,385

2,606

4,232

12,483

14,665

Total auto loans

$

144,722

$

559,876

$

480,899

$

354,450

$

260,531

$

223,450

$

$

2,023,928

$

2,043,011

Charge-offs on auto loans

$

16

$

1,615

$

2,328

$

3,049

$

1,614

$

1,383

$

$

10,005

Finance leases

Accrual Status:

Performing

$

54,180

$

217,931

$

200,464

$

196,600

$

128,607

$

79,785

$

$

877,567

$

888,529

Non-Performing

71

772

950

799

1,643

4,235

3,510

Total finance leases

$

54,180

$

218,002

$

201,236

$

197,550

$

129,406

$

81,428

$

$

881,802

$

892,039

Charge-offs on finance leases

$

$

191

$

519

$

842

$

539

$

624

$

$

2,715

Personal loans

Accrual Status:

Performing

$

31,838

$

105,208

$

77,904

$

63,537

$

38,136

$

12,764

$

$

329,387

$

333,364

Non-Performing

290

360

467

300

100

1,517

1,792

Total personal loans

$

31,838

$

105,498

$

78,264

$

64,004

$

38,436

$

12,864

$

$

330,904

$

335,156

Charge-offs on personal loans

$

$

533

$

1,153

$

1,414

$

964

$

284

$

$

4,348

Credit cards

Accrual Status:

Performing

$

$

$

$

$

$

$

280,364

$

280,364

$

293,088

Total credit cards

$

$

$

$

$

$

$

280,364

$

280,364

$

293,088

Charge-offs on credit cards

$

$

$

$

$

$

$

4,772

$

4,772

Other consumer loans

Accrual Status:

Performing

$

19,609

$

56,256

$

26,028

$

16,523

$

7,180

$

5,339

$

9,541

$

140,476

$

144,115

Non-Performing

440

450

298

103

47

144

1,482

1,467

Total other consumer loans

$

19,609

$

56,696

$

26,478

$

16,821

$

7,283

$

5,386

$

9,685

$

141,958

$

145,582

Charge-offs on other consumer loans

$

$

1,701

$

1,356

$

705

$

273

$

111

$

133

$

4,279

Total

Accrual Status:

Performing

$

250,349

$

938,127

$

783,179

$

628,725

$

431,848

$

317,106

$

289,905

$

3,639,239

$

3,687,442

Non-Performing

1,945

3,698

4,100

3,808

6,022

144

19,717

21,434

Total consumer loans

$

250,349

$

940,072

$

786,877

$

632,825

$

435,656

$

323,128

$

290,049

$

3,658,956

$

3,708,876

Charge-offs on total consumer loans

$

16

$

4,040

$

5,356

$

6,010

$

3,390

$

2,402

$

4,905

$

26,119

(1)

Excludes accrued interest receivable.

As of March 31, 2026 and December 31, 2025, the balance of revolving loans converted

to term loans was

no

t material.

Accrued

interest

receivable

on

loans

totaled

$

54.5

million

as

of

March

31,

2026

($

58.7

million

as

of

December

31,

2025),

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.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

27

The

following

tables

present

information

about

collateral

dependent

loans

that

were

individually

evaluated

for

purposes

of

determining the ACL as of March 31, 2026 and December 31, 2025:

As of March 31, 2026

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

$

22,044

$

1,200

$

$

22,044

$

1,200

Commercial loans:

Construction loans

4,201

597

956

5,157

597

Commercial mortgage loans

17,130

17,130

C&I loans

12,447

12,447

$

26,245

$

1,797

$

30,533

$

56,778

$

1,797

As of December 31, 2025

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

$

22,919

$

1,233

$

$

22,919

$

1,233

Commercial loans:

Construction loans

4,321

627

956

5,277

627

Commercial mortgage loans

4,454

130

19,009

23,463

130

C&I loans

13,753

13,753

$

31,694

$

1,990

$

33,718

$

65,412

$

1,990

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

March

31,

2026

was

65

%,

compared to

67

% as

of December

31, 2025,

driven by

a $

1.2

million repayment

of a

C&I loan

in the

Puerto Rico

region in

the food

retail industry with a loan-to-value ratio of

77

% and a $

4.7

million outflow from the collateral-dependent loan

portfolio, attributable to

a commercial mortgage loan in the Puerto Rico region with a loan-to-value

ratio of

80

%.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

28

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

Federal

National

Mortgage

Association

(“FNMA”)

and

Federal

Home

Loan

Mortgage

Corporation

(“FHLMC”).

During the

quarters ended

March 31,

2026 and

2025, loans

pooled

into GNMA

MBS amounted

to approximately

$

41.6

million and

$

42.2

million,

respectively,

for

which

the

Corporation

recognized

a

net

gain

on

sale of

$

2.4

million

and

$

1.1

million,

respectively.

Also, during

the quarter

ended March

31, 2025,

the Corporation

sold approximately

$

4.1

million of

performing residential

mortgage

loans to GSEs,

for which the

Corporation recognized

a net gain on

sale of $

0.2

million. There were

no

sales of performing

residential

mortgage loans

to GSEs

for the

quarter ended

March 31,

2026. 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

each of

March 31,

2026 and

December 31,

2025, rebooked

GNMA delinquent

loans that were included in the residential mortgage loan portfolio

amounted to $

6.7

million.

During

the

quarters

ended

March

31,

2026

and

2025,

the

Corporation

repurchased,

pursuant

to

the

aforementioned

repurchase

option, $

0.4

million and $

0.2

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

quarter ended

March 31,

2026, the

Corporation purchased

C&I loan

participations in

the Florida

region totaling

$

35.7

million, compared to $

15.0

million during the quarter ended March 31, 2025.

During

the

quarter

ended

March

31,

2025,

the

Corporation

recognized

recoveries

of

$

2.4

million

from

the

bulk

sale

of

fully

charged-off

consumer

loans

and

finance

leases.

There

were

no

significant

sales

of

loans

during

the

quarter

ended

March

31,

2026,

other than sales of conforming residential mortgage loans mentioned above.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

29

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 $

13.1

billion as

of March

31, 2026,

credit risk

concentration was

approximately

77

% in

Puerto Rico,

19

% in

the U.S.,

and

4

% in

the USVI and the BVI.

As

of

March

31,

2026,

the

Corporation

had

$

215.0

million

outstanding

in

loans

extended

to

the

Puerto

Rico

government,

its

municipalities and

public corporations,

compared to

$

215.5

million as

of December

31, 2025.

As of

March 31,

2026, approximately

$

155.4

million

consisted

of

loans

extended

to

municipalities

in

Puerto

Rico

that

are

general

obligations

supported

by

assigned

property

tax

revenues,

and $

18.6

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 March 31, 2026 included

$

8.6

million in a

loan granted to

an affiliate of

the Puerto Rico

Electric Power Authority

(“PREPA”)

and $

32.4

million in loans

to a public corporation

of the Puerto Rico government.

Moreover,

as

of

March

31,

2026,

the

outstanding

balance

of

construction

loans

funded

through

conduit

financing

structures

to

support

the

federal

programs

of

Low-Income

Housing

Tax

Credit

(“LIHTC”)

combined

with

other

federal

programs

amounted

to

$

81.6

million, compared

to $

92.4

million as

of December

31, 2025.

The main

objective of

these programs

is to

spur development

in

new or rehabilitated

and affordable rental

housing. PRHFA,

as program subrecipient

and conduit issuer,

issues tax-exempt obligations

which

are

acquired

by

private

financial

institutions

and

are

required

to

co-underwrite

with

PRHFA

a

mirror

construction

loan

agreement for the specific project

loan to which the Corporation will

serve as ultimate lender,

but where the PRHFA

will be the lender

of record.

