8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13
or 15(d) of the Securities
Exchange Act of 1934

Date of Report (Date of earliest event reported): September 4, 2003

First BanCorp.

(Exact name of registrant as specified in this charter)

Puerto Rico	001-14793	66-0561882
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

1519 Ponce De León Avenue, San Juan, Puerto Rico	00908-0146
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (787) 729-8200

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

(c) Exhibits

1.1	Form of Underwriting Agreement by and between First BanCorp and UBS Financial Services Incorporated of Puerto Rico (as representative of the Underwriters) relating to First BanCorp’s      % Noncumulative Perpetual Monthly Income Preferred Stock, Series E (the “Series E Preferred Stock”)
4.1	Form of Preferred Stock Certificate for the Series E Preferred Stock
4.2	Form of Certificate of Designation for the Series E Preferred Stock
5.1	Opinion Regarding Legality and Consent of Fiddler, Gonzalez & Rodriguez P.S.C. for Series E Preferred Stock
8.1	Opinion Regarding Tax Matters and Consent of Fiddler, Gonzalez & Rodriguez P.S.C. for Series E Preferred Stock
12.1	Statement re: Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends
23.1	Consent of PriceWaterhouseCoopers LLP
23.2	Consent of Fiddler, Gonzalez & Rodriguez, P.S.C. (included in the opinion of counsel filed as Exhibit 5.1 hereto)
23.3	Consent of Fiddler, Gonzalez & Rodriguez, P.S.C. (included in the opinion of counsel filed as Exhibit 8.1 hereto)

SIGNATURES

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

FIRST BANCORP.
By:	/s/ Annie Astor-Carbonell
	Annie Astor-Carbonell
	Senior Executive Vice President
	and Chief Financial Officer

