fbp investor presentation 3q-2009

Third Quarter 2009 Earnings ReviewNovember 2009

[NYSE: FBP]

200 01 02 03 04 05 06 07 08 09 E* 10 E*

38,000

39,000

40,000

41,000

42,000

43,000

44,000

45,000

46,000

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

41,419

45,063

40,774 41,059

3.0%

1.5%

-0.3%

2.1%2.7%

1.9%

0.5%

-1.8%-2.5%

-5.5%

0.7%

PNB Real Crecimiento PNB

Puerto Rico GDP & Yearly % Growth 2000 - 2010

Puerto Rico Economy Should Turnaround in 2010

Sources: (1) GDB Puerto Rico - www.bgfpr.com *Index is subject to monthly revisions. (2) PR Planning Board - www.jp.gobierno.pr.

Real GDP GDP Growth

GDB Economic Activity Index (EAI) According to November publications of the Puerto Rico Government Development Bank, after 42 consecutive months,. latest reading of the economic activity index shows an upswing

GDB-EAI reflected a 0.8% increase month-over-month in September 2009, the highest increment since October 2006

Total Payroll Employment + 7,000 vs. August 2009

Cement Sales + 10k bags vs. August 2009

Gasoline Consumption + 2.2% monthly 2009 average

Electric Power Consumption On a year-over-year basis, grew

by 2.5% in September 2009

Additional $500 million from the Local Stimulus Plan to be introduced short-term

(2)

(1)

3

2006 2007 2008 399956%

12%

18%

10.2%11.2%

12.7%

16.4%

Challenging Employment Environment in Puerto Rico Persists

Unemployment Rate

2006 2007 2008 20090

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

3,682

5,7196,593

8,420Accumulated Bankruptcies (Jan-Sep)

Unemployment rate may increase further in early 2010 due to planned government layoffs:

Nov 2009: 2,046Jan 2010: 12,321

Largest sectors of the economy have lost jobs – manufacturing, service, retail, financial & government

Government sponsored programs should help counteract layoffs by multiple sectors

Bankruptcies, business and personal, have risen steadily since 2006

ARRA impact to inject over $6.0 billion into the Puerto Rico economy and potentially create over 42,000 jobs, with over 17,000 jobs created or retained so far. Approximately $850 million has been disbursed to date.

Sources: (1) PR Department of Labor (2) Boletín de Puerto Rico.

(1)

(2)

4

FloridaShowing signs the recession is easing:

The S&P/Case-Shiller home price index showed South Florida home prices posted a monthly gain of 1.3% in July 2009, as strong sales and shrinking inventory helped to firm up prices

Consumer confidence rose 3 points in September 2009 to 74

Virgin IslandsAffected by global recession:

Unemployment rate has reached 8.2% as of June 2009

Real estate sales are down by approximately 50% in first half of 2009

Government efforts to expand economy include:

New mega ship arrivalsIncrease air passenger arrivalsRum production expansionWaste to energy plant

Florida single family median home price

Sources: (1) Florida Association of Realtors, Moody’s Economy.com (2) University of Florida

Florida single family home sales

Florida & Virgin Islands Economies

(1)

(1)

(2)

5

Net loss of $165.2 million, which includes a $152.2 million non-cash charge to increase the deferred tax asset valuation allowance, vs. net loss of $78.7 million in 2Q09Increase in net interest income, excluding fair value adjustments, of $3.6 million compared to 2Q09Net interest margin, excluding fair value adjustments, of 2.68% up 4 b.p.s. from 2Q09Realized gain on sale of investments of $34.3 million, up $24 million from 2Q09Provision expense of $148.1 million, reduction of 37% from 2Q09Increase in allowance for loan losses to total loans from 3.11% to 3.43%Continued progress on franchise development in selected market segments:

