10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

____________

FORM 10-Q

(Mark One)

[X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

[   ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

COMMISSION FILE NUMBER 001-14793

First BanCorp.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Puerto Rico		66-0561882
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)
1519 Ponce de León Avenue, Stop 23 Santurce, Puerto Rico (Address of principal executive offices)		00908 (Zip Code)
	(787) 729-8200
(Registrant’s telephone number, including area code)
Not applicable (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x   No ¨ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes x   No ¨ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

                             Large accelerated filer ¨                                                                                              Accelerated filer x 

                             Non-accelerated filer ¨  (Do not check if a smaller reporting company)   Smaller reporting company ¨ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 Yes ¨   No x 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock:  212,764,795 shares outstanding as of July 31, 2014.

FIRST BANCORP.

INDEX PAGE

PART I FINANCIAL INFORMATION	PAGE
Item 1. Financial Statements:
Consolidated Statements of Financial Condition (Unaudited) as of June 30, 2014 and December 31, 2013	5
Consolidated Statements of Income (Loss) (Unaudited) – Quarters ended June 30, 2014 and 2013 and six-month periods ended June 30, 2014 and 2013	6
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) – Quarters ended June 30, 2014 and 2013 and six-month periods ended June 30, 2014 and 2013	7
Consolidated Statements of Cash Flows (Unaudited) – Six-month periods ended June 30, 2014 and 2013	8
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Six-month periods ended June 30, 2014 and 2013	9
Notes to Consolidated Financial Statements (Unaudited)	10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations	80
Item 3. Quantitative and Qualitative Disclosures About Market Risk	154
Item 4. Controls and Procedures	154
PART II. OTHER INFORMATION
Item 1.    Legal Proceedings	155
Item 1A. Risk Factors	155
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	158
Item 3.    Defaults Upon Senior Securities	159
Item 4.    Mine Safety Disclosures	159
Item 5.    Other Information	159
Item 6.    Exhibits	159
SIGNATURES

2

Forward Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the safe harbor created by such sections.  When used in this Form 10-Q or future filings by First BanCorp. (the “Corporation”) with the U.S. Securities and Exchange Commission (“SEC”), in the Corporation’s press releases or in other public or stockholder communications, or in oral statements made with the approval of an authorized executive officer, the word or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “should,” “anticipate” and similar expressions are meant to identify “forward-looking statements.”

First BanCorp. wishes to caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and to advise readers that various factors, including, but not limited to, the following, could cause actual results to differ materially from those expressed in, or implied by, such “forward-looking statements”:

·uncertainty about whether the Corporation  and FirstBank Puerto Rico (“FirstBank” or “the Bank”) will be able to fully comply with the written agreement dated June 3, 2010 (the “Written Agreement”) that the Corporation entered into with the Federal Reserve Bank of New York (the “New York FED” or “Federal Reserve”) and the consent order dated June 2, 2010 (the “FDIC Order”) and together with the Written Agreement, (the “Agreements”) that the Corporation’s banking subsidiary, FirstBank, entered into with the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico (“OCIF”) that, among other things, require the Bank to maintain certain capital levels and reduce its special mention, classified, delinquent and non-performing assets;

·the risk of being subject to possible additional regulatory actions;

·uncertainty as to the availability of certain funding sources, such as retail brokered certificates of deposit (“brokered CDs”);

·the Corporation’s reliance on brokered CDs and its ability to obtain, on a periodic basis, approval from the FDIC to issue brokered CDs to fund operations and provide liquidity in accordance with the terms of the FDIC Order;

·the risk of not being able to fulfill the Corporation’s cash obligations or resume paying dividends to the Corporation’s stockholders in the future due to the Corporation’s inability to receive approval from the New York FED and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) to receive dividends from FirstBank or FirstBank’s failure to generate sufficient cash flow to make a dividend payment to the Corporation;

·the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and their impact on the credit quality of the Corporation’s loans and other assets, which has contributed and may continue to contribute to, among other things, high levels of non-performing assets, charge-offs and provisions and may subject the Corporation to further risk from loan defaults and foreclosures;

·the ability of FirstBank to realize the benefit of its deferred tax asset;

3

·adverse changes in general economic conditions in Puerto Rico, the United States (“U.S.”) and the U.S. Virgin Islands (“USVI”), and British Virgin Islands (“BVI”), including the interest rate environment, market liquidity, housing absorption rates, real estate prices, and disruptions in the U.S. capital markets, which may reduce interest margins, impact funding sources, and affect demand for all of the Corporation’s products and services and reduce the Corporation’s revenues, earnings, and the value of the Corporation’s assets;

·a credit default by the Puerto Rico government or any of its public corporations or other instrumentalities, and recent and any future downgrades of the long-term and short-term debt ratings of the Puerto Rico government, which could exacerbate Puerto Rico’s adverse economic conditions;

·an adverse change in the Corporation’s ability to attract new clients and retain existing ones;

·a decrease in demand for the Corporation’s products and services and lower revenues and earnings because of the continued recession in Puerto Rico, the current fiscal problems of the Puerto Rico government and recent credit downgrades of the Puerto Rico government’s debt;

·the risk that any portion of the unrealized losses in the Corporation’s investment portfolio is determined to be other-than-temporary, including unrealized losses on the Puerto Rico government’s obligations;

·uncertainty about regulatory and legislative changes for financial services companies in Puerto Rico, the U.S., the  USVI, and the BVI, which could affect the Corporation’s financial condition or performance and could cause the Corporation’s actual results for future periods to differ materially from prior results and anticipated or projected results;

·changes in the fiscal and monetary policies and regulations of the U.S. federal government, including those determined by the Federal Reserve Board, the New York FED, the FDIC, government-sponsored housing agencies, and regulators in Puerto Rico, the USVI and the BVI;

·the risk of possible failure or circumvention of controls and procedures and the risk that the Corporation’s risk management policies may not be adequate;

·the risk that the FDIC may further increase the deposit insurance premium and/or require special assessments to replenish its insurance fund, causing an additional increase in the Corporation’s non-interest expenses;

·the impact on the Corporation’s results of operations and financial condition of acquisitions and dispositions;

·a need to recognize additional impairments on financial instruments, goodwill or other intangible assets relating to acquisitions;

·the risk that downgrades in the credit ratings of the Corporation’s long-term senior debt will adversely affect the Corporation’s ability to access necessary external funds;

·the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) on the Corporation’s businesses, business practices and cost of operations; and

·general competitive factors and industry consolidation.

The Corporation does not undertake, and specifically disclaims any obligation, to update any “forward-looking statements” to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by the federal securities laws.

Investors should refer to the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013, as well as “Part II, Item 1A, Risk Factors” in this quarterly report on Form 10-Q, for a discussion of such factors and certain risks and uncertainties to which the Corporation is subject.

4

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	June 30, 2014		December 31, 2013
(In thousands, except for share information)
ASSETS
Cash and due from banks	$	660,709	$	454,302
Money market investments:
Time deposits with other financial institutions		300		300
Other short-term investments		16,653		201,069
Total money market investments		16,953		201,369
Investment securities available for sale, at fair value:
Securities pledged that can be repledged		1,038,071		1,042,482
Other investment securities		959,337		935,800
Total investment securities available for sale		1,997,408		1,978,282
Other equity securities		29,141		28,691
Investment in unconsolidated entity		-		7,279
Loans, net of allowance for loan and lease losses of $241,177
(2013 - $285,858)		9,225,924		9,350,312
Loans held for sale, at lower of cost or market		72,105		75,969
Total loans, net		9,298,029		9,426,281
Premises and equipment, net		170,056		166,946
Other real estate owned		121,842		160,193
Accrued interest receivable on loans and investments		52,092		54,012
Other assets		177,021		179,570
Total assets	$	12,523,251	$	12,656,925
LIABILITIES
Non-interest-bearing deposits	$	851,038	$	851,212
Interest-bearing deposits		8,779,750		9,028,712
Total deposits		9,630,788		9,879,924
Securities sold under agreements to repurchase		900,000		900,000
Advances from the Federal Home Loan Bank (FHLB)		320,000		300,000
Other borrowings		231,959		231,959
Accounts payable and other liabilities		134,503		129,184
Total liabilities		11,217,250		11,441,067
STOCKHOLDERS' EQUITY
Preferred stock, authorized, 50,000,000 shares:
Non-cumulative Perpetual Monthly Income Preferred Stock: issued 22,004,000 shares,
outstanding 1,444,146 shares (2013 - 2,521,872 shares outstanding), aggregate liquidation
value of $36,104 (2013 - $63,047)		36,104		63,047
Common stock, $0.10 par value, authorized, 2,000,000,000 shares;  issued, 213,399,037 shares
(2013 - 207,635,157 shares issued)		21,340		20,764
Less: Treasury stock (at par value)		(64)		(57)
Common stock outstanding, 212,760,158 shares outstanding (2013 - 207,068,978 shares
outstanding)		21,276		20,707
Additional paid-in capital		914,382		888,161
Retained earnings		362,646		322,679
Accumulated other comprehensive loss, net of tax of $7,752 (2013 - $7,755)		(28,407)		(78,736)
Total stockholders' equity		1,306,001		1,215,858
Total liabilities and stockholders' equity	$	12,523,251	$	12,656,925
The accompanying notes are an integral part of these statements.