Date: September 5, 2003

EX-1.1 3 g84776exv1w1.txt UNDERWRITING AGREEMENT EXHIBIT 1.1 4,000,000 Shares FIRST BANCORP _____ % Noncumulative Perpetual Monthly Income Preferred Stock, Series E UNDERWRITING AGREEMENT UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO As lead underwriter of the several Underwriters named in Schedule 1 American International Plaza, PH 250 Munoz Rivera Avenue San Juan, Puerto Rico 00918 Ladies and Gentlemen: FIRST BANCORP, a corporation organized under the laws of Puerto Rico (the "Company"), proposes to sell to you and the other underwriters named in Schedule 1 (collectively, the "Underwriters"), for whom you are acting as representative (the "Representative"), an aggregate of 4,000,000 shares (the "Firm Shares") of the Company's ____% Noncumulative Perpetual Monthly Income Preferred Stock, Series E to be issued by the Company (the "Preferred Stock"). The Company also has agreed to grant to you and the other Underwriters an option (the "Option") to purchase up to an additional 600,000 shares of Preferred Stock (the "Option Shares") on the terms and for the purposes set forth in Section 1(b) hereto. The Firm Shares and the Option Shares are hereinafter collectively referred to as the "Shares." The Company hereby confirms its agreements with the Representative and the other Underwriters as follows: 2 1. Agreement to Sell and Purchase. (a) On the basis of the representations, warranties and agreements of the Company contained herein and subject to all the terms and conditions of this Agreement, the Company agrees to sell to the Representative for the account of the Underwriters, and the Representative agrees to purchase from the Company on behalf of the Underwriters, at a purchase price of $24.15 per share, the number of Firm Shares set forth above, plus such additional number of Firm Shares which the Underwriters may become obligated to purchase pursuant to Section 9 hereof. (b) Subject to all the terms and conditions of this Agreement, the Company grants the Option to the Representative as agent of the Underwriters, to purchase the Option Shares at the same price per share as the Representative shall pay for the Firm Shares on behalf of the Underwriters. The Option may be exercised only to cover overallotments in the sale of the Firm Shares by the Underwriters and may be exercised in whole or in part at any time and from time to time on or before the thirtieth (30th) day after the date of this Agreement (or on the next business day if the thirtieth (30th) day is not a business day), upon notice (the "Option Shares Notice") in writing or by telephone (confirmed in writing) by the Representative to the Company no later than 5:00 p.m., New York City time, at least two (2) and no more than five (5) business days before the date specified for closing in the Option Shares Notice (the "Option Closing Date") setting forth the aggregate number of Option Shares to be purchased and the time and date for such purchase. On the Option Closing Date, the Company will issue and sell to the Representative for the account of the Underwriters the number of Option Shares set forth in the Option Shares Notice and Representative will purchase on behalf of the Underwriters such number of Option Shares as is set forth in the Option Shares Notice and will allocate the Option Shares purchased among the Underwriters in such manner as the Representative, in its sole discretion, deems necessary and advisable. The term "business day" as used in this Agreement means any day in which banks are open for business in both New York and Puerto Rico. 2. Delivery and Payment. Delivery of the Firm Shares shall be made to the Representative for the accounts of the Underwriters at the office of Adsuar Muniz Goyco & Besosa, P.S.C., counsel to the Underwriters, Westernbank World Plaza, 268 Munoz Rivera Ave., Suite 1400, San Juan, P.R. 00918, or such other place as may be agreed upon by the Company and the Representative, against payment of the purchase price by wire transfer of immediately available funds to the bank account designated by the Company. Such payment shall be made at 10:00 a.m., New York City time, on the third (3rd) full business day following the date of this Agreement, or at such other time on such other date, not later than seven (7) business days after the date of this Agreement, as may be agreed upon by the Company and the Representative (such date is hereinafter referred to as the "Closing Date"). 3 Time shall be of the essence and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of each Underwriter hereunder. To the extent the Option is exercised, delivery of the Option Shares against payment by the Representative on behalf of the Underwriters (in the manner specified above) will take place at the offices specified above for the Closing Date at the time and date (which may be the Closing Date) specified in the Option Shares Notice. Certificates evidencing the Shares shall be in definitive form and shall be registered in such names and in such denominations as the Representative shall request at least two (2) business days prior to the Closing Date or the Option Closing Date, as the case may be, by written notice to the Company. For the purpose of expediting the checking and packaging of certificates for the Shares, the Company agrees to make such certificates available for inspection at least twenty-four (24) hours prior to the Closing Date or the Option Closing Date, as the case may be. Notwithstanding the other provisions of this Section 2, if transactions in the Shares can be settled through the facilities of the Depository Trust Company ("DTC"), payment for and delivery of the Shares will be made through the facilities of DTC. The cost of original issue tax stamps, if any, in connection with the issuance, sale and delivery of the Firm Shares and Option Shares by the Company to the Representative for the account of the Underwriters shall be borne by the Company. The Company will pay and save the Representative and the Underwriters and any subsequent holder of the Shares harmless from any and all liabilities with respect to or resulting from any failure or delay in paying Federal, state or Commonwealth of Puerto Rico stamp or other transfer taxes, if any, which may be payable or determined to be payable in connection with the original issuance, sale or delivery to such Underwriter of the Firm Shares or Option Shares. 3. Representations and Warranties of the Company. The Company represents, warrants and covenants to the Representative and to each Underwriter that: (a) The Company and the Shares meet the requirements for the use of Form S -3 under the Securities Act of 1933 (the "Act") and the rules and regulations promulgated thereunder (the "Rules and Regulations"), and the Company has filed with the Securities and Exchange Commission (the "SEC") a Registration Statement (as defined below) on such form, including a basic prospectus, for registration under the Act of the offering and sale of the Shares. The Company may have filed one or more amendments thereto, and may have used one or more prospectus supplement(s), each of which has previously been furnished to you. Such Registration Statement, as so amended, has become effective. The offering of the Shares is a delayed offering pursuant to Rule 415 of the Rules and Regulations. Although the basic prospectus may not include all the information with respect to the Shares and the offering 4 thereof required by the Act and the Rules and Regulations to be included in the prospectus supplement(s), the basic prospectus includes all such information required by the Act and the Rules and Regulations to be included therein as of the Effective Date (as defined below). The Company will next file with the SEC pursuant to Rules 415 and 424(b)(2) or (5) of the Rules and Regulations one or more prospectus supplement(s). As filed, such prospectus supplement(s) shall include all required information with respect to the Shares and the offering thereof and, except to the extent the Representative shall agree in writing to a modification, shall be in all substantive respects in the form furnished to the Representative prior to the Closing Date or, to the extent not completed at the Closing Date, shall contain only such specific additional information and other changes as the Company has advised you, prior to the Closing Date, will be included or made therein. (b) The term "Registration Statement" means the registration statement at the time it became effective (the "Effective Date"), including all financial statements and schedules and all exhibits, documents incorporated therein by reference, and all information contained in the basic prospectus, any preliminary prospectus(es) and any final prospectus supplement(s) filed with the SEC pursuant to Rule 424(b) of the Rules and Regulations and including any registration statement filed pursuant to Rule 462(b) of the Rules and Regulations (a "Rule 462 Registration Statement") increasing the size of the offering. The term "Prospectus" means the basic prospectus relating to the Shares as filed with the SEC pursuant to Rule 424(b) of the Rules and Regulations, and includes any preliminary and final prospectus supplement(s). References herein to any document or any other information incorporated by reference in the Registration Statement shall include documents or other information incorporated by reference in the Prospectus. References herein to the Prospectus shall be deemed to include all documents and information incorporated by reference therein and shall be deemed to refer to and include any documents and information filed after the date of such Prospectus, as the case may be, and so incorporated by reference, under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). (c) On the date that the Prospectus was first filed with the SEC pursuant to Rule 424(b), at all times subsequent to and including the Closing Date and, if later, the Option Closing Date and when any post-effective amendment to the Registration Statement becomes effective or any amendment or supplement to the Prospectus is filed with the SEC, the Registration Statement and the Prospectus (as amended or as supplemented if the Company shall have filed with the SEC any amendment or supplement thereto), including the financial statements included in the Prospectus, did or will comply with all applicable provisions of the Act and the Rules and Regulations and did or will contain all statements required to be stated therein in accordance with the Act and the Rules and Regulations. On the Effective Date and when any post-effective amendment to the Registration Statement becomes effective, no part of the Registration Statement or any such amendment did or will contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. At the Effective Date, the date the 5 Prospectus or any amendment or supplement to the Prospectus is filed with the SEC and at the Closing Date and, if later, the Option Closing Date, the Prospectus did not or will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing representations and warranties in this Section 3(c) do not apply to any statements or omissions made in reliance on and in conformity with information relating to any Underwriter furnished in writing to the Company by the Representative specifically for inclusion in the Registration Statement, the Prospectus or any amendment or supplement thereto. There are no contracts or other documents required to be filed as exhibits to the Registration Statement by the Act or the Rules and Regulations that have not been so filed. The documents which are incorporated by reference in the Prospectus or from which information is so incorporated by reference, when they became effective or were filed with the SEC, as the case may be, complied in all material respects with the requirements of the Act and the Rules and Regulations or the Exchange Act and the rules and regulations thereunder, as applicable, and did not, when such documents were so filed, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and any documents so filed and incorporated by reference subsequent to the Effective Date shall, when they are filed with the SEC, conform in all material respects with the requirements of the Act and the Rules and Regulations and the Exchange Act and the rules and regulations thereunder, as applicable. (d) The only directly or indirectly controlled subsidiaries of the Company (each, a "Subsidiary" and collectively, the "Subsidiaries") are FirstBank Puerto Rico, First Federal Financial Corp., First Leasing and Rental Corporation, FirstBank Insurance Agency, Inc., FirstBank Insurance Agency V.I., Inc. and First Trade, Inc. Except as set forth in the Prospectus or as acquired in connection with the exercise of its rights as a creditor, or pursuant to a bona fide collateral pledge arrangement, neither the Company nor any Subsidiary owns, nor at the Closing Date and the Option Closing Date, will own an interest in any corporation, partnership, trust, joint venture or other business entity other than passive, non-controlling equity investments permitted under the applicable laws and regulations. The Company has been and, at the Closing Date and Option Closing Date, will be duly organized and validly existing as a corporation under the laws of the Commonwealth of Puerto Rico and is and, at the Closing Date and Option Closing Date, will be in good standing with the Commonwealth of Puerto Rico. The Company is treated as a bank holding company under the Bank Holding Company Act of 1956 (the "BHCA") and is and, at the Closing Date and Option Closing Date will be in good standing with the Board of Governors of the Federal Reserve System (the "Federal Reserve"). Each of the Subsidiaries is and, at the Closing Date and Option Closing Date, will be, respectively, a commercial bank, a finance company, a leasing and rental company, an insurance agency, an insurance agency and a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation, and are duly authorized to conduct therein their respective businesses. Each of 6 the Company and its Subsidiaries is and, at the Closing Date and the Option Closing Date, will be duly qualified and in good standing as a foreign corporation in each jurisdiction in which the character or location of its properties (owned, leased or licensed) or the nature or conduct of its business or use of its property and assets makes such qualification necessary, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, prospects results of operations or business affairs of the Company and its Subsidiaries taken as a whole (each, a "Material Adverse Effect"). (e) The outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable and are not subject to any preemptive or similar rights. The Shares to be issued and sold by the Company will be, upon such issuance and payment therefor, duly authorized, validly issued, fully paid and nonassessable and will not be subject to any preemptive or similar rights. The Company has, and, upon completion of the sale of the Shares, will have, an authorized, issued and outstanding capitalization as set forth in the Registration Statement and the Prospectus. The description of the securities of the Company in the Registration Statement and the Prospectus is, and at the Closing Date and, if later, the Option Closing Date, will be, complete and accurate in all respects. No holders of securities of the Company are entitled to have such securities registered under the Registration Statement, except where such rights have been waived. (f) The consolidated financial statements and the related notes of the Company included in the Registration Statement or incorporated therein by reference and the Prospectus present fairly the financial condition of the Company and its Subsidiaries as of the dates indicated and the consolidated results of operations, and cash flows of the Company and its Subsidiaries for the periods covered thereby, all in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the entire periods involved. PricewaterhouseCoopers LLP (the "Accountants"), who have reported on those of such financial statements and related notes which are audited, are independent accountants with respect to the Company and its Subsidiaries within the meaning of the Act and the applicable Rules and Regulations. (g) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 7 (h) Except as set forth in the Registration Statement and Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus and prior to the Closing Date and, if later, the Option Closing Date, (i) there has not been, and will not have been, any Material Adverse Effect, (ii) neither the Company nor any of its Subsidiaries has entered into, or will have entered into any material transactions other than pursuant to this Agreement, and (iii) the Company has not, and will not have, paid or declared any dividends or other distributions of any kind on any class of its capital stock, except for the payment or declaration of quarterly dividends on the Company's common stock (the "Common Stock") and payment or declaration of monthly dividends on its outstanding series of preferred stock, both in the ordinary course of its business. (i) The Company and each of its Subsidiaries have good and marketable title to all properties and assets described in the Registration Statement, including the documents incorporated by reference therein, and the Prospectus, as owned by it, free and clear of all liens, security interests, restrictions, pledges, encumbrances, charges, equities, claims, easements, leases and tenancies (collectively, "Encumbrances") other than those described in the Registration Statement, or in the documents incorporated by reference therein, and the Prospectus or those that will not materially affect the value of such properties and assets or will not interfere with the use made and proposed to be made of such properties and assets. The Company and each of its Subsidiaries have valid, subsisting and enforceable leases for the properties and assets described in the Registration Statement or in the documents incorporated by reference therein, and the Prospectus as leased by them, free and clear of all Encumbrances, other than those described in the Registration Statement or in the documents incorporated by reference therein, and the Prospectus or those that will not materially affect the value of such properties and assets or will not interfere with the use made and proposed to be made of such properties and assets. (j) The Company and its Subsidiaries are not required to be registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"). (k) Except as set forth in the Registration Statement, or incorporated therein by reference, and the Prospectus, there are no actions, suits, arbitrations, claims, governmental or other proceedings (formal or informal), or investigations pending or, to the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries, or any directors, officers or shareholders of the Company or any of its Subsidiaries in their respective capacities as such, or any of the properties or assets owned or leased by the Company or any of its Subsidiaries, before or by any Federal, state or Commonwealth of Puerto Rico court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign (collectively, a "Governmental Body"), wherein an unfavorable ruling, decision or finding would have a Material Adverse Effect and would be required to be disclosed in the Registration Statement and the Prospectus. Neither the Company nor any 8 Subsidiary is in violation of, or in default with respect to, any law, rule, or regulation, or any order, judgment, or decree, except as described in the Prospectus or such as in the aggregate do not now have and can reasonably be expected in the future not to have a Material Adverse Effect; nor is the Company or any Subsidiary presently required under any order, judgment or decree to take any action in order to avoid any such violation or default. (l) The Company and each of its Subsidiaries have and, at the Closing Date and the Option Closing Date, will have all governmental licenses, permits, consents, orders, approvals, franchises, certificates and other authorizations (collectively, "Licenses") necessary to carry on their respective businesses, except where the failure to have such licenses would not have a Material Adverse Effect, and own or lease their respective properties as contemplated in the Registration Statement and the Prospectus. The Company and each of its Subsidiaries have and, at the Closing Date and the Option Closing Date will have, complied with all laws, regulations and orders applicable to it or its business, assets and properties, the violations of which would, individually or in the aggregate, not now have, or could reasonably be expected in the future to have, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is, nor, at the Closing Date and the Option Closing Date, will be in default (nor has any event occurred which, with notice or lapse of time or both, would constitute a default) in the due performance and observation of any term, covenant or condition of any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond, debenture, note agreement or other evidence of indebtedness, lease, contract or other agreement or instrument (collectively, a "contract or other agreement") to which they are a party or by which their respective properties are bound or affected, the violation of which would individually or in the aggregate have a Material Adverse Effect. There are no governmental proceedings or actions pending or to be threatened for the purpose of suspending, modifying or revoking any License held by the Company and its Subsidiaries. (m) No consent, approval, authorization or order of, or any filing or declaration with, any Governmental Body is required for the consummation of the transactions contemplated by this Agreement or in connection with the issuance and sale of the Shares by the Company, except such as have been obtained and such as may be required under state or Commonwealth of Puerto Rico securities or blue sky laws or the bylaws and rules of the National Association of Securities Dealers, Inc. (the "NASD") in connection with the purchase and distribution by the Underwriters of the Shares to be sold hereby. (n) The Company has full power (corporate and other) and authority to enter into this Agreement and to carry out all the terms and provisions hereof to be carried out by it. This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company and is enforceable against the Company in accordance with its terms, except as rights to indemnity and contribution may be limited by applicable laws. Except as disclosed in the Registration Statement and the Prospectus, the execution, delivery and the performance of this Agreement and the 9 consummation of the transactions contemplated hereby will not result in the creation or imposition of any Encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries pursuant to the terms or provisions of, or result in a breach or violation of or conflict with any of the terms or provisions of, or constitute a default under, or give any other party a right to terminate any of its obligations under, or result in the acceleration of any obligation under, (i) the Certificate of Incorporation or By-laws of the Company, in each case as amended, or (ii) any contract or other agreement to which the Company or any of its Subsidiaries is a party or by which it or any of the respective assets or properties are bound or affected, the violation of which would individually or in the aggregate have a Material Adverse Effect, or (iii) any judgment, ruling, decree, order, law, statute, rule or regulation of any Governmental Body applicable to the Company or any of its Subsidiaries or their respective businesses or properties, the violation of which would individually or in the aggregate have a Material Adverse Effect. (o) No statement, representation, or warranty made by the Company in this Agreement or made in any certificate or document required by this Agreement to be delivered to the Representative was or will be, when made, inaccurate, untrue or incorrect in any material respect. Each certificate signed by an officer of the Company and delivered to the Representative or counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to each Underwriter as to the matters covered thereby. (p) Neither the Company nor any of its directors, officers or affiliates has taken, nor will he, she or it take, directly or indirectly, any action designed, or which might reasonably be expected in the future, to cause or result in, under the Act or otherwise, or which has constituted, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares or otherwise. (q) The Shares have been approved for listing on the New York Stock Exchange ("NYSE"), subject only to notice of issuance. (r) Neither the Company nor any of its Subsidiaries is involved in any collective labor dispute with its employees nor is any such dispute threatened or imminent. (s) Neither the Company nor any of its Subsidiaries nor, to the Company's best knowledge, any employee or agent of the Company or any Subsidiary has made any payment of funds of the Company or any Subsidiary or received or retained any funds of the Company or any Subsidiary in violation of any law, rule or regulation which payment, receipt or retention of funds is of a character required to be disclosed in the Prospectus. (t) The business, operations and facilities of the Company and its Subsidiaries have been and are being conducted in compliance with all applicable laws, ordinances, rules, regulations, licenses, permits, approvals, plans, authorizations or 10 requirements relating to occupational safety and health, or pollution, or protection of health or the environment (including, without limitation, those relating to emissions, discharges, releases or threatened releases of pollutants, contaminants or hazardous or toxic substances, materials or wastes into ambient air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment storage, disposal, transport or handling of chemical substances, pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, gaseous or liquid in nature) of any governmental department, commission, board, bureau, agency or instrumentality of the United States, any state, or the Commonwealth of Puerto Rico or political subdivision thereof, and all applicable judicial or administrative agency or regulatory decrees, awards, judgments and orders relating thereto, except where failure to so comply would not have a Material Adverse Effect; and neither the Company nor any of its Subsidiaries has received any notice from any governmental instrumentality or any third party alleging any violation thereof or liability thereunder (including, without limitation, liability for costs of investigating or remediating sites containing hazardous substances and/or damages to natural resources). The intended use and occupancy of each of the facilities owned or operated by the Company and its Subsidiaries complies in all material respects with all applicable codes and zoning laws and regulations, and there is no pending or threatened condemnation, zoning change, environmental or other proceeding or action that will in any material respect adversely affect the size of, use of, improvements on, construction on, or access to such facilities. (u) The Company and each of its Subsidiaries have filed all foreign, federal, state and local tax returns that are required to be filed or have requested extensions thereof and have paid all taxes required to be paid by them and any other assessment, fine or penalty levied against them, to the extent that any of the foregoing is due and payable, except for any failure to file that would not have a Material Adverse Effect. (v) The deposit accounts of FirstBank Puerto Rico, a Subsidiary of the Company ("FirstBank") are insured by the Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation ("FDIC") to the legal maximum, and no proceeding for the termination or revocation of such insurance is pending or threatened. FirstBank is a member in good standing of the Federal Home Loan Bank of New York. (w) None of the Company, FirstBank, their affiliates, or, to the Company's knowledge, any of their respective directors or officers is subject to any order or directive of, or party to any agreement with, any regulatory agency having jurisdiction with respect to its business or operations except as disclosed in the Prospectus. 4. Agreements of the Company. The Company covenants and agrees with each of the several Underwriters as follows: 11 (a) The Company will not, during such period as the Prospectus is required by law to be delivered in connection with sales of the Shares by an Underwriter or dealer, file any amendment or supplement to the Registration Statement or the Prospectus, unless a copy thereof shall first have been submitted to the Representative within a reasonable period of time prior to the filing thereof and the Representative shall not have objected thereto in good faith. (b) The Company will notify the Representative promptly, and will confirm such advice in writing, (i) when any post-effective amendment to the Registration Statement becomes effective, (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose or the threat thereof, (iv) of the happening of any event during such period as the Prospectus is required by law to be delivered in connection with sales of the Shares by an Underwriter or dealer, that in the judgment of the Company makes any statement of a material fact made in the Registration Statement or the Prospectus untrue or that requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein, in light of the circumstances in which they are made, not misleading, and (v) of receipt by the Company or any representative or attorney of the Company of any other communication from the SEC relating to the Company, the Registration Statement or the Prospectus. If at any time the SEC shall issue any order suspending the effectiveness of the Registration Statement, the Company will make every reasonable effort to obtain the withdrawal of such order at the earliest possible moment. The Company will prepare the Prospectus in a form approved by the Representative and will file such Prospectus pursuant to Rule 424(b) under the Act not later than the SEC's close of business on the second business day following the execution and delivery of this Agreement. (c) If the Company elects to rely upon Rule 462(b) of the Rules and Regulations, the Company shall file the Rule 462(b) Registration Statement with the SEC in compliance with Rule 462(b) of the Rules and Regulations by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing, either pay to the SEC the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) of the Rules and Regulations. (d) If, at any time when a Prospectus relating to the Shares is required to be delivered under the Act, any event occurs as a result of which, in the judgment of the Company or in the opinion of counsel for the Underwriters, the Prospectus, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or the Registration Statement, as then amended or supplemented, would include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading, or if for any other reason it is necessary at any time to amend or supplement the Prospectus or the 12 Registration Statement to comply with the Act or the Rules and Regulations, the Company will promptly notify the Representative thereof and, subject to Section 4(b) hereof, will prepare and file with the SEC, at the Company's expense, an amendment to the Registration Statement or an amendment or supplement to the Prospectus that corrects such statement or omission or effects such compliance. (e) The Company will furnish to the Representative, without charge, two signed copies of the Registration Statement and of any post-effective amendment thereto, including financial statements and schedules, and all exhibits thereto and will furnish to the Representative, without charge, for transmittal to each of the other Underwriters, copies of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules but without exhibits. (f) The Company will comply with all the provisions of all undertakings contained in the Registration Statement. (g) From time to time for such period as the Prospectus is required by the Act to be delivered, the Company will deliver to each of the Underwriters, without charge, as many copies of the Prospectus or any amendment or supplement thereto as the Representative may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by the several Underwriters and by all dealers to whom the Shares may be sold, both in connection with the offering or sale of the Shares and for any period of time thereafter during which the Prospectus is required by law to be delivered in connection therewith. If during such period of time any event shall occur which in the judgment of the Company or counsel to the Underwriters should be set forth in the Prospectus in order to make any statement therein, in the light of the circumstances under which it was made, not misleading, or in the Registration Statement in order to make any statement therein not misleading, or if it is necessary to supplement or amend the Prospectus or the Registration Statement to comply with law, the Company will forthwith prepare and duly file with the SEC an appropriate supplement or amendment thereto, and deliver to each of the Underwriters, without charge, such number of copies thereof as the Representative may reasonably request. (h) Prior to any public offering of the Shares by the Underwriters, the Company will cooperate with the Representative and its counsel in connection with the registration or qualification of the Shares for offer and sale under the securities or blue sky laws of such jurisdictions as the Representative may reasonably request; provided, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now so subject. (i) During the period of five (5) years commencing on the Closing Date, the Company will furnish to the Representative and each other Underwriter who may so request 13 copies of such financial statements and other periodic and special reports as the Company may from time to time distribute generally to the holders of any class of its capital stock, and will furnish to the Representative and each other Underwriter who may so request a copy of each annual or other report it shall be required to file with the SEC. (j) The Company will make generally available to holders of its securities, as soon as may be practicable, but in no event later than the last day of the fifteenth full calendar month following the calendar quarter in which the Closing Date falls, a consolidated earnings statement (which need not be audited but shall be in reasonable detail) for a period of twelve (12) months commencing after the Closing Date, and satisfying the provisions of Section 11(a) of the Act (including Rule 158 of the Rules and Regulations). (k) The Company will apply the net proceeds from the offering and sale of the Shares in the manner set forth in the Prospectus under "Use of Proceeds." (l) The Company will not at any time, directly or indirectly, take any action intended, or which might reasonably be expected, to cause or result in, or which will constitute, stabilization of the price of the Shares to facilitate the sale or resale of any of the Shares. 14 5. Expenses. (a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company will pay, or reimburse if paid by the Representative, all costs and expenses incidental to the performance of the obligations of the Company under this Agreement, including, but not limited to, costs and expenses of or relating to (i) the preparation, printing and filing by the Company of the Registration Statement and amendments and exhibits thereto, the Prospectus and any amendment or supplement to the Registration Statement or the Prospectus, (ii) the preparation and delivery of certificates representing the Shares, (iii) furnishing (including costs of shipping and mailing) such copies of the Registration Statement, the Prospectus and all amendments and supplements thereto, as may be requested for use in connection with the offering and sale of the Shares by the Underwriters or by dealers to whom Shares may be sold, (iv) the listing of the Shares on the NYSE, (v) any filings required to be made by the Underwriters with the NASD, (vi) the registration or qualification of the Shares for offer and sale under the securities or blue sky laws of such jurisdictions designated pursuant to Section 4(h) and the preparation and printing of preliminary, supplemental and final blue sky memoranda, (vii) counsel and accountants to the Company, and (viii) the transfer agent for the Shares. (b) If the transactions contemplated by this Agreement are not consummated or if this Agreement is terminated by the Company pursuant to any of the provisions hereof, the Company will reimburse the Representative for all of its accountable out-of-pocket fees and expenses (including the fees, disbursements and other charges of its counsel) incurred by it in connection herewith. 