In addition,

as of March

31, 2026, the

Corporation had

$

66.0

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

$

67.1

million as of

December 31, 2025.

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

March 31, 2026,

the Corporation

had

$

168.3

million

in loans

to USVI

government public

corporations, compared

to $

138.7

million as

of December

31, 2025.

As of

March 31,

2026, all

loans were currently performing and up to date on principal and interest payments.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

30

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

and

home

equity

lines of

credit. Borrowers

continue making reduced monthly

payments during the

trial period, which is

generally 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,

change in

amortization

term,

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

$

0.8

million

in

restructured

residential

mortgage

loans

that

are

government-guaranteed

(e.g.

FHA/VA

loans)

and

were

modified

during

the

quarter

ended March 31, 2026, compared to $

1.4

million for the comparable period in 2025.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

31

The following

tables present

the amortized

cost basis

as of March

31, 2026

and 2025

of loans

modified to

borrowers experiencing

financial difficulty

during the quarters

ended March 31, 2026

and 2025, 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 March 31, 2026

Payment Delay Only

Forbearance

Payment

Plan

Trial

Modification

Change in

Amortization

term

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

$

$

$

144

$

$

$

$

$

$

144

0.01%

Construction loans

Commercial mortgage loans

365

365

0.01%

C&I loans

298

12

(1)

19

1,559

8

(2)

1,896

0.05%

Consumer loans:

Auto loans

81

141

640

(2)

862

0.04%

Personal loans

197

197

0.06%

Credit cards

570

(1)

570

0.20%

Other consumer loans

59

3

62

0.04%

Total modifications

$

$

663

$

144

$

$

582

$

159

$

1,900

$

648

$

4,096

Quarter Ended March 31, 2025

Payment Delay Only

Forbearance

Payment

Plan

Trial

Modification

Change in

Amortization

Term

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

$

$

95

$

$

$

117

$

$

$

212

0.01%

Construction loans

Commercial mortgage loans

C&I loans

201

(3)

21

(1)

331

553

0.02%

Consumer loans:

Auto loans

205

55

796

(2)

1,056

0.05%

Personal loans

7

91

98

0.03%

Credit cards

965

(1)

965

0.32%

Other consumer loans

76

57

133

0.09%

Total modifications

$

201

$

95

$

$

986

$

736

$

203

$

796

$

3,017

(1)

Modification consists of reduction in interest rate and revocation of revolving line privileges.

(2)

Modification consists of court mandated reduction to 0% interest rate for remaining loan term to borrowers in bankruptcy proceedings unless dismissal occurs.

(3)

Modification consists of a six-month deferral of principal and interest to be repaid on or before the end of the forbearance

plan.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

32

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

ended March

31, 2026 and

2025. The financial

effects of the modifications associated to payment delay were discussed

above and, as such, were excluded from the tables below:

Quarter Ended March 31, 2026

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)

Change in

Amortization Term

(in months)

Conventional residential mortgage loans

%

%

Construction loans

%

%

Commercial mortgage loans

%

%

C&I loans

15.27

%

8

2.25

%

12

Consumer loans:

Auto loans

%

27

4.04

%

26

Personal loans

%

4.79

%

26

Credit cards

14.60

%

%

Other consumer loans

%

24

2.00

%

20

Quarter Ended March 31, 2025

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)

Change in

Amortization Term

(in months)

Conventional residential mortgage loans

%

66

%

Construction loans

%

%

Commercial mortgage loans

%

%

C&I loans

14.23

%

120

%

Consumer loans:

Auto loans

%

25

1.88

%

16

Personal loans

%

36

3.65

%

23

Credit cards

16.01

%

%

Other consumer loans

%

27

3.14

%

21

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

33

The following

tables present

by portfolio

classes the

performance of

loans modified

during the

last twelve

months ended

March

31, 2026 and 2025 that were granted to borrowers experiencing financial difficulty:

Last Twelve Months Ended March 31, 2026

30-59

60-89

90+

Total

Delinquency

Current

Total

(In thousands)

Conventional residential mortgage loans

$

165

$

$

$

165

$

1,374

$

1,539

Construction loans

Commercial mortgage loans

30,530

30,530

C&I loans

8

14

22

3,007

3,029

Consumer loans:

Auto loans

54

107

121

282

3,630

3,912

Personal loans

79

15

94

604

698

Credit cards

365

207

267

839

2,194

3,033

Other consumer loans

15

9

9

33

387

420

Total modifications

$

686

$

323

$

426

$

1,435

$

41,726

$

43,161

Last Twelve Months Ended March 31, 2025

30-59

60-89

90+

Total

Delinquency

Current

Total

(In thousands)

Conventional residential mortgage loans

$

$

$

$

$

981

$

981

Construction loans

119

119

Commercial mortgage loans

126,974

126,974

C&I loans

6

4

10

10,519

10,529

Consumer loans:

Auto loans

78

99

152

329

3,313

3,642

Personal loans

267

267

Credit cards

218

117

99

434

2,651

3,085

Other consumer loans

18

23

10

51

488

539

Total modifications

$

320

$

243

$

261

$

824

$

145,312

$

146,136

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

34

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

Commercial

Mortgage

Loans

Consumer Loans

and Finance

Leases

Construction

Loans

C&I

Loans

Total

Quarter Ended March 31, 2026

(In thousands)

ACL:

Beginning balance

$

41,071

$

5,672

$

23,832

$

41,416

$

137,046

$

249,037

Provision for credit losses - expense (benefit)

239

(2,361)

360

1,017

17,915

17,170

Charge-offs

(130)

(562)

(390)

(26,119)

(27,201)

Recoveries

354

13

40

81

5,566

6,054

Ending balance

$

41,534

$

3,324

$

23,670

$

42,124

$

134,408

$

245,060

Residential

Mortgage

Loans

Construction

Loans

Commercial

Mortgage

Loans

C&I

Loans

Consumer Loans

and Finance

Leases

Total

Quarter Ended March 31, 2025

(In thousands)

ACL:

Beginning balance

$

40,654

$

3,824

$

22,447

$

33,034

$

143,983

$

243,942

Provision for credit losses - expense (benefit)

1,004

(421)

1,656

3,353

19,245

24,837

Charge-offs

(235)

(77)

(27,898)

(28,210)

Recoveries

217

14

40

154

6,275

(1)

6,700

Ending balance

$

41,640

$

3,417

$

24,143

$

36,464

$

141,605

$

247,269

(1) Includes recoveries totaling $

2.4

million associated with the bulk sale of fully charged-off

consumer loans and finance leases.

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

2025 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

March

31,

2026

and

December

31,

2025,

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.

As of March 31,

2026, the ACL for loans

and finance leases was $

245.1

million, a decrease of

$

3.9

million, from $

249.0

million as

of December

31, 2025.

The decrease

was mainly

related to

the ACL

for consumer

loans, which

decreased by

$

2.6

million, driven

by

improvements in macroeconomic variables,

mainly in the projection of the unemployment

rate, and lower delinquency levels, partially

offset by higher qualitative reserves associated with geopolitical

uncertainty driven by,

among other things, higher oil prices as a result

of the conflict

in the Middle

East. In addition,

the ACL for

commercial and

construction loans decreased

by $

1.8

million, mainly due

to

improvements

in

the

projections

of

the

unemployment

rate

and

the

CRE

price

index,

net

of

aforementioned

qualitative

reserves,

partially offset by renewals and refinancings.