5

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

	Quarter Ended				Six-Month Period Ended
	June 30,				June 30,
	2014		2013		2014		2013
(In thousands, except per share information)
Interest and dividend income:
Loans	$	144,241	$	147,986	$	289,084	$	296,629
Investment securities		13,728		12,185		28,956		23,228
Money market investments		454		499		954		1,038
Total interest income	158,423		160,670		318,994		320,895
Interest expense:
Deposits		19,466		23,918		39,765		49,462
Securities sold under agreements to repurchase		6,430		6,470		12,798		12,887
Advances from FHLB		833		1,631		1,657		3,656
Notes payable and other borrowings		1,787		1,763		3,547		3,509
Total interest expense	28,516		33,782		57,767		69,514
Net interest income		129,907		126,888		261,227		251,381
Provision for loan and lease losses		26,744		87,464		58,659		198,587
Net interest income after provision for loan and lease losses	103,163		39,424		202,568		52,794
Non-interest income (loss):
Service charges on deposit accounts		3,290		3,098		6,493		6,478
Mortgage banking activities		3,036		4,823		6,404		9,403
Net gain (loss) on sale of investments (includes $42 accumulated other
comprehensive income reclassification for other-than-temporary
impairment on equity securities for the quarter and six-month
period ended June 30, 2013)		291		(42)		291		(42)
Other-than-temporary impairment losses on available-for-sale debt securities:
Total other-than-temporary impairment losses		-		-		-		-
Portion of other-than-temporary impairment losses recognized in other
comprehensive income		-		-		-		(117)
Net impairment losses on available-for-sale debt securities		-		-		-		(117)
Equity in (loss) earnings of unconsolidated entity		(670)		648		(7,280)		(4,890)
Impairment of collateral pledged to Lehman		-		(66,574)		-		(66,574)
Insurance commission income		1,467		1,508		4,038		3,528
Other non-interest income		8,517		4,876		17,335		14,180
Total non-interest income (loss)	15,931		(51,663)		27,281		(38,034)
Non-interest expenses:
Employees' compensation and benefits		35,023		33,116		67,965		66,670
Occupancy and equipment		14,509		14,946		28,855		30,016
Business promotion		4,142		3,831		8,115		7,188
Professional fees		11,371		13,735		21,411		24,867
Taxes, other than income taxes		4,477		6,239		9,024		9,228
Insurance and supervisory fees		10,784		12,699		21,774		25,505
Net loss on other real estate owned (OREO) and OREO operations		6,778		14,829		12,615		22,139
Credit and debit card processing expenses		3,882		2,281		7,706		5,358
Communications		1,894		1,885		3,773		3,699
Other non-interest expenses		5,285		7,762		9,692		14,663
Total non-interest expenses	98,145		111,323		190,930		209,333
Income (loss) before income taxes		20,949		(123,562)		38,919		(194,573)
Income tax benefit (expense)		276		979		(611)		(643)
Net income (loss)	$	21,225	$	(122,583)	$	38,308	$	(195,216)
Net income (loss) attributable to common stockholders	$	22,505	$	(122,583)	$	39,967	$	(195,216)
Net earnings (loss) per common share:
Basic	$	0.11	$	(0.60)	$	0.19	$	(0.95)
Diluted	$	0.11	$	(0.60)	$	0.19	$	(0.95)
Dividends declared per common share	$	-	$	-	$	-	$	-
The accompanying notes are an integral part of these statements.

6

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Quarter Ended				Six-Month Period Ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
(In thousands)
Net income (loss)	$	21,225	$	(122,583)	$	38,308	$	(195,216)
Available-for-sale debt securities on which an other-than-temporary
impairment has been recognized:
Subsequent unrealized gain on debt securities on which an
other-than-temporary impairment has been recognized		274		592		1,187		1,435
Reclassification adjustment for other-than-temporary impairment
on debt securities included in net income		-		-		-		117
All other unrealized holding gains (losses) on available-for-sale securities:
All other unrealized holding gains (losses) arising
during the period		27,806		(60,176)		49,430		(69,746)
Reclassification adjustments for net gain included in net income		(291)		-		(291)		-
Reclassification adjustment for other-than-temporary impairment
on equity securities		-		42		-		42
Income tax benefit (expense) related to items of other comprehensive income		1		(422)		3		(422)
Other comprehensive income (loss) for the period, net of tax	$	27,790	$	(59,964)	$	50,329	$	(68,574)
Total comprehensive income (loss)	$	49,015	$	(182,547)	$	88,637	$	(263,790)
The accompanying notes are an integral part of these statements.

7

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited) 

	Six-Month Period Ended
	June 30,		June 30,
	2014		2013
(In thousands)
Cash flows from operating activities:
Net income (loss)	$	38,308	$	(195,216)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		10,574		11,933
Amortization of intangible assets		2,488		3,039
Provision for loan and lease losses		58,659		198,587
Deferred income tax benefit		(1,352)		(2,154)
Stock-based compensation		1,960		1,321
Gain on sales of investments, net		(291)		-
Other-than-temporary impairments on debt securities		-		117
Other-than-temporary impairments on equity securities		-		42
Equity in loss of unconsolidated entity		7,280		4,890
Impairment of collateral pledged to Lehman		-		66,574
Derivative instruments and financial liabilities measured at fair value, gain		(173)		(1,974)
Gain on sale of premises and equipment and other assets		(32)		-
Net gain on sales of loans		(3,868)		(4,870)
Net amortization of premiums, discounts and deferred loan fees and costs		(1,564)		(2,078)
Originations and purchases of loans held for sale		(141,099)		(306,579)
Sales and repayments of loans held for sale		157,964		263,072
Loans held for sale valuation adjustment		-		6,103
Amortization of broker placement fees		3,501		4,182
Net amortization of premium and discounts on investment securities		869		6,713
Increase (decrease) in accrued income tax payable		5,013		(1,623)
Decrease (increase) in accrued interest receivable		1,920		(2,965)
Increase in accrued interest payable		2,449		1,257
Decrease in other assets		12,480		20,702
(Decrease) increase in other liabilities		(4,940)		16,116
Net cash provided by operating activities		150,146		87,189
Cash flows from investing activities:
Principal collected on loans		1,619,024		1,363,136
Loans originated and purchased		(1,582,527)		(1,545,408)
Proceeds from sales of loans held for investment		16,558		296,610
Proceeds from sales of repossessed assets		35,344		60,568
Proceeds from sales of available-for-sale securities		4,855		-
Purchases of available-for-sale securities		(88,493)		(541,910)
Proceeds from principal repayments and maturities of available-for-sale securities		114,277		207,810
Additions to premises and equipment		(13,689)		(4,999)
Proceeds from sale of premises and equipments and other assets		37		-
Net redemptions/sales of other equity securities		(450)		6,436
Net cash provided by (used in) investing activities		104,936		(157,757)
Cash flows from financing activities:
Net (decrease) increase in deposits		(252,637)		108,917
Net FHLB advances proceeds (paid)		20,000		(150,000)
Repurchase of outstanding common stock		(392)		(233)
Issuance costs of common stock issued in exchange for preferred stock Series A through E		(62)		-
Net cash used in financing activities		(233,091)		(41,316)
Net increase (decrease) in cash and cash equivalents		21,991		(111,884)
Cash and cash equivalents at beginning of period		655,671		946,851
Cash and cash equivalents at end of period	$	677,662	$	834,967
Cash and cash equivalents include:
Cash and due from banks	$	660,709	$	618,593
Money market instruments		16,953		216,374
	$	677,662	$	834,967
The accompanying notes are an integral part of these statements.

8

FIRST BANCORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

	Six-Month Period Ended
	June 30,		June 30,
	2014		2013
(In thousands)
Preferred Stock
Balance at beginning of period	$	63,047	$	63,047
Exchange of preferred stock- Series A through E		(26,943)		-
Balance at end of period		36,104		63,047
Common Stock outstanding:
Balance at beginning of period		20,707		20,624
Common stock issued as compensation		15		11
Common stock withheld for taxes		(7)		(4)
Common stock issued in exchange for Series A through E preferred stock		459		-
Restricted stock grants		102		70
Restricted stock forfeited		-		(3)
Balance at end of period		21,276		20,698
Additional Paid-In-Capital:
Balance at beginning of period		888,161		885,754
Stock-based compensation		1,960		1,321
Common stock withheld for taxes		(385)		(233)
Common stock issued in exchange for Series A through E preferred stock		23,904		-
Reversal of issuance costs of Series A through E preferred stock exchanged		921		-
Issuance costs of common stock issued in exchange for Series A through E preferred stock		(62)		-
Restricted stock grants		(102)		(70)
Common stock issued as compensation		(15)		-
Restricted stock forfeited		-		3
Balance at end of period		914,382		886,775
Retained Earnings:
Balance at beginning of period		322,679		487,166
Net income (loss)		38,308		(195,216)
Excess of carrying amount of Series A though E preferred stock exchanged over fair value of new
shares of common stock		1,659		-
Balance at end of period		362,646		291,950
Accumulated Other Comprehensive Income (Loss), net of tax:
Balance at beginning of period		(78,736)		28,432
Other comprehensive income (loss), net of tax		50,329		(68,574)
Balance at end of period		(28,407)		(40,142)
Total stockholders' equity	$	1,306,001	$	1,222,328
The accompanying notes are an integral part of these statements.

9

FIRST BANCORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The Consolidated Financial Statements (unaudited) of First BanCorp. (“the Corporation”) have been prepared in conformity with the accounting policies stated in the Corporation’s Audited Consolidated Financial Statements included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013. Certain information and note disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from these statements pursuant to the rules and regulations of the SEC and, accordingly, these financial statements should be read  in conjunction with the Audited Consolidated Financial Statements of the Corporation for the year ended December 31, 2013, which are included in the Corporation’s 2013 Annual Report on Form 10-K. All adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the statement of financial position, results of operations and cash flows for the interim periods have been reflected. All significant intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for the quarter and six-month period ended June 30, 2014 are not necessarily indicative of the results to be expected for the entire year. 

Adoption of new accounting requirements and recently issued but not yet effective accounting requirements

The Financial Accounting Standards Board (“FASB”) has issued the following accounting pronouncements and guidance relevant to the Corporation’s operations:

In July 2013, the FASB updated the Codification to provide explicit guidelines on how to present an unrecognized tax benefit in financial statements when a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward exists. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The amendments are effective for public entities with fiscal periods beginning after December 15, 2013. The adoption of this guidance in 2014 did not have an effect on the Corporation’s financial statements as the Corporation’s NOLs and tax credit carryfowards are not available to settle any additional income taxes that would result from the disallowance of the Corporation’s unrecognized tax benefits.