6. Conditions of the Obligations of the Underwriters. The obligations of each Underwriter hereunder are subject to the following conditions: (a) All filings required by Rule 424 of the Rules and Regulations and Rule 430A shall have been made. If the Company has elected to rely upon Rule 462(b) of the Rules and Regulations, the Company has filed the Rule 462(b) Registration Statement by 10:00 p.m., Washington D.C. time, on the date of this Agreement. (b) (i) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall be pending or threatened by the SEC, (ii) no order suspending the effectiveness of the Registration Statement or the qualification or registration of the Shares under the securities or blue sky laws of any jurisdiction shall be in effect, and no proceeding for such purpose shall be pending before or threatened or contemplated by the SEC or the authorities of any such jurisdiction, (iii) any request for additional information on the part of the staff of the SEC or any such authorities shall have been complied with to the satisfaction of the staff of the SEC or such authorities, 15 and (iv) after the date hereof no amendment or supplement to the Registration Statement or the Prospectus shall have been filed unless a copy thereof was first submitted to the Representative and the Representative did not object thereto in good faith, and the Representative shall have received certificates, dated the Closing Date and the Option Closing Date and signed by the Chief Executive Officer of the Company and the Chief Financial Officer of the Company (who may, as to proceedings threatened, rely upon the best of their information and belief), to the effect of the foregoing clauses (i), (ii) and (iii). (c) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, (i) there shall not have been a Material Adverse Effect whether or not arising from transactions in the ordinary course of business, and (ii) the Company and its Subsidiaries shall not have sustained any material loss or interference with its business, assets or properties from fire, explosion, flood or other casualty, or from any labor dispute or any court or legislative or other governmental action, order or decree, which is not set forth in the Registration Statement and the Prospectus. (d) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall have been no litigation or other proceeding instituted against the Company or any of its officers, directors or shareholders in their capacities as such, or any of its assets or properties, before or by any Governmental Body in which litigation or proceeding an unfavorable ruling, decision or finding would result in a Material Adverse Effect. (e) Each of the representations and warranties of the Company contained herein shall be true and correct at the Closing Date and, with respect to the Option Shares, at the Option Closing Date, as if made on such date, and all covenants and agreements herein contained to be performed on the part of the Company and all conditions herein contained to be fulfilled or complied with by the Company at or prior to the Closing Date and, with respect to the Option Shares, at or prior to the Option Closing Date, shall have been fully performed, fulfilled or complied with. (f) The Representative shall have received an opinion, dated the Closing Date and the Option Closing Date, from Fiddler Gonzalez & Rodriguez, P.S.C., counsel for the Company in a form and substance reasonably satisfactory to counsel for the Underwriters (g) The Representative shall have received an opinion, dated the Closing Date and the Option Closing Date, from Adsuar Muniz Goyco & Besosa, P.S.C., counsel to the Underwriters, which opinion shall be satisfactory in all respects to the Representative. (h) Concurrently with the execution and delivery of this Agreement, the Accountants shall have furnished to the Representative a letter, dated the date of its delivery 16 (the "Original Comfort Letter"), addressed to the Representative and in form and substance satisfactory to the Representative, to the effect that: (i) they are independent accountants within the meaning of the Act and the applicable Rules and Regulations; (ii) in their opinion, the consolidated financial statements of the Company and its Subsidiaries audited by them and incorporated by reference in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Act, the Exchange Act and the Rules and Regulations with respect to registration statements on Form S-3; (iii) on the basis of procedures set forth in detail in such letter, nothing has come to their attention (as of a date not more than five (5) business days prior to the date of the delivery of such letter) as a result of the foregoing procedures that caused them to believe that: (1) the unaudited consolidated interim financial statements, if any, incorporated by reference in the Registration Statement, do not comply as to form in all material respects with the applicable accounting requirements of the Exchange Act and the published rules and regulations thereunder; (2) any material modifications should be made to the unaudited consolidated interim financial statements, if any, incorporated by reference in the Registration Statement, for them to be in conformity with generally accepted accounting principles; (3) (i) at the date of the latest available interim financial data and at a specified date not more than five (5) business days prior to the date of delivery of the Original Comfort Letter there was any change in the capital stock, notes payable, advances from the Federal Home Loan Bank, or federal funds purchased and securities sold under agreements to repurchase or any decreases in the consolidated stockholders' equity (only as to the latest interim financial data) of the Company and its Subsidiaries as compared with amounts shown in the December 31, 2002 balance sheet incorporated by reference in the Registration Statement and (ii) for the period from the latest interim financial statements incorporated by reference in the Registration Statement, to the latest interim financial data available which should be no later than forty (40) days prior to the date of delivery of the Original Comfort Letter, there were any decreases, as compared with the corresponding period in the preceding year, in consolidated net interest income, other income, income before taxes or in the total or per share amounts of net income, except in all instances for changes or decreases which the Registration Statement discloses have occurred or may occur, or they shall state any specific changes or decreases; and 17 (iv) the information set forth under the captions "Prospectus Summary - Summary Financial Data," "Preliminary Prospectus Summary - Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends," "Recent Developments," "Capitalization," "Selected Financial Data,", "Description of Capital Stock," "Preliminary Prospectus Summary - The Company", "About First BanCorp" and "Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends," which is expressed in dollars (or percentages derived from such dollar amounts) and has been obtained from accounting records which are subject to the internal controls of the Company's accounting system or which has been derived directly from such accounting records and analysis or computations, is in agreement with such records or computations. At the Closing Date and, as to the Option Shares, the Option Closing Date, the Accountants shall have furnished to the Representative a letter, dated the date of its delivery, which shall confirm, on the basis of a review in accordance with the procedures set forth in the Original Comfort Letter, that nothing has come to their attention during the period from the date of the Original Comfort Letter referred to in the prior sentence to a date (specified in the letter) not more than five business days prior to the Closing Date or the Option Closing Date, as the case may be, which would require any change in the Original Comfort Letter if it were required to be dated and delivered at the Closing Date or the Option Closing Date, as the case may be. In the event that the letters referred to above set forth any such changes, decreases or increases, it shall be a further condition to the obligations of the Underwriters that (A) such letters shall be accompanied by a written explanation of the Company as to the significance thereof, unless the Representative deems such explanation unnecessary, and (B) such changes, decreases or increases do not, in the sole judgment of the Representative, make it impractical or inadvisable to proceed with the purchase and delivery of the Shares as contemplated by the Registration Statement, as amended as of the date hereof. (i) At the Closing Date and, as to the Option Shares, the Option Closing Date, there shall be furnished to the Representative an accurate certificate, dated the date of its delivery, signed by each of the Chief Executive Officer and the Chief Financial Officer of the Company, in form and substance satisfactory to the Representative, to the effect that to the best of their knowledge: (i) Each signer of such certificate has carefully examined the Registration Statement and the Prospectus and (A) as of the date of such certificate, (x) the Registration Statement does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading and (y) the Prospectus does 18 not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (B) since the Effective Date no event has occurred as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein not untrue or misleading in any material respect; (ii) Each of the representations and warranties of the Company contained in this Agreement were, when originally made, and are, at the time such certificate is delivered, true and correct in all respects; each of the covenants required herein to be performed by the Company on or prior to the date of such certificate has been duly, timely and fully performed and each condition herein required to be complied with by the Company on or prior to the delivery of such certificate has been duly, timely and fully complied with. (iii) No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto and no order directed at any document incorporated by reference in the Registration Statement or any amendment thereto or the Prospectus has been issued, and no proceedings for that purpose have been instituted or, to the Company's best knowledge, are threatened or contemplated by the SEC. (j) The Shares shall be qualified for sale in such states and possessions as the Representative may reasonably request, and each such qualification shall be in effect and not subject to any stop order or other proceeding on the Closing Date and the Option Closing Date. (k) Prior to the Closing Date, the Shares shall have been accepted for listing on the NYSE, subject only to official notice of issuance. (l) The Company shall have furnished to the Representative such certificates, letters and other documents, in addition to those specifically mentioned herein, as the Representative may have reasonably requested as to the accuracy and completeness at the Closing Date and the Option Closing Date of any statement in the Registration Statement or the Prospectus, as to the accuracy at the Closing Date and the Option Closing Date of the representations and warranties of the Company, as to the performance by the Company of its obligations hereunder, or as to the fulfillment of the conditions concurrent and precedent to the obligations hereunder of the Underwriters. All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are satisfactory in form and substance to the 19 Representative. The Company will furnish the Representative with such conformed copies of such opinions, certificates, letters and other documents as you shall reasonably request. 7. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each Underwriter, the directors, officers, employees and agents of each Underwriter and each person, if any, who controls each Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages or liabilities, joint or several (and actions in respect thereof), to which they, or any of them, may become subject under the Act or other Federal, state or Commonwealth of Puerto Rico statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement made by the Company in Section 3 of this Agreement, (ii) any untrue statement or alleged untrue statement of any material fact contained in (A) the Registration Statement or the Prospectus or any amendment or supplement to the Registration Statement or the Prospectus or (B) any application or other document, or any amendment or supplement thereto, executed by the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify the Shares under the securities or blue sky laws thereof or filed with the SEC or any securities association or securities exchange (each, an "Application"), or (iii) the omission or alleged omission to state in the Registration Statement or the Prospectus or any amendment or supplement to the Registration Statement or the Prospectus or any Application a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse, as incurred, each Underwriter and each such other person for any legal or other expenses reasonably incurred by such Underwriter or such other person in connection with investigating defending or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability is based solely upon an untrue statement or omission or alleged untrue statement or omission in any of such documents made in reliance upon and in conformity with information relating to any Underwriter furnished in writing to the Company by the Representative on behalf of any Underwriter expressly for inclusion therein. This indemnity agreement will be in addition to any liability that the Company might otherwise have. The Company will not, without the prior written consent of each Underwriter, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not such Underwriter or any person who controls such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to each claim, action, suit or proceeding), unless such settlement, compromise or consent includes an unconditional release of each Underwriter and each such other person from all liability arising out of such claim, action, suit or proceeding. 20 (b) Each Underwriter will indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, each director of the Company and each officer of the Company who signed the Registration Statement against any losses, claims, damages or liabilities (or actions in respect thereof) to which the Company and any such director, officer or controlling person may become subject under the Act or other federal, state or Commonwealth of Puerto Rico statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement to the Registration Statement or the Prospectus or any Application, or material fact required to be stated therein or (ii) the omission or the alleged omission to state in the Registration Statement or the Prospectus or any amendment or supplement to the Registration Statement or the Prospectus, or any Application, a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representative expressly for use therein; and, subject to the limitation set forth immediately preceding this clause, will reimburse, as incurred, any legal or other expenses reasonably incurred by the Company and any such director, officer or controlling person in connection with investigating or defending any such loss, claim, damage, liability or any action in respect thereof. The Company acknowledges that, for all purposes under this Agreement, the statements set forth under the heading "Underwriting" constitute the only information relating to any Underwriter furnished in writing to the Company by the Representative on behalf of the Underwriters expressly for inclusion in the Registration Statement or the Prospectus. This indemnity agreement will be in addition to any liability that each Underwriter might otherwise have. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party or parties under this Section 7, notify such indemnifying party or parties of the commencement thereof, but the omission so to notify the indemnifying party or parties will not relieve it or them from any liability which it or they may have to any indemnified party under the foregoing provisions of this Section 7 or otherwise unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against an indemnified party and it notifies an indemnifying party or parties of its commencement, the indemnifying party or parties against which a claim is made will be entitled to participate therein and, to the extent that it or they may wish, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be one or more legal defenses available to it 21 and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnifying party shall not have the right to direct the defense of such action on behalf of such indemnified party or parties and such indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by such indemnified party of counsel appointed to defend such action, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses other than reasonable costs of investigation subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that in connection with such action the indemnifying party shall not be liable for the reasonable fees and expenses of more than one separate counsel (in addition to the fees and expenses of local counsel necessary in connection with any such proceedings) in any one action or separate but substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances, designated by the Representative in the case of paragraph (a) of this Section 7, representing the indemnified parties under paragraph (a) who are parties to such action or actions), or (ii) the indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense of the indemnifying party. After such notice from the indemnifying party to such indemnified party, the indemnifying party will not be liable for the costs and expenses of any settlement of such action effected by such indemnified party without the written consent of the indemnifying party, unless such indemnified party waived its rights under this Section 7 in which case the indemnified party may effect such a settlement without such consent. (d) If the indemnification provided for in the foregoing paragraphs of this Section 7 is unavailable or insufficient to hold harmless an indemnified party under paragraph (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties, on the one hand, and the indemnified party, on the other, from the offering of the Shares or (ii) if, but only if, the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand, and the indemnified party, on the other, in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other, shall be deemed to be in the same proportion as the total proceeds from the offering of the Shares (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions 22 received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. Relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Representative on behalf of the Underwriters, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 7(d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities (or actions in respect thereof) referred to above in this Section 7(d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7(d), no Underwriter shall be required to contribute any amount in excess of the total underwriting discounts and commissions received by it with respect to the Shares purchased by such Underwriter under this Agreement, less the aggregate amount of any damages that such Underwriter has otherwise been required to pay in respect of the same or any substantially similar claim. No person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 7(d) are several in proportion to their respective underwriting obligations and not joint. For purposes of this Section 7(d), each person, if any, who controls an Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act will have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, will have the same rights to contribution as the Company, subject in each case to the provisions of this paragraph (d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made under this Section 7(d), notify any such party or parties from whom contribution may be sought, but the omission so to notify will not relieve the party or parties from whom contribution may be sought from any other obligation(s) it or they may have hereunder or otherwise than under this paragraph (d) or to the extent that such party or parties were not adversely affected by such omission. The contribution agreement set forth above shall be in addition to any liabilities which any indemnifying party may otherwise have. No party will be liable for contribution with respect to any action or claim settled without its written consent (which consent will not be unreasonably withheld). (e) The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on 23 behalf of the Underwriters, (ii) acceptance of any of the Shares and payment therefor or (iii) any termination of this Agreement. (f) In no case shall the indemnification provided in this Section 7 be available to protect any person against any liability to which any such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its or his obligations or duties hereunder, or by reason of its or his reckless disregard of its or his obligations and duties hereunder. 8. Termination. The obligations of the several Underwriters under this Agreement may be terminated at any time prior to the Closing Date (or, with respect to the Option Shares, on or prior to the Option Closing Date), by notice to the Company from the Representative, without liability on the part of any Underwriter to the Company if, prior to delivery and payment for the Firm Shares (or the Option Shares, as the case may be), in the sole judgment of the Representative, (i) trading in the Company's Common Stock or any series of Preferred Stock or securities generally shall have been suspended by the SEC or by the NYSE , (ii) minimum or maximum prices shall have been established for the Company's Common Stock or any series of Preferred Stock or securities generally on the NYSE, or additional material governmental restrictions, not in force on the date of this Agreement, shall have been imposed upon trading in securities generally by any of such market or exchange or by order of the SEC or any court or other Governmental Authority, (iii) a general banking moratorium shall have been declared by the United States, New York State, or Commonwealth of Puerto Rico authorities, or (iv) any material adverse change in the financial or securities markets in the United States or any outbreak or material escalation of hostilities or declaration by the United States of a national emergency or war or other calamity or crisis shall have occurred, the effect of any of which is such as to make it, in the sole judgment of the Representative, impracticable or inadvisable to market the Shares on the terms and in the manner contemplated by the Prospectus. Any termination pursuant to Section 8 shall be without liability of any party to any other party except as provided in Sections 5(a) and 7. 9. Default of Underwriters. If one or more Underwriters default in their obligations to purchase Firm Shares or Option Shares hereunder and the aggregate number of such Shares that such defaulting Underwriter or Underwriters agreed but failed to purchase is ten (10%) percent or less of the aggregate number of Firm Shares or Option Shares to be purchased by all of the Underwriters at such time hereunder, the other Underwriters may make arrangements satisfactory to the Representative for the purchase of such Shares by other persons (who may include one or more of the nondefaulting Underwriters, including the Representative), but if no such arrangements are made by the Closing Date or the related Option Closing Date, as the case may be, the other Underwriters shall be obligated severally in proportion to their respective commitments hereunder to purchase the Firm Shares or Option Shares that such defaulting Underwriter or Underwriters agreed but failed to purchase. If one or more Underwriters so default with respect to an aggregate number of Shares that is 24 more than ten (10%) percent of the aggregate number of Firm Shares or Option Shares, as the case may be, to be purchased by all of the Underwriters at such time hereunder, and if arrangements satisfactory to the Representative are not made within 36 hours after such default for the purchase by other persons (who may include one or more of the nondefaulting Underwriters, including the Representative) of the Shares with respect to which such default occurs, this Agreement will terminate without liability on the part of any nondefaulting Underwriter and the Company other than as provided in Section 10 hereof. In the event of any default by one or more Underwriters as described in this Section 9, the Representative shall have the right to postpone the Closing Date or the Option Closing Date, as the case may be, for not more than seven (7) business days in order that any necessary changes may be made in the arrangements or documents for the purchase and delivery of the Firm Shares or Option Shares, as the case may be. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section 9. Nothing herein shall relieve any defaulting Underwriter from liability for its default. 10. Survival. The respective representations, warranties, agreements, covenants, indemnities and other statements of the Company, its officers, and the several Underwriters set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement shall remain in full force and effect, regardless of (i) any investigation made by or on behalf of the Company, any of its officers or directors, any Underwriter or any controlling person referred to in Section 7 hereof and (ii) delivery of and payment for the Shares. The respective agreements, covenants, indemnities and other statements set forth in Sections 5 and 7 hereof shall remain in full force and effect, regardless of any termination or cancellation of this Agreement. 11. Notices. Notice given pursuant to any of the provisions of this Agreement shall be in writing and, unless otherwise specified, shall be mailed or delivered: (a) If to the Company, to: First BanCorp. 1519 Ponce de Leon Ave., Penthouse Floors San Juan, Puerto Rico 00908 Attention: Annie Astor de Carbonell, Senior Executive Vice President and Chief Financial Officer With a copy to: Fiddler Gonzalez & Rodriguez, P.S.C. Banco Bilbao Vizcaya Bldg, 6th Floor 25 254 Munoz Rivera Avenue San Juan, Puerto Rico 00918 Attention: Aurelio Emanuelli Freese, Esq. (a) If to the Underwriters, to: UBS Financial Services Incorporated of Puerto Rico American International Plaza, Penthouse Floor 250 Munoz Rivera Avenue San Juan, Puerto Rico 00918 Attention: Jose G. Arias, Managing Director With a copy to: Adsuar Muniz Goyco & Besosa, P.S.C. Westernbank World Plaza 268 Munoz Rivera Avenue, Suite 1400 San Juan, Puerto Rico 00918 Attention: Fernando Goyco-Covas, Esq. Any such notice shall be effective only upon receipt. Any notice under Section 7 or 8 may be made by telex or telephone, but if so made shall be subsequently confirmed in writing. 12. Successors. This Agreement shall inure to the benefit of and shall be binding upon the several Underwriters, the Company, and their respective successors and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person except that (i) the indemnities of the Company contained in Section 7 of this Agreement shall also be for the benefit of directors, officers, employees and agents of, and any person or persons who control, any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters contained in Section 7 of this Agreement shall also be for the benefit of the directors of the Company, the officers of the Company who have signed the Registration Statement and any person or persons who control the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of Shares from any Underwriter shall be deemed a successor because of such purchase. This Agreement shall not be assignable by either party hereto without the prior written consent of the other party. 26 13. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. 14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 15. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty other than those set forth in this Agreement has been made or relied upon by either party hereto. Please confirm that the foregoing correctly sets forth the agreement among the Company and the several Underwriters. Very truly yours, FIRST BANCORP By: _____________________________ Name: Annie Astor-Carbonell Title: Senior Executive Vice President and Chief Financial Officer 27 Confirmed as of the date first above mentioned: UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO By: ________________________________ Name: Carlos V. Ubinas Title: Executive Vice President By: ________________________________ Name: Jose G. Arias Title: Managing Director Acting on its behalf and as lead underwriter of the several Underwriters named in Schedule 1 hereof. 28 SCHEDULE 1 UNDERWRITERS UBS Financial Services Incorporated of Puerto Rico BBVA Capital Markets of Puerto Rico, Inc. R-G Investments Corporation Santander Securities Corporation EX-4.1 4 g84776exv4w1.txt FORM OF STOCK CERTIFICATE EXHIBIT 4.1 % NONCUMULATIVE PERPETUAL MONTHLY INCOME PREFERRED STOCK, SERIES E PAR VALUE $1.00 PER SHARE SHARES FIRST BANCORP. INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF PUERTO RICO CUSIP SEE REVERSE FOR CERTAIN DEFINITIONS THIS IS TO CERTIFY that is the owner of FULLY PAID AND NON-ASSESSABLE SHARES OF % NONCUMULATIVE PERPETUAL MONTHLY INCOME PREFERRED STOCK, SERIES E, WITH A PAR VALUE OF $1 EACH, OF FIRST BANCORP., transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: /s/ Carmen Gabriella Szendrey-Ramos /s/ Angel Alvarez-Perez Secretary [First BanCorp. Seal] President COUNTERSIGNED AND REGISTERED: Bank of New York TRANSFER AGENT AND REGISTRAR BY: AUTHORIZED SIGNATURE FIRST BANCORP. The Corporation will furnish without charge to each shareholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series which the Corporation is authorized to issue and the qualifications, limitations or restrictions of such preferences and/or rights. Any request should be made to the Secretary of the Corporation. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT -__________CUSTODIAN___________ TEN ENT - as tenant by the entireties (Cust) (Minor) JT TEN - as joint tenants with rights of survivorship Under Uniform Gifts to Minors and not as tenants in common Act_____________________________ Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED,_________________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - --------------------------------------- - -------------------------------------------------------------------------------- Please print or typewrite name and address, including postal zip code of assignee. - -------------------------------------------------------------------------------- - ------------------------------------------------Shares of the capital stock represented by the within certificate, and do hereby irrevocably constitute and appoint---------------------------------------------------------------Attorney, to transfer said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated,_____________________ ------------------------------- EX-4.2 5 g84776exv4w2.txt FORM OF CERTIFICATE OF DESIGNATION EXHIBIT 4.2 CERTIFICATE OF DESIGNATION OF THE BOARD OF DIRECTORS OF FIRST BANCORP _____% NONCUMULATIVE PERPETUAL MONTHLY INCOME PREFERRED STOCK, SERIES E (PURSUANT TO ARTICLE 5.01 OF THE GENERAL CORPORATION LAW OF THE COMMONWEALTH OF PUERTO RICO) We, the undersigned, Annie Astor-Carbonell and Carmen Gabriella Szendrey-Ramos, the Senior Executive Vice President and Chief Financial Officer and the Secretary, respectively of FIRST BANCORP. (hereinafter called the "Corporation"), a corporation duly organized and existing under the laws of the Commonwealth of Puerto Rico, do hereby certify that, pursuant to the authority conferred upon the Board of Directors of the Corporation by the Certificate of Incorporation of the Corporation and resolutions adopted by the Board of Directors creating a committee thereof known as the "Pricing Committee", the said Pricing Committee on September __, 2003 adopted the following resolutions creating a series of ________ shares of Preferred Stock designated as the "____% Noncumulative Perpetual Monthly Income Preferred Stock, Series E." RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation in accordance with the provisions of its Certificate of Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created. FURTHER RESOLVED, that the Pricing Committee designated by the Board of Directors has determined that the preferences and relative, participating, optional or other special rights of the shares of such series of Preferred Stock, and the qualifications, limitations or restrictions thereof, as stated and expressed herein, are under the circumstances prevailing on the date hereof fair and equitable to all the existing shareholders of the Corporation. FURTHER RESOLVED, that the designation and amount of such series of Preferred Stock and the voting powers, preferences and relative, participating, optional or other special rights of the shares of such series of Preferred Stock, and the qualifications, limitations or restrictions thereof are as follows: A. DESIGNATION AND AMOUNT The shares of such series of Preferred Stock shall be designated as the "____% Noncumulative Perpetual Monthly Income Preferred Stock, Series E" (hereinafter called the "Series E Preferred Stock"), and the number of authorized shares constituting such series shall be ___________. B. DIVIDENDS 1. Holders of record of the Series E Preferred Stock ("Holders") will be entitled to receive, when, as and if declared by the Board of Directors of the Corporation or an authorized committee thereof (the "Board of Directors"), out of funds of the Corporation legally available therefor, noncumulative cash dividends at the annual rate per share of _____% of their liquidation preferences, or $0.__________ per share per month, with each aggregate payment made to each record holder of the Series E Preferred Stock being rounded to the next lowest cent. 2. Dividends on the Series E Preferred Stock will accrue from their date of original issuance and will be payable (when, as and if declared by the Board of Directors of the Corporation out of funds of the Corporation legally available therefor) monthly in arrears in United States dollars commencing on _________, 2003, and on the last day of each calendar month of each year thereafter to the holders of record of the Series E Preferred Stock as they appear on the books of the Corporation on the fifteenth (15th) day of the month for which the dividends are payable. In the case of the dividend payable on _________, 2003, such dividend shall cover the period from the date of issuance of the Series E Preferred Stock to __________, 2003. In the event that any date on which dividends are payable is not a Business Day, then payment of the dividend payable on such date will be made on the next succeeding Business Day without any interest or other payment in respect of any such delay, except that, if such Business Day is in the next succeeding calendar year, such payment will be made on the Business Day immediately preceding the relevant date of payment, in each case with the same force and effect as if made on such date. A "Business Day" is a day other than a Saturday, Sunday or a general bank holiday in San Juan, Puerto Rico or New York, New York. 3. Dividends on the Series E Preferred Stock will be noncumulative. The Corporation is not obligated or required to declare or pay dividends on the Series E Preferred Stock, even if it has funds available for the payment of such dividends. If the Board of Directors of the Corporation does not declare a dividend payable on a dividend payment date in respect of the Series E Preferred Stock, then the holders of such Series E Preferred Stock shall have no right to receive a dividend in respect of the monthly dividend period ending on such dividend payment date and the Company will have no obligation to pay the dividend accrued for such monthly dividend period or to pay any interest thereon, whether or not dividends on such Series E Preferred Stock are declared for any future monthly dividend period. 4. The amount of dividends payable for any monthly dividend period will be computed on the basis of twelve 30-day months and a 360-day year. The amount of dividends payable for any period shorter than a full monthly dividend period will be computed on the basis of the actual number of days elapsed in such period. 5. Subject to any applicable fiscal or other laws and regulations, each dividend payment will be made by dollar check drawn on a bank in New York, New -2- York or San Juan, Puerto Rico and mailed to the record holder thereof at such holder's address as it appears on the register for such Series E Preferred Stock. 6. So long as any shares of the Series E Preferred Stock remain outstanding, the Corporation shall not declare, set apart or pay any dividend or make any other distribution of assets (other than dividends paid or other distributions made in stock of the Corporation ranking junior to the Series E Preferred Stock as to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Corporation) on, or redeem, purchase, set apart or otherwise acquire (except upon conversion or exchange for stock of the Corporation ranking junior to the Series E Preferred Stock as to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Corporation), shares of common stock or of any other class of stock of the Corporation ranking junior to the Series E Preferred Stock as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation, unless (i) all accrued and unpaid dividends on the Series E Preferred Stock for the twelve monthly dividend periods ending on the immediately preceding dividend payment date shall have been paid or are paid contemporaneously and the full monthly dividend on the Series E Preferred Stock for the then current month has been or is contemporaneously declared and paid or declared and set apart for payment, and (ii) the Corporation has not defaulted in the payment of the redemption price of any shares of Series E Preferred Stock called for redemption. 7. When dividends are not paid in full on the Series E Preferred Stock and any other shares of stock of the Corporation ranking on a parity as to the payment of dividends with the Series E Preferred Stock, all dividends declared upon the Series E Preferred Stock and any such other shares of stock of the Corporation will be declared pro rata so that the amount of dividends declared per share on the Series E Preferred Stock and any such other shares of stock will in all cases bear to each other the same ratio that the liquidation preference per share of the Series E Preferred Stock and any such other shares of stock bear to each other. 8. Holders of record of the Series E Preferred Stock will not be entitled to any dividend, whether payable in cash, property or stock, in excess of the dividends provided for herein on the shares of Series E Preferred Stock. C. CONVERSION The Series E Preferred Stock will not be convertible into or exchangeable for any other securities of the Corporation. D. REDEMPTION AT THE OPTION OF THE CORPORATION 1. The shares of the Series E Preferred Stock are not redeemable prior to __________, 2008. On and after that date, the shares of the Series E Preferred Stock will be redeemable in whole or in part from time to time at the option of the Corporation, with -3- the consent of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") to the extent required by D.8 below, upon not less than thirty nor more than sixty days' notice by mail, at the redemption prices set forth below, during the twelve-month periods beginning on ____________ of the years set forth below, plus accrued and unpaid dividends from the dividend payment date immediately preceding the redemption date (without any cumulation for unpaid dividends for prior dividend periods on the Series E Preferred Stock) to the date fixed for redemption.