Loan production of $1,448 million, down $141 million from 2Q09, when excluding $689 million in loan disbursements to the Puerto Rico GovernmentNon-brokered deposit growth of $5.4 million compared to 2Q09Efficiency ratio during the quarter of 46.21%, as compared to 62.16% for 2Q09

Regulatory Capital ratios are above well-capitalized requirements:Total Capital: to 13.79% from 14.35% in 2Q09Tier 1 Capital: to 12.52% from 13.08% in 2Q09Leverage Ratio: to 8.97% from 9.12% in 2Q09

Third Quarter 2009 Highlights

6

(in thousands, except for per share results)

3Q09 2Q09 3Q08Income Statement ($000)Net interest income 129,133$ 131,014$ -1.4% 144,621$ -10.7%

Provision for loan and lease losses 148,090 235,152 -37.0% 55,319 167.7%

Non-interest income 49,989 23,415 113.5% 13,871 260.4%

Non-interest expenses 82,777 95,988 -13.8% 82,376 0.5%

Pre-tax net (loss) income (51,745) (176,711) 70.7% 20,797 -348.8%

Income tax (expense) benefit (113,473) 98,053 -215.7% 3,749 -3126.8%

Net (loss) income (165,218)$ (78,658)$ -110.0% 24,546$ -773.1%

Pre-tax, pre-provision earnings 62,280$ 58,361$ 6.7% 76,680$ -18.8%

Net (loss) income per share to common ($) (1.89) (1.03) -83.5% 0.16 -1281.3%

Cash dividends declared per share ($) * - 0.07 -100.0% 0.07 -100.0%

Book value per common share ($) 8.34 9.88 -15.6% 9.63 -13.4%

Tangible book value per common share ($) 7.85 9.38 -16.3% 9.06 -13.4%

%Change

%Change

* In July 2009, the Corporation announced the suspension of dividends on common and preferred stock

Financial Results

7

A Diversified Operation With Multiple Businesses Across Several Markets

As of September 30, 2009

Assets by Geography

3Q08 2Q09 3Q09 $-

$4,500

$9,000

$13,500

$18,000

$22,500

29% 29% 32%

32% 32% 28%

29% 28% 27%

7% 7% 7%

$19,304 $20,013 $20,081

Commercial Loans Investments & Money MarketConsumer & Residential Loans Construction LoansCash & Other

Assets by Line of Business

3% 4%

Puerto Rico87% Florida 8%

Eastern Caribbean Region 5%

6%

($ in millions)Total Assets - $20,081 million

8

3Q08 2Q09 3Q09 $-

$1,000

$2,000

$3,000

$4,000

$5,000 $4,452 $4,799 $4,805

Growing Core Deposits

3Q08 2Q09 3Q09 $-

$1,000

$2,000

$3,000

$4,000

$5,000 $4,452

$4,799 $4,805Continue our focus on core deposit growth and the successful deployment of our One Stop Shop strategy

Increase of 2.28 points to 10.5%** in market share of total deposits, net of brokered, in the Puerto Rico market

Total deposits, excluding brokered CDs, increased by $353 million, or 8%, during last 12 months reflecting successful marketing campaigns and cross-selling initiatives

Total Deposits (net of brokered CDs) - $4,805 million($ in millions)

**As of June 30, 2009 vs. June 30, 2008

3Q08 2Q09 3Q09 $-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,176

$900

$1,448

9 *3Q09 Includes the $500 million loan facility to the Puerto Rico Sales & Use Tax Financing Corp. and $189 million TRANS **3Q08 increase in consumer portfolio driven by purchase of $218 million Chrysler Financial portfolio

Managing Loan Production

Total Loan Production - $1,448 million($ in millions)

Weakening loan demand across most markets and segments

Loan originations down when excluding $689 million commercial loan facilities extended to the Puerto Rico Government

Construction originations are mainly draws on existing commitments

**

*

10

3Q08 2Q09 3Q09 $-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$12,713 $13,136 $13,756