In January 2014, the FASB updated the Codification to clarify when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan so that the loan should be derecognized and the real estate property recognized in the financial statements. The Update clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either: (i) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure, or (ii) the borrower conveying all interest in the residential real estate property to the creditor to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. In addition, creditors are required to disclose on an annual and interim basis both (i) the amount of the foreclosed residential real estate property held and (ii) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.

10

The amendments are effective for public business entities for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 31, 2015. Early adoption is permitted. The guidance can be implemented using either a modified retrospective transition method or a prospective transition method. The Corporation is currently evaluating the impact of the adoption of this guidance, if any, on its financial statements.

In April 2014, the FASB issued an update to current accounting standards which will change the criteria for reporting discontinued operations. The amendments will also require new disclosures about discontinued operations and disposals of components of an entity that do not qualify for discontinued operations reporting. The amendments are effective for the Corporation for new disposals (or classifications as held for sale) of components of the Corporation, should they occur, beginning in the first quarter of fiscal year 2016. Early adoption is permitted for disposals (or classifications as held for sale) that have not been previously reported.

In May 2014, the FASB updated the Codification to create a new, principle-based revenue recognition framework. The Update is the culmination of efforts by the FASB and the International Accounting Standards Board to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  This guidance describes a 5-step process entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. The amendments are effective for public business entities for annual periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Corporation is currently evaluating the impact that the adoption of this guidance will have on the presentation and disclosures in its financial statements.

In June 2014, the FASB updated the Codification to respond to stakeholders’ concerns about current accounting and disclosures for repurchase agreements and similar transactions. This Update requires two accounting changes. First, the Update changes the accounting for repurchase-to-maturity transactions to secured borrowing accounting. Second, for repurchase financing arrangements, the Update requires separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. Additionally, the Update introduces new disclosures to (i) increase transparency about the types of collateral pledged in secured borrowing transactions and (ii) enable users to better understand transactions in which the transferor retains substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction. For public business entities, the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. All other accounting and disclosure amendments in the Update are effective for public business entities for the first interim or annual period beginning after December 15, 2014. The Corporation is currently evaluating the impact that the adoption of this guidance will have on the presentation and disclosures in its financial statements, if any.

In June 2014, the FASB updated the Codification to provide guidance for determining compensation cost under specific circumstances when an employee’s compensation award is eligible to vest regardless of whether the employee is rendering service on the date the performance target is achieved. This Update becomes effective for annual and interim periods beginning after December 15, 2015 with early adoption permitted. The Company is currently evaluating the effects of this guidance on its financial statements and disclosures, if any. The Update is effective for all business entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The Corporation is currently evaluating the impact that the adoption of this guidance will have on the presentation and disclosures in its financial statements, if any.

11

NOTE 2 – EARNINGS PER COMMON SHARE

The calculations of earnings (losses) per common share for the quarters and six month periods ended  June 30, 2014 and 2013 are as follows:
	Quarter Ended				Six-Month Period Ended
	June 30,		June 30,		June 30,		June 30,
	2014		2013		2014		2013
		(In thousands, except per share information)
Net income (loss)	$	21,225	$	(122,583)	$	38,308	$	(195,216)
Favorable impact from issuing common stock in exchange
for Series A through E preferred stock		1,280		-		1,659		-
Net income (loss) attributable to common stockholders	$	22,505	$	(122,583)	$	39,967	$	(195,216)
Weighted-Average Shares:
Basic weighted-average common shares outstanding		208,202		205,490		206,974		205,477
Average potential common shares		1,942		-		1,543		-
Diluted weighted-average number of common shares
outstanding		210,144		205,490		208,517		205,477
Earnings (loss) per common share:
Basic	$	0.11	$	(0.60)	$	0.19	$	(0.95)
Diluted	$	0.11	$	(0.60)	$	0.19	$	(0.95)

Earnings (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares issued and outstanding. Net income (loss) attributable to common stockholders represents net income (loss) adjusted for any preferred stock dividends, including any dividends declared, and any cumulative dividends related to the current dividend period that have not been declared as of the end of the period. For the second quarter and first half of 2014, net income attributable to common stockholders also includes the one-time effect of the issuance of common stock in exchange for Series A through E preferred stock. This transaction is discussed in Note 17 to the unaudited consolidated financial statements. Basic weighted average common shares outstanding excludes unvested shares of restricted stock.

 Potential common shares consist of common stock issuable under the assumed exercise of stock options, unvested shares of restricted stock, and outstanding warrants using the treasury stock method. This method assumes that the potential common shares are issued and the proceeds from the exercise, in addition to the amount of compensation cost attributable to future services, are used to purchase common stock at the exercise date. The difference between the number of potential shares issued and the shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted earnings per share. Stock options, unvested shares of restricted stock, and outstanding warrants that result in lower potential shares issued than shares purchased under the treasury stock method are not included in the computation of dilutive earnings per share since their inclusion would have an antidilutive effect on earnings per share. Stock options not included in the computation of outstanding shares because they were antidilutive amounted to 82,575 and 104,499 for the quarters and six-month periods ended June 30, 2014 and 2013, respectively. Warrants outstanding to purchase 1,285,899 shares of common stock and 1,442,427 unvested shares of restricted stock were excluded from the computation of diluted earnings per share for the quarter and six-month period ended June 30, 2013 because the Corporation reported a net loss attributable to common stockholders for the periods and their inclusion would have an antidilutive effect.

12

NOTE 3 – STOCK-BASED COMPENSATION

Between 1997 and January 2007, the Corporation had the 1997 stock option plan that authorized the granting of up to 579,740 options on shares of the Corporation’s common stock to eligible employees. The options granted under the plan could not exceed 20% of the number of common shares outstanding.

On January 21, 2007, the 1997 stock option plan expired; all outstanding awards granted under this plan continue in full force and effect, subject to their original terms.  No awards for shares could be granted under the 1997 stock option plan as of its expiration.

The activity of stock options granted under the 1997 stock option plan for the six-month period ended June 30, 2014 is set forth below:
				Weighted-Average
				Remaining		Aggregate
	Number of		Weighted-Average	Contractual Term		Intrinsic Value
	Options	Exercise Price		(Years)	(In thousands)
Beginning of period outstanding and
exercisable	101,435	$	206.95
Options expired	(12,795)		321.75
Options cancelled	(6,065)		226.15
End of period outstanding and exercisable	82,575	$	187.75	1.9	$	-

On April 29, 2008, the Corporation’s stockholders approved the First BanCorp. 2008 Omnibus Incentive Plan, as amended (the “Omnibus Plan”).  The Omnibus Plan provides for equity-based compensation incentives (the “awards”) through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other stock-based awards.  The Omnibus Plan authorizes the issuance of up to 8,169,807 shares of common stock, subject to adjustments for stock splits, reorganizations and other similar events.  The Corporation’s Board of Directors, upon receiving the relevant recommendation of the Compensation Committee, has the power and authority to determine those eligible to receive awards and to establish the terms and conditions of any awards, subject to various limits and vesting restrictions that apply to individual and aggregate awards. 

Under the Omnibus Plan, during the second quarter of 2014, 210,840 shares of restricted stock were awarded to the Corporation’s independent directors subject to a one-year vesting period. In addition, during the first quarter of 2014, the Corporation issued 810,138 shares of restricted stock that will vest based on the employees’ continued service with the Corporation. Fifty percent (50%) of those shares vest in two years from the grant date and the remaining 50% vests in three years from the grant date. Included in those 810,138 shares of restricted stock are 653,138 shares granted to certain senior officers consistent with the requirements of the Troubled Asset Relief Program (“TARP”) Interim Final Rule, which permit TARP recipients to grant “long-term restricted stock” without violating the prohibition on paying or accruing a bonus payment if it satisfies the following requirements: (i) the value of the grant may not exceed one-third of the amount of the employee’s annual compensation, (ii) no portion of the grant may vest before two years after the grant date, and (iii) the grant must be subject to a further restriction on transfer or payment as described below. Specifically, the stock that has otherwise vested may not become transferable at any time earlier than as permitted under the schedule set forth by TARP, which is based on the repayment in 25% increments of the aggregate financial assistance received from the U.S. Department of Treasury (the “Treasury”). Hence, notwithstanding the vesting period mentioned above, the employees covered by TARP are restricted from transferring the shares.

    The fair value of the shares of restricted stock granted in 2014 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 653,138 shares of restricted stock granted under the TARP requirements, the market price was discounted due to postvesting restrictions. For purposes of computing the discount, the Corporation estimated an appreciation of 16% in the value of the common stock using the Capital Asset Pricing Model as a basis of what would be a market participant’s expected return on the Corporation’s stock and assumed that the Treasury would hold its outstanding common stock of the Corporation for two years, resulting in a fair value of $2.63 for restricted shares granted under the TARP requirements. Also, the Corporation uses empirical data to estimate employee termination; separate groups of employees that have similar historical exercise behavior were considered separately for valuation purposes.

13

The following table summarizes the restricted stock activity in 2014 under the Omnibus Plan for both executive officers covered by the TARP requirements and other employees as well as for independent directors:
	Six-Month Period Ended
	June 30, 2014
	Number of shares		Weighted-Average
	of restricted		Grant Date
	stock		Fair Value
Non-vested shares at beginning of year	1,411,185	$	3.04
Granted	1,020,978		3.52
Forfeited	(2,000)		6.03
Vested	(101,323)		4.39
Non-vested shares at June 30, 2014	2,328,840	$	3.20

   For the quarter and six-month period ended June 30, 2014, the Corporation recognized $0.8 million and $1.2 million, respectively, of stock-based compensation expense related to restricted stock awards, compared to $0.4 million and $0.6 million for the same periods in 2013. As of June 30, 2014, there was $4.4 million of total unrecognized compensation cost related to nonvested shares of restricted stock. The weighted average period over which the Corporation expects to recognize such cost is 1.7 years.