Year Redemption Price - ---- ---------------- 2008 $25.50 2009 $25.25 2010 $25.00

2. In the event that less than all of the outstanding shares of the Series E Preferred Stock are to be redeemed in any redemption at the option of the Corporation, the total number of shares to be redeemed in such redemption shall be determined by the Board of Directors and the shares to be redeemed shall be allocated pro rata or by lot as may be determined by the Board of Directors or by such other method as the Board of Directors may approve and deem equitable, including any method to conform to any rule or regulation of any national or regional stock exchange or automated quotation system upon which the shares of the Series E Preferred Stock may at the time be listed or eligible for quotation. 3. Notice of any proposed redemption shall be given by the Corporation by mailing a copy of such notice to the holders of record of the shares of Series E Preferred Stock to be redeemed, at their address of record, not more than sixty nor less than thirty days prior to the redemption date. The notice of redemption to each holder of shares of Series E Preferred Stock shall specify the number of shares of Series E Preferred Stock to be redeemed, the redemption date and the redemption price payable to such holder upon redemption, and shall state that from and after said date dividends thereon will cease to accrue. If less than all the shares owned by a holder are then to be redeemed at the option of the Corporation, the notice shall also specify the number of shares of Series E Preferred Stock which are to be redeemed and the numbers of the certificates representing such shares. Any notice which is mailed as herein provided shall be conclusively presumed to have been duly given, whether or not the stockholder receives such notice; and failure duly to give such notice by mail, or any defect in such notice, to the holders of any stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Series E Preferred Stock. 4. Notice having been mailed as aforesaid, from and after the redemption date (unless default be made in the payment of the redemption price for any shares to be redeemed), all dividends on the shares of Series E Preferred Stock called for redemption shall cease to accrue and all rights of the holders of such shares as stockholders of the Corporation by reason of the ownership of such shares (except the right to receive the -4- redemption price, on presentation and surrender of the respective certificates representing the redeemed shares), shall cease on the redemption date, and such shares shall not after the redemption date be deemed to be outstanding. In case less than all the shares represented by such certificate are redeemed, a new certificate shall be issued without cost to the holder thereof representing the unredeemed shares. 5. At its option, the Corporation may, on or prior to the redemption date, irrevocably deposit the aggregate amount payable upon redemption of the shares of the Series E Preferred Stock to be redeemed with a bank or trust company designated by the Board of Directors having its principal office in New York, New York, San Juan, Puerto Rico, or any other city in which the Corporation shall at that time maintain a transfer agency with respect to its capital stock, and having a combined capital and surplus (as shown by its latest published financial statement) of at least $50,000,000 (hereinafter referred to as the "Depositary"), to be held in trust by the Depositary for payment to the holders of the shares of the Series E Preferred Stock then to be redeemed. If such deposit is made and the funds so deposited are made immediately available to the holders of the shares of the Series E Preferred Stock to be redeemed, the Corporation shall thereupon be released and discharged (subject to the provisions of Section D.6) from any obligation to make payment of the amount payable upon redemption of the shares of the Series E Preferred Stock to be redeemed, and the holders of such shares shall look only to the Depositary for such payment. 6. Any funds remaining unclaimed at the end of two years from and after the redemption date in respect of which such funds were deposited shall be returned to the Corporation forthwith and thereafter the holders of shares of the Series E Preferred Stock called for redemption with respect to which such funds were deposited shall look only to the Corporation for the payment of the redemption price thereof. Any interest accrued on any funds deposited with the Depositary shall belong to the Corporation and shall be paid to it from time to time on demand. 7. Any shares of the Series E Preferred Stock which shall at any time have been redeemed shall, after such redemption, have the status of authorized but unissued shares of Preferred Stock, without designation as to series, until such shares are once more designated as part of a particular series by the Board of Directors. 8. To the extent required to have the Series E Preferred Stock treated as Tier 1 capital for bank regulatory purposes or otherwise required by applicable regulations of the Federal Reserve Board, the shares of Series E Preferred Stock may not be redeemed by the Company without the prior consent of the Federal Reserve Board. E. LIQUIDATION PREFERENCE 1. Upon any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation, the then record holders of shares of Series E Preferred Stock will be entitled to receive out of the assets of the Corporation available for distribution to -5- shareholders, before any distribution is made to holders of common stock or any other equity securities of the Corporation ranking junior upon liquidation to the Series E Preferred Stock, distributions upon liquidation in the amount of $25.00 per share plus an amount equal to any accrued and unpaid dividends (without any cumulation for unpaid dividends for prior dividend periods on the Series E Preferred Stock) for the current monthly dividend period to the date of payment. Such amount shall be paid to the holders of the Series E Preferred Stock prior to any payment or distribution to the holders of the common stock of the Corporation or any other class of stock or series thereof of the Corporation ranking junior to the Series E Preferred Stock in respect of dividends or as to the distribution of assets upon liquidation. 2. If upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the amounts payable with respect to the Series E Preferred Stock and any other shares of stock of the Corporation ranking as to any such distribution on a parity with the Series E Preferred Stock are not paid in full, the holders of the Series E Preferred Stock and of such other shares will share ratably in any such distribution of assets of the Corporation in proportion to the full liquidation preferences to which each is entitled. After payment of the full amount of the liquidation preference to which they would otherwise be entitled, the holders of shares of Series E Preferred Stock will not be entitled to any further participation in any distribution of assets of the Corporation. 3. Neither the consolidation or merger of the Corporation with any other corporation, nor any sale, lease or conveyance of all or any part of the property or business of the Corporation, shall be deemed to be a liquidation, dissolution, or winding up of the Corporation. F. VOTING RIGHTS 1. Except as described in this Section F, or except as required by applicable law, holders of the Series E Preferred Stock will not be entitled to receive notice of or attend or vote at any meeting of stockholders of the Corporation. 2. If the Corporation does not pay dividends in full on the Series E Preferred Stock for eighteen monthly dividend periods (whether consecutive or not), the holders of outstanding shares of the Series E Preferred Stock, together with the holders of any other shares of stock of the Corporation having the right to vote for the election of directors solely in the event of any failure to pay dividends, acting as a single class without regard to series, will be entitled, by written notice to the Corporation given by the holders of a majority in liquidation preference of such shares or by ordinary resolution passed by the holders of a majority in liquidation preference of such shares present in person or by proxy at a separate general meeting of such holders convened for the purpose, to appoint two additional members of the Board of Directors of the Corporation, to remove any such member from office and to appoint another person in place of such member. Not later than 30 days after such entitlement arises, if written notice by a majority of the holders of such shares has not been given as provided for in the preceding sentence, the Board of -6- Directors or an authorized committee thereof will convene a separate general meeting for the above purpose. If the Board of Directors or such authorized committee fails to convene such meeting within such 30-day period, the holders of 10% of the total aggregate outstanding shares of the Series E Preferred Stock and any such other stock will be entitled to convene such meeting. The provisions of the Certificate of Incorporation and By-laws of the Corporation relating to the convening and conduct of general meetings of stockholders will apply with respect to any such separate general meeting. Any member of the Board of Directors so appointed shall vacate office if, following the event which gave rise to such appointment, the Corporation shall have resumed the payment of dividends in full on the Series E Preferred Stock and each such other series of stock for twelve consecutive monthly dividend periods. 3. Any amendment, alteration or repeal of the rights, preferences and privileges of the Series E Preferred Stock by way of amendment of the Corporation's Certificate of Incorporation or otherwise (including, without limitation, the authorization or issuance of any shares of the Corporation ranking, as to dividend rights or rights on liquidation, winding up and dissolution, senior to the Series E Preferred Stock) which would materially and adversely affect the powers, preferences or special rights of the Series E Preferred Stock shall not be effective (unless otherwise required by applicable law) except with the consent in writing of the holders of at least two thirds of the outstanding aggregate liquidation preference of the outstanding shares of the Series E Preferred Stock or with the sanction of a special resolution passed at a separate general meeting by the holders of at least two thirds of the aggregate liquidation preference of the outstanding shares of the Series E Preferred Stock. Notwithstanding the foregoing, the Corporation may, without the consent or sanction of the holders of the Series E Preferred Stock, authorize and issue shares of the Corporation ranking, as to dividend rights and rights on liquidation, winding up and dissolution, on a parity with or junior to the Series E Preferred Stock. The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of the Series E Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption. 4. No vote of the holders of the Series E Preferred Stock will be required for the Corporation to redeem or purchase and cancel the Series E Preferred Stock in accordance with the Certificate of Incorporation of the Corporation. 5. The Corporation will cause a notice of any meeting at which holders of any series of Preferred Stock are entitled to vote to be mailed to each record holder of such series of Preferred Stock. Each such notice will include a statement setting forth (i) the date of such meeting, (ii) a description of any resolution to be proposed for adoption at such meeting on which such holders are entitled to vote and (iii) instructions for deliveries of proxies. -7- 6. Except as set forth in this Section F, holders of Series E Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote as set forth herein) for taking any corporate action. G. RANK The Series E Preferred Stock will, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank (i) senior to all classes of common stock of the Corporation and to all other equity securities issued by the Corporation the terms of which specifically provide that such equity securities will rank junior to the Series E Preferred Stock (or to a number of series of Preferred Stock which includes the Series E Preferred Stock); (ii) on a parity with the Corporation's 7.125% Noncumulative Perpetual Monthly Income Preferred Stock, Series A, the Corporation's 8.35% Noncumulative Perpetual Monthly Income Preferred Stock, Series B, the Corporation's 7.40% Noncumulative Perpetual Monthly Income Preferred Stock, Series C, Corporation's 7.25% Noncumulative Perpetual Monthly Income Preferred Stock, Series D and with all other equity securities issued by the Corporation the terms of which specifically provide that such equity securities will rank on a parity with the Series E Preferred Stock (or with a number of series of Preferred Stock which includes the Series E Preferred Stock); and (iii) junior to all equity securities issued by the Corporation the terms of which specifically provide that such equity securities will rank senior to the Series E Preferred Stock (or to a number of series of Preferred Stock which includes the Series E Preferred Stock). For this purpose, the term "equity securities" does not include debt securities convertible into or exchangeable for equity securities. H. FORM OF CERTIFICATE FOR SERIES E PREFERRED STOCK; TRANSFER AND REGISTRATION 1. The Series E Preferred Stock shall be issued in registered form only. The Corporation may treat the record holder of a share of Series E Preferred Stock, including the Depository Trust Company and its nominee and any other holder that holds such share on behalf of any other person, as such record holder appears on the books of the registrar for the Series E Preferred Stock, as the sole owner of such share for all purposes. 2. The transfer of a share of Series E Preferred Stock may be registered upon the surrender of the certificate evidencing the share of Series E Preferred Stock to be transferred, together with the form of transfer endorsed on it duly completed and executed, at the office of the transfer agent and registrar. 3. Registration of transfers of shares of Series E Preferred Stock will be effected without charge by or on behalf of the Corporation, but upon payment (or the giving of such indemnity as the transfer agent and registrar may require) in respect of any tax or other governmental charges which may be imposed in relation to it. -8- 4. The Corporation will not be required to register the transfer of a share of Series E Preferred Stock after such share has been called for redemption. I. REPLACEMENT OF LOST CERTIFICATES If any certificate for a share of Series E Preferred Stock is mutilated or alleged to have been lost, stolen or destroyed, a new certificate representing the same share shall be issued to the holder upon request subject to delivery of the old certificate or, if alleged to have been lost, stolen or destroyed, compliance with such conditions as to evidence, indemnity and the payment of out-of-pocket expenses of the Corporation in connection with the request as the Board of Directors of the Corporation may determine. J. NO PREEMPTIVE RIGHTS Holders of the Series E Preferred Stock will have no preemptive or preferential rights to purchase any securities of the Corporation. K. NO REPURCHASE AT THE OPTION OF HOLDERS; MISCELLANEOUS Holders of Series E Preferred Stock will have no right to require the Corporation to redeem or repurchase any shares of Series E Preferred Stock, and the shares of Series E Preferred Stock are not subject to any sinking fund or similar obligation. The Corporation may, at its option, purchase shares of the Series E Preferred Stock from holders thereof from time to time, by tender, in privately negotiated transactions or otherwise. [REST OF PAGE IS INTENTIONALLY LEFT BLANK] -9- The undersigned hereby certify that the capital of the Corporation will not be reduced under or by reason of the adoption of the above resolutions providing for the creation of the above described series of Preferred Stock. IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be hereunto affixed and this Certificate to be signed by Annie Astor-Carbonell, its Senior Executive Vice President and Chief Financial Officer, and Carmen Gabriella Szendrey - Ramos, its Secretary, this ____ day of September, 2003. FIRST BANCORP. By:____________________________ Annie Astor-Carbonell [CORPORATE SEAL] By:_______________________________ Carmen Gabriella Szendrey-Ramos -10- EX-5.1 6 g84776exv5w1.txt OPINION RE: LEGALITY & CONSENT EXHIBIT 5.1 FIDDLER GONZALEZ & RODRIGUEZ, P.S.C. BANCO BILBAO VIZCAYA BUILDING 254 MUNOZ RIVERA AVENUE 6TH FLOOR SAN JUAN, PUERTO RICO 00918 September 4, 2003 First BanCorp. 1519 Ponce De Leon Avenue San Juan, Puerto Rico 00908-0146 Dear Sirs: We have acted as counsel to First BanCorp., a Puerto Rico corporation (the "Company"), with respect to the shelf Registration Statement on Form S-3 (SEC File No. 333-75682) (the "Registration Statement") under which the Company will undertake a public offering of up to 4,600,000 shares (the "Shares") of Noncumulative Perpetual Monthly Income Preferred Stock, Series E, $1.00 par value per share, of the Company. In connection with such representation as your counsel, we have examined such documents, corporate records and other instruments, and such questions of law, as we have deemed necessary or appropriate for the purposes of this opinion, including but not limited to, the prospectus supplement relating to the Shares contained in the Registration Statement (the "Prospectus Supplement"). The Prospectus Supplement is going to be filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Act"). Upon the basis of such examination, we are of the opinion that when the certificate of resolutions containing the designation of the relative rights and preferences of the Shares has been duly filed with the Department of State of the Commonwealth of Puerto Rico, the Shares have been issued in accordance with the authorization of the Board of Directors of the Company, and when the Shares have been duly countersigned by the Company's transfer agent and registrar and sold and delivered as contemplated by the Registration Statement and the Underwriting Agreement referred to in the Prospectus Supplement, the Shares will be duly authorized and validly issued, fully-paid and nonassessable when delivered against payment therefor. First BanCorp. September 4, 2003 Page 2 We are members of the Bar of the Commonwealth of Puerto Rico. The opinions expressed above are limited to the laws of the Commonwealth of Puerto Rico and any applicable Federal laws and we do not purport to be experts in, or to render any opinions with respect to, the laws of any state or other jurisdiction other than the laws of the Commonwealth of Puerto Rico and the Federal laws of the United States of America. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading "Legal Matters" in the Prospectus Supplement contained in the Registration Statement. In giving the foregoing consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Fiddler Gonzalez & Rodriguez, P.S.C. EX-8.1 7 g84776exv8w1.txt OPINION RE TAX MATTERS EXHIBIT 8.1 FIDDLER GONZALEZ & RODRIGUEZ, P.S.C. BANCO BILBAO VIZCAYA BUILDING 254 MUNOZ RIVERA AVENUE 6TH FLOOR SAN JUAN, PUERTO RICO 00918 September 4, 2003 First BanCorp. 1519 Ponce De Leon Avenue San Juan, Puerto Rico 00908-0146 Dear Sirs: We have acted as counsel to First BanCorp., a Puerto Rico corporation (the "Company"), with respect to the shelf Registration Statement on Form S-3 (SEC File No. 333-75682) (the "Registration Statement") under which the Company will undertake a public offering of up to 4,600,000 shares (the "Shares") of Noncumulative Perpetual Monthly Income Preferred Stock, Series E, $1.00 par value per share, of the Company. We have examined the prospectus supplement relating to the Shares contained in the Registration Statement (the "Prospectus Supplement"), which is going to be filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Act"), and we have reviewed the discussion of certain Federal and Puerto Rico income tax considerations of the proposed offering described in the Prospectus Supplement (the "Tax Discussion") appearing under the captions "Taxation," "Puerto Rico Taxation" and "United States Taxation." We have also reviewed such other documents and instruments and have examined such questions of law as we have considered necessary for the purposes of this opinion. In addition, we have relied on certificates of officers of the Company as to certain factual matters. The Tax Discussion represents our opinion regarding the material Federal and Puerto Rico tax consequences described therein. Our opinion is based upon the review of the Prospectus Supplement and of applicable Federal and Puerto Rico income tax statutes, regulations, rulings and decisions, as now in effect. A change in any of the foregoing could necessitate a change in our opinion. In addition, our First BanCorp. September 4, 2003 Page 2 opinion pertains only to the accuracy of the statements of law contained in the Tax Discussion. As to statements of fact, we are relying on your representation that such factual statements are accurate. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading "Taxation" in the Prospectus Supplement contained in the Registration Statement. In giving the foregoing consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Fiddler Gonzalez & Rodriguez, P.S.C. EX-12.1 8 g84776exv12w1.txt STATEMENT RE: COMPUTATION OF RATIOS & EARNINGS EXHIBIT 12.1 FIRST BANCORP RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS- EXCLUDING INTEREST ON DEPOSITS (In thousands)

6/30/03 2002 2001 2000 1999 1998 EARNINGS: Net Income before cumulative effect of accounting change $ 65,699 $ 107,956 $ 87,016 $ 67,276 $ 62,075 $ 51,812 Income Taxes 11,900 22,327 20,134 14,761 7,288 4,798 ---------- --------- --------- ---------- -------- -------- Pre-tax income 77,599 130,283 107,150 82,037 69,363 56,610 Plus: Fixed Charges 64,075 141,452 120,856 120,481 92,760 86,814 ---------- --------- --------- ---------- -------- -------- TOTAL EARNINGS $ 141,674 $ 271,735 $ 228,006 $ 202,518 $162,123 $143,424 FIXED CHARGES: Interest expense $ 119,404 $ 273,184 $ 280,201 $ 272,615 $183,330 $155,130 Less: Interest on deposits (56,217) (133,235) (160,758) (153,283) (90,489) (70,418) Interest capitalized -- -- -- -- -- -- Rental expense relating to operating leases (1/3 of rentals) 888 1,503 1,413 1,347 1,130 1,053 Net amortized premiums/discounts on debt -- -- -- (198) (1,211) -- Net capitalized premiums/discounts on debt -- -- -- -- -- 1,049 ---------- --------- --------- ---------- -------- --------

TOTAL FIXED CHARGES BEFORE PREFERRED DIVIDENDS 64,075 141,452 120,856 120,481 92,760 86,814 Preferred Dividend Requirements 13,502 26,406 16,508 7,408 4,275 -- Ratio of pre-tax income to net income 1.181 1.207 1.231 1.219 1.117 -- -------- -------- -------- -------- -------- PREFERRED DIVIDEND FACTOR 15,948 31,867 20,328 9,033 4,777 -- -------- -------- -------- -------- -------- -------- TOTAL FIXED CHARGES AND PREFERRED STOCK DIVIDENDS $ 80,023 $173,319 $141,184 $129,514 $ 97,537 $ 86,814 RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS 1.77 1.57 1.61 1.56 1.66 1.65 FIRST BANCORP RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS- INCLUDING INTEREST ON DEPOSITS (In thousands)

6/30/03 2002 2001 2000 1999 1998 EARNINGS: Net Income before cumulative $ 65,699 $ 107,956 $ 87,016 $ 67,276 $ 62,075 $ 51,812 effect of accounting charge Income Taxes 11,900 22,327 20,134 14,761 7,288 4,798 --------- --------- --------- --------- --------- --------- Pre-tax income 77,599 130,283 107,150 82,037 69,363 56,610 Plus: Fixed Charges 120,292 274,687 281,614 273,764 183,249 157,232 --------- --------- --------- --------- --------- --------- TOTAL EARNINGS $ 197,891 $ 404,970 $ 388,764 $ 355,801 $ 252,612 $ 213,842 FIXED CHARGES: Interest expense $ 119,404 $ 273,184 $ 280,201 $ 272,615 $ 183,330 $ 155,130 Interest capitalized -- -- -- -- -- -- Rental expense relating to operating leases (1/3 of rentals) 888 1,503 1,413 1,347 1,130 1,053 Net amortized premiums/discounts on debt -- -- -- (198) (1,211) -- Net capitalized premiums/discounts on debt -- -- -- -- -- 1,049 --------- --------- --------- --------- --------- --------- TOTAL FIXED CHARGES BEFORE PREFERRED DIVIDENDS 120,292 274,687 281,614 273,764 183,249 157,232

Preferred Dividend Requirements 13,502 26,406 16,508 7,408 4,275 -- Ratio of pre-tax income to net income 1.181 1.207 1.231 1.219 1.117 -- -------- -------- -------- -------- -------- PREFERRED DIVIDEND FACTOR 15,948 31,867 20,328 9,033 4,777 -- -------- -------- -------- -------- -------- --------- TOTAL FIXED CHARGES AND PREFERRED STOCK DIVIDENDS $136,240 $306,554 $301,942 $282,797 $188,026 $ 157,232 RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS 1.45 1.32 1.29 1.26 1.34 1.36 EX-23.1 9 g84776exv23w1.txt CONSENT OF PRICE WATERHOUSE COOPERS LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-75682) of First BanCorp. of our report dated March 7, 2003 relating to the financial statements as of December 31, 2002 and 2001 and for each of the three years in the period ending December 31, 2002, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP San Juan, Puerto Rico August 20, 2003 -----END PRIVACY-ENHANCED MESSAGE-----

EX-1.1

                                                                     EXHIBIT 1.1

                                4,000,000 Shares

                                  FIRST BANCORP

    _____ % Noncumulative Perpetual Monthly Income Preferred Stock, Series E

                             UNDERWRITING AGREEMENT

UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO
As lead underwriter of the several Underwriters
named in Schedule 1
American International Plaza, PH
250 Munoz Rivera Avenue
San Juan, Puerto Rico 00918

Ladies and Gentlemen:

         FIRST BANCORP, a corporation organized under the laws of Puerto Rico
(the "Company"), proposes to sell to you and the other underwriters named in
Schedule 1 (collectively, the "Underwriters"), for whom you are acting as
representative (the "Representative"), an aggregate of 4,000,000 shares (the
"Firm Shares") of the Company's ____% Noncumulative Perpetual Monthly Income
Preferred Stock, Series E to be issued by the Company (the "Preferred Stock").
The Company also has agreed to grant to you and the other Underwriters an option
(the "Option") to purchase up to an additional 600,000 shares of Preferred
Stock (the "Option Shares") on the terms and for the purposes set forth in
Section 1(b) hereto. The Firm Shares and the Option Shares are hereinafter
collectively referred to as the "Shares."