Meanwhile,

the

ACL

for

residential

mortgage

loans

increased

by

$

0.5

million,

driven

by

loan

growth

and

the

aforementioned

geopolitical uncertainty,

partially offset by an improvement in the projection of the unemployment

rate.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

35

Net charge-offs

were $

21.1

million for

the quarter

ended March

31, 2026,

compared to

$

21.4

million for

the same

period in

The $

0.3

million decrease

was driven by

a $

1.1

million reduction

in consumer loans

and finance leases

net charge-offs,

mainly in

the

unsecured loan portfolios, after considering the

impact of $

2.4

million in recoveries related to the aforementioned bulk

sale recognized

during the first quarter of 2025. This improvement was partially offset

by a $

0.9

million increase in commercial and construction loans

net charge-offs,

driven by a $

0.6

million charge-off

on a nonaccrual commercial

mortgage loan in the Virgin

Islands region during the

first quarter of 2026.

The tables below present the

ACL related to loans and

finance leases and the carrying

values of loans by portfolio

segment as of

March 31, 2026 and December 31, 2025:

As of March 31, 2026

Residential

Mortgage

Loans

Construction

Loans

Commercial

Mortgage

Loans

C&I

Loans

Consumer Loans

and Finance

Leases

Total

(Dollars in thousands)

Total loans held for investment:

Amortized cost of loans

$

2,914,898

$

195,267

$

2,627,113

$

3,694,843

$

3,658,956

$

13,091,077

Allowance for credit losses

41,534

3,324

23,670

42,124

134,408

245,060

Allowance for credit losses to

amortized cost

1.42

%

1.70

%

0.90

%

1.14

%

3.67

%

1.87

%

As of December 31, 2025

Residential

Mortgage

Loans

Construction

Loans

Commercial

Mortgage

Loans

C&I

Loans

Consumer Loans

and Finance

Leases

Total

(Dollars in thousands)

Total loans held for investment:

Amortized cost of loans

$

2,908,302

$

265,568

$

2,554,252

$

3,688,358

$

3,708,876

$

13,125,356

Allowance for credit losses

41,071

5,672

23,832

41,416

137,046

249,037

Allowance for credit losses to

amortized cost

1.41

%

2.14

%

0.93

%

1.12

%

3.70

%

1.90

%

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

18

–

“Regulatory

Matters,

Commitments

and

Contingencies”

for

information

on

off-balance

sheet

exposures

as

of

March

31,

2026

and

December 31,

2025. 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

2025 Annual Report

on Form 10-K.

As of March

31, 2026, the

ACL for off-balance

sheet credit exposures

amounted

to $

3.1

million, compared to $

3.0

million as of December 31, 2025.

The following

table presents

the activity

in the

ACL for

unfunded loan

commitments and

standby letters

of credit

for the

quarters

ended March 31, 2026 and 2025:

Quarter Ended March 31,

2026

2025

(In thousands)

Beginning balance

$

3,013

$

3,143

Provision for credit losses - expense (benefit)

107

(63)

Ending balance

$

3,120

$

3,080

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

36

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

The following table presents the OREO inventory as of the indicated dates:

March 31, 2026

December 31, 2025

(In thousands)

OREO balances, carrying value:

Residential

(1)

$

5,107

$

6,524

Construction

442

386

Commercial

795

612

Total

$

6,344

$

7,522

(1)

Excludes $

3.1

million and $

4.1

million as of

March 31, 2026

and December 31,

2025, 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.

See Note 14 – “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 ended March 31, 2026 and 2025.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

37

NOTE 6 – DEPOSITS

The following table summarizes deposit balances as of the indicated dates:

March 31, 2026

December 31, 2025

(In thousands)

Type of account:

Non-interest-bearing deposit accounts

$

5,554,751

$

5,549,416

Interest-bearing checking accounts

3,545,690

3,512,649

Interest-bearing saving accounts

3,505,401

3,452,192

Time deposits

3,482,968

3,562,331

Brokered CDs

507,011

593,555

Total

$

16,595,821

$

16,670,143

The following table presents the remaining contractual maturities of time deposits,

including brokered CDs, as of March 31, 2026:

Total

(In thousands)

Three months or less

$

937,286

Over three months to six months

789,420

Over six months to one year

1,372,283

Over one year to two years

665,539

Over two years to three years

126,660

Over three years to four years

41,270

Over four years to five years

41,715

Over five years

15,806

Total

$

3,989,979

Total

Puerto

Rico

and

U.S.

time

deposits

with

balances

of

more

than

$250,000

amounted

to

$

1.7

billion

and

$

1.8

billion

as

of

March 31, 2026

and December 31,

2025, 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

March

31,

2026

and

December

31,

2025,

unamortized

broker

placement

fees

amounted

to

$

0.8

million

and

$

0.9

million,

respectively,

which

are

amortized

over

the

contractual

maturity

of

the

brokered CDs under the interest method.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

38

NOTE 7 – BORROWINGS As of March 31, 2026 and December 31, 2025, total borrowings consisted of FHLB advances as set forth below:

March 31, 2026

December 31, 2025

(In thousands)

Short-term

Fixed

-rate advances from the FHLB

(1)

$

90,000

$

Long-term

Fixed

-rate advances from the FHLB

(2)

200,000

290,000

$

290,000

$

290,000

(1)

Interest rate of

3.86

% as of March 31, 2026.

(2)

Weighted-average interest rate of

4.25

% and

4.32

% as of March 31, 2026 and December 31, 2025, respectively. Contractual maturity

date of November 2027 as of

March 31, 2026.

Advances from the FHLB mature as follows as of the indicated date:

March 31, 2026

(In thousands)

Three months or less

$

90,000

Over one year to two years

200,000

Total

(1)

$

290,000

(1) Average remaining term to maturity of

1.13

years.

During the first

quarter of 2026, the

Corporation added a $

90.0

million short-term fixed-rate

FHLB advance with

an interest rate of

3.86

% and repaid at maturity $

90.0

million of long-term FHLB advances at an average rate of

4.49

%.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

39

NOTE 8 – EARNINGS PER COMMON.SHARE

The calculations of earnings per common share for the quarters ended March 31, 2026

and 2025 are as follows:

Quarter Ended March 31,

2026

2025

(In thousands, except per share information)

Net income attributable to common stockholders

$

88,778

$

77,059

Weighted-Average

Shares:

Average common

shares outstanding

155,262

162,934

Average potential

dilutive common shares

839

815

Average common

shares outstanding - assuming dilution

156,101

163,749

Earnings per common share:

Basic

$

0.57

$

0.47

Diluted

$

0.57

$

0.47

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 ended March 31, 2026

and 2025.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

40

NOTE 9 – STOCK-BASED.COMPENSATION

The First BanCorp.

2016 Omnibus Plan (the “2016

Omnibus Plan”), provided for

equity-based and non-equity-based

compensation

incentives (the

“awards”), and

authorized 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

March

31,

2026,

there

were

1,336,410

authorized

shares

of

common

stock

available for issuance under the 2016 Omnibus Plan.

On

May 6,

2026,

the Corporation’s

stockholders

approved the

adoption

of the

First BanCorp.

2026 Omnibus

Incentive

Plan

(the

“2026

Omnibus

Plan”).

The 2026

Omnibus

Plan

is

the

successor

to

the

2016

Omnibus

Plan

(referred

together

herein

as

“Omnibus

Plan”) and

effective as

of May

6, 2026,

no awards

will be granted

under the

2016 Omnibus

Incentive Plan.

The 2026 Omnibus

Plan,

which is

effective until

May 6, 2036,

authorizes up

to

5,000,000

shares of

common stock,

subject to

certain adjustments.