    During the second quarter of 2013, the Corporation issued 701,405 shares of restricted stock that will vest based on the employees’ continued service with the Corporation. Fifty percent (50%) of those shares vest in two years from the grant date and the remaining 50% vest in three years from the grant date. Included in those 701,405 shares of restricted stock are 582,905 shares granted to certain senior officers consistent with the requirements of TARP. The employees covered by TARP are restricted from transferring the shares, subject to certain conditions as explained above.

   The fair value of the shares of restricted stock granted in the second quarter of 2013 was based on the market price of the Corporation’s outstanding common stock on the date of the grant of $6.03. For the 582,905 shares of restricted stock granted under the TARP requirements, the market price was discounted due to postvesting restrictions. For purposes of computing the discount, the Corporation assumed appreciation of 13% in the value of the common stock and a holding period by the Treasury of its outstanding common stock of the Corporation of two years, resulting in a fair value of $3.02 for restricted shares granted under the TARP requirements.

Stock-based compensation accounting guidance requires the Corporation to develop an estimate of the number of share-based awards that will be forfeited due to employee or director turnover. Quarterly changes in the estimated forfeiture rate may have a significant effect on share-based compensation, as the effect of adjusting the rate for all expense amortization is recognized in the period in which the forfeiture estimate is changed. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease in the expense recognized in the financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase in the expense recognized in the financial statements. When unvested options or shares of restricted stock are forfeited, any compensation expense previously recognized on the forfeited awards is reversed in the period of the forfeiture.  Approximately $5 thousand of compensation expense was reversed during the first six months of 2014 related to forfeited awards.

   Also, under the Omnibus Plan, effective April 1, 2013, the Corporation’s Board of Directors determined to increase the salary amounts paid to certain executive officers primarily by paying the increased salary amounts in the form of shares of the Corporation’s common stock, instead of cash. During the first six months of 2014, the Corporation issued 147,781 shares of common stock with a weighted average market value of $5.24 as salary stock compensation. This resulted in a compensation expense of $0.8 million recorded in the first six-months of 2014.  For the first half of 2014, the Corporation withheld 49,145 shares from the common stock paid to certain senior officers as additional compensation and 23,555 shares of restricted stock that vested during the first quarter of 2014, to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid any fractional share of salary stock that the officer was entitled to in cash. In the consolidated financial statements, the Corporation treats shares withheld for tax purposes as common stock repurchases.

14

NOTE 4 – INVESTMENT SECURITIES

Investment Securities Available for Sale

The amortized cost, non-credit loss component of other-than-temporary impairment (“OTTI”) recorded in other comprehensive income (“OCI”), gross unrealized gains and losses recorded in OCI, approximate fair value, weighted average yield and contractual maturities of investment securities available for sale as of June 30, 2014 and December 31, 2013 were as follows:

		June 30, 2014
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI						Fair value		Weighted average yield%
						Gross Unrealized
						gains		losses
		(Dollars in thousands)
U.S. Treasury securities:
	Due within one year	$	7,494	$	-	$	3	$	-	$	7,497	0.11
Obligations of U.S.
government-sponsored
agencies:
After 1 to 5 years			50,000		-		-		521		49,479	1.05
After 5 to 10 years			214,245		-		-		6,868		207,377	1.31
Puerto Rico government
obligations:
After 1 to 5 years			39,807		-		-		10,807		29,000	4.49
After 5 to 10 years			885		-		1		-		886	5.20
After 10 years			20,399		-		-		5,303		15,096	5.82
United States and Puerto Rico
government obligations			332,830		-		4		23,499		309,335	1.91
Mortgage-backed securities:
FHLMC certificates:
After 10 years			335,489		-		1,354		3,298		333,545	2.20
GNMA certificates:
After 1 to 5 years			59		-		2		-		61	3.39
After 5 to 10 years			1,620		-		91		-		1,711	3.30
After 10 years			394,842		-		21,917		-		416,759	3.83
			396,521		-		22,010		-		418,531	3.83
FNMA certificates:
After 1 to 5 years			5,114		-		237		-		5,351	3.46
After 5 to 10 years			7,627		-		485		-		8,112	3.81
After 10 years			889,130		-		7,077		11,875		884,332	2.38
			901,871		-		7,799		11,875		897,795	2.40
Collateralized mortgage
obligations issued or
guaranteed by the FHLMC:
After 1 to 5 years			9		-		-		-		9	3.01
Other mortgage pass-through
trust certificates:
Over  5 to 10 years			120		-		-		-		120	7.27
After 10 years			51,187		13,123		-		-		38,064	2.21
			51,307		13,123		-		-		38,184	2.21
Total mortgage-backed
securities			1,685,197		13,123		31,163		15,173		1,688,064	2.69
Equity securities (without
contractual maturity) (1)			35		-		-		26		9	-
Total investment securities
available for sale		$	2,018,062	$	13,123	$	31,167	$	38,698	$	1,997,408	2.56
(1)	Represents common shares of another financial institution in Puerto Rico.

15

		December 31, 2013
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI						Fair value		Weighted average yield%
						Gross Unrealized
						gains		losses
U.S. Treasury securities:
	Due within one year	$	7,498	$	-	$	1	$	-	$	7,499	0.12
Obligations of U.S.
government-sponsored
agencies:
	After 1 to 5 years		50,000		-		-		1,408		48,592	1.05
	After 5 to 10 years		214,271		-		-		13,368		200,903	1.31
Puerto Rico government
obligations:
	Due within one year		10,000		-		-		210		9,790	3.50
	After 5 to 10 years		40,699		-		-		12,962		27,737	4.51
	After 10 years		20,309		-		-		6,506		13,803	5.82
United States and Puerto Rico
government obligations			342,777		-		1		34,454		308,324	1.96
Mortgage-backed securities:
FHLMC certificates:
	After 10 years		332,766		-		133		10,712		322,187	2.16
GNMA certificates:
	After 1 to 5 years		86		-		4		-		90	3.48
	After 5 to 10 years		800		-		37		-		837	2.47
	After 10 years		425,589		-		18,492		-		444,081	3.82
			426,475		-		18,533		-		445,008	3.82
FNMA certificates:
	After 1 to 5 years		1,389		-		84		-		1,473	4.82
	After 5 to 10 years		7,765		-		389		-		8,154	4.09
	After 10 years		882,798		-		2,984		33,626		852,156	2.36
			891,952		-		3,457		33,626		861,783	2.38
Collateralized mortgage
	obligations issued or
	guaranteed by the FHLMC:
	After 1 to 5 years		82		-		-		1		81	3.01
Other mortgage pass-through
trust certificates:
	Over  5 to 10 years		127		-		1		-		128	7.27
	After 10 years		55,048		14,310		-		-		40,738	2.24
			55,175		14,310		1		-		40,866	2.24
Total mortgage-backed
	securities		1,706,450		14,310		22,124		44,339		1,669,925	2.69
Equity securities (without
	contractual maturity) (1)		35		-		-		2		33	-
Total investment securities
	available for sale	$	2,049,262	$	14,310	$	22,125	$	78,795	$	1,978,282	2.57
(1)	Represents common shares of another financial institution in Puerto Rico.

16

Maturities of mortgage-backed securities are based on contractual terms assuming no prepayments. Expected maturities of investments might differ from contractual maturities because they may be subject to prepayments and/or call options. The weighted average yield on investment securities available for sale is based on amortized cost and, therefore, does not give effect to changes in fair value. The net unrealized gain or loss on securities available for sale and the non credit loss component of OTTI are presented as part of OCI.

The following tables show the Corporation’s available-for-sale investments’ fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of June 30, 2014 and December 31, 2013. The tables also include debt securities for which an OTTI was recognized and only the amount related to a credit loss was recognized in earnings. Unrealized losses for which OTTI had been recognized have been reduced by any subsequent recoveries in fair value.

	As of June 30, 2014
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico government obligations	$	-	$	-	$	44,096	$	16,110	$	44,096	$	16,110
U.S. government agencies obligations		-		-		256,856		7,389		256,856		7,389
Mortgage-backed securities:
FNMA		40,008		67		577,485		11,808		617,493		11,875
FHLMC		-		-		195,771		3,298		195,771		3,298
Collateralized mortgage obligations
issued or guaranteed by FHLMC		-		-		9		-		9		-
Other mortgage pass-through trust
certificates		-		-		38,064		13,123		38,064		13,123
Equity securities		9		26		-		-		9		26
	$	40,017	$	93	$	1,112,281	$	51,728	$	1,152,298	$	51,821
	As of December 31, 2013
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico government obligations	$	23,156	$	5,977	$	28,174	$	13,701	$	51,330	$	19,678
U.S. government agencies obligations		175,369		8,913		74,126		5,863		249,495		14,776
Mortgage-backed securities:
FNMA		748,215		33,626		-		-		748,215		33,626
FHLMC		286,208		10,712		-		-		286,208		10,712
Collateralized mortgage obligations
issued or guaranteed by FHLMC		-		-		81		1		81		1
Other mortgage pass-through trust
certificates		-		-		40,738		14,310		40,738		14,310
Equity securities		33		2		-		-		33		2
	$	1,232,981	$	59,230	$	143,119	$	33,875	$	1,376,100	$	93,105

17

Assessment for OTTI

On a quarterly basis, the Corporation performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered an OTTI. A debt security is considered impaired if the fair value is less than its amortized cost basis at the reporting date. The accounting literature requires the Corporation to assess whether the unrealized loss is other than temporary.

OTTI losses must be recognized in earnings if an investor has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis.  However, even if an investor does not expect to sell a debt security, it must evaluate expected cash flows to be received and determine if a credit loss has occurred. 