         The Company hereby confirms its agreements with the Representative and
the other Underwriters as follows:



                                        2

         1.       Agreement to Sell and Purchase.

                  (a)      On the basis of the representations, warranties and
agreements of the Company contained herein and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to the Representative
for the account of the Underwriters, and the Representative agrees to purchase
from the Company on behalf of the Underwriters, at a purchase price of $24.15
per share, the number of Firm Shares set forth above, plus such additional
number of Firm Shares which the Underwriters may become obligated to purchase
pursuant to Section 9 hereof.

                  (b)      Subject to all the terms and conditions of this
Agreement, the Company grants the Option to the Representative as agent of the
Underwriters, to purchase the Option Shares at the same price per share as the
Representative shall pay for the Firm Shares on behalf of the Underwriters. The
Option may be exercised only to cover overallotments in the sale of the Firm
Shares by the Underwriters and may be exercised in whole or in part at any time
and from time to time on or before the thirtieth (30th) day after the date of
this Agreement (or on the next business day if the thirtieth (30th) day is not a
business day), upon notice (the "Option Shares Notice") in writing or by
telephone (confirmed in writing) by the Representative to the Company no later
than 5:00 p.m., New York City time, at least two (2) and no more than five (5)
business days before the date specified for closing in the Option Shares Notice
(the "Option Closing Date") setting forth the aggregate number of Option Shares
to be purchased and the time and date for such purchase. On the Option Closing
Date, the Company will issue and sell to the Representative for the account of
the Underwriters the number of Option Shares set forth in the Option Shares
Notice and Representative will purchase on behalf of the Underwriters such
number of Option Shares as is set forth in the Option Shares Notice and will
allocate the Option Shares purchased among the Underwriters in such manner as
the Representative, in its sole discretion, deems necessary and advisable. The
term "business day" as used in this Agreement means any day in which banks are
open for business in both New York and Puerto Rico.

         2.       Delivery and Payment. Delivery of the Firm Shares shall be
made to the Representative for the accounts of the Underwriters at the office of
Adsuar Muniz Goyco & Besosa, P.S.C., counsel to the Underwriters, Westernbank
World Plaza, 268 Munoz Rivera Ave., Suite 1400, San Juan, P.R. 00918, or such
other place as may be agreed upon by the Company and the Representative, against
payment of the purchase price by wire transfer of immediately available funds to
the bank account designated by the Company. Such payment shall be made at 10:00
a.m., New York City time, on the third (3rd) full business day following the
date of this Agreement, or at such other time on such other date, not later than
seven (7) business days after the date of this Agreement, as may be agreed upon
by the Company and the Representative (such date is hereinafter referred to as
the "Closing Date").


                                       3

Time shall be of the essence and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder.

         To the extent the Option is exercised, delivery of the Option Shares
against payment by the Representative on behalf of the Underwriters (in the
manner specified above) will take place at the offices specified above for the
Closing Date at the time and date (which may be the Closing Date) specified in
the Option Shares Notice.

         Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representative shall request at least two (2) business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least twenty-four (24) hours prior to the Closing
Date or the Option Closing Date, as the case may be.

         Notwithstanding the other provisions of this Section 2, if transactions
in the Shares can be settled through the facilities of the Depository Trust
Company ("DTC"), payment for and delivery of the Shares will be made through the
facilities of DTC.

         The cost of original issue tax stamps, if any, in connection with the
issuance, sale and delivery of the Firm Shares and Option Shares by the Company
to the Representative for the account of the Underwriters shall be borne by the
Company. The Company will pay and save the Representative and the Underwriters
and any subsequent holder of the Shares harmless from any and all liabilities
with respect to or resulting from any failure or delay in paying Federal, state
or Commonwealth of Puerto Rico stamp or other transfer taxes, if any, which may
be payable or determined to be payable in connection with the original issuance,
sale or delivery to such Underwriter of the Firm Shares or Option Shares.

         3.       Representations and Warranties of the Company. The Company
represents, warrants and covenants to the Representative and to each Underwriter
that:

                  (a)      The Company and the Shares meet the requirements for
the use of Form S -3 under the Securities Act of 1933 (the "Act") and the rules
and regulations promulgated thereunder (the "Rules and Regulations"), and the
Company has filed with the Securities and Exchange Commission (the "SEC") a
Registration Statement (as defined below) on such form, including a basic
prospectus, for registration under the Act of the offering and sale of the
Shares. The Company may have filed one or more amendments thereto, and may have
used one or more prospectus supplement(s), each of which has previously been
furnished to you. Such Registration Statement, as so amended, has become
effective. The offering of the Shares is a delayed offering pursuant to Rule 415
of the Rules and Regulations. Although the basic prospectus may not include all
the information with respect to the Shares and the offering

                                       4

thereof required by the Act and the Rules and Regulations to be included in the
prospectus supplement(s), the basic prospectus includes all such information
required by the Act and the Rules and Regulations to be included therein as of
the Effective Date (as defined below). The Company will next file with the SEC
pursuant to Rules 415 and 424(b)(2) or (5) of the Rules and Regulations one or
more prospectus supplement(s). As filed, such prospectus supplement(s) shall
include all required information with respect to the Shares and the
offering thereof and, except to the extent the Representative shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to the Representative prior to the Closing Date or, to the extent not
completed at the Closing Date, shall contain only such specific additional
information and other changes as the Company has advised you, prior to the
Closing Date, will be included or made therein.

                  (b)      The term "Registration Statement" means the
registration statement at the time it became effective (the "Effective Date"),
including all financial statements and schedules and all exhibits, documents
incorporated therein by reference, and all information contained in the basic
prospectus, any preliminary prospectus(es) and any final prospectus
supplement(s) filed with the SEC pursuant to Rule 424(b) of the Rules and
Regulations and including any registration statement filed pursuant to Rule
462(b) of the Rules and Regulations (a "Rule 462 Registration Statement")
increasing the size of the offering. The term "Prospectus" means the basic
prospectus relating to the Shares as filed with the SEC pursuant to Rule 424(b)
of the Rules and Regulations, and includes any preliminary and final prospectus
supplement(s). References herein to any document or any other information
incorporated by reference in the Registration Statement shall include documents
or other information incorporated by reference in the Prospectus. References
herein to the Prospectus shall be deemed to include all documents and
information incorporated by reference therein and shall be deemed to refer to
and include any documents and information filed after the date of such
Prospectus, as the case may be, and so incorporated by reference, under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act").

                  (c)      On the date that the Prospectus was first filed with
the SEC pursuant to Rule 424(b), at all times subsequent to and including the
Closing Date and, if later, the Option Closing Date and when any post-effective
amendment to the Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the SEC, the Registration Statement
and the Prospectus (as amended or as supplemented if the Company shall have
filed with the SEC any amendment or supplement thereto), including the financial
statements included in the Prospectus, did or will comply with all applicable
provisions of the Act and the Rules and Regulations and did or will contain all
statements required to be stated therein in accordance with the Act and the
Rules and Regulations. On the Effective Date and when any post-effective
amendment to the Registration Statement becomes effective, no part of the
Registration Statement or any such amendment did or will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the

                                       5

Prospectus or any amendment or supplement to the Prospectus is filed with the
SEC and at the Closing Date and, if later, the Option Closing Date, the
Prospectus did not or will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(c) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representative specifically for inclusion in the Registration Statement, the
Prospectus or any amendment or supplement thereto. There are no contracts or
other documents required to be filed as exhibits to the Registration Statement
by the Act or the Rules and Regulations that have not been so filed. The
documents which are incorporated by reference in the Prospectus or from which
information is so incorporated by reference, when they became effective or were
filed with the SEC, as the case may be, complied in all material respects with
the requirements of the Act and the Rules and Regulations or the Exchange Act
and the rules and regulations thereunder, as applicable, and did not, when such
documents were so filed, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and any documents so filed and incorporated by reference
subsequent to the Effective Date shall, when they are filed with the SEC,
conform in all material respects with the requirements of the Act and the Rules
and Regulations and the Exchange Act and the rules and regulations thereunder,
as applicable.

                  (d)      The only directly or indirectly controlled
subsidiaries of the Company (each, a "Subsidiary" and collectively, the
"Subsidiaries") are FirstBank Puerto Rico, First Federal Financial Corp., First
Leasing and Rental Corporation, FirstBank Insurance Agency, Inc., FirstBank
Insurance Agency V.I., Inc. and First Trade, Inc. Except as set forth in the
Prospectus or as acquired in connection with the exercise of its rights as a
creditor, or pursuant to a bona fide collateral pledge arrangement, neither the
Company nor any Subsidiary owns, nor at the Closing Date and the Option Closing
Date, will own an interest in any corporation, partnership, trust, joint venture
or other business entity other than passive, non-controlling equity investments
permitted under the applicable laws and regulations. The Company has been and,
at the Closing Date and Option Closing Date, will be duly organized and validly
existing as a corporation under the laws of the Commonwealth of Puerto Rico and
is and, at the Closing Date and Option Closing Date, will be in good standing
with the Commonwealth of Puerto Rico. The Company is treated as a bank holding
company under the Bank Holding Company Act of 1956 (the "BHCA") and is and, at
the Closing Date and Option Closing Date will be in good standing with the Board
of Governors of the Federal Reserve System (the "Federal Reserve"). Each of the
Subsidiaries is and, at the Closing Date and Option Closing Date, will be,
respectively, a commercial bank, a finance company, a leasing and rental
company, an insurance agency, an insurance agency and a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation, and are duly authorized to conduct
therein their respective businesses. Each of

                                       6

the Company and its Subsidiaries is and, at the Closing Date and the Option
Closing Date, will be duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
or use of its property and assets makes such qualification necessary, except
where the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects results of
operations or business affairs of the Company and its Subsidiaries taken as a
whole (each, a "Material Adverse Effect").

                  (e)      The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar rights. The
Shares to be issued and sold by the Company will be, upon such issuance and
payment therefor, duly authorized, validly issued, fully paid and nonassessable
and will not be subject to any preemptive or similar rights. The Company has,
and, upon completion of the sale of the Shares, will have, an authorized, issued
and outstanding capitalization as set forth in the Registration Statement and
the Prospectus. The description of the securities of the Company in the
Registration Statement and the Prospectus is, and at the Closing Date and, if
later, the Option Closing Date, will be, complete and accurate in all respects.
No holders of securities of the Company are entitled to have such securities
registered under the Registration Statement, except where such rights have been
waived.

                  (f)      The consolidated financial statements and the related
notes of the Company included in the Registration Statement or incorporated
therein by reference and the Prospectus present fairly the financial condition
of the Company and its Subsidiaries as of the dates indicated and the
consolidated results of operations, and cash flows of the Company and its
Subsidiaries for the periods covered thereby, all in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the entire periods involved. PricewaterhouseCoopers LLP (the "Accountants"), who
have reported on those of such financial statements and related notes which are
audited, are independent accountants with respect to the Company and its
Subsidiaries within the meaning of the Act and the applicable Rules and
Regulations.

                  (g)      The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

                                       7

                  (h)      Except as set forth in the Registration Statement and
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date
and, if later, the Option Closing Date, (i) there has not been, and will not
have been, any Material Adverse Effect, (ii) neither the Company nor any of its
Subsidiaries has entered into, or will have entered into any material
transactions other than pursuant to this Agreement, and (iii) the Company has
not, and will not have, paid or declared any dividends or other distributions of
any kind on any class of its capital stock, except for the payment or
declaration of quarterly dividends on the Company's common stock (the "Common
Stock") and payment or declaration of monthly dividends on its outstanding
series of preferred stock, both in the ordinary course of its business.

                  (i)      The Company and each of its Subsidiaries have good
and marketable title to all properties and assets described in the Registration
Statement, including the documents incorporated by reference therein, and the
Prospectus, as owned by it, free and clear of all liens, security interests,
restrictions, pledges, encumbrances, charges, equities, claims, easements,
leases and tenancies (collectively, "Encumbrances") other than those described
in the Registration Statement, or in the documents incorporated by reference
therein, and the Prospectus or those that will not materially affect the value
of such properties and assets or will not interfere with the use made and
proposed to be made of such properties and assets. The Company and each of its
Subsidiaries have valid, subsisting and enforceable leases for the properties
and assets described in the Registration Statement or in the documents
incorporated by reference therein, and the Prospectus as leased by them, free
and clear of all Encumbrances, other than those described in the Registration
Statement or in the documents incorporated by reference therein, and the
Prospectus or those that will not materially affect the value of such properties
and assets or will not interfere with the use made and proposed to be made of
such properties and assets.

                  (j)      The Company and its Subsidiaries are not required to
be registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act").

                  (k)      Except as set forth in the Registration Statement, or
incorporated therein by reference, and the Prospectus, there are no actions,
suits, arbitrations, claims, governmental or other proceedings (formal or
informal), or investigations pending or, to the Company's knowledge, threatened
against or affecting the Company or any of its Subsidiaries, or any directors,
officers or shareholders of the Company or any of its Subsidiaries in their
respective capacities as such, or any of the properties or assets owned or
leased by the Company or any of its Subsidiaries, before or by any Federal,
state or Commonwealth of Puerto Rico court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign
(collectively, a "Governmental Body"), wherein an unfavorable ruling, decision
or finding would have a Material Adverse Effect and would be required to be
disclosed in the Registration Statement and the Prospectus. Neither the Company
nor any

                                       8

Subsidiary is in violation of, or in default with respect to, any law, rule, or
regulation, or any order, judgment, or decree, except as described in the
Prospectus or such as in the aggregate do not now have and can reasonably be
expected in the future not to have a Material Adverse Effect; nor is the Company
or any Subsidiary presently required under any order, judgment or decree to take
any action in order to avoid any such violation or default.

                  (l)      The Company and each of its Subsidiaries have and, at
the Closing Date and the Option Closing Date, will have all governmental
licenses, permits, consents, orders, approvals, franchises, certificates and
other authorizations (collectively, "Licenses") necessary to carry on their
respective businesses, except where the failure to have such licenses would not
have a Material Adverse Effect, and own or lease their respective properties as
contemplated in the Registration Statement and the Prospectus. The Company and
each of its Subsidiaries have and, at the Closing Date and the Option Closing
Date will have, complied with all laws, regulations and orders applicable to it
or its business, assets and properties, the violations of which would,
individually or in the aggregate, not now have, or could reasonably be expected
in the future to have, a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries is, nor, at the Closing Date and the Option Closing Date, will
be in default (nor has any event occurred which, with notice or lapse of time or
both, would constitute a default) in the due performance and observation of any
term, covenant or condition of any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract or other agreement or instrument
(collectively, a "contract or other agreement") to which they are a party or by
which their respective properties are bound or affected, the violation of which
would individually or in the aggregate have a Material Adverse Effect. There are
no governmental proceedings or actions pending or to be threatened for the
purpose of suspending, modifying or revoking any License held by the Company and
its Subsidiaries.

                  (m)      No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in connection
with the issuance and sale of the Shares by the Company, except such as have
been obtained and such as may be required under state or Commonwealth of Puerto
Rico securities or blue sky laws or the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Shares to be sold hereby.

                  (n)      The Company has full power (corporate and other) and
authority to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with its terms, except as rights to indemnity and contribution may be
limited by applicable laws. Except as disclosed in the Registration Statement
and the Prospectus, the execution, delivery and the performance of this
Agreement and the

                                       9

consummation of the transactions contemplated hereby will not result in the
creation or imposition of any Encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries pursuant to the terms or provisions
of, or result in a breach or violation of or conflict with any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, (i) the Certificate of Incorporation or By-laws of the
Company, in each case as amended, or (ii) any contract or other agreement to
which the Company or any of its Subsidiaries is a party or by which it or any of
the respective assets or properties are bound or affected, the violation of
which would individually or in the aggregate have a Material Adverse Effect, or
(iii) any judgment, ruling, decree, order, law, statute, rule or regulation of
any Governmental Body applicable to the Company or any of its Subsidiaries or
their respective businesses or properties, the violation of which would
individually or in the aggregate have a Material Adverse Effect.

                  (o)      No statement, representation, or warranty made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representative was or will be, when made,
inaccurate, untrue or incorrect in any material respect. Each certificate signed
by an officer of the Company and delivered to the Representative or counsel for
the Underwriters shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.

                  (p)      Neither the Company nor any of its directors,
officers or affiliates has taken, nor will he, she or it take, directly or
indirectly, any action designed, or which might reasonably be expected in the
future, to cause or result in, under the Act or otherwise, or which has
constituted, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares or otherwise.

                  (q)      The Shares have been approved for listing on the New
York Stock Exchange ("NYSE"), subject only to notice of issuance.

                  (r)      Neither the Company nor any of its Subsidiaries is
involved in any collective labor dispute with its employees nor is any such
dispute threatened or imminent.

                  (s)      Neither the Company nor any of its Subsidiaries nor,
to the Company's best knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds of the Company or any Subsidiary in violation of
any law, rule or regulation which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.

                  (t)      The business, operations and facilities of the
Company and its Subsidiaries have been and are being conducted in compliance
with all applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or

                                       10

requirements relating to occupational safety and health, or pollution, or
protection of health or the environment (including, without limitation, those
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous or toxic substances, materials or wastes
into ambient air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state, or the Commonwealth
of Puerto Rico or political subdivision thereof, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto, except where failure to so comply would not have a Material
Adverse Effect; and neither the Company nor any of its Subsidiaries has received
any notice from any governmental instrumentality or any third party alleging any
violation thereof or liability thereunder (including, without limitation,
liability for costs of investigating or remediating sites containing hazardous
substances and/or damages to natural resources). The intended use and occupancy
of each of the facilities owned or operated by the Company and its Subsidiaries
complies in all material respects with all applicable codes and zoning laws and
regulations, and there is no pending or threatened condemnation, zoning change,
environmental or other proceeding or action that will in any material respect
adversely affect the size of, use of, improvements on, construction on, or
access to such facilities.

                  (u)      The Company and each of its Subsidiaries have filed
all foreign, federal, state and local tax returns that are required to be filed
or have requested extensions thereof and have paid all taxes required to be paid
by them and any other assessment, fine or penalty levied against them, to the
extent that any of the foregoing is due and payable, except for any failure to
file that would not have a Material Adverse Effect.

                  (v)      The deposit accounts of FirstBank Puerto Rico, a
Subsidiary of the Company ("FirstBank") are insured by the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation ("FDIC") to
the legal maximum, and no proceeding for the termination or revocation of such
insurance is pending or threatened. FirstBank is a member in good standing of
the Federal Home Loan Bank of New York.

                  (w)      None of the Company, FirstBank, their affiliates, or,
to the Company's knowledge, any of their respective directors or officers is
subject to any order or directive of, or party to any agreement with, any
regulatory agency having jurisdiction with respect to its business or operations
except as disclosed in the Prospectus.