In addition,

any shares of

common stock subject

to outstanding

awards granted under

the 2016 Omnibus

Incentive Plan

that are payable

in shares

and that are

forfeited or

otherwise terminate on

or after

May 6, 2026,

without the delivery

of shares of

common stock, may

be issued

with respect to

awards under

the 2026 Omnibus

Plan. The Corporation’s

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 2016 Omnibus

Plan during the quarters ended March 31,

2026 and 2025:

Quarter ended

Quarter ended

March 31, 2026

March 31, 2025

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

1,033,690

$

16.71

1,007,621

$

14.39

Granted

(1)

436,540

20.59

447,631

18.35

Forfeited

(2,180)

15.22

Vested

(404,613)

14.48

(364,677)

12.44

Unvested shares outstanding at end of period

1,065,617

$

19.14

1,088,395

$

16.67

(1)

For the quarter ended March 31, 2026, includes

1,872

shares of restricted stock awarded to independent directors and

434,668

shares of restricted stock awarded to employees, of which

87,895

shares were granted to retirement-eligible employees and thus

charged to earnings as of the grant date. For the

quarter ended March 31, 2025, includes

2,086

shares of restricted

stock awarded to independent directors and

445,545

shares of restricted stock awarded to employees, of which

103,560

shares were granted to retirement-eligible employees and thus

charged to earnings as of the grant date.

For the quarters

ended March 31,

2026 and 2025,

the Corporation recognized

$

3.2

million and $

3.1

million, respectively,

of stock-

based compensation

expense related

to restricted

stock awards.

As of

March 31,

2026, there

was $

10.8

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

2.0

years.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

41

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, have the right to receive dividend

equivalents. Such dividend equivalents accrue during the performance cycle and are paid in cash on the vesting date based upon

achievement of the performance goals.

Performance units granted 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. During the

quarter ended March 31, 2026, 55,805 additional shares related to the 2023 performance share award, which vested in March 2026,

were awarded as a result of performance achieved in excess of target opportunity.

The following

table summarizes

the performance

units activity under

the 2016

Omnibus Plan

during the

quarters ended

March 31,

2026 and 2025:

Quarter ended

Quarter ended

March 31, 2026

March 31, 2025

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

544,107

$

16.02

549,032

$

14.37

Additions

(1)

(3)

144,458

20.22

160,744

18.66

Vested

(2)

(3)

(216,876)

12.24

(166,669)

13.15

Performance units at end of period

471,689

$

19.04

543,107

$

16.01

(1)

Units granted during the quarters ended March 31, 2026 and 2025

are based on the achievement of the Relative TSR and TBVPS

performance goals during a three-year performance cycle

beginning January 1, 2026 and January 1, 2025, respectively,

and ending on December 31, 2028 and December 31, 2027,

respectively.

(2)

Units vested during the quarters ended March 31, 2026 and

2025 are related to performance units granted in

2023 and 2022, respectively,

that met the pre-established target and were

settled with shares of common stock reissued from treasury shares.

(3)

Excludes the aforementioned

55,805

additional shares awarded

in connection with the

2023 performance share award

which were also

settled with shares of

common stock reissued

from

treasury shares.

The

fair

value

of

the

performance

units

awarded,

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 March

31, 2026, 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)

42

The following table

summarizes the valuation

assumptions used to

calculate the fair

value as of

the grant date

of the Relative

TSR

component of the performance units granted under the 2016 Omnibus Plan during

the quarters March 31, 2026 and 2025:

Quarter ended March 31,

2026

2025

Risk-free interest rate

(1)

3.75

%

3.92

%

Correlation coefficient

77.54

74.96

Expected dividend yield

(2)

Expected volatility

(3)

29.07

31.94

Expected life (in years)

2.79

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 quarters

ended March 31,

2026 and 2025,

the Corporation recognized

$

0.7

million and $

0.6

million, respectively,

of stock-

based

compensation

expense

related

to

performance

units.

As

of

March

31,

2026,

there

was

$

5.9

million

of

total

unrecognized

compensation cost

related to unvested

performance units that

the Corporation

expects to recognize

over a weighted

-average period of

2.3

years.

Shares withheld

During

the

first

quarter

of

2026,

the

Corporation

withheld

225,099

shares

(2025

–

182,249

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)

43

NOTE 10 – STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On October

22, 2025, the

Corporation announced

that its Board

of Directors had

approved a stock

repurchase program authorizing

the

repurchase

of up

to $

200

million

of its

outstanding

common

stock.

Under

this program,

the Corporation

repurchased

2,409,192

shares

of

common

stock

through

open

market

transactions

at

an

average

price

of

$

20.75

,

for

a

total

cost

of

approximately

$

50.0

million during

the first

quarter of

2026. As

of March

31, 2026,

the Corporation

has remaining

authorization of

approximately $

138.3

million, which it expects to execute during the remainder of 2026.

Repurchases

under

the

program

may

be

executed

through

open

market

purchases,

accelerated

share

repurchases

and

privately

negotiated

transactions

or

plans,

including

plans

complying

with

Rule

10b5-1

under

the

Exchange

Act,

and

will

be

conducted

in

accordance

with

applicable

legal

and

regulatory

requirements.

The

Corporation’s

stock

repurchase

program

is

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 stock

repurchase program

does not obligate

it to acquire

any specific

number of shares

and

does

not

have

an

expiration

date.

The

stock

repurchase

program

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 changes in shares of common stock outstanding for

the quarters ended March 31, 2026 and 2025:

Total

Number of Shares

Quarter Ended March 31,

2026

2025

Common stock outstanding, beginning of year

156,618,996

163,868,877

Common stock repurchased

(1)

(2,634,291)

(1,376,816)

Common stock reissued under stock-based compensation plan

(2)

709,221

614,300

Restricted stock forfeited

(2,180)

Common stock outstanding, end of period

154,693,926

163,104,181

(1)

For the quarters ended March 31, 2026 and 2025 includes

225,099

and

182,249

shares, respectively, of common stock

surrendered to cover officers’ payroll and income

taxes.

(2)

Include

55,805

additional shares awarded in connection with the 2023 performance

share award. See Note 9 – “Stock-Based Compensation”

for additional information.

For

the

quarters

ended

March

31,

2026

and

2025,

total

cash

dividends

declared

on

shares

of

common

stock

amounted

to

$

31.5

million ($

0.20

per share)

and $

29.6

million ($

0.18

per share),

respectively.

On

April 22, 2026

, the

Corporation’s

Board of

Directors

declared a quarterly

cash dividend of

$

0.20

per common share.

The dividend is

payable on

June 12, 2026

to shareholders of

record at

the close

of business

on

May 28, 2026

. 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

of Directors at the relevant times.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

44

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 March 31, 2026 and December

31, 2025.

Treasury Stock

The following table shows the changes in shares of treasury stock for the quarters

ended March 31, 2026 and 2025:

Total

Number of Shares

Quarter Ended March 31,

2026

2025

Treasury stock, beginning of year

67,044,120

59,794,239

Common stock repurchased

2,634,291

1,376,816

Common stock reissued under stock-based compensation plan

(709,221)

(614,300)

Restricted stock forfeited

2,180

Treasury stock, end of period

68,969,190

60,558,935

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 $

262.5

million as of each

of March

31, 2026 and December 31, 2025. There were

no

transfers to the legal surplus reserve during the first quarter of 2026.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

45

NOTE 11 – ACCUMULATED OTHER COMPREHENSIVE LOSS The following table presents the changes in accumulated other comprehensive loss for the quarters ended March 31, 2026 and 2025:

Changes in Accumulated Other Comprehensive

Loss by Component

(1)

Quarter ended March 31,

2026

2025

(In thousands)

Unrealized net holding losses on available-for-sale debt securities:

Beginning balance

$

(354,940)

$

(567,338)

Other comprehensive (loss) income

(2)

(6,168)

84,061

Ending balance

$

(361,108)

$

(483,277)

Adjustment of pension and postretirement benefit plans:

Beginning balance

$

390

$

782

Other comprehensive (loss) income

Ending balance

$

390

$

782

(1)

All amounts presented are net of tax.