An unrealized loss is generally deemed to be other-than-temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. The credit loss component of an OTTI, if any, is recorded as a component of net impairment losses on investment securities in the accompanying consolidated statements of income (loss), while the remaining portion of the impairment loss is recognized in OCI, provided the Corporation does not intend to sell the underlying debt security and it is “more likely than not” that the Corporation will not have to sell the debt security prior to recovery.

     Debt securities issued by U.S. government agencies, government-sponsored entities and the Treasury accounted for approximately 96% of the total available-for-sale portfolio as of June 30, 2014 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government. The Corporation’s OTTI assessment was concentrated mainly on private label mortgage-backed securities (“MBS”) with an amortized cost of $51.2 million for which credit losses are evaluated on a quarterly basis. The Corporation considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

·The length of time and the extent to which the fair value has been less than the amortized cost basis;

·Changes in the near term prospects of the underlying collateral of a security, such as changes in default rates, loss severity given default, and significant changes in prepayment assumptions;

·The level of cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities; and

·Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the overall financial condition of the issuer, credit ratings, recent legislation and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate. 

The Corporation recorded OTTI losses on available-for-sale debt securities as follows:

	Private Label MBS				Private Label MBS
	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
(In thousands)
Total other-than-temporary impairment losses	$	-	$	-	$	-	$	-
Portion of  other-than-temporary impairment losses recognized in OCI		-		-		-		(117)
Net impairment losses recognized in earnings	$	-	$	-	$	-	$	(117)

18

The following table summarizes the roll-forward of credit losses on debt securities held by the Corporation for which a portion of an OTTI is recognized in OCI:
	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
(In thousands)
Credit losses at the beginning of the period	$	5,389	$	5,389	$	5,389	$	5,272
Additions:
Credit losses on debt securities for which an OTTI was
previously recognized		-		-		-		117
Ending balance of credit losses on debt securities held for
which a portion of an OTTI was recognized in OCI	$	5,389	$	5,389	$	5,389	$	5,389

During the first half of 2013, the $117 thousand credit-related impairment loss is related to private label MBS, which are collateralized by fixed-rate mortgages on single-family residential properties in the United States. The interest rate on these private-label MBS is variable, tied to 3-month LIBOR and limited to the weighted-average coupon of the underlying collateral. The underlying mortgages are fixed-rate single-family loans with original high FICO scores (over 700) and moderate original loan-to-value ratios (under 80%), as well as moderate delinquency levels.

Based on the expected cash flows derived from the model, and since the Corporation does not have the intention to sell the securities and has sufficient capital and liquidity to hold these securities until a recovery of the fair value occurs, only the credit loss component was reflected in earnings.  Significant assumptions in the valuation of the private label MBS were as follows:

	June 30, 2014		December 31, 2013
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	14.5%	14.5%	14.5%	14.5%
Prepayment rate	32%	18.15%-100.00%	29%	15.86%-100.00%
Projected Cumulative Loss Rate	8.5%	0.90%-80.00%	6.8%	0.58%-38.16%
No OTTI losses on equity securities held in the available-for-sale investment portfolio were recognized in the first half of 2014. The Corporation recorded OTTI losses of $42,000 on equity securities held in the available-for-sale investment portfolio in the second quarter and first half of 2013.

19

    Total proceeds from the sale of securities available for sale during the second quarter and first half of 2014 amounted to $4.9 million, including a $0.3 million gain on the sale of a Puerto Rico government agency bond.

    As of June 30, 2014, the Corporation held approximately $61.1 million of Puerto Rico government and agencies bond obligations, mainly bonds of the Government Development Bank (“GDB”) and the Puerto Rico Building Authority, as part of its available-for-sale investment securities portfolio, which were reflected at their aggregate fair value of $45.0 million. During the first half of 2014, the fair value of these obligation increased by $3.6 million. In February 2014, Standard & Poor’s (“S&P”), Moody’s Investor Service (“Moodys”) and Fitch Ratings (“Fitch”) downgraded the Commonwealth of Puerto Rico general obligation bonds and other obligations of Puerto Rico instrumentalities to non-investment grade category. In July 2014, the Puerto Rico debt was downgraded further into speculative grade by these credit agencies after the enactment of The Puerto Rico Public Corporations Debt Enforcement and Recovery Act that provides a legislative framework for certain public corporations that are experiencing severe financial stress to address their financial obstacles through an orderly statutory process that allows them to handle their debts. The issuers of Puerto Rico government and agencies bonds held by the Corporation have not defaulted, and the contractual payments on these securities have been made as scheduled. The Corporation has the ability and intent to hold these securities until a recovery of the fair value occurs, and it is not more likely than not that the Corporation will be required to sell the securities prior to such recovery. It is uncertain how the financial markets may react to any potential further rating downgrade of Puerto Rico’s debt. However, further deterioration in the fiscal situation could further adversely affect the value of Puerto Rico’s government obligations. The Corporation will continue to closely monitor Puerto Rico’s political and economic status and evaluate the portfolio for any declines in value that could be considered other-than temporary.

NOTE 5 – OTHER EQUITY SECURITIES

Institutions that are members of the FHLB system are required to maintain a minimum investment in FHLB stock. Such minimum investment is calculated as a percentage of aggregate outstanding mortgages, and an additional investment is required that is calculated as a percentage of total FHLB advances, letters of credit, and the collateralized portion of interest-rate swaps outstanding. The stock is capital stock issued at $100 par value. Both stock and cash dividends may be received on FHLB stock.

As of June 30, 2014 and December 31, 2013, the Corporation had investments in FHLB stock with a book value of $28.9 million and $28.4 million, respectively. The net realizable value is a reasonable proxy for the fair value of these instruments. Dividend income from FHLB stock for the quarter and six-month period ended June 30, 2014 was $0.3 million and $0.6 million, respectively, compared to $0.3 million and $0.7 million for the comparable periods in 2013.

The shares of FHLB stock owned by the Corporation are issued by the FHLB of New York. The FHLB of New York is part of the Federal Home Loan Bank System, a national wholesale banking network of 12 regional, stockholder-owned congressionally chartered banks. The Federal Home Loan Banks are all privately capitalized and operated by their member stockholders. The system is supervised by the Federal Housing Finance Agency, which ensures that the Home Loan Banks operate in a financially safe and sound manner, remain adequately capitalized and able to raise funds in the capital markets, and carry out their housing finance mission.

    The Corporation has other equity securities that do not have a readily available fair value. The carrying value of such securities as of June 30, 2014 and December 31, 2013 was $0.3 million.

20

NOTE 6 – LOANS HELD FOR INVESTMENT

 The following table provides information about the loan portfolio held for investment:

		June 30,		December 31,
		2014		2013
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	2,795,159	$	2,549,008
Commercial loans:
Construction loans			148,266		168,713
Commercial mortgage loans			1,813,930		1,823,608
Commercial and Industrial loans (1)			2,647,478		2,788,250
Loans to a local financial institution collateralized by
real estate mortgages (2)			-		240,072
Commercial loans			4,609,674		5,020,643
Finance leases			240,593		245,323
Consumer loans			1,821,675		1,821,196
Loans held for investment			9,467,101		9,636,170
Allowance for loan and lease losses			(241,177)		(285,858)
Loans held for investment, net		$	9,225,924	$	9,350,312
(1)	As of June 30, 2014 and December 31, 2013, includes $1.1 billion and 1.2 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.
(2)	On May 30, 2014, FirstBank acquired from Doral Financial Corporation ("Doral") mortgage loans, mainly residential mortgage loans, having an unpaid principal balance of $241.7 million (estimated fair value at acquisition of $226.0 million) in full satisfaction of secured borrowings with a book value of $232.9 million owed by Doral to FirstBank. Refer to Acquired Loans, including Purchased Credit-Impaired ("PCI") loans discussion below for additional information.

Loans held for investment on which accrual of interest income had been discontinued were as follows:
(In thousands)		June 30,		December 31,
		2014		2013
Non-performing loans:
Residential mortgage		$	175,404	$	161,441
Commercial mortgage			166,218		120,107
Commercial and Industrial			143,669		114,833
Construction:
Land			20,838		27,834
Construction-commercial			3,849		3,924
Construction-residential			14,143		27,108
Consumer:
Auto loans			22,005		21,316
Finance leases			3,414		3,082
Other consumer loans			15,091		15,904
Total non-performing loans held for investment  (1) (2)		$	564,631	$	495,549
_______________
(1)	As of June 30, 2014 and December 31, 2013, excludes $54.8 million of non-performing loans held for sale.
(2)	Amount excludes PCI loans with a carrying value of approximately $105.6 million and $4.8 million as of June 30, 2014 and December 31, 2013, respectively, primarily mortgage loans acquired from Doral in the second quarter of 2014, as further discussed below. These loans are not considered non-performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

21

The Corporation’s aging of the loans held for investment portfolio is as follows:
										Purchased Credit-Impaired Loans				Total loans held for investment		90 days past due and still accruing (2)
		30-59 Days Past Due		60-89 Days Past Due			90 days or more Past Due (1)	Total Past Due
As of June 30, 2014
(In thousands)												Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	10,357	$	79,082	$	89,439	$	-	$	72,554	$	161,993	$	79,082
Other residential mortgage loans (4)			-		95,029		189,752		284,781		99,997		2,248,388		2,633,166		14,348
Commercial:
Commercial and Industrial loans			12,240		3,015		162,557		177,812		-		2,469,666		2,647,478		18,888
Commercial mortgage loans (4)			-		5,362		179,861		185,223		3,447		1,625,260		1,813,930		13,643
Construction:
Land (4)			-		258		23,212		23,470		-		39,879		63,349		2,374
Construction-commercial			-		-		3,849		3,849		-		14,980		18,829		-
Construction-residential (4)			-		-		14,143		14,143		-		51,945		66,088		-
Consumer:
Auto loans			82,018		20,391		22,005		124,414		-		997,700		1,122,114		-
Finance leases			9,664		3,376		3,414		16,454		-		224,139		240,593		-
Other consumer loans			7,139		8,770		18,713		34,622		2,176		662,763		699,561		3,622
Total loans held for investment		$	111,061	$	146,558	$	696,588	$	954,207	$	105,620	$	8,407,274	$	9,467,101	$	131,957
_____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.
(3)	As of June 30, 2014, includes $19.8 million of defaulted loans collateralizing Government National Mortgage Association ("GNMA") securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the  Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $16.5 million, $160.1 million, $72.1 million, $0.8 million, and $2.5 million, respectively.