         4.       Agreements of the Company. The Company covenants and agrees
with each of the several Underwriters as follows:

                                       11

                  (a)      The Company will not, during such period as the
Prospectus is required by law to be delivered in connection with sales of the
Shares by an Underwriter or dealer, file any amendment or supplement to the
Registration Statement or the Prospectus, unless a copy thereof shall first have
been submitted to the Representative within a reasonable period of time prior to
the filing thereof and the Representative shall not have objected thereto in
good faith.

                  (b)      The Company will notify the Representative promptly,
and will confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement becomes effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, (iv) of the happening of
any event during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
that in the judgment of the Company makes any statement of a material fact made
in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements therein, in light of the circumstances in which they are
made, not misleading, and (v) of receipt by the Company or any representative or
attorney of the Company of any other communication from the SEC relating to the
Company, the Registration Statement or the Prospectus. If at any time the SEC
shall issue any order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible moment. The Company will
prepare the Prospectus in a form approved by the Representative and will file
such Prospectus pursuant to Rule 424(b) under the Act not later than the SEC's
close of business on the second business day following the execution and
delivery of this Agreement.

                  (c)      If the Company elects to rely upon Rule 462(b) of the
Rules and Regulations, the Company shall file the Rule 462(b) Registration
Statement with the SEC in compliance with Rule 462(b) of the Rules and
Regulations by 10:00 p.m., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing, either pay to the SEC the filing
fee for the Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) of the Rules and
Regulations.

                  (d)      If, at any time when a Prospectus relating to the
Shares is required to be delivered under the Act, any event occurs as a result
of which, in the judgment of the Company or in the opinion of counsel for the
Underwriters, the Prospectus, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or the Registration Statement, as then
amended or supplemented, would include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein not
misleading, or if for any other reason it is necessary at any time to amend or
supplement the Prospectus or the

                                       12

Registration Statement to comply with the Act or the Rules and Regulations, the
Company will promptly notify the Representative thereof and, subject to Section
4(b) hereof, will prepare and file with the SEC, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance.

                  (e)      The Company will furnish to the Representative,
without charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representative, without charge,
for transmittal to each of the other Underwriters, copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.

                  (f)      The Company will comply with all the provisions of
all undertakings contained in the Registration Statement.

                  (g)      From time to time for such period as the Prospectus
is required by the Act to be delivered, the Company will deliver to each of the
Underwriters, without charge, as many copies of the Prospectus or any amendment
or supplement thereto as the Representative may reasonably request. The Company
consents to the use of the Prospectus or any amendment or supplement thereto by
the several Underwriters and by all dealers to whom the Shares may be sold, both
in connection with the offering or sale of the Shares and for any period of time
thereafter during which the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall occur which
in the judgment of the Company or counsel to the Underwriters should be set
forth in the Prospectus in order to make any statement therein, in the light of
the circumstances under which it was made, not misleading, or in the
Registration Statement in order to make any statement therein not misleading, or
if it is necessary to supplement or amend the Prospectus or the Registration
Statement to comply with law, the Company will forthwith prepare and duly file
with the SEC an appropriate supplement or amendment thereto, and deliver to each
of the Underwriters, without charge, such number of copies thereof as the
Representative may reasonably request.

                  (h)      Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representative and its counsel
in connection with the registration or qualification of the Shares for offer and
sale under the securities or blue sky laws of such jurisdictions as the
Representative may reasonably request; provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.

                  (i)      During the period of five (5) years commencing on the
Closing Date, the Company will furnish to the Representative and each other
Underwriter who may so request

                                       13

copies of such financial statements and other periodic and special reports as
the Company may from time to time distribute generally to the holders of any
class of its capital stock, and will furnish to the Representative and each
other Underwriter who may so request a copy of each annual or other report it
shall be required to file with the SEC.

                  (j)      The Company will make generally available to holders
of its securities, as soon as may be practicable, but in no event later than the
last day of the fifteenth full calendar month following the calendar quarter in
which the Closing Date falls, a consolidated earnings statement (which need not
be audited but shall be in reasonable detail) for a period of twelve (12) months
commencing after the Closing Date, and satisfying the provisions of Section
11(a) of the Act (including Rule 158 of the Rules and Regulations).

                  (k)      The Company will apply the net proceeds from the
offering and sale of the Shares in the manner set forth in the Prospectus under
"Use of Proceeds."

                  (l)      The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
Shares to facilitate the sale or resale of any of the Shares.

                                       14

         5.       Expenses.

                  (a)      Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representative, all costs and expenses incidental to
the performance of the obligations of the Company under this Agreement,
including, but not limited to, costs and expenses of or relating to (i) the
preparation, printing and filing by the Company of the Registration Statement
and amendments and exhibits thereto, the Prospectus and any amendment or
supplement to the Registration Statement or the Prospectus, (ii) the preparation
and delivery of certificates representing the Shares, (iii) furnishing
(including costs of shipping and mailing) such copies of the Registration
Statement, the Prospectus and all amendments and supplements thereto, as may be
requested for use in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold, (iv) the listing of the
Shares on the NYSE, (v) any filings required to be made by the Underwriters with
the NASD, (vi) the registration or qualification of the Shares for offer and
sale under the securities or blue sky laws of such jurisdictions designated
pursuant to Section 4(h) and the preparation and printing of preliminary,
supplemental and final blue sky memoranda, (vii) counsel and accountants to the
Company, and (viii) the transfer agent for the Shares.

                  (b)      If the transactions contemplated by this Agreement
are not consummated or if this Agreement is terminated by the Company pursuant
to any of the provisions hereof, the Company will reimburse the Representative
for all of its accountable out-of-pocket fees and expenses (including the fees,
disbursements and other charges of its counsel) incurred by it in connection
herewith.

         6.       Conditions of the Obligations of the Underwriters. The
obligations of each Underwriter hereunder are subject to the following
conditions:

                  (a)      All filings required by Rule 424 of the Rules and
Regulations and Rule 430A shall have been made. If the Company has elected to
rely upon Rule 462(b) of the Rules and Regulations, the Company has filed the
Rule 462(b) Registration Statement by 10:00 p.m., Washington D.C. time, on the
date of this Agreement.

                  (b)      (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the SEC, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Shares under the securities or blue sky laws of any jurisdiction shall be
in effect, and no proceeding for such purpose shall be pending before or
threatened or contemplated by the SEC or the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the SEC or any such authorities shall have been complied with to the
satisfaction of the staff of the SEC or such authorities,

                                       15

and (iv) after the date hereof no amendment or supplement to the Registration
Statement or the Prospectus shall have been filed unless a copy thereof was
first submitted to the Representative and the Representative did not object
thereto in good faith, and the Representative shall have received certificates,
dated the Closing Date and the Option Closing Date and signed by the Chief
Executive Officer of the Company and the Chief Financial Officer of the Company
(who may, as to proceedings threatened, rely upon the best of their information
and belief), to the effect of the foregoing clauses (i), (ii) and (iii).

                  (c)      Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a Material Adverse Effect whether or not arising from transactions in the
ordinary course of business, and (ii) the Company and its Subsidiaries shall not
have sustained any material loss or interference with its business, assets or
properties from fire, explosion, flood or other casualty, or from any labor
dispute or any court or legislative or other governmental action, order or
decree, which is not set forth in the Registration Statement and the Prospectus.

                  (d)      Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
officers, directors or shareholders in their capacities as such, or any of its
assets or properties, before or by any Governmental Body in which litigation or
proceeding an unfavorable ruling, decision or finding would result in a Material
Adverse Effect.

                  (e)      Each of the representations and warranties of the
Company contained herein shall be true and correct at the Closing Date and, with
respect to the Option Shares, at the Option Closing Date, as if made on such
date, and all covenants and agreements herein contained to be performed on the
part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to the Closing Date and, with respect
to the Option Shares, at or prior to the Option Closing Date, shall have been
fully performed, fulfilled or complied with.

                  (f)      The Representative shall have received an opinion,
dated the Closing Date and the Option Closing Date, from Fiddler Gonzalez &
Rodriguez, P.S.C., counsel for the Company in a form and substance reasonably
satisfactory to counsel for the Underwriters

                  (g)      The Representative shall have received an opinion,
dated the Closing Date and the Option Closing Date, from Adsuar Muniz Goyco &
Besosa, P.S.C., counsel to the Underwriters, which opinion shall be satisfactory
in all respects to the Representative.

                  (h)      Concurrently with the execution and delivery of this
Agreement, the Accountants shall have furnished to the Representative a letter,
dated the date of its delivery

                                       16

(the "Original Comfort Letter"), addressed to the Representative and in form and
substance satisfactory to the Representative, to the effect that:

                  (i) they are independent accountants within the meaning of the
                  Act and the applicable Rules and Regulations;

                  (ii) in their opinion, the consolidated financial statements
                  of the Company and its Subsidiaries audited by them and
                  incorporated by reference in the Registration Statement comply
                  as to form in all material respects with the applicable
                  accounting requirements of the Act, the Exchange Act and the
                  Rules and Regulations with respect to registration statements
                  on Form S-3;

                  (iii) on the basis of procedures set forth in detail in such
                  letter, nothing has come to their attention (as of a date not
                  more than five (5) business days prior to the date of the
                  delivery of such letter) as a result of the foregoing
                  procedures that caused them to believe that: (1) the unaudited
                  consolidated interim financial statements, if any,
                  incorporated by reference in the Registration Statement, do
                  not comply as to form in all material respects with the
                  applicable accounting requirements of the Exchange Act and the
                  published rules and regulations thereunder; (2) any material
                  modifications should be made to the unaudited consolidated
                  interim financial statements, if any, incorporated by
                  reference in the Registration Statement, for them to be in
                  conformity with generally accepted accounting principles; (3)
                  (i) at the date of the latest available interim financial data
                  and at a specified date not more than five (5) business days
                  prior to the date of delivery of the Original Comfort Letter
                  there was any change in the capital stock, notes payable,
                  advances from the Federal Home Loan Bank, or federal funds
                  purchased and securities sold under agreements to repurchase
                  or any decreases in the consolidated stockholders' equity
                  (only as to the latest interim financial data) of the Company
                  and its Subsidiaries as compared with amounts shown in the
                  December 31, 2002 balance sheet incorporated by reference in
                  the Registration Statement and (ii) for the period from the
                  latest interim financial statements incorporated by reference
                  in the Registration Statement, to the latest interim financial
                  data available which should be no later than forty (40) days
                  prior to the date of delivery of the Original Comfort Letter,
                  there were any decreases, as compared with the corresponding
                  period in the preceding year, in consolidated net interest
                  income, other income, income before taxes or in the total or
                  per share amounts of net income, except in all instances for
                  changes or decreases which the Registration Statement
                  discloses have occurred or may occur, or they shall state any
                  specific changes or decreases; and

                                       17

                  (iv) the information set forth under the captions "Prospectus
                  Summary - Summary Financial Data," "Preliminary Prospectus
                  Summary - Consolidated Ratio of Earnings to Combined Fixed
                  Charges and Preferred Stock Dividends," "Recent Developments,"
                  "Capitalization," "Selected Financial Data,", "Description of
                  Capital Stock," "Preliminary Prospectus Summary - The
                  Company", "About First BanCorp" and "Consolidated Ratio of
                  Earnings to Combined Fixed Charges and Preferred Stock
                  Dividends," which is expressed in dollars (or percentages
                  derived from such dollar amounts) and has been obtained from
                  accounting records which are subject to the internal controls
                  of the Company's accounting system or which has been derived
                  directly from such accounting records and analysis or
                  computations, is in agreement with such records or
                  computations.

                  At the Closing Date and, as to the Option Shares, the Option
Closing Date, the Accountants shall have furnished to the Representative a
letter, dated the date of its delivery, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the Original Comfort
Letter, that nothing has come to their attention during the period from the date
of the Original Comfort Letter referred to in the prior sentence to a date
(specified in the letter) not more than five business days prior to the Closing
Date or the Option Closing Date, as the case may be, which would require any
change in the Original Comfort Letter if it were required to be dated and
delivered at the Closing Date or the Option Closing Date, as the case may be.

                  In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the date
hereof.

                  (i) At the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to the Representative an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Representative, to the effect that to the best of
their knowledge:

                  (i) Each signer of such certificate has carefully examined the
                  Registration Statement and the Prospectus and (A) as of the
                  date of such certificate, (x) the Registration Statement does
                  not contain any untrue statement of a material fact or omit to
                  state a material fact required to be stated therein or
                  necessary in order to make the statements therein not
                  misleading and (y) the Prospectus does

                                       18

                  not contain any untrue statement of a material fact or omit to
                  state a material fact required to be stated therein or
                  necessary in order to make the statements therein, in light of
                  the circumstances under which they were made, not misleading
                  and (B) since the Effective Date no event has occurred as a
                  result of which it is necessary to amend or supplement the
                  Prospectus in order to make the statements therein not untrue
                  or misleading in any material respect;

                  (ii) Each of the representations and warranties of the Company
                  contained in this Agreement were, when originally made, and
                  are, at the time such certificate is delivered, true and
                  correct in all respects; each of the covenants required herein
                  to be performed by the Company on or prior to the date of such
                  certificate has been duly, timely and fully performed and each
                  condition herein required to be complied with by the Company
                  on or prior to the delivery of such certificate has been duly,
                  timely and fully complied with.

                  (iii) No stop order suspending the effectiveness of the
                  Registration Statement or any post-effective amendment thereto
                  and no order directed at any document incorporated by
                  reference in the Registration Statement or any amendment
                  thereto or the Prospectus has been issued, and no proceedings
                  for that purpose have been instituted or, to the Company's
                  best knowledge, are threatened or contemplated by the SEC.

                  (j)      The Shares shall be qualified for sale in such states
and possessions as the Representative may reasonably request, and each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.

                  (k)      Prior to the Closing Date, the Shares shall have been
accepted for listing on the NYSE, subject only to official notice of issuance.

                  (l)      The Company shall have furnished to the
Representative such certificates, letters and other documents, in addition to
those specifically mentioned herein, as the Representative may have reasonably
requested as to the accuracy and completeness at the Closing Date and the Option
Closing Date of any statement in the Registration Statement or the Prospectus,
as to the accuracy at the Closing Date and the Option Closing Date of the
representations and warranties of the Company, as to the performance by the
Company of its obligations hereunder, or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Underwriters.

                  All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to the

                                       19

Representative. The Company will furnish the Representative with such conformed
copies of such opinions, certificates, letters and other documents as you shall
reasonably request.

         7.       Indemnification and Contribution.

                  (a)      The Company agrees to indemnify and hold harmless
each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls each Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages or liabilities, joint or several
(and actions in respect thereof), to which they, or any of them, may become
subject under the Act or other Federal, state or Commonwealth of Puerto Rico
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement made by the
Company in Section 3 of this Agreement, (ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Shares under the securities or blue sky laws thereof or
filed with the SEC or any securities association or securities exchange (each,
an "Application"), or (iii) the omission or alleged omission to state in the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or any Application a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse, as incurred, each Underwriter and each such
other person for any legal or other expenses reasonably incurred by such
Underwriter or such other person in connection with investigating defending or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability is based solely upon an untrue statement or omission or alleged untrue
statement or omission in any of such documents made in reliance upon and in
conformity with information relating to any Underwriter furnished in writing to
the Company by the Representative on behalf of any Underwriter expressly for
inclusion therein. This indemnity agreement will be in addition to any liability
that the Company might otherwise have. The Company will not, without the prior
written consent of each Underwriter, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
each claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter and each such
other person from all liability arising out of such claim, action, suit or
proceeding.

                                       20

                  (b)      Each Underwriter will indemnify and hold harmless the
Company, and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signed the Registration Statement
against any losses, claims, damages or liabilities (or actions in respect
thereof) to which the Company and any such director, officer or controlling
person may become subject under the Act or other federal, state or Commonwealth
of Puerto Rico statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus or any Application, or material fact required to be stated therein or
(ii) the omission or the alleged omission to state in the Registration Statement
or the Prospectus or any amendment or supplement to the Registration Statement
or the Prospectus, or any Application, a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representative expressly for use therein; and, subject
to the limitation set forth immediately preceding this clause, will reimburse,
as incurred, any legal or other expenses reasonably incurred by the Company and
any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or any action
in respect thereof. The Company acknowledges that, for all purposes under this
Agreement, the statements set forth under the heading "Underwriting" constitute
the only information relating to any Underwriter furnished in writing to the
Company by the Representative on behalf of the Underwriters expressly for
inclusion in the Registration Statement or the Prospectus. This indemnity
agreement will be in addition to any liability that each Underwriter might
otherwise have.

                  (c)      Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party or parties under this Section 7, notify such indemnifying party or parties
of the commencement thereof, but the omission so to notify the indemnifying
party or parties will not relieve it or them from any liability which it or they
may have to any indemnified party under the foregoing provisions of this Section
7 or otherwise unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against an indemnified party and it notifies an
indemnifying party or parties of its commencement, the indemnifying party or
parties against which a claim is made will be entitled to participate therein
and, to the extent that it or they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it

                                       21

and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 7 for any legal or
other expenses other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that in connection with such action the indemnifying party shall not be
liable for the reasonable fees and expenses of more than one separate counsel
(in addition to the fees and expenses of local counsel necessary in connection
with any such proceedings) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representative in the case of
paragraph (a) of this Section 7, representing the indemnified parties under
paragraph (a) who are parties to such action or actions), or (ii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the written consent of the
indemnifying party, unless such indemnified party waived its rights under this
Section 7 in which case the indemnified party may effect such a settlement
without such consent.

                  (d)      If the indemnification provided for in the foregoing
paragraphs of this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties, on the one hand, and the indemnified party, on the other, from the
offering of the Shares or (ii) if, but only if, the allocation provided by the
foregoing clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties on
the one hand, and the indemnified party, on the other, in connection with the
statements or omissions or alleged statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company, on the one hand, and the Underwriters, on the other, shall be
deemed to be in the same proportion as the total proceeds from the offering of
the Shares (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions

                                       22

received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. Relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Representative on behalf of the Underwriters, the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities (or actions in respect
thereof) referred to above in this Section 7(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the total underwriting discounts
and commissions received by it with respect to the Shares purchased by such
Underwriter under this Agreement, less the aggregate amount of any damages that
such Underwriter has otherwise been required to pay in respect of the same or
any substantially similar claim. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act will have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, will have the same rights to contribution as the Company, subject
in each case to the provisions of this paragraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made under this Section 7(d), notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation(s) it or they may have hereunder or otherwise than under this
paragraph (d) or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may otherwise have.
No party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).

                  (e)      The indemnity and contribution agreements contained
in this Section 7 and the representations and warranties of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on

                                       23

behalf of the Underwriters, (ii) acceptance of any of the Shares and payment
therefor or (iii) any termination of this Agreement.

                  (f)      In no case shall the indemnification provided in this
Section 7 be available to protect any person against any liability to which any
such person would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its or his obligations or duties
hereunder, or by reason of its or his reckless disregard of its or his
obligations and duties hereunder.

         8.       Termination. The obligations of the several Underwriters under
this Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, on or prior to the Option Closing Date), by notice
to the Company from the Representative, without liability on the part of any
Underwriter to the Company if, prior to delivery and payment for the Firm Shares
(or the Option Shares, as the case may be), in the sole judgment of the
Representative, (i) trading in the Company's Common Stock or any series of
Preferred Stock or securities generally shall have been suspended by the SEC or
by the NYSE , (ii) minimum or maximum prices shall have been established for the
Company's Common Stock or any series of Preferred Stock or securities generally
on the NYSE, or additional material governmental restrictions, not in force on
the date of this Agreement, shall have been imposed upon trading in securities
generally by any of such market or exchange or by order of the SEC or any court
or other Governmental Authority, (iii) a general banking moratorium shall have
been declared by the United States, New York State, or Commonwealth of Puerto
Rico authorities, or (iv) any material adverse change in the financial or
securities markets in the United States or any outbreak or material escalation
of hostilities or declaration by the United States of a national emergency or
war or other calamity or crisis shall have occurred, the effect of any of which
is such as to make it, in the sole judgment of the Representative, impracticable
or inadvisable to market the Shares on the terms and in the manner contemplated
by the Prospectus. Any termination pursuant to Section 8 shall be without
liability of any party to any other party except as provided in Sections 5(a)
and 7.