Total Loan Portfolio - $13,756 million($ in millions)

* Loans to local Financial Institution **Includes Finance Leases Market Shares Source: Commissioner of Financial Institutions, June 30, 2009

Managing Loan Portfolio

Reduction in Construction, Residential and Consumer loan portfolios from 2Q09

Increase in Commercial loan portfolio resulted from loan facility to Puerto Rico Government

Within FBP’s primary market, Puerto Rico,. FirstBank has the following shares and market positions in these lending segments:

Share PositionCommercial 25% #2Construction 15% #4Residential 15% #3Total Auto 22% #1Small Loans 15% #3Personal Loans 9% #4

11

Loan Portfolio by Geography and Category($ in millions)

Diversified Loan Portfolio

Residential mortgage loans, including loans held for sale 2,781$ 450$ 388$

Construction 971 194 406 Commercial mortgage loans 959 74 511 Commercial and Industrial loans 4,476 230 32 Loans to local financial institution collaterized by real estate mortgages 329 - - Total commercial loans 6,735 498 949 Finance leases 329 - - Consumer loans 1,483 105 37 Total Loans 11,329$ 1,053$ 1,374$

Percentage of Total Portfolio 82.36% 7.65% 9.99%

PuertoRico

VirginIslands

UnitedStates


Over 80% of total loans are in Puerto Rico, the Corporation’s main market

Construction portfolio in Florida now $406 million,. down from $533 million in 3Q08

Loans to local financial institution down to $329 million from $579 million in 3Q08

12

(1) For purposes of the above table, high-rise portfolio is composed of buildings with more than 7 stories, mainly composed of two projects that account for approximately 72% of the Corporation’s total outstanding high-rise residential construction loan portfolio in Puerto Rico.

(2) Mid-rise relates to buildings of up to 7 stories.

(3) Mainly composed of three high-rise projects that accounts for approximately 64% of the residential housing projects in Puerto Rico with estimated selling prices over $600,000.


Detailed Breakdown of Construction Portfolio

Construction Loan Portfolio by Geography($ in thousands)

High-rise (1) 196,760$ -$ 559$ Mid-rise (2) 102,026 3,344 43,783 Sigle-family detach 116,123 5,247 34,754

Total for residential housing projects 414,909 8,591 79,096

Construction loans to individualssecured by residential properties 10,894 30,737 - Condo-conversion loans 8,334 - 141,143 Loans for commercial projects 314,837 110,706 9,076 Bridge and Land loans 198,262 43,165 176,382 Working capital 28,058 1,007 -

975,294 194,206 405,697

Net deferred fees (4,071) (593) (82)

Total construction loan portfolio, gross 971,223$ 193,613$ 405,615$

Total before net deferred fees and allowance for loan losses

PuertoRico

VirginIslands

UnitedStates

Loans for residential housing projects:

Total construction loan portfolio of $1.570 billion:

34.7% Residential27.7% Commercial26.6% Bridge & Land Loans11.0% Other

PR residential portfolio of $414.9 million distribution by price range:

Under $300k 33%$300k - $600k 20%Over $600k (3) 47%

FirstBank new housing units inventory represents approximately 10% of the residential units available for sale in the PR market

13

Total Non-Performing Assets of $1.684 billion

$665.6 million in NPL’s for which interest income is recognized on a cost-recovery method (interest collections applied to principal)

$873.2 million in NPL’s for which interest income is recognized on a cash basis (interest through earnings when collected)

$624.2 million of NPL’s were charged-off to realizable value

Proactive programs in place for workouts, sales of notes and recapitalization of projects

Performance of consumer portfolios continues stable

(1) Collateral pledge with Lehman Brothers Special Financing, Inc.