As of December 31, 2013		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due  (1)								Total loans held for investment		90 days past due and still accruing (2)
(In thousands)									Total Past Due		Purchased Credit- Impaired Loans		Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	12,180	$	78,645	$	90,825	$	-	$	104,401	$	195,226	$	78,645
Other residential mortgage loans (4)			-		88,898		172,286		261,184		-		2,092,598		2,353,782		10,845
Commercial:
Commercial and Industrial loans			21,029		5,454		134,233		160,716		-		2,867,606		3,028,322		19,400
Commercial mortgage loans (4)			-		5,428		126,674		132,102		-		1,691,506		1,823,608		6,567
Construction:
Land (4)			-		358		27,871		28,229		-		52,145		80,374		37
Construction-commercial			-		-		3,924		3,924		-		12,907		16,831		-
Construction-residential (4)			-		-		27,108		27,108		-		44,400		71,508		-
Consumer:
Auto loans			79,279		17,944		21,316		118,539		-		993,781		1,112,320		-
Finance leases			10,275		3,536		3,082		16,893		-		228,430		245,323		-
Other consumer loans			11,710		8,691		20,492		40,893		4,791		663,192		708,876		4,588
Total loans held for investment		$	122,293	$	142,489	$	615,631	$	880,413	$	4,791	$	8,750,966	$	9,636,170	$	120,082
____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.
(3)	As of December 31, 2013, includes $11.5 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the  Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments.  FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $23.9 million, $166.7 million, $18.4 million, $0.9 million and $2.5 million, respectively.

22

The Corporation’s credit quality indicators by loan type as of June 30, 2014 and December 31, 2013 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
June 30, 2014
(In thousands)
Commercial mortgage		$	295,588	$	3,133	$	-	$	298,721	$	1,813,930
Construction:
Land			21,134		936		-		22,070		63,349
Construction-commercial			12,490		3,149		-		15,639		18,829
Construction-residential			13,343		741		60		14,144		66,088
Commercial and Industrial			252,595		2,768		475		255,838		2,647,478
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2013
(In thousands)
Commercial mortgage		$	317,365	$	9,160	$	234	$	326,759	$	1,823,608
Construction
Land			31,777		3,308		52		35,137		80,373
Construction-commercial			16,022		-		-		16,022		16,831
Construction-residential			27,829		2,209		241		30,279		71,509
Commercial and Industrial			205,807		7,998		973		214,778		3,028,322
_________
(1)	Excludes $54.8 million ($7.8 million land, $39.1 million construction-commercial, $0.9 million construction-residential and $ 7.0 million commercial mortgage) as of June 30, 2014 and December 31, 2013, of non-performing loans held for sale.

The Corporation considers a loan as adversely classified if its risk rating is Substandard, Doubtful or Loss.   These categories are defined as follows:

Substandard- A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful- Doubtful classifications have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. A Doubtful classification may be appropriate in cases where significant risk exposures are perceived, but Loss cannot be determined because of specific reasonable pending factors which may strengthen the credit in the near term.

Loss- Assets classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. There is little or no prospect for near term improvement and no realistic strengthening action of significance pending.

23

June 30, 2014		Consumer Credit Exposure-Credit Risk Profile based on payment activity
		Residential Real-Estate				Consumer
		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	161,993	$	2,357,765	$	1,100,109	$	237,179	$	682,294
Purchased Credit-Impaired (2)			-		99,997		-		-		2,176
Non-performing			-		175,404		22,005		3,414		15,091
Total		$	161,993	$	2,633,166	$	1,122,114	$	240,593	$	699,561
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of  residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
December 31, 2013		Consumer Credit Exposure-Credit Risk Profile based on payment activity
			Residential Real-Estate			Consumer
		FHA/VA/ Guaranteed  (1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	195,226	$	2,192,341	$	1,091,004	$	242,241	$	688,181
Purchased Credit-Impaired (2)			-		-		-		-		4,791
Non-performing			-		161,441		21,316		3,082		15,904
Total		$	195,226	$	2,353,782	$	1,112,320	$	245,323	$	708,876
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of  residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

24

      The following tables present information about impaired loans, excluding purchased credit-impaired loans, which are reported separately, as discussed below:

Impaired Loans
(In thousands)
									Quarter ended				Six-month Period Ended
										June 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment		Interest Income Recognized Accrual Basis		Interest Income Recognized Cash Basis		Interest Income Recognized Accrual Basis		Interest Income Recognized Cash Basis
As of June 30, 2014
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		263,024		286,904		-		265,285		2,788		355		5,357		749
Commercial:
Commercial mortgage loans		84,909		90,834		-		85,642		423		484		884		640
Commercial and Industrial Loans		39,507		55,335		-		40,027		6		264		14		264
Construction:
Land		1,821		2,500		-		1,844		6		3		12		3
Construction-commercial		-		-		-		-		-		-		-		-
Construction-residential		4,848		4,946		-		4,917		42		2		83		4
Consumer:
Auto loans		-		-		-		-		-		-		-		-
Finance leases		-		-		-		-		-		-		-		-
Other consumer loans		4,882		5,699		-		4,962		75		18		154		32
	$	398,991	$	446,218	$	-	$	402,677	$	3,340	$	1,126	$	6,504	$	1,692
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		151,424		172,951		16,464		153,650		1,393		660		2,728		1,040
Commercial:
Commercial mortgage loans		154,088		176,208		16,317		160,076		471		162		937		599
Commercial and Industrial Loans		140,257		171,068		22,745		150,374		611		333		1,177		390
Construction:
Land		13,548		22,265		3,855		13,690		13		10		27		14
Construction-commercial		15,639		15,639		3,950		15,881		-		87		-		259
Construction-residential		10,865		11,062		1,157		12,548		-		-		-		-
Consumer:
Auto loans		14,110		14,110		1,980		14,887		258		-		498		-
Finance leases		2,162		2,162		91		2,348		58		-		110		-
Other consumer loans		7,774		8,616		1,799		8,042		589		15		1,113		26
	$	509,867	$	594,081	$	68,358	$	531,496	$	3,393	$	1,267	$	6,590	$	2,328
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		414,448		459,855		16,464		418,935		4,181		1,015		8,085		1,789
Commercial:
Commercial mortgage loans		238,997		267,042		16,317		245,718		894		646		1,821		1,239
Commercial and Industrial Loans		179,764		226,403		22,745		190,401		617		597		1,191		654
Construction:
Land		15,369		24,765		3,855		15,534		19		13		39		17
Construction-commercial		15,639		15,639		3,950		15,881		-		87		-		259
Construction-residential		15,713		16,008		1,157		17,465		42		2		83		4
Consumer:
Auto loans		14,110		14,110		1,980		14,887		258		-		498		-
Finance leases		2,162		2,162		91		2,348		58		-		110		-
Other consumer loans		12,656		14,315		1,799		13,004		664		33		1,267		58
	$	908,858	$	1,040,299	$	68,358	$	934,173	$	6,733	$	2,393	$	13,094	$	4,020

25

(In thousands)
	Recorded Investments		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment
As of December 31, 2013
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		220,428		237,709		-		222,617
Commercial:
Commercial mortgage loans		69,484		73,723		-		71,367
Commercial and Industrial Loans		32,418		56,831		-		37,946
Construction:
Land		359		366		-		360
Construction-commercial		-		-		-		-
Construction-residential		14,761		19,313		-		17,334
Consumer:
Auto loans		-		-		-		-
Finance leases		-		-		-		-
Other consumer loans		4,035		4,450		-		3,325
	$	341,485	$	392,392	$	-	$	352,949
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		190,566		212,028		18,125		193,372
Commercial:
Commercial mortgage loans		149,888		163,656		32,189		153,992
Commercial and Industrial Loans		154,686		170,191		26,686		162,786
Construction:
Land		27,711		40,348		10,455		28,906
Construction-commercial		16,022		16,238		8,873		16,157
Construction-residential		13,864		13,973		2,816		13,640
Consumer:
Auto loans		14,121		14,122		1,829		12,937
Finance leases		2,359		2,359		73		2,219
Other consumer loans		8,410		8,919		1,555		8,919
	$	577,627	$	641,834	$	102,601	$	592,928
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		410,994		449,737		18,125		415,989
Commercial:
Commercial mortgage loans		219,372		237,379		32,189		225,359
Commercial and Industrial Loans		187,104		227,022		26,686		200,732
Construction:
Land		28,070		40,714		10,455		29,266
Construction-commercial		16,022		16,238		8,873		16,157
Construction-residential		28,625		33,286		2,816		30,974
Consumer:
Auto loans		14,121		14,122		1,829		12,937
Finance leases		2,359		2,359		73		2,219
Other consumer loans		12,445		13,369		1,555		12,244
	$	919,112	$	1,034,226	$	102,601	$	945,877
Interest income of approximately $7.9 million ($6.4 million on an accrual basis and $1.5 million on a cash basis) and $15.3 million ($12.0 million on an accrual basis and $3.3 million on a cash basis) was recognized on impaired loans for the second quarter and six-month period ended June 30, 2013, respectively.