(2)

Unrealized net 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.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

46

NOTE 12 – 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,

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 for

the indicated periods:

Affected Line Item

in the Consolidated

Quarter Ended March 31,

Statements of Income

2026

2025

(In thousands)

Net periodic benefit, pension plans:

Interest cost

Other expenses

$

880

$

928

Expected return on plan assets

Other expenses

(992)

(998)

Net periodic benefit, pension plans

(112)

(70)

Net periodic cost, postretirement plan

Other expenses

11

7

Net periodic benefit

$

(101)

$

(63)

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

47

NOTE 13 – INCOME TAXES

The Corporation is subject

to Puerto Rico income

tax on its income from

all sources. Under the

Puerto Rico Internal Revenue

Code

of

2011,

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 first quarter

of 2026, the Corporation

recorded an income tax

expense of $

25.5

million, compared to an

income tax expense

of $

23.2

million for

the same

period in

2025. The

increase in

income tax

expense was

mainly due

to higher

pre-tax income.

For the

year,

the

Corporation’s

annual

effective

tax

rate,

excluding

discrete

items,

was

estimated

at

21.9

%

for

the

first

quarter

of

2026,

compared to

23.9

% for the

comparable period in

2025. The decrease in

the annual effective

tax rate was due

to a higher proportion

of

exempt to taxable income.

Income

tax

expense

attributable

to

Puerto

Rico

is

considered

domestic

for

Puerto

Rico

tax

purposes.

Income

tax

expense

also

includes

U.S.

federal

taxes,

as

well

as

USVI

and

state

income

taxes

in

Florida,

which

are

considered

foreign

for

Puerto

Rico

tax

purposes. 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.

Income

generally

from

BVI

operations

is

considered

foreign-source

income and

is not

subject to

taxation in

that jurisdiction.

For the

first quarter

of 2026,

FirstBank incurred

current income

tax expense of

approximately $

2.8

million related to

its U.S. operations,

compared to

$

2.6

million for the

comparable

period in 2025.

As of March 31, 2026,

the Corporation had a net deferred

tax asset of $

143.6

million, net of a valuation allowance

of $

75.9

million,

compared to

a net

deferred tax

asset of

$

149.0

million, net

of a

valuation allowance

of $

75.0

million, as

of December

31, 2025.

The

net deferred

tax asset

of the

Corporation’s

banking subsidiary,

FirstBank, amounted

to $

130.8

million as

of March

31, 2026,

net of

a

valuation

allowance of

$

73.2

million,

compared

to a

net deferred

tax asset

of $

134.8

million, net

of a

valuation

allowance of

$

72.2

million, as of December 31, 2025.

The decrease in the net deferred tax

asset was mainly related to stock-based

compensation, usage of

alternative

minimum

tax credits,

and

changes in

the ACL.

The Corporation

maintains

a full

valuation

allowance for

its deferred

tax

assets

associated

with

capital

loss

carryforwards,

net

operating

loss

(“NOL”)

carryforwards

corresponding

to

USVI

and

unrealized

losses of available-for-sale debt securities.

See Note 17

– “Income Taxes,”

to the audited

consolidated financial statements

included in the

2025 Annual Report

on Form 10-K

for information on the tax

treatment of 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 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.

For U.S.

and USVI

income tax

purposes, all

tax years

subsequent to

2021

remain open to examination. For Puerto Rico tax purposes, all tax years

subsequent to 2020 remain open to examination.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

48

NOTE 14 – 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 three-level

hierarchy for

measuring fair

value

based on the

observability of inputs:

(i) Level 1

inputs are quoted

prices in active markets

for identical assets and

liabilities; (ii) Level

2 inputs are observable

inputs other than Level

1 prices, such as quoted

prices for similar assets or

liabilities in active markets,

as well

as inputs

that are

observable for

the asset

or liability

(other than

quoted prices);

and (iii)

Level 3

inputs are

significant unobservable

inputs, requiring significant judgment due to limited or no market activity.

See Note 19 –

“Fair Value,”

to the audited consolidated

financial statements included

in the 2025 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 ended March 31, 2026 and 2025.

Assets and liabilities measured at fair value on a recurring basis are summarized below as of

the indicated dates:

As of March 31, 2026

As of December 31, 2025

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:

Available-for-sale debt securities:

U.S. Treasury securities

$

497,254

$

$

$

497,254

$

497,342

$

$

$

497,342

Noncallable U.S. agencies debt securities

277,130

277,130

336,849

336,849

Callable U.S. agencies debt securities

562,787

562,787

566,263

566,263

MBS

3,326,804

3,113

(1)

3,329,917

3,148,692

3,266

(1)

3,151,958

Puerto Rico government obligation

1,609

1,609

1,620

1,620

Equity securities

5,005

5,005

5,024

5,024

Derivative assets

350

350

345

345

Liabilities:

Derivative liabilities

162

162

200

200

(1) Related to private label MBS.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

49

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 ended March 31, 2026 and 2025:

Quarter Ended March 31,

2026

2025

Level 3 Instruments Only

Securities Available

for Sale

(1)

Securities Available

for Sale

(1)

(In thousands)

Beginning balance

$

4,886

$

6,815

Total gain (losses):

Included in other comprehensive income (unrealized)

182

46

Included in earnings (unrealized)

(2)

(88)

5

Principal repayments and amortization

(258)

(233)

Ending balance

$

4,722

$

6,633

(1)

Amounts mostly related to private label MBS.

(2)

Changes in unrealized (losses) gains included in earnings were

recognized within provision for credit losses - expense

and relate to assets still held as of the reporting date.

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 the indicated dates:

March 31, 2026

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted

Average

Minimum

Maximum

(Dollars in thousands)

Available-for-sale

debt securities:

Private label MBS

$

3,113

Discounted cash flows

Discount rate

16.2%

16.2%

16.2%

Prepayment rate

1.6%

8.0%

2.5%

Projected cumulative loss rate

0.1%

12.5%

6.8%

Puerto Rico government obligation

$

1,609

Discounted cash flows

Discount rate

10.8%

10.8%

10.8%

Projected cumulative loss rate

23.6%

23.6%

23.6%

December 31, 2025

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted

Average

Minimum

Maximum

(Dollars in thousands)

Available-for-sale

debt securities:

Private label MBS

$

3,266

Discounted cash flows

Discount rate

15.9%

15.9%

15.9%

Prepayment rate

1.6%

8.0%

3.1%

Projected cumulative loss rate

0.1%

11.4%

5.5%

Puerto Rico government obligation

$

1,620

Discounted cash flows

Discount rate

10.8%

10.8%

10.8%

Projected cumulative loss rate

24.0%

24.0%

24.0%

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.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

50

Additionally, fair value

is used on a non-recurring basis to evaluate certain assets in accordance with GAAP.

For the quarters ended March 31, 2026 and 2025, the Corporation recorded

losses or valuation adjustments for assets recognized at

fair value on a non-recurring basis and still held at the respective reporting dates,

as shown in the following table:

Carrying value as of March 31,

Related to losses recorded for the Quarter Ended

March 31,

2026

2025

2026

2025

(In thousands)

Level 3:

Loans receivable

(1)

$

3,970

$

4,647

$

(436)

$

(164)

OREO

(2)

119

335

(6)

(24)

(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 adjustment applied to

appraisals was

3

% for the quarter

ended March 31, 2026

and

22

% for the

quarter ended March 31, 2025.