         9.       Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Shares or Option Shares hereunder and the
aggregate number of such Shares that such defaulting Underwriter or Underwriters
agreed but failed to purchase is ten (10%) percent or less of the aggregate
number of Firm Shares or Option Shares to be purchased by all of the
Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such Shares
by other persons (who may include one or more of the nondefaulting Underwriters,
including the Representative), but if no such arrangements are made by the
Closing Date or the related Option Closing Date, as the case may be, the other
Underwriters shall be obligated severally in proportion to their respective
commitments hereunder to purchase the Firm Shares or Option Shares that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If one or
more Underwriters so default with respect to an aggregate number of Shares that
is

                                       24

more than ten (10%) percent of the aggregate number of Firm Shares or Option
Shares, as the case may be, to be purchased by all of the Underwriters at such
time hereunder, and if arrangements satisfactory to the Representative are not
made within 36 hours after such default for the purchase by other persons (who
may include one or more of the nondefaulting Underwriters, including the
Representative) of the Shares with respect to which such default occurs, this
Agreement will terminate without liability on the part of any nondefaulting
Underwriter and the Company other than as provided in Section 10 hereof. In the
event of any default by one or more Underwriters as described in this Section 9,
the Representative shall have the right to postpone the Closing Date or the
Option Closing Date, as the case may be, for not more than seven (7) business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Shares or Option Shares, as
the case may be. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 9. Nothing herein shall
relieve any defaulting Underwriter from liability for its default.

         10.      Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, and the several Underwriters set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, any Underwriter or any
controlling person referred to in Section 7 hereof and (ii) delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 5 and 7 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.

         11.      Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered:

                  (a)      If to the Company, to:

                                    First BanCorp.
                                    1519 Ponce de Leon Ave., Penthouse Floors
                                    San Juan, Puerto Rico 00908
                                    Attention:  Annie Astor de Carbonell,
                                    Senior Executive Vice President and
                                    Chief Financial Officer

                           With a copy to:

                                    Fiddler Gonzalez & Rodriguez, P.S.C.
                                    Banco Bilbao Vizcaya Bldg, 6th Floor

                                       25

                                    254 Munoz Rivera Avenue
                                    San Juan, Puerto Rico 00918
                                    Attention:  Aurelio Emanuelli Freese, Esq.

                  (a)      If to the Underwriters, to:

                                    UBS Financial Services Incorporated of
                                    Puerto Rico
                                    American International Plaza, Penthouse
                                    Floor
                                    250 Munoz Rivera Avenue
                                    San Juan, Puerto Rico 00918
                                    Attention:  Jose G. Arias, Managing Director

                           With a copy to:

                                    Adsuar Muniz Goyco & Besosa, P.S.C.
                                    Westernbank World Plaza
                                    268 Munoz Rivera Avenue, Suite 1400
                                    San Juan, Puerto Rico 00918
                                    Attention:  Fernando Goyco-Covas, Esq.

         Any such notice shall be effective only upon receipt. Any notice under
Section 7 or 8 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.

         12.      Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 7 of this Agreement shall
also be for the benefit of directors, officers, employees and agents of, and any
person or persons who control, any Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act and (ii) the indemnities of the
Underwriters contained in Section 7 of this Agreement shall also be for the
benefit of the directors of the Company, the officers of the Company who have
signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Shares from any Underwriter shall be deemed a
successor because of such purchase. This Agreement shall not be assignable by
either party hereto without the prior written consent of the other party.

                                       26

         13.      APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.

         14.      Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         15.      Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings, and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement. No representation, inducement, promise, understanding, condition or
warranty other than those set forth in this Agreement has been made or relied
upon by either party hereto.

         Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.

                                    Very truly yours,

                                    FIRST BANCORP

                                    By: _____________________________
                                    Name:  Annie Astor-Carbonell
                                    Title: Senior Executive Vice President
                                           and Chief Financial Officer

                                       27

Confirmed as of the date first above mentioned:

 UBS FINANCIAL SERVICES
 INCORPORATED OF PUERTO RICO

 By:  ________________________________
 Name:  Carlos V. Ubinas
 Title: Executive Vice President

 By:  ________________________________
 Name:  Jose G. Arias
 Title: Managing Director

 Acting on its behalf and as lead underwriter of the
 several Underwriters named in Schedule 1 hereof.

                                       28

                                   SCHEDULE 1

                                  UNDERWRITERS

UBS Financial Services Incorporated of Puerto Rico

BBVA Capital Markets of Puerto Rico, Inc.

R-G Investments Corporation

Santander Securities Corporation

EX-4.1

                                                                     EXHIBIT 4.1

    % NONCUMULATIVE PERPETUAL MONTHLY INCOME
         PREFERRED STOCK, SERIES E
         PAR VALUE $1.00 PER SHARE

                                             SHARES

                                 FIRST BANCORP.
         INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF PUERTO RICO

                                             CUSIP
                                             SEE REVERSE FOR CERTAIN DEFINITIONS

THIS IS TO CERTIFY that

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF   % NONCUMULATIVE PERPETUAL MONTHLY
INCOME PREFERRED STOCK, SERIES E, WITH A PAR VALUE OF $1 EACH, OF FIRST
BANCORP., transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this certificate properly endorsed. This
certificate is not valid until countersigned and registered by the Transfer
Agent and Registrar.

         WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.

Dated:

/s/ Carmen Gabriella Szendrey-Ramos                      /s/ Angel Alvarez-Perez
         Secretary                 [First BanCorp. Seal]         President

COUNTERSIGNED AND REGISTERED:

         Bank of New York
         TRANSFER AGENT
         AND REGISTRAR

BY:

         AUTHORIZED SIGNATURE



                                 FIRST BANCORP.

         The Corporation will furnish without charge to each shareholder who so
requests the powers, designations, preferences and relative participating,
optional or other special rights of each class of stock or series which the
Corporation is authorized to issue and the qualifications, limitations or
restrictions of such preferences and/or rights. Any request should be made to
the Secretary of the Corporation.

         The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

                                                      
TEN COM      -     as tenants in common                     UNIF GIFT MIN ACT -__________CUSTODIAN___________
TEN ENT      -     as tenant by the entireties                                  (Cust)               (Minor)
JT TEN   -   as joint tenants with rights of survivorship                    Under Uniform Gifts to Minors
                   and not as tenants in common                              Act_____________________________



         Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED,_________________________ hereby sell, assign and transfer
unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
         IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------

- --------------------------------------------------------------------------------

      Please print or typewrite name and address, including postal zip code
of assignee.

- --------------------------------------------------------------------------------

- ------------------------------------------------Shares of the capital stock
represented by the within certificate, and do hereby irrevocably constitute and
appoint---------------------------------------------------------------Attorney,
to transfer said stock on the books of the within-named Corporation with full
power of substitution in the premises.

Dated,_____________________

                                             -------------------------------

EX-4.2

                                                                     EXHIBIT 4.2

                           CERTIFICATE OF DESIGNATION
                   OF THE BOARD OF DIRECTORS OF FIRST BANCORP
                  _____% NONCUMULATIVE PERPETUAL MONTHLY INCOME
                            PREFERRED STOCK, SERIES E

              (PURSUANT TO ARTICLE 5.01 OF THE GENERAL CORPORATION
                     LAW OF THE COMMONWEALTH OF PUERTO RICO)

         We, the undersigned, Annie Astor-Carbonell and Carmen Gabriella
Szendrey-Ramos, the Senior Executive Vice President and Chief Financial Officer
and the Secretary, respectively of FIRST BANCORP. (hereinafter called the
"Corporation"), a corporation duly organized and existing under the laws of the
Commonwealth of Puerto Rico, do hereby certify that, pursuant to the authority
conferred upon the Board of Directors of the Corporation by the Certificate of
Incorporation of the Corporation and resolutions adopted by the Board of
Directors creating a committee thereof known as the "Pricing Committee", the
said Pricing Committee on September __, 2003 adopted the following resolutions
creating a series of ________ shares of Preferred Stock designated as the "____%
Noncumulative Perpetual Monthly Income Preferred Stock, Series E."

                  RESOLVED, that pursuant to the authority expressly granted to
         and vested in the Board of Directors of the Corporation in accordance
         with the provisions of its Certificate of Incorporation, a series of
         Preferred Stock of the Corporation be and it hereby is created.

                  FURTHER RESOLVED, that the Pricing Committee designated by the
         Board of Directors has determined that the preferences and relative,
         participating, optional or other special rights of the shares of such
         series of Preferred Stock, and the qualifications, limitations or
         restrictions thereof, as stated and expressed herein, are under the
         circumstances prevailing on the date hereof fair and equitable to all
         the existing shareholders of the Corporation.

                  FURTHER RESOLVED, that the designation and amount of such
         series of Preferred Stock and the voting powers, preferences and
         relative, participating, optional or other special rights of the shares
         of such series of Preferred Stock, and the qualifications, limitations
         or restrictions thereof are as follows:

         A.       DESIGNATION AND AMOUNT

                  The shares of such series of Preferred Stock shall be
         designated as the "____% Noncumulative Perpetual Monthly Income
         Preferred Stock, Series E" (hereinafter called the "Series E Preferred
         Stock"), and the number of authorized shares constituting such series
         shall be ___________.



         B.       DIVIDENDS

                  1.       Holders of record of the Series E Preferred Stock
         ("Holders") will be entitled to receive, when, as and if declared by
         the Board of Directors of the Corporation or an authorized committee
         thereof (the "Board of Directors"), out of funds of the Corporation
         legally available therefor, noncumulative cash dividends at the annual
         rate per share of _____% of their liquidation preferences, or
         $0.__________ per share per month, with each aggregate payment made to
         each record holder of the Series E Preferred Stock being rounded to the
         next lowest cent.

                  2.       Dividends on the Series E Preferred Stock will accrue
         from their date of original issuance and will be payable (when, as and
         if declared by the Board of Directors of the Corporation out of funds
         of the Corporation legally available therefor) monthly in arrears in
         United States dollars commencing on _________, 2003, and on the last
         day of each calendar month of each year thereafter to the holders of
         record of the Series E Preferred Stock as they appear on the books of
         the Corporation on the fifteenth (15th) day of the month for which the
         dividends are payable. In the case of the dividend payable on
         _________, 2003, such dividend shall cover the period from the date of
         issuance of the Series E Preferred Stock to __________, 2003. In the
         event that any date on which dividends are payable is not a Business
         Day, then payment of the dividend payable on such date will be made on
         the next succeeding Business Day without any interest or other payment
         in respect of any such delay, except that, if such Business Day is in
         the next succeeding calendar year, such payment will be made on the
         Business Day immediately preceding the relevant date of payment, in
         each case with the same force and effect as if made on such date. A
         "Business Day" is a day other than a Saturday, Sunday or a general bank
         holiday in San Juan, Puerto Rico or New York, New York.

                  3.       Dividends on the Series E Preferred Stock will be
         noncumulative. The Corporation is not obligated or required to declare
         or pay dividends on the Series E Preferred Stock, even if it has funds
         available for the payment of such dividends. If the Board of Directors
         of the Corporation does not declare a dividend payable on a dividend
         payment date in respect of the Series E Preferred Stock, then the
         holders of such Series E Preferred Stock shall have no right to receive
         a dividend in respect of the monthly dividend period ending on such
         dividend payment date and the Company will have no obligation to pay
         the dividend accrued for such monthly dividend period or to pay any
         interest thereon, whether or not dividends on such Series E Preferred
         Stock are declared for any future monthly dividend period.

                  4.       The amount of dividends payable for any monthly
         dividend period will be computed on the basis of twelve 30-day months
         and a 360-day year. The amount of dividends payable for any period
         shorter than a full monthly dividend period will be computed on the
         basis of the actual number of days elapsed in such period.

                  5.       Subject to any applicable fiscal or other laws and
         regulations, each dividend payment will be made by dollar check drawn
         on a bank in New York, New

                                       -2-



         York or San Juan, Puerto Rico and mailed to the record holder thereof
         at such holder's address as it appears on the register for such Series
         E Preferred Stock.

                  6.       So long as any shares of the Series E Preferred Stock
         remain outstanding, the Corporation shall not declare, set apart or pay
         any dividend or make any other distribution of assets (other than
         dividends paid or other distributions made in stock of the Corporation
         ranking junior to the Series E Preferred Stock as to the payment of
         dividends and the distribution of assets upon liquidation, dissolution
         or winding up of the Corporation) on, or redeem, purchase, set apart or
         otherwise acquire (except upon conversion or exchange for stock of the
         Corporation ranking junior to the Series E Preferred Stock as to the
         payment of dividends and the distribution of assets upon liquidation,
         dissolution or winding up of the Corporation), shares of common stock
         or of any other class of stock of the Corporation ranking junior to the
         Series E Preferred Stock as to the payment of dividends or the
         distribution of assets upon liquidation, dissolution or winding up of
         the Corporation, unless (i) all accrued and unpaid dividends on the
         Series E Preferred Stock for the twelve monthly dividend periods ending
         on the immediately preceding dividend payment date shall have been paid
         or are paid contemporaneously and the full monthly dividend on the
         Series E Preferred Stock for the then current month has been or is
         contemporaneously declared and paid or declared and set apart for
         payment, and (ii) the Corporation has not defaulted in the payment of
         the redemption price of any shares of Series E Preferred Stock called
         for redemption.

                  7.       When dividends are not paid in full on the Series E
         Preferred Stock and any other shares of stock of the Corporation
         ranking on a parity as to the payment of dividends with the Series E
         Preferred Stock, all dividends declared upon the Series E Preferred
         Stock and any such other shares of stock of the Corporation will be
         declared pro rata so that the amount of dividends declared per share on
         the Series E Preferred Stock and any such other shares of stock will in
         all cases bear to each other the same ratio that the liquidation
         preference per share of the Series E Preferred Stock and any such other
         shares of stock bear to each other.

                  8.       Holders of record of the Series E Preferred Stock
         will not be entitled to any dividend, whether payable in cash, property
         or stock, in excess of the dividends provided for herein on the shares
         of Series E Preferred Stock.

         C.       CONVERSION

                  The Series E Preferred Stock will not be convertible into or
         exchangeable for any other securities of the Corporation.

         D.       REDEMPTION AT THE OPTION OF THE CORPORATION

                  1.       The shares of the Series E Preferred Stock are not
         redeemable prior to __________, 2008. On and after that date, the
         shares of the Series E Preferred Stock will be redeemable in whole or
         in part from time to time at the option of the Corporation, with

                                       -3-



         the consent of the Board of Governors of the Federal Reserve System
         (the "Federal Reserve Board") to the extent required by D.8 below, upon
         not less than thirty nor more than sixty days' notice by mail, at the
         redemption prices set forth below, during the twelve-month periods
         beginning on ____________ of the years set forth below, plus accrued
         and unpaid dividends from the dividend payment date immediately
         preceding the redemption date (without any cumulation for unpaid
         dividends for prior dividend periods on the Series E Preferred Stock)
         to the date fixed for redemption.



Year                                   Redemption Price
- ----                                   ----------------
                                    
2008                                        $25.50
2009                                        $25.25
2010                                        $25.00


                  2.       In the event that less than all of the outstanding
         shares of the Series E Preferred Stock are to be redeemed in any
         redemption at the option of the Corporation, the total number of shares
         to be redeemed in such redemption shall be determined by the Board of
         Directors and the shares to be redeemed shall be allocated pro rata or
         by lot as may be determined by the Board of Directors or by such other
         method as the Board of Directors may approve and deem equitable,
         including any method to conform to any rule or regulation of any
         national or regional stock exchange or automated quotation system upon
         which the shares of the Series E Preferred Stock may at the time be
         listed or eligible for quotation.

                  3.       Notice of any proposed redemption shall be given by
         the Corporation by mailing a copy of such notice to the holders of
         record of the shares of Series E Preferred Stock to be redeemed, at
         their address of record, not more than sixty nor less than thirty days
         prior to the redemption date. The notice of redemption to each holder
         of shares of Series E Preferred Stock shall specify the number of
         shares of Series E Preferred Stock to be redeemed, the redemption date
         and the redemption price payable to such holder upon redemption, and
         shall state that from and after said date dividends thereon will cease
         to accrue. If less than all the shares owned by a holder are then to be
         redeemed at the option of the Corporation, the notice shall also
         specify the number of shares of Series E Preferred Stock which are to
         be redeemed and the numbers of the certificates representing such
         shares. Any notice which is mailed as herein provided shall be
         conclusively presumed to have been duly given, whether or not the
         stockholder receives such notice; and failure duly to give such notice
         by mail, or any defect in such notice, to the holders of any stock
         designated for redemption shall not affect the validity of the
         proceedings for the redemption of any other shares of Series E
         Preferred Stock.

                  4.       Notice having been mailed as aforesaid, from and
         after the redemption date (unless default be made in the payment of the
         redemption price for any shares to be redeemed), all dividends on the
         shares of Series E Preferred Stock called for redemption shall cease to
         accrue and all rights of the holders of such shares as stockholders of
         the Corporation by reason of the ownership of such shares (except the
         right to receive the

                                       -4-



         redemption price, on presentation and surrender of the respective
         certificates representing the redeemed shares), shall cease on the
         redemption date, and such shares shall not after the redemption date be
         deemed to be outstanding. In case less than all the shares represented
         by such certificate are redeemed, a new certificate shall be issued
         without cost to the holder thereof representing the unredeemed shares.

                  5.       At its option, the Corporation may, on or prior to
         the redemption date, irrevocably deposit the aggregate amount payable
         upon redemption of the shares of the Series E Preferred Stock to be
         redeemed with a bank or trust company designated by the Board of
         Directors having its principal office in New York, New York, San Juan,
         Puerto Rico, or any other city in which the Corporation shall at that
         time maintain a transfer agency with respect to its capital stock, and
         having a combined capital and surplus (as shown by its latest published
         financial statement) of at least $50,000,000 (hereinafter referred to
         as the "Depositary"), to be held in trust by the Depositary for payment
         to the holders of the shares of the Series E Preferred Stock then to be
         redeemed. If such deposit is made and the funds so deposited are made
         immediately available to the holders of the shares of the Series E
         Preferred Stock to be redeemed, the Corporation shall thereupon be
         released and discharged (subject to the provisions of Section D.6) from
         any obligation to make payment of the amount payable upon redemption of
         the shares of the Series E Preferred Stock to be redeemed, and the
         holders of such shares shall look only to the Depositary for such
         payment.

                  6.       Any funds remaining unclaimed at the end of two years
         from and after the redemption date in respect of which such funds were
         deposited shall be returned to the Corporation forthwith and thereafter
         the holders of shares of the Series E Preferred Stock called for
         redemption with respect to which such funds were deposited shall look
         only to the Corporation for the payment of the redemption price
         thereof. Any interest accrued on any funds deposited with the
         Depositary shall belong to the Corporation and shall be paid to it from
         time to time on demand.

                  7.       Any shares of the Series E Preferred Stock which
         shall at any time have been redeemed shall, after such redemption, have
         the status of authorized but unissued shares of Preferred Stock,
         without designation as to series, until such shares are once more
         designated as part of a particular series by the Board of Directors.

                  8.       To the extent required to have the Series E Preferred
         Stock treated as Tier 1 capital for bank regulatory purposes or
         otherwise required by applicable regulations of the Federal Reserve
         Board, the shares of Series E Preferred Stock may not be redeemed by
         the Company without the prior consent of the Federal Reserve Board.