26

The following tables show the activity for impaired loans and the related specific reserve for the quarter and six-month
period ended June 30, 2014:
	Quarter Ended		Six-Month Period Ended
	June 30, 2014
		(In thousands)
Impaired Loans:
Balance at beginning of period	$	879,388	$	919,112
Loans determined impaired during the period		98,966		153,243
Net charge-offs		(32,646)		(64,685)
Increases to impaired loans- additional disbursements		294		919
Foreclosures		(4,134)		(8,140)
Loans no longer considered impaired		(14,003)		(17,731)
Paid in full or partial payments		(19,007)		(73,860)
Balance at end of period	$	908,858	$	908,858

		Quarter Ended		Six-Month Period Ended
	June 30, 2014
	(In thousands)
Specific Reserve:
Balance at beginning of period	$	85,016	$	102,601
Provision for loan losses		15,988		30,442
Net charge-offs		(32,646)		(64,685)
Balance at end of period	$	68,358	$	68,358

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Acquired loans, including PCI Loans

    On May 30, 2014, FirstBank purchased from Doral all of its rights, title and interests in first and second mortgage loans having an unpaid principal balance of approximately $241.7 million for an aggregate price of approximately $232.9 million.  Doral had pledged the mortgage loans to FirstBank as collateral for secured borrowings pursuant to a series of credit agreements between the parties entered into in 2006. As consideration for the purchase of the mortgage loans, FirstBank credited approximately $232.9 million as full satisfaction of the outstanding balance of the Doral secured borrowings plus interest owed to FirstBank. The estimated fair value of the mortgage loans at acquisition was $226.0 million. This transaction resulted in a loss of $6.9 million derived from the difference between the fair value of the mortgage loans acquired, $226.0 million, and the book value of the secured borrowings of $232.9 million. Approximately $5.5 million of the loss was part of the general allowance for loan losses established for commercial loans in prior periods; thus, an additional charge of $1.4 million to the provision was recorded in the second quarter of 2014.  In addition, the Corporation recorded $0.6 million of professional service fees in the second quarter of 2014 specifically related to this transaction.

    Acquired loans are recorded at fair value at the date of acquisition. The Corporation concluded that loans with a contractual unpaid principal balance of $119.2 million and an estimated fair value at acquisition of $102.8 million were acquired with evidence of credit quality deterioration and, as purchased credit impaired loans, have been accounted for under ASC 310-30, while loans with a contractual unpaid principal balance of $122.5 million and an estimated fair value at acquisition of $123.2 million are non-credit impaired purchased loans that have been accounted for under ASC 310-20. 

     Subsequent to the day-one fair value, acquired loans accounted for under ASC 310-20 are accounted for consistently with other originated loans, potentially becoming non-accrual or impaired, as well as being classified under the Corporation’s standard practices and procedures. In addition, these loans are considered in the determination of the allowance for loan losses. 

Under ASC 310-30, the acquired loans were aggregated into pools based on similar characteristics (i.e. delinquency status, loan terms). Each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. The loans which are accounted for under ASC 310-30 by the Corporation are not considered non-performing and will continue to have an accretable yield as long as there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The Corporation measures additional losses for this portfolio when it is probable the Corporation will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition.

On May 30, 2012, the Corporation reentered the credit card business with the acquisition of an approximate $406 million portfolio of FirstBank-branded credit card loans from FIA Card Services (“FIA”). These loans were recorded on the Consolidated Statement of Financial Condition at estimated fair value on the acquisition date of $368.9 million.  The Corporation concluded that loans with a contractual outstanding unpaid principal and interest balance at acquisition of $34.6 million and an estimated fair value of $15.7 million were PCI loans.

The carrying amount of PCI loans follows:
	June 30,		December 31,
	2014		2013
(In thousands)
Residential mortgage loans	$	99,997	$	-
Commercial mortgage loans		3,447		-
Credit Cards		2,176		4,791
	$	105,620	$	4,791

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The following tables present PCI loans by past due status as of June 30, 2014 and December 31, 2013:
As of June 30, 2014		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)										Current
Residential mortgage loans (1)		$	-	$	11,282	$	11,522	$	22,804	$	77,193	$	99,997
Commercial mortgage loans (1)			-		366		437		803		2,644		3,447
Credit Cards			166		62		145		373		1,803		2,176
		$	166	$	11,710	$	12,104	$	23,980	$	81,640	$	105,620
_____________
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the  Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans and commercial mortgage loans past due 30-59 days amounted to $18.2 million and $0.9 million, respectively.
As of December 31, 2013		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)										Current
Credit Cards		$	377	$	354	$	573	$	1,304	$	3,487	$	4,791

Initial Fair Value and Accretable Yield of PCI Loans

At acquisition, the Corporation estimated the cash flows the Corporation expected to collect on PCI loans. Under the accounting guidance for PCI loans, the difference between the contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. This difference is neither accreted into income nor recorded on the Corporation’s Consolidated Statement of Financial Condition. The excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loans, using the effective-yield method.

The following table presents acquired loans from Doral accounted for pursuant to ASC 310-30 as of May 30, 2014 acquisition date:
(In thousands)
Contractually- required principal and interest	$	275,842
Less: Nonaccretable difference		(86,252)
Cash flows expected to be collected		189,590
Less: Accretable yield		(86,759)
Fair value of loans acquired in 2014	$	102,831

The cash flows expected to be collected consider the estimated remaining life of the underlying loans and include the effects of estimated prepayments.

Changes in accretable yield of acquired loans

Subsequent to acquisition, the Corporation is required to periodically evaluate its estimate of cash flows expected to be collected. These evaluations, performed quarterly, require the continued use of key assumptions and estimates, similar to the initial estimate of fair value. Subsequent changes in the estimated cash flows expected to be collected may result in changes in the accretable yield and nonaccretable difference or reclassifications from nonaccretable yield to accretable. Increases in the cash flows expected to be collected will generally result in an increase in interest income over the remaining life of the loan or pool of loans. Decreases in expected cash flows due to further credit deterioration will generally result in an impairment charge recognized in the Corporation’s provision for loan and lease losses, resulting in an increase to the allowance for loan losses. During the first half of 2014, the Corporation did not record charges to the provision for loan losses related to PCI loans, most of which were acquired on May 30, 2014.

.

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Changes in the accretable yield of PCI loans for the quarter and six month period ended June 30, 2014 were as follows:
	Quarter ended June 30, 2014		Quarter ended June 30, 2013		Six month period ended June 30, 2014		Six month period ended June 30, 2013
(In thousands)
Balance at beginning of period	$	-	$	406	$	-	$	2,171
Additions (accretable yield at acquisition
of loans from Doral)		86,759		-		86,759		-
Accretion recognized in earnings		(612)		-		(612)		(413)
Reclassification to non accretable		-		-		-		(1,352)
Balance at end of period	$	86,147	$	406	$	86,147	$	406

Changes in the carrying amount of loans accounted pursuant to ASC 310-30 follows:
		Quarter Ended		Six-Month Period Ended
			June 30, 2014		June 30, 2014
(In thousands)
Balance at beginning of period (1)		$	3,383	$	4,791
Additions (2)			102,831		102,831
Accretion			612		612
Collections and charge-offs			(1,207)		(2,615)
Ending balance		$	105,619	$	105,619
(1)	Relates to PCI loans acquired as part of the credit card portfolio purchased in the second quarter of 2012.
(2)	Represents the estimated fair value of the PCI loans acquired from Doral at the date of acquisition.

 The outstanding principal balance of PCI loans, including amounts charged off by the Corporation, amounted to $139.3 million as of June 30, 2014 (December 2013- $22.7 million).

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Purchases and Sales of Loans

In addition to loans acquired from Doral, during 2014, the Corporation purchased $80.5 million of residential mortgage loans consistent with a strategic program established by the Corporation in 2005 to purchase ongoing residential mortgage loan production from mortgage bankers in Puerto Rico.  Generally, the loans purchased from mortgage bankers were conforming residential mortgage loans.  Purchases of conforming residential mortgage loans provide the Corporation the flexibility to retain or sell the loans, including through securitization transactions, depending upon the Corporation’s interest rate risk management strategies. When the Corporation sells such loans, it generally keeps the servicing of the loans.

In the ordinary course of business, the Corporation sells residential mortgage loans (originated or purchased) to the GNMA and government-sponsored entities (“GSEs”). GNMA and GSEs, such as Fannie Mae (“FNMA”) and Freddie Mac (“FHLMC”), generally securitize the transferred loans into mortgage-backed securities for sale into the secondary market.  The Corporation sold approximately $65.1 million of performing residential mortgage loans to FNMA and FHLMC during the first half of 2014. Also, the Corporation securitized $104.2 million of FHA/VA mortgage loans into GNMA mortgage-backed securities during the first half of 2014. The Corporation’s continuing involvement in these loan sales consists primarily of servicing the loans.  In addition, the Corporation agreed to repurchase loans when it breaches any of the representations and warranties included in the sale agreement. These representations and warranties are consistent with the GSEs’ selling and servicing guidelines (i.e., ensuring that the mortgage was properly underwritten according to established guidelines).

For loans sold to GNMA, the Corporation holds an option to repurchase individual delinquent loans issued on or after January 1, 2003 when the borrower fails to make any payment for three consecutive months. This option gives the Corporation the ability, but not the obligation, to repurchase the delinquent loans at par without prior authorization from GNMA.

Under ASC Topic 860 Transfer and Servicing, once the Corporation has the unilateral ability to repurchase the delinquent loan, it is considered to have regained effective control over the loan and is required to recognize the loan and a corresponding repurchase liability on the balance sheet regardless of the Corporation’s intent to repurchase the loan.

During the first half of 2014, the Corporation repurchased pursuant to its repurchase option with GNMA $2.7 million of loans previously sold to GNMA. The principal balance of these loans is fully guaranteed and the risk of loss related to repurchases is generally limited to the difference between the delinquent interest payment advanced to GNMA computed at the loan’s interest rate and the interest payments reimbursed by FHA, which are computed at a pre-determined debenture rate. Repurchases of GNMA loans allow the Corporation, among other things, to maintain acceptable delinquency rates on outstanding GNMA pools and remain as a seller and servicer in good standing with GNMA. The Corporation generally remediates any breach of representations and warranties related to the underwriting of such loans according to established GNMA guidelines without incurring losses. The Corporation does not maintain a liability for estimated losses as a result of breaches in representations and warranties.