(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

adjustment applied to

appraisals was

16

% for the

quarter ended March

31, 2026, and

from

2

% to

24

% for the quarter ended March 31, 2025.

See Note 19 –

“Fair Value,”

to the audited

consolidated financial statements

included in the

2025 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.

The

following

tables

present

the

carrying

value,

estimated

fair

value

and

estimated

fair

value

level

of

the

hierarchy

of

financial

instruments as of the indicated dates:

Total Carrying Amount

in Statement of

Financial Condition as

of March 31, 2026

Fair Value Estimate as

of

March 31, 2026

Level 1

Level 2

Level 3

(In thousands)

Assets:

Cash and due from banks and money market investments (amortized

cost)

$

550,899

$

550,899

$

550,899

$

$

Available-for-sale debt

securities (fair value)

4,668,697

4,668,697

497,254

4,166,721

4,722

Held-to-maturity debt securities:

Held-to-maturity debt securities (amortized cost)

257,522

Less: ACL on held-to-maturity debt securities

(641)

Held-to-maturity debt securities, net of ACL

$

256,881

253,485

171,353

82,132

Equity securities (amortized cost)

41,427

41,427

41,427

(1)

Other equity securities (fair value)

5,005

5,005

5,005

Loans held for sale (lower of cost or market)

12,805

13,006

13,006

Loans held for investment:

Loans held for investment (amortized cost)

13,091,077

Less: ACL for loans and finance leases

(245,060)

Loans held for investment, net of ACL

$

12,846,017

12,773,439

12,773,439

MSRs (amortized cost)

22,880

40,485

40,485

Derivative assets (fair value) (2)

350

350

350

Liabilities:

Deposits (amortized cost)

$

16,595,821

$

16,600,047

$

$

16,600,047

$

Short-term advances from the FHLB (amortized cost)

90,000

90,001

90,001

Long-term advances from the FHLB (amortized cost)

200,000

201,168

201,168

Derivative liabilities (fair value) (2)

162

162

162

(1) Includes FHLB stock with a carrying value of $

24.7

million, which is considered restricted.

(2) Includes interest rate swap agreements, forward contracts, and interest rate lock commitments.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

51

Total Carrying Amount

in Statement of

Financial Condition as

of December 31, 2025

Fair Value Estimate as

of

December 31, 2025

Level 1

Level 2

Level 3

(In thousands)

Assets:

Cash and due from banks and money market investments (amortized

cost)

$

658,599

$

658,599

$

658,599

$

$

Available-for-sale debt

securities (fair value)

4,554,032

4,554,032

497,342

4,051,804

4,886

Held-to-maturity debt securities:

Held-to-maturity debt securities (amortized cost)

265,296

Less: ACL on held-to-maturity debt securities

(733)

Held-to-maturity debt securities, net of ACL

$

264,563

262,055

178,815

83,240

Equity securities (amortized cost)

39,729

39,729

39,729

(1)

Other equity securities (fair value)

5,024

5,024

5,024

Loans held for sale (lower of cost or market)

16,697

16,996

16,996

Loans held for investment:

Loans held for investment (amortized cost)

13,125,356

Less: ACL for loans and finance leases

(249,037)

Loans held for investment, net of ACL

$

12,876,319

12,806,115

12,806,115

MSRs (amortized cost)

23,288

40,874

40,874

Derivative assets (fair value) (2)

345

345

345

Liabilities:

Deposits (amortized cost)

$

16,670,143

$

16,675,488

$

$

16,675,488

$

Long-term advances from the FHLB (amortized cost)

290,000

292,581

292,581

Derivative liabilities (fair value) (2)

200

200

200

(1) Includes FHLB stock with a carrying value of $

24.7

million, which is considered restricted.

(2) Includes interest rate swap agreements, 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

judgments

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.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

52

NOTE 15 – 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

ended

March 31, 2026 and 2025:

Quarter ended March 31, 2026

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)

$

17,802

$

144,963

$

44,655

$

(25,101)

$

21,897

$

16,740

$

220,956

Service charges and fees on deposit accounts

7,436

1,580

156

760

9,932

Insurance commission income

5,742

14

188

5,944

Card and processing income

10,109

231

14

1,404

11,758

Other service charges and fees

33

1,793

221

726

149

2,922

Not in scope of ASC Topic

606

(1)

4,375

2,460

271

35

(3)

(9)

7,129

Total non-interest income

4,408

27,540

2,303

35

907

2,492

37,685

Total Revenue (Loss)

$

22,210

$

172,503

$

46,958

$

(25,066)

$

22,804

$

19,232

$

258,641

Quarter ended March 31, 2025

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)

$

17,586

$

143,015

$

42,809

$

(27,659)

$

20,789

$

15,857

$

212,397

Service charges and fees on deposit accounts

7,315

1,441

142

742

9,640

Insurance commission income

5,585

39

181

5,805

Card and processing income

9,450

404

22

1,599

11,475

Other service charges and fees

20

1,580

19

282

140

2,041

Not in scope of ASC Topic

606

(1)

3,562

2,263

393

151

369

35

6,773

Total non-interest income

3,582

26,193

2,257

151

854

2,697

35,734

Total Revenue (Loss)

$

21,168

$

169,208

$

45,066

$

(27,508)

$

21,643

$

18,554

$

248,131

(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.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

53

For

the

quarters

ended

March

31,

2026

and

2025,

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

20

–

“Revenue

from

Contracts

with

Customers,”

to

the

audited

consolidated

financial

statements

included

in

the

2025

Annual Report on Form 10-K for a discussion of major revenue streams under

the scope of ASC Topic 606.

Contract Balances

As

of

March

31,

2026

and

December

31,

2025,

the

Corporation

had

no

contract

assets

recorded

in

its

consolidated

financial

statements. In addition, the balances of contract liabilities as of those

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)

54

NOTE 16 – SEGMENT INFORMATION

The Corporation’s

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

March

31,

2026,

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. The Chief

Executive Officer (“CEO”),

who is the

designated

chief

operating

decision

maker

(“CODM”),

as

ultimate

decision

maker,

evaluates

performance

and

allocates

resources

based

on financial

information

provided

by management.

In determining

the reportable

segments,

the

Corporation

considers

factors

such as

the organizational

structure, nature

of the

products,

distribution

channels, customer

relationship

management,

and economic

characteristics

of

the

business

lines.

The

Corporation

evaluates

the

performance

of

the

segments

based

on

segment

income

or

loss,

which consists of

net interest income,

the provision for

credit losses, non-interest

income and

non-interest expenses.

Segment income

or

loss

is

measured

on

a

pre-tax

basis,

consistent

with

the

Corporation’s

consolidated

financial

statements

under

GAAP.

The

total

segment income or loss equals

consolidated pre-tax income or

loss, and no adjustments or

reconciliations are necessary.

The segments

are also

evaluated based

on the

average volume

of their

interest-earning assets

(net of

fair value

adjustments of

investment securities

and the ACL).

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

market.

The

Consumer

(Retail)

Banking

segment

includes the

Corporation’s

consumer lending,

commercial lending

to small

businesses, commercial

transaction banking,

and deposit-

taking activities

primarily conducted

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

consists of the Corporation’s

commercial lending (other than

small

business

commercial

loans)

and

commercial

deposit-taking

activities

(other

than

the

government

sector).