         E.       LIQUIDATION PREFERENCE

                  1.       Upon any voluntary or involuntary liquidation,
         dissolution, or winding up of the Corporation, the then record holders
         of shares of Series E Preferred Stock will be entitled to receive out
         of the assets of the Corporation available for distribution to

                                       -5-



         shareholders, before any distribution is made to holders of common
         stock or any other equity securities of the Corporation ranking junior
         upon liquidation to the Series E Preferred Stock, distributions upon
         liquidation in the amount of $25.00 per share plus an amount equal to
         any accrued and unpaid dividends (without any cumulation for unpaid
         dividends for prior dividend periods on the Series E Preferred Stock)
         for the current monthly dividend period to the date of payment. Such
         amount shall be paid to the holders of the Series E Preferred Stock
         prior to any payment or distribution to the holders of the common stock
         of the Corporation or any other class of stock or series thereof of the
         Corporation ranking junior to the Series E Preferred Stock in respect
         of dividends or as to the distribution of assets upon liquidation.

                  2.       If upon any voluntary or involuntary liquidation,
         dissolution or winding up of the Corporation, the amounts payable with
         respect to the Series E Preferred Stock and any other shares of stock
         of the Corporation ranking as to any such distribution on a parity with
         the Series E Preferred Stock are not paid in full, the holders of the
         Series E Preferred Stock and of such other shares will share ratably in
         any such distribution of assets of the Corporation in proportion to the
         full liquidation preferences to which each is entitled. After payment
         of the full amount of the liquidation preference to which they would
         otherwise be entitled, the holders of shares of Series E Preferred
         Stock will not be entitled to any further participation in any
         distribution of assets of the Corporation.

                  3.       Neither the consolidation or merger of the
         Corporation with any other corporation, nor any sale, lease or
         conveyance of all or any part of the property or business of the
         Corporation, shall be deemed to be a liquidation, dissolution, or
         winding up of the Corporation.

         F.       VOTING RIGHTS

                  1.       Except as described in this Section F, or except as
         required by applicable law, holders of the Series E Preferred Stock
         will not be entitled to receive notice of or attend or vote at any
         meeting of stockholders of the Corporation.

                  2.       If the Corporation does not pay dividends in full on
         the Series E Preferred Stock for eighteen monthly dividend periods
         (whether consecutive or not), the holders of outstanding shares of the
         Series E Preferred Stock, together with the holders of any other shares
         of stock of the Corporation having the right to vote for the election
         of directors solely in the event of any failure to pay dividends,
         acting as a single class without regard to series, will be entitled, by
         written notice to the Corporation given by the holders of a majority in
         liquidation preference of such shares or by ordinary resolution passed
         by the holders of a majority in liquidation preference of such shares
         present in person or by proxy at a separate general meeting of such
         holders convened for the purpose, to appoint two additional members of
         the Board of Directors of the Corporation, to remove any such member
         from office and to appoint another person in place of such member. Not
         later than 30 days after such entitlement arises, if written notice by
         a majority of the holders of such shares has not been given as provided
         for in the preceding sentence, the Board of

                                       -6-



         Directors or an authorized committee thereof will convene a separate
         general meeting for the above purpose. If the Board of Directors or
         such authorized committee fails to convene such meeting within such
         30-day period, the holders of 10% of the total aggregate outstanding
         shares of the Series E Preferred Stock and any such other stock will be
         entitled to convene such meeting. The provisions of the Certificate of
         Incorporation and By-laws of the Corporation relating to the convening
         and conduct of general meetings of stockholders will apply with respect
         to any such separate general meeting. Any member of the Board of
         Directors so appointed shall vacate office if, following the event
         which gave rise to such appointment, the Corporation shall have resumed
         the payment of dividends in full on the Series E Preferred Stock and
         each such other series of stock for twelve consecutive monthly dividend
         periods.

                  3.       Any amendment, alteration or repeal of the rights,
         preferences and privileges of the Series E Preferred Stock by way of
         amendment of the Corporation's Certificate of Incorporation or
         otherwise (including, without limitation, the authorization or issuance
         of any shares of the Corporation ranking, as to dividend rights or
         rights on liquidation, winding up and dissolution, senior to the Series
         E Preferred Stock) which would materially and adversely affect the
         powers, preferences or special rights of the Series E Preferred Stock
         shall not be effective (unless otherwise required by applicable law)
         except with the consent in writing of the holders of at least two
         thirds of the outstanding aggregate liquidation preference of the
         outstanding shares of the Series E Preferred Stock or with the sanction
         of a special resolution passed at a separate general meeting by the
         holders of at least two thirds of the aggregate liquidation preference
         of the outstanding shares of the Series E Preferred Stock.
         Notwithstanding the foregoing, the Corporation may, without the consent
         or sanction of the holders of the Series E Preferred Stock, authorize
         and issue shares of the Corporation ranking, as to dividend rights and
         rights on liquidation, winding up and dissolution, on a parity with or
         junior to the Series E Preferred Stock.

                  The foregoing voting provisions shall not apply if, at or
         prior to the time when the act with respect to which such vote would
         otherwise be required shall be effected, all outstanding shares of the
         Series E Preferred Stock shall have been redeemed or called for
         redemption upon proper notice and sufficient funds shall have been
         deposited in trust to effect such redemption.

                  4.       No vote of the holders of the Series E Preferred
         Stock will be required for the Corporation to redeem or purchase and
         cancel the Series E Preferred Stock in accordance with the Certificate
         of Incorporation of the Corporation.

                  5.       The Corporation will cause a notice of any meeting at
         which holders of any series of Preferred Stock are entitled to vote to
         be mailed to each record holder of such series of Preferred Stock. Each
         such notice will include a statement setting forth (i) the date of such
         meeting, (ii) a description of any resolution to be proposed for
         adoption at such meeting on which such holders are entitled to vote and
         (iii) instructions for deliveries of proxies.

                                       -7-



                  6.       Except as set forth in this Section F, holders of
         Series E Preferred Stock shall have no special voting rights and their
         consent shall not be required (except to the extent they are entitled
         to vote as set forth herein) for taking any corporate action.

         G.       RANK

                  The Series E Preferred Stock will, with respect to dividend
         rights and rights on liquidation, winding up and dissolution, rank (i)
         senior to all classes of common stock of the Corporation and to all
         other equity securities issued by the Corporation the terms of which
         specifically provide that such equity securities will rank junior to
         the Series E Preferred Stock (or to a number of series of Preferred
         Stock which includes the Series E Preferred Stock); (ii) on a parity
         with the Corporation's 7.125% Noncumulative Perpetual Monthly Income
         Preferred Stock, Series A, the Corporation's 8.35% Noncumulative
         Perpetual Monthly Income Preferred Stock, Series B, the Corporation's
         7.40% Noncumulative Perpetual Monthly Income Preferred Stock, Series C,
         Corporation's 7.25% Noncumulative Perpetual Monthly Income Preferred
         Stock, Series D and with all other equity securities issued by the
         Corporation the terms of which specifically provide that such equity
         securities will rank on a parity with the Series E Preferred Stock (or
         with a number of series of Preferred Stock which includes the Series E
         Preferred Stock); and (iii) junior to all equity securities issued by
         the Corporation the terms of which specifically provide that such
         equity securities will rank senior to the Series E Preferred Stock (or
         to a number of series of Preferred Stock which includes the Series E
         Preferred Stock). For this purpose, the term "equity securities" does
         not include debt securities convertible into or exchangeable for equity
         securities.

         H.       FORM OF CERTIFICATE FOR SERIES E PREFERRED STOCK; TRANSFER AND
                  REGISTRATION

                  1.       The Series E Preferred Stock shall be issued in
         registered form only. The Corporation may treat the record holder of a
         share of Series E Preferred Stock, including the Depository Trust
         Company and its nominee and any other holder that holds such share on
         behalf of any other person, as such record holder appears on the books
         of the registrar for the Series E Preferred Stock, as the sole owner of
         such share for all purposes.

                  2.       The transfer of a share of Series E Preferred Stock
         may be registered upon the surrender of the certificate evidencing the
         share of Series E Preferred Stock to be transferred, together with the
         form of transfer endorsed on it duly completed and executed, at the
         office of the transfer agent and registrar.

                  3.       Registration of transfers of shares of Series E
         Preferred Stock will be effected without charge by or on behalf of the
         Corporation, but upon payment (or the giving of such indemnity as the
         transfer agent and registrar may require) in respect of any tax or
         other governmental charges which may be imposed in relation to it.

                                       -8-



                  4.       The Corporation will not be required to register the
         transfer of a share of Series E Preferred Stock after such share has
         been called for redemption.

         I.       REPLACEMENT OF LOST CERTIFICATES

                  If any certificate for a share of Series E Preferred Stock is
         mutilated or alleged to have been lost, stolen or destroyed, a new
         certificate representing the same share shall be issued to the holder
         upon request subject to delivery of the old certificate or, if alleged
         to have been lost, stolen or destroyed, compliance with such conditions
         as to evidence, indemnity and the payment of out-of-pocket expenses of
         the Corporation in connection with the request as the Board of
         Directors of the Corporation may determine.

         J.       NO PREEMPTIVE RIGHTS

                  Holders of the Series E Preferred Stock will have no
         preemptive or preferential rights to purchase any securities of the
         Corporation.

         K.       NO REPURCHASE AT THE OPTION OF HOLDERS; MISCELLANEOUS

                  Holders of Series E Preferred Stock will have no right to
         require the Corporation to redeem or repurchase any shares of Series E
         Preferred Stock, and the shares of Series E Preferred Stock are not
         subject to any sinking fund or similar obligation. The Corporation may,
         at its option, purchase shares of the Series E Preferred Stock from
         holders thereof from time to time, by tender, in privately negotiated
         transactions or otherwise.

                   [REST OF PAGE IS INTENTIONALLY LEFT BLANK]

                                       -9-



                  The undersigned hereby certify that the capital of the
         Corporation will not be reduced under or by reason of the adoption of
         the above resolutions providing for the creation of the above described
         series of Preferred Stock.

                  IN WITNESS WHEREOF, the Corporation has caused its corporate
         seal to be hereunto affixed and this Certificate to be signed by Annie
         Astor-Carbonell, its Senior Executive Vice President and Chief
         Financial Officer, and Carmen Gabriella Szendrey - Ramos, its
         Secretary, this ____ day of September, 2003.

                                                         FIRST BANCORP.

                                              By:____________________________
                                                     Annie Astor-Carbonell
         [CORPORATE SEAL]

                                              By:_______________________________
                                                 Carmen Gabriella Szendrey-Ramos

                                      -10-

EX-5.1

                                                                     EXHIBIT 5.1


                      FIDDLER GONZALEZ & RODRIGUEZ, P.S.C.
                          BANCO BILBAO VIZCAYA BUILDING
                             254 MUNOZ RIVERA AVENUE
                                    6TH FLOOR
                          SAN JUAN, PUERTO RICO 00918

                               September 4, 2003

First BanCorp.
1519 Ponce De Leon Avenue
San Juan, Puerto Rico 00908-0146

Dear Sirs:

         We have acted as counsel to First BanCorp., a Puerto Rico corporation
(the "Company"), with respect to the shelf Registration Statement on Form S-3
(SEC File No. 333-75682) (the "Registration Statement") under which the Company
will undertake a public offering of up to 4,600,000 shares (the "Shares") of
Noncumulative Perpetual Monthly Income Preferred Stock, Series E, $1.00 par
value per share, of the Company. In connection with such representation as your
counsel, we have examined such documents, corporate records and other
instruments, and such questions of law, as we have deemed necessary or
appropriate for the purposes of this opinion, including but not limited to, the
prospectus supplement relating to the Shares contained in the Registration
Statement (the "Prospectus Supplement"). The Prospectus Supplement is going to
be filed with the Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act of 1933, as amended (the "Act").

         Upon the basis of such examination, we are of the opinion that when the
certificate of resolutions containing the designation of the relative rights and
preferences of the Shares has been duly filed with the Department of State of
the Commonwealth of Puerto Rico, the Shares have been issued in accordance with
the authorization of the Board of Directors of the Company, and when the Shares
have been duly countersigned by the Company's transfer agent and registrar and
sold and delivered as contemplated by the Registration Statement and the
Underwriting Agreement referred to in the Prospectus Supplement, the Shares will
be duly authorized and validly issued, fully-paid and nonassessable when
delivered against payment therefor.



First BanCorp.
September 4, 2003
Page 2

         We are members of the Bar of the Commonwealth of Puerto Rico. The
opinions expressed above are limited to the laws of the Commonwealth of Puerto
Rico and any applicable Federal laws and we do not purport to be experts in, or
to render any opinions with respect to, the laws of any state or other
jurisdiction other than the laws of the Commonwealth of Puerto Rico and the
Federal laws of the United States of America.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Prospectus Supplement contained in the Registration Statement.
In giving the foregoing consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act.

                                        Very truly yours,

                                        /s/ Fiddler Gonzalez & Rodriguez, P.S.C.

EX-8.1

                                                                     EXHIBIT 8.1


                      FIDDLER GONZALEZ & RODRIGUEZ, P.S.C.
                          BANCO BILBAO VIZCAYA BUILDING
                             254 MUNOZ RIVERA AVENUE
                                    6TH FLOOR
                          SAN JUAN, PUERTO RICO 00918

                               September 4, 2003

First BanCorp.
1519 Ponce De Leon Avenue
San Juan, Puerto Rico 00908-0146

Dear Sirs:

         We have acted as counsel to First BanCorp., a Puerto Rico corporation
(the "Company"), with respect to the shelf Registration Statement on Form S-3
(SEC File No. 333-75682) (the "Registration Statement") under which the Company
will undertake a public offering of up to 4,600,000 shares (the "Shares") of
Noncumulative Perpetual Monthly Income Preferred Stock, Series E, $1.00 par
value per share, of the Company.

         We have examined the prospectus supplement relating to the Shares
contained in the Registration Statement (the "Prospectus Supplement"), which is
going to be filed with the Securities and Exchange Commission pursuant to Rule
424(b) under the Securities Act of 1933, as amended (the "Act"), and we have
reviewed the discussion of certain Federal and Puerto Rico income tax
considerations of the proposed offering described in the Prospectus Supplement
(the "Tax Discussion") appearing under the captions "Taxation," "Puerto Rico
Taxation" and "United States Taxation." We have also reviewed such other
documents and instruments and have examined such questions of law as we have
considered necessary for the purposes of this opinion. In addition, we have
relied on certificates of officers of the Company as to certain factual matters.

         The Tax Discussion represents our opinion regarding the material
Federal and Puerto Rico tax consequences described therein.

         Our opinion is based upon the review of the Prospectus Supplement and
of applicable Federal and Puerto Rico income tax statutes, regulations, rulings
and decisions, as now in effect. A change in any of the foregoing could
necessitate a change in our opinion. In addition, our



First BanCorp.
September 4, 2003
Page 2

opinion pertains only to the accuracy of the statements of law contained in the
Tax Discussion. As to statements of fact, we are relying on your representation
that such factual statements are accurate.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Taxation"
in the Prospectus Supplement contained in the Registration Statement. In giving
the foregoing consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Act.

                                       Very truly yours,

                                       /s/ Fiddler Gonzalez & Rodriguez, P.S.C.

EX-12.1

                                                                    EXHIBIT 12.1

                                  FIRST BANCORP
   RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS-
                         EXCLUDING INTEREST ON DEPOSITS
                                 (In thousands)



                                        6/30/03           2002            2001             2000              1999          1998
                                                                                                       
EARNINGS:

Net Income before cumulative
  effect of accounting change          $   65,699       $ 107,956      $  87,016        $   67,276         $ 62,075      $ 51,812

Income Taxes                               11,900          22,327         20,134            14,761            7,288         4,798
                                       ----------       ---------      ---------        ----------         --------      --------

Pre-tax income                             77,599         130,283        107,150            82,037           69,363        56,610

Plus:
Fixed Charges                              64,075         141,452        120,856           120,481           92,760        86,814
                                       ----------       ---------      ---------        ----------         --------      --------

TOTAL EARNINGS                         $  141,674       $ 271,735      $ 228,006        $  202,518         $162,123      $143,424

FIXED CHARGES:
Interest expense                       $  119,404       $ 273,184      $ 280,201        $  272,615         $183,330      $155,130
Less: Interest on deposits                (56,217)       (133,235)      (160,758)         (153,283)         (90,489)      (70,418)

Interest capitalized                           --              --             --                --               --            --

Rental expense relating to operating
leases (1/3 of rentals)                       888           1,503          1,413             1,347            1,130         1,053

Net amortized premiums/discounts
on debt                                        --              --             --              (198)          (1,211)           --

Net capitalized premiums/discounts
on debt                                        --              --             --                --               --         1,049
                                       ----------       ---------      ---------        ----------         --------      --------




                                                                                            
TOTAL FIXED CHARGES BEFORE
PREFERRED DIVIDENDS                            64,075      141,452      120,856      120,481       92,760       86,814

Preferred Dividend Requirements                13,502       26,406       16,508        7,408        4,275           --

Ratio of pre-tax income to net income           1.181        1.207        1.231        1.219        1.117           --
                                             --------     --------     --------     --------     --------

PREFERRED DIVIDEND FACTOR                      15,948       31,867       20,328        9,033        4,777           --
                                             --------     --------     --------     --------     --------     --------

TOTAL FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS                              $ 80,023     $173,319     $141,184     $129,514     $ 97,537     $ 86,814

RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS                    1.77         1.57         1.61         1.56         1.66         1.65





                                  FIRST BANCORP
   RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS-
                         INCLUDING INTEREST ON DEPOSITS
                                 (In thousands)



                                          6/30/03         2002          2001          2000           1999           1998
                                                                                               
EARNINGS:

Net Income before cumulative             $  65,699     $ 107,956     $  87,016     $  67,276      $  62,075      $  51,812
effect of accounting charge

Income Taxes                                11,900        22,327        20,134        14,761          7,288          4,798
                                         ---------     ---------     ---------     ---------      ---------      ---------

Pre-tax income                              77,599       130,283       107,150        82,037         69,363         56,610

Plus:
Fixed Charges                              120,292       274,687       281,614       273,764        183,249        157,232
                                         ---------     ---------     ---------     ---------      ---------      ---------

TOTAL EARNINGS                           $ 197,891     $ 404,970     $ 388,764     $ 355,801      $ 252,612      $ 213,842

FIXED CHARGES:
Interest expense                         $ 119,404     $ 273,184     $ 280,201     $ 272,615      $ 183,330      $ 155,130

Interest capitalized                            --            --            --            --             --             --

Rental expense relating to operating
leases (1/3 of rentals)                        888         1,503         1,413         1,347          1,130          1,053

Net amortized premiums/discounts
on debt                                         --            --            --          (198)        (1,211)            --

Net capitalized premiums/discounts
on debt                                         --            --            --            --             --          1,049
                                         ---------     ---------     ---------     ---------      ---------      ---------

TOTAL FIXED CHARGES BEFORE
PREFERRED DIVIDENDS                        120,292       274,687       281,614       273,764        183,249        157,232




                                                                                        
Preferred Dividend Requirements          13,502       26,406       16,508        7,408        4,275              --

Ratio of pre-tax income to net
income                                    1.181        1.207        1.231        1.219        1.117              --
                                       --------     --------     --------     --------     --------

PREFERRED DIVIDEND FACTOR                15,948       31,867       20,328        9,033        4,777              --
                                       --------     --------     --------     --------     --------       ---------

TOTAL FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS                        $136,240     $306,554     $301,942     $282,797     $188,026       $ 157,232

RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS              1.45         1.32         1.29         1.26         1.34            1.36

EX-23.1

                                                                    EXHIBIT 23.1

                         CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 (No. 333-75682) of First BanCorp. of our report dated
March 7, 2003 relating to the financial statements as of December 31, 2002 and
2001 and for each of the three years in the period ending December 31, 2002,
which appears in the Annual Report to Shareholders, which is incorporated in
this Annual Report on Form 10-K.

/s/ PricewaterhouseCoopers LLP

PRICEWATERHOUSECOOPERS LLP

San Juan, Puerto Rico

August 20, 2003