Non-Performing Assets($ in millions)

Management Towards Improvement of Asset Quality

Con-struction

Residential Commercial Repossesed Investment Securities

Consumer $-

$100

$200

$300

$400

$500

$600

$700

$72

$249

$131

$53 $-

$49

$507

$400

$219

$71 $65 $45

$610

$440 $437

$81 $65 $52

3Q082Q093Q09

Construction Residential Commercial Consumer Total Loans 0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

0.27%0.19% 0.46%

2.98%0.80%

20.38%

0.39%1.74%

3.12% 3.85%

11.80%

1.21% 0.71%3.09% 2.53%

Net Charge-offs to Average Loans(1)


14(1) Collateral pledge with Lehman Brothers Special Financing, Inc.

Non-Performing Assets by Geography($ in thousands)

Q309 Q209 Q309 Q209 Q309 Q209

Residential Mortgage 365,705$ 342,501$ 7,116$ 7,381$ 66,899$ 49,962$ Commercial 349,986 157,322 19,774 4,723 67,372 57,364 Construction 252,127 156,112 2,727 2,052 355,011 348,478 Consumer loans 42,816 35,696 3,393 3,296 1,151 987 Finance Leases 4,744 5,474 - - - -

Total Non-Performing Loans 1,015,378$ 697,105$ 33,010$ 17,452$ 490,433$ 456,791$

Repossessed Assets 59,958 52,425 977 999 19,896 17,372 Investment Securities (1) 64,543 64,543 - - - -

Total Non-Performing Assets 1,139,879$ 814,073$ 33,987$ 18,451$ 510,329$ 474,163$

Non-Performing Loans:

Puerto Rico Virgin Islands United States

Reducing the high level of NPA is the #1 priority for the Corporation’s Management team


15


Residential Commercial & CRE

Construction Consumer Total $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$2,781,401

$5,764,002

$971,223 $1,812,778

$11,329,404

$365,705 $349,986 $252,127 $47,560 $1,015,378

13.15%

6.07%

25.96%2.62%

8.96%

% Non-performing/loan portfolio

*

As of September 30, 2009 *Includes finance leases

Non-performing Loans to Total Loans

Puerto Rico($ in thousands)

16




$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$388,495

$542,576 $405,615

$37,041

$1,373,727

$66,899 $67,372

$355,011

$1,151

$490,433

17.22%12.42%

87.52%

3.11%

35.70%


*


United States($ in thousands)


17




$200,000

$400,000

$600,000

$800,000

$1,000,000

$450,154

$303,928

$193,613 $105,342

$1,053,037

$7,116 $19,774 $2,727 $3,393 $33,010

1.58%

6.51%

1.41%3.22%

3.13%


*


Virgin Islands($ in thousands)


18

Q308 Q209 Q3090%

120%

0.00%

3.50%

52%

35% 31%

104%

53%43%

2.06%

3.11%3.43%

ALLL to Non-Performing Loans (NPL) ALLL to NPL (excluding Residential) ALLL to Total Loans

Allowance to Loan & Lease Losses Ratios

As of 3Q09, total allowance for loan and lease losses of $471.5 million, an increase of $63.7 million from 2Q09

Excluding the $624 million in NPL charged-off to net realizable value, allowance to remaining non-performing loans in 3Q09 is 51.6%


19

Q308 Q209 Q309$0

$50,000

$100,000

$150,000

$200,000

$250,000

0%

250%

55,319

235,152

148,090

25,152

129,937

84,352

220%

181% 176%

Provision for loan lossesNet charge-offsProvision/Net charge-offs

The Corporation will continue to take provisions as necessary in accordance with the performance of the loan portfolios and the economic environment

Total net charge-offs were $252.7 million and $80.2 million for first nine months of 2009 and 2008,

respectively

First BanCorp took total provisions of $442.7 million and $142.4 million for first nine months of 2009 and 2008, respectively

Provisions to Net Charge-offs


($ in thousands)