The

Treasury

and

Investments segment

is responsible for

the Corporation’s

investment portfolio

and treasury functions

that are executed

to manage and

enhance

liquidity.

Under

the

Corporation’s

fund

transfer

pricing

(“FTP”)

methodology,

the

Treasury

and

Investments

segment

centrally

manages

funding

by

providing

funds

to

the

Mortgage

Banking,

Consumer

(Retail)

Banking,

Commercial

and

Corporate

Banking, United States

Operations, and Virgin

Islands Operations segments

to support their lending

activities and compensating

these

units

for

deposits

gathered.

The

mismatch

between

funds

provided

and

funds

used

is

managed

by

the

Treasury

and

Investments

segment.

The funds

transfer

pricing

charged

or credited

are calculated

using

the Secured

Overnight

Financing Rate

(“SOFR”)/swap

curve

with

term

rates,

adjusted

for

a

funding

spread

that

reflects

the

Corporation’s

cost

of

funds.

The

methodology,

which

is

performed

based

on

matched

maturity

funding,

ensures

a

market-based

allocation

of

funding

costs

and

credits,

impacting

segment

profitability by aligning internal pricing with external market conditions.

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

consistent

with

those

referred

to

in

Note

1

–

“Nature

of

Business

and

Summary

of

Significant Accounting Policies” to the audited consolidated financial

statements included in the 2025 Annual Report on Form 10-K.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

55

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 March 31, 2026:

Interest income

$

33,286

$

102,130

$

61,546

$

35,948

$

38,580

$

8,359

$

279,849

Net (charge) credit for transfer of funds

(15,484)

79,089

(13,039)

(58,678)

(1,638)

9,750

Interest expense

(36,256)

(3,852)

(2,371)

(15,045)

(1,369)

(58,893)

Net interest income (loss)

17,802

144,963

44,655

(25,101)

21,897

16,740

220,956

Provision for credit losses - (benefit) expense

(329)

18,582

(3,306)

88

1,392

846

17,273

Non-interest income

4,408

27,540

2,303

35

907

2,492

37,685

Non-interest expenses:

Employees’ compensation and benefits

7,022

39,827

5,172

1,258

7,418

4,602

65,299

Occupancy and equipment

1,378

15,198

1,351

179

1,857

2,100

22,063

Business promotion

241

2,527

209

173

298

107

3,555

Professional fees

1,629

7,736

992

376

1,026

1,153

12,912

Taxes, other than income taxes

492

4,648

660

121

91

172

6,184

FDIC deposit insurance

376

675

629

244

134

2,058

Net (gain) loss on OREO operations

(1,016)

(11)

90

(937)

Credit and debit card processing expenses

6,451

191

2

683

7,327

Other non-interest expenses

(1)

817

5,565

390

229

714

929

8,644

Total non-interest expenses

10,939

82,627

9,583

2,336

11,650

9,970

127,105

Segment income (loss)

$

11,600

$

71,294

$

40,681

$

(27,490)

$

9,762

$

8,416

$

114,263

Average interest-earning assets

$

2,202,958

$

3,975,633

$

3,755,974

$

5,274,088

$

2,578,130

$

478,759

$

18,265,542

Mortgage

Banking

Consumer

(Retail) Banking

Commercial and

Corporate

Banking

Treasury and

Investments

United States

Operations

Virgin Islands

Operations

Total

(In thousands)

Quarter ended March 31, 2025:

Interest income

$

32,064

$

105,753

$

61,872

$

32,638

$

37,400

$

7,338

$

277,065

Net (charge) credit for transfer of funds

(14,478)

75,097

(15,280)

(54,717)

(1,039)

10,417

Interest expense

(37,835)

(3,783)

(5,580)

(15,572)

(1,898)

(64,668)

Net interest income (loss)

17,586

143,015

42,809

(27,659)

20,789

15,857

212,397

Provision for credit losses - expense (benefit)

676

20,020

2,654

(5)

849

616

24,810

Non-interest income

3,582

26,193

2,257

151

854

2,697

35,734

Non-interest expenses:

Employees’ compensation and benefits

6,972

36,619

5,764

1,140

6,999

4,643

62,137

Occupancy and equipment

1,517

15,129

1,604

173

1,878

2,329

22,630

Business promotion

203

2,320

218

170

273

94

3,278

Professional fees

1,540

6,244

1,042

348

948

1,364

11,486

Taxes, other than income taxes

471

4,394

605

120

117

171

5,878

FDIC deposit insurance

415

778

668

237

138

2,236

Net (gain) loss on OREO operations

(1,096)

36

(69)

(1,129)

Credit and debit card processing expenses

4,002

260

2

846

5,110

Other non-interest expenses

(1)

972

6,733

1,412

648

711

920

11,396

Total non-interest expenses

10,994

76,219

11,609

2,599

11,165

10,436

123,022

Segment income (loss)

$

9,498

$

72,969

$

30,803

$

(30,102)

$

9,629

$

7,502

$

100,299

Average interest-earning assets

$

2,156,558

$

4,056,039

$

3,550,790

$

5,730,140

$

2,391,708

$

426,092

$

18,311,327

(1) Consists of communication expenses and the expense categories described in Note 16 - “Other Non-Interest Expenses,” to the audited consolidated financial statements included in the 2025 Annual Report on Form 10-K.

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals for the indicated periods:

Quarter Ended March 31,

2026

2025

(In thousands)

Average assets:

Total average interest-earning assets for segments

$

18,265,542

$

18,311,327

Average non-interest-earning assets

(1)

803,696

795,775

Total consolidated average assets

$

19,069,238

$

19,107,102

(1)

Includes,

among

other

things,

non-interest-earning

cash,

premises

and

equipment,

net

deferred

tax

asset,

right-of-use

("ROU")

assets,

and

accrued

interest

receivable

on

loans

and

investments.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

56

NOTE 17 – SUPPLEMENTAL STATEMENTS OF CASH FLOWS INFORMATION

Supplemental statements of cash flows information is as follows for

the indicated periods:

Quarter ended March 31,

2026

2025

(In thousands)

Cash paid for:

Interest

$

60,282

$

68,412

Income tax

10,839

15,401

Operating cash flow from operating leases

4,514

4,408

Non-cash investing and financing activities:

Additions to OREO

1,062

1,455

Additions to auto and other repossessed assets

17,177

15,407

Capitalization of servicing assets

645

641

Loan securitizations

41,134

41,518

Loans held for investment transferred to held for sale

605

Payable related to unsettled purchases of investment securities

39,875

ROU assets obtained in exchange for operating lease liabilities, net of lease

terminations

4,166

99

Payable related to unsettled common stock repurchases

286

Redemption of investments in FBP Statutory Trusts

1,517

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

57

NOTE 18 – 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

March 31,

2026 and

December 31,

2025,

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

March

31,

2026,

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.

The regulatory capital position of the Corporation and FirstBank as of

March 31, 2026 and December 31, 2025 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 March 31, 2026

Total Capital (to Risk-Weighted

Assets)

First BanCorp.

$

2,420,129

18.19

%

$

1,064,412

8.0

%

N/A

N/A

FirstBank

$

2,362,757

17.77

%

$

1,063,962

8.0

%

$

1,329,953

10.0

%

CET1 Capital (to Risk-Weighted Assets)

First BanCorp.

$

2,253,076

16.93

%

$

598,732

4.5

%

N/A

N/A

FirstBank

$

2,095,773

15.76

%

$

598,479

4.5

%

$

864,469

6.5

%

Tier I Capital (to Risk-Weighted

Assets)

First BanCorp.