20

Money Market Instruments $92

US Government and Agency $1,166

PR Government and Agency

$169 Mortgage Backed Se-curities$4,063

FHLB Stock; $77

Equity Investments, $2

Corporate Bonds; $2

Agency AAA 20.97%

MBS Aaa 70.15%

PR A-; 0.34%PR AAA; 0.33%PR BBB-; 0.40%

PR BBB; 2.14%

Treasuries AAA; 0.16%

CMO Agcy Aaa; 3.14%

CMO Not Rated; 2.33%Corp Bond B;

0.04%

Highly liquid securities portfolio95% of portfolio AAA-rated No exposure to sub-prime mortgage and CDOsProactively managing portfolio prepayment riskEasily pledgeable for financing

By Rating Distribution:

($ in millions)


Total Investment Portfolio - $5,571 million

High Grade Investment Portfolio

21* During the quarter ended September 30, 2009.

Regular Repos7.65%

Structured Repos13.09%

Brokered CD's - Bullets41.09%

DDA and Sav-ings

18.34%

Certificates of Deposit8.00%

FHLB Advances6.58%

Advances from FED

3.84%

Term Notes 1.42%

Strong Sources of Borrowings

Average Cost of Funds on Interest-bearing Liabilities: 2.55%*

Total brokered CDs decreased from $8.4 billion at year-end 2008 to $7.5 billion as of September 30, 2009

The Corporation has been partly refinancing brokered CDs that matured or were called during 2009 with alternate sources of funding at a lower cost

22

3Q 2009

Investment securities2 5,339,801$

Loans pledged to FHLB NY3 2,062,483

Loans pledged at the Federal Reserve Bank 1,425,276

8,827,560$

$ %

Basic Surplus1

(w/out repo roll.)2,244,098$ 11.06%

Overall Surplus (with short repo roll.)

3,038,732$ 14.98%

* Information for FirstBank Puerto Rico including FirstBank Overseas Corp as of September 30, 2009 (excludes liquidity of FirstBank Florida)

1. Surplus: (liquid assets – short-term liabilities) + secured line of credit; 2. Market Value, Subject to 6% haircut; 3. Subject to 25% haircut.

Basic Liquidity Surplus*

Non-Deposit Sources of Liquidity

Investment portfolio is composed of highly liquid investment grade securities

FRB BIC Program provides a secure, alternate line of credit

FHLB NY line is expected to grow in line with increases in mortgage originations

($000)

($000)

Maintaining High Liquidity

23** Includes retained earnings

Total regulatory capital composition: $832.2 million in net common equity**, $550.1 million in non-cumulative preferred stock, $225 million in Trust Preferred stock, $377.3 million cumulative preferred stock (TARP, net of discount of $22.7 million)

Approximately $546 million and $938 million in excess of regulatory total and Tier 1 capital well-capitalized requirements, respectively

Capital Position

3Q09 2Q09 3Q08

Total Capital Ratio 13.79% 14.35% -3.9% 13.06% 5.6%

Tier 1 Capital Ratio 12.52% 13.08% -4.3% 11.81% 6.0%

Leverage Ratio 8.97% 9.12% -1.6% 8.38% 7.0%

Tier 1 Common Ratio 4.51% 4.73% -4.7% 6.06% -25.6%

Tangible Common Equity Ratio 3.62% 4.35% -16.8% 4.35% -16.8%

Book Value per Share 8.34$ 9.88$ -15.6% 9.63$ -13.4%

Tangible Common BV per Share 7.85$ 9.38$ -16.3% 9.06$ -13.4%

%Change

%Change


24

Managing towards improvement of Asset Quality:Continue to reinforce loss mitigation program, collection and work-out teamsPursuing alternatives to restructure current loansTargeted disposition or sale of non-performing assets

Optimization of interest margin:Maximize loan repricing opportunities with an expanded target spread of 200 bpsMaximize opportunities to continue reducing funding costs