$

2,253,076

16.93

%

$

798,309

6.0

%

N/A

N/A

FirstBank

$

2,195,773

16.51

%

$

797,972

6.0

%

$

1,063,962

8.0

%

Leverage ratio

First BanCorp.

$

2,253,076

11.66

%

$

773,001

4.0

%

N/A

N/A

FirstBank

$

2,195,773

11.37

%

$

772,626

4.0

%

$

965,783

5.0

%

As of December 31, 2025

Total Capital (to Risk-Weighted

Assets)

First BanCorp.

$

2,412,137

18.01

%

$

1,071,257

8.0

%

N/A

N/A

FirstBank

$

2,355,882

17.61

%

$

1,070,432

8.0

%

$

1,338,040

10.0

%

CET1 Capital (to Risk-Weighted Assets)

First BanCorp.

$

2,243,981

16.76

%

$

602,582

4.5

%

N/A

N/A

%

FirstBank

$

2,087,853

15.60

%

$

602,118

4.5

%

$

869,726

6.5

%

Tier I Capital (to Risk-Weighted

Assets)

First BanCorp.

$

2,243,981

16.76

%

$

803,443

6.0

%

N/A

N/A

FirstBank

$

2,187,853

16.35

%

$

802,824

6.0

%

$

1,070,432

8.0

%

Leverage ratio

First BanCorp.

$

2,243,981

11.58

%

$

774,882

4.0

%

N/A

N/A

FirstBank

$

2,187,853

11.30

%

$

774,609

4.0

%

$

968,261

5.0

%

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

58

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 March 31, 2026,

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

March

31,

2026

amounted

to

approximately

$

63.1

million.

Contingencies

As

of

March

31,

2026,

First

BanCorp.

and

its

subsidiaries

were

defendants

in

or

parties

to

certain

pending

and

threatened

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 such

legal proceedings,

claims and

other loss

contingencies

utilizing the

latest information

available,

advice from

legal counsel,

and available

insurance coverage.

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 the

Corporation has

determined that

loss is

not probable or the amount of the loss cannot be estimated, no accrual is established.

Any estimate

of possible loss

is based

on currently

available information

and subject

to significant

judgment, given

the complexity

of the facts,

the novelty of

the legal theories,

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,

it may take

months or years

after the initial

claim, filing of

a case or

commencement of

a proceeding or

an

investigation before

an estimate

of the reasonably

possible loss can

be made

and 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,

including

tax

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.

For information regarding

ongoing litigation, see

Note 23 –

“Regulatory Matters, Commitments

and Contingencies,” to

the audited

consolidated financial statements included in the 2025 Annual Report on

Form 10-K.

FIRST BANCORP.

NOTES TO CONSOLIDATED

FINANCIAL

STATEMENTS – (Continued)

59

NOTE 19 – 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 March 31, 2026 and December 31, 2025, and the results of its operations for the quarters

ended March 31, 2026 and 2025:

Statements of Financial Condition

As of March 31,

As of December 31,

2026

2025

(In thousands)

Assets

Cash and due from banks (includes $

39,108

due from FirstBank as of March 31, 2026

and $

37,654

as of December 31, 2025)

$

39,855

$

38,401

Equity securities

1,950

1,950

Investment in FirstBank, at equity

1,898,589

1,898,022

Investment in FirstBank Insurance Agency, at equity

22,998

18,630

Dividends receivable

558

560

Deferred tax asset

(1)

11,820

13,246

Other assets

770

917

Total assets

$

1,976,540

$

1,971,726

Liabilities and Stockholders’ Equity

Accounts payable and other liabilities

9,301

4,861

Stockholders’ equity

1,967,239

1,966,865

Total liabilities and stockholders’ equity

$

1,976,540

$

1,971,726

(1)

Consists of deferred tax assets associated with NOL carryforwards,

which the Corporation expects to realize under the election

established by Act 65-2025.

Statements of Income

Quarter Ended March 31,

2026

2025

(In thousands)

Income

Interest income on interest-bearing cash balances due from FirstBank

$

460

$

94

Dividend income from banking subsidiaries

83,000

117,457

Other income

29

Total income

83,460

117,580

Expense

Interest expense on long-term borrowings

981

Other non-interest expenses

475

478

Total expense

475

1,459

Income before income taxes and equity in undistributed

earnings of subsidiaries

82,985

116,121

Income tax expense

1,426

1

Equity in undistributed earnings of subsidiaries (distribution in excess of

earnings)

7,219

(39,061)

Net income

$

88,778

$

77,059

Other comprehensive (loss) income, net of tax

(6,168)

84,061

Comprehensive income

$

82,610

$

161,120

60

ITEM

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,

2025 (the

“2025 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

Economic

conditions

in

Puerto

Rico

continued

to

remain

generally

stable

through

the

end

of

the

first

quarter

of

The

unemployment rate was largely

unchanged on a quarter-over-quarter

basis, from 5.7% in the fourth quarter of

2025 to 5.6% by the end

of the first quarter of 2026, remaining near historic lows and reflecting a resilient

and stable labor market.

In the broader

U.S. economy,

economic momentum

continued to moderate

during the first

quarter of 2026

following softer

growth

trends

observed

in

the

second

half

of

Labor

market

conditions

eased

further

but

remained

orderly,

characterized

by

slower

hiring activity and a

gradual moderation in labor

demand. The U.S. unemployment

rate remained elevated relative

to mid-2025 levels,

standing

at

4.3%

in

January

2026,

unchanged

from

late

2025,

consistent

with

an

ongoing

transition

toward

a

more

balanced

labor

market rather

than a deterioration

in overall

economic conditions.

In response

to these

trends, and

following the

three 25

basis points

(“bps”) rate

cuts implemented

in September,

October,

and December

2025, the

Federal Reserve

(the “FED”)

maintained

the federal

funds target

range at

3.50%-3.75% during

the first

quarter of

2026, allowing

time to

assess the

lagged effects

of prior

policy actions

and to help ensure that inflation continues to move sustainably toward

its long-term 2% target.

Business activity

and

economic

conditions

in

Puerto

Rico

remained

stable

and

progressed

broadly

in line

with

the

Corporation’s

expectations.

Supported

by

a

resilient

labor

market

and

stable

economic

backdrop,

the

Corporation

remains

focused

on

serving

its

customers

across

a

range

of

economic

environments,

while

closely

monitoring

key

risks,

including

energy

costs

and

their

potential

impact

on

customers.

For

the

remainder

of

2026,

the

Corporation

continues

to

expect

growth

in

the

commercial

and

residential

mortgage

loan

portfolios,

despite

the

expected

moderation

in

consumer

credit demand.

In

addition,

the

Corporation

expects

the

net

interest margin to continue expanding as cash flows are reinvested

in higher-yielding assets.

Capital Deployment Actions

In the

first quarter

of 2026,

the Corporation

delivered approximately

$81.5 million

in the

form of

capital deployment

actions that

included $50.0 million in repurchases of common stock and $31.

5

million in common stock dividends declared.

On

April

22,

2026,

the

Corporation’s

Board

of

Directors

declared

a

quarterly

cash

dividend

of

$0.20

per

common

share.

The

dividend is payable on June 12, 2026 to shareholders of record at the close of

business on May 28, 2026.

61

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

2025

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 allowance

for

credit

losses (“ACL”).

In addition,

the use

of estimates

and

assumptions

is also

important

in performing

the

accounting

for

income

taxes, valuation of

financial instruments, determining

the accounting for goodwill,

pension and postretirement

benefit obligations, and

provisions for losses

that may arise from

litigation and regulatory proceedings

(including governmental investigations).

For additional

information, see “Critical Accounting

Estimates” and “Other Estimates” in Part II,