The Corporation is actively managing expenses:Consolidation of operating units in the Florida regionDivesture of daily car & truck rental business in Puerto RicoRationalization of businesses and operations. Have completed initiatives with an annualized net benefit of approximately $40 million and identified $30 million in additional benefits Has achieved 6% annualized headcount reduction, and efforts will continue throughout remainder of 2009 and 2010

Prudent and targeted loan production in all marketsContinue to gain market share in core deposits and fee generating products

Key Management Actions for Return to Profitability

25

First BanCorp [NYSE: FBP]

Alan Cohen Senior Vice PresidentMarketing and Public Relations Office (787) 729-8256 [email protected]

Contact Information

26

Disclaimer

These forward-looking statements may relate to the Corporation’s financial condition, results of operations, plans, objectives, future performance and business, including, but not limited to, statements with respect to the adequacy of the allowance for loan and lease losses, market risk and the impact of interest rate changes, capital markets conditions, capital adequacy and liquidity, and the effect of legal proceedings and new accounting guidance on the Corporation’s financial condition and results of operations. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and are generally identified by the use of words or phrases such as “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “believe,” “expect,” “may” or similar expressions. The Corporation cautions readers not to place undue reliance on any of these forward-looking statements since they speak only as of the date made and represent the Corporation’s expectations of future conditions or results and are not guarantees of future performance. The Corporation does not undertake and specifically disclaims any obligations to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of those statements. Forward-looking statements are, by their nature, subject to risks and uncertainties. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain important factors that could cause actual results to differ materially to those contained in any forward-looking statement: the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of the Corporation’s loans and other assets, including the Corporation’s construction and commercial real estate loan portfolios, which have contributed and may continue to contribute, among other things, to the increase in the levels of non-performing assets, charge-offs and the provision expense; adverse changes in general economic conditions in the United States and in Puerto Rico, including the interest rate scenario, market liquidity, housing absorption rates and real estate prices, and disruptions in the U.S. capital markets, which may reduce interest margins, impact funding sources and affect demand for all of the Corporation’s products and services and the value of the Corporation’s assets, including the value of derivative instruments used for protection from interest rate fluctuations; an adverse change in the Corporation’s ability to attract new clients and retain existing ones; a decrease in demand for the Corporation’s products and services and lower revenues and earnings because of the continued recession in Puerto Rico and the current fiscal problems and budget deficit of the Puerto Rico government; uncertainty about the legislative and other measures adopted by the Puerto Rico government in response to its fiscal deficit situation and the impact of such measures on several sectors of the Puerto Rico economy; uncertainty about the effectiveness of the various actions undertaken to stimulate the United States economy and stabilize the United States financial markets, and the impact such actions may have on the Corporation’s business, financial condition and results of operations; changes in the fiscal and monetary policies and regulations of the federal government, including those determined by the Federal Reserve System (FED), the Federal Deposit Insurance Corporation (FDIC), government-sponsored housing agencies and local regulators in Puerto Rico and the U.S. and British Virgin Islands; risks of not being able to generate sufficient income to realize the benefit of the deferred tax asset; risks of not being able to recover the assets pledged to Lehman Brothers Special Financing, Inc.; risks associated with the soundness of other financial institutions; changes in the Corporation’s expenses associated with acquisitions and dispositions; developments in technology; the impact of Doral Financial Corporation’s financial condition on the repayment of its outstanding secured loans to the Corporation; the Corporation’s ability to issue brokered certificates of deposit and fund operations; risks associated with downgrades in the credit ratings of the Corporation’s securities; general competitive factors and industry consolidation; risks associated with regulatory and legislative changes for financial services companies in Puerto Rico, the United States, and the U.S. and British Virgin Islands, which could affect the Corporation’s financial performance and could cause the Corporation’s actual results for future periods to differ materially from those anticipated or projected; and the risk that the FDIC may further increase the deposit insurance premium and/or require special assessments to replenish its insurance fund, causing an increase in our non-interest expense.

fbp investor presentation 3q-2009

Investor Relations