Loan sales to FNMA and FHLMC are without recourse in relation to the future performance of the loans.  The Corporation repurchased at par loans previously sold to FNMA and FHLMC in the amount of $1.3 million during the first half of 2014. The Corporation’s risk of loss with respect to these loans is also minimal as these repurchased loans are generally performing loans with documentation deficiencies. A $0.7 million loss was recorded in the first half of 2014 related to breaches in representations and warranties and a $0.3 million charge was recorded related to compensatory fees imposed by GSEs. Historically, losses experienced related to breaches in representation and warranties have been immaterial.

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As a consequence, as of June 30, 2014, the Corporation does not maintain a liability for estimated losses on loans expected to be repurchased as a result of breaches in loan and servicer representations and warranties.

Bulk Sales of Assets and Transfer of Loans to Held For Sale

  On June 21, 2013, the Corporation announced that it had completed a sale of non-performing residential mortgage loans with a book value of $203.8 million and OREO properties with a book value of $19.2 million in a cash transaction.  The sales price of this bulk sale was $128.3 million. Approximately $30.1 million of reserves had already been allocated to the loans. This transaction resulted in total charge-offs of $98.0 million and an incremental loss of $69.8 million, reflected in the provision for loan and lease losses for the second quarter and first half of 2013. In addition, the Corporation recorded $3.1 million of professional service fees specifically related to this bulk sale of non-performing residential assets. This transaction resulted in a total pre-tax loss of $72.9 million.

On March 28, 2013, the Corporation completed the sale of adversely classified loans with a book value of $211.4 million ($100.1 million of commercial and industrial loans, $68.8 million of commercial mortgage loans, $41.3 million of construction loans, and $1.2 million of residential mortgage loans), and $6.3 million of OREO properties in a cash transaction. Included in the bulk sale was $185.0 million of non-performing assets. The sales price of this bulk sale was $120.2 million. Approximately $39.9 million of reserves had already been allocated to the loans. This transaction resulted in total charge-offs of $98.5 million and an incremental loss of $58.9 million, reflected in the provision for loan and lease losses for the first half of 2013. In addition, the Corporation recorded $3.9 million of professional fees specifically related to this bulk sale of assets. This transaction resulted in a total pre-tax loss of $62.8 million.

In addition, during the first quarter of 2013, the Corporation transferred to held for sale non-performing loans with an aggregate book value of $181.6 million.  These transfers resulted in charge-offs of $36.0 million and an incremental loss of $5.2 million reflected in the provision for loan and lease losses for the first half of 2013.

During the second quarter of 2013, the Corporation completed the sale of a $40.8 million non-performing commercial mortgage loan that was among the loans transferred to held for sale in the first quarter of 2013 without incurring additional losses. 

In a separate transaction during 2013, the Corporation foreclosed on the collateral underlying $39.2 million related to one of the loans written-off and transferred to held for sale in the first quarter of 2013.Furthermore, in the third quarter of 2013, approximately $6.4 million of construction loan held for sale participations were paid-off.

The Corporation’s primary goal with respect to these sales has been to accelerate the disposition of non-performing assets, which is the main priority of the Corporation’s Strategic Plan. The opportunistic sale of distressed assets is a pivotal and tactical step in the Corporation’s efforts to reduce balance sheet risk, improve earnings in the future through reductions of credit-related-costs and enhance credit quality consistent with regulators’ expectations of adequate levels of adversely classified assets for financial institutions.

Loan Portfolio Concentration

The Corporation’s primary lending area is Puerto Rico. The Corporation’s banking subsidiary, First Bank, also lends in the USVI and BVI markets and in the United States (principally in the state of Florida). Of the total gross loans held for investment of $9.5 billion as of June 30, 2014, approximately 83% have credit risk concentration in Puerto Rico, 10% in the United States, and 7% in the USVI and BVI.

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   As of June 30, 2014, the Corporation had $385.3 million in credit facilities granted to the Puerto Rico government, its municipalities and public corporations, of which $340.7 million was outstanding, compared to $397.8 million outstanding as of December 31, 2013, and $80.2 million granted to the government of the Virgin Islands, compared to $60.6 million as of December 31, 2013. Approximately $205.7 million of the outstanding credit facilities consists of loans to municipalities in Puerto Rico. Municipal debt exposure is secured by ad valorem taxation without limitation as to rate or amount on all taxable property within the boundaries of each municipality. The good faith, credit, and unlimited taxing power of the applicable municipality have been pledged to the repayment of all outstanding bonds and notes. Approximately $46.4 million consists of loans to units of the central government, and approximately $88.6 million consists of loans to public corporations that receive revenues from the rates they charge for services or products, such as electric power services, including a $75.0 million credit extended to the Puerto Rico Electric Power Authority for fuel purchases that have priority over senior bonds and other debt. Main public corporations have varying degrees of independence from the central government and many receive appropriations or other payments from the Puerto Rico’s government general fund. Debt issued by the central government can either carry the full faith, credit and taxing power of the Commonwealth of Puerto Rico or represent an obligation that is subject to annual budget appropriations. Furthermore, the Corporation had $200.2 million outstanding as of June 30, 2014 in financing to the hotel industry in Puerto Rico guaranteed by the Puerto Rico Tourism Development Fund (“TDF”). The TDF is a subsidiary of the GDB that works with private-sector financial institutions to structure financings for new hospitality projects.  

       As disclosed in Note 4, S&P, Moody’s and Fitch downgraded the credit rating of the Commonwealth of Puerto Rico’s debt and certain public corporations to non-investment grade categories. The Corporation cannot predict at this time the impact that the current fiscal situation of the Commonwealth of Puerto Rico and the various legislative and other measures adopted and to be adopted by the Puerto Rico government in response to such fiscal situation will have on the Puerto Rico economy and on the Corporation’s financial condition and results of operations.

Troubled Debt Restructurings

The Corporation provides homeownership preservation assistance to its customers through a loss mitigation program in Puerto Rico that is similar to the U.S. government’s Home Affordable Modification Program guidelines. Depending upon the nature of borrowers’ financial condition, restructurings or loan modifications through this program as well as other restructurings of individual commercial, commercial mortgage, construction, and residential mortgage loans in the U.S. mainland fit the definition of a troubled debt restructuring (a “TDR”). A restructuring of a debt constitutes a TDR if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Modifications involve changes in one or more of the loan terms that bring a defaulted loan current and provide sustainable affordability. Changes may include the refinancing of any past-due amounts, including interest and escrow, the extension of the maturity of the loan and modifications of the loan rate. As of June 30, 2014, the Corporation’s total TDR loans held for investment of $628.2 million consisted of $342.9 million of residential mortgage loans, $103.5 million of commercial and industrial loans, $137.6 million of commercial mortgage loans, $17.0 million of construction loans, and $27.2 million of consumer loans. Outstanding unfunded commitments on TDR loans amounted to $0.4 million as of June 30, 2014.

The Corporation’s loss mitigation programs for residential mortgage and consumer loans can provide for one or a combination of the following: movement of interest past due to the end of the loan, extension of the loan term, deferral of principal payments for a significant period of time, and reduction of interest rates either permanently (offered up to 2010) or for a period of up to two years (step-up rates). Additionally, in certain cases, the restructuring may provide for the forgiveness of contractually due principal or interest. Uncollected interest is added to the end of the loan term at the time of the restructuring and not recognized as income until collected or when the loan is paid off. These programs are available only to those borrowers who have defaulted, or are likely to default, permanently on their loan and would lose their homes in a foreclosure action absent some lender concession. Nevertheless, if the Corporation is not reasonably assured that the borrower will comply with its contractual commitment, properties are foreclosed.

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   Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers. Trial modifications generally represent a six-month period during which the borrower makes monthly payments under the anticipated modified payment terms prior to a formal modification. Upon successful completion of a trial modification, the Corporation and the borrower enter into a permanent modification. TDR loans that are participating in or that have been offered a binding trial modification are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification. As of June 30, 2014, we classified an additional $8.2 million of residential mortgage loans as TDRs that were participating in or had been offered a trial modification.

For the commercial real estate, commercial and industrial, and construction portfolios, at the time of a restructuring, the Corporation determines, on a loan-by-loan basis, whether a concession was granted for economic or legal reasons related to the borrower’s financial difficulty. Concessions granted for commercial loans could include: reductions in interest rates to rates that are considered below market; extension of repayment schedules and maturity dates beyond original contractual terms; waivers of borrower covenants; forgiveness of principal or interest; or other contract changes that would be considered a concession. The Corporation mitigates loan defaults for its commercial loan portfolios through its collections function. The function’s objective is to minimize both early stage delinquencies and losses upon default of commercial loans. In the case of the commercial and industrial,  commercial mortgage and construction loan portfolios, the Corporation’s Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO.  In addition to the management of the resolution process for problem loans, the SAG oversees collection efforts for all loans to prevent migration to the non-performing and/or adversely classified status.  The SAG utilizes relationship officers, collection specialists, and attorneys. In the case of residential construction projects, the workout function monitors project specifics, such as project management and marketing, as deemed necessary. The SAG utilizes its collections infrastructure of workout collection officers, credit work-out specialists, in-house legal counsel, and third-party consultants. In the case of residential construction projects and large commercial loans, the function also utilizes third-party specialized consultants to monitor the residential and commercial construction projects in terms of construction, marketing and sales, and assists with the restructuring of large commercial loans. In addition, the Corporation extends, renews, and restructures loans with satisfactory credit profiles. Many commercial loan facilities are structured as lines of credit, which are mainly one year in term and therefore are required to be renewed annually. Other facilities may be restructured or extended from time to time based upon changes in the borrower’s business needs, use of funds, timing of completion of projects, and other factors. If the borrower is not deemed to have financial difficulties, extensions, renewals, and restructurings are done in the normal course of business and not considered concessions, and the loans continue to be recorded as performing.

Selected information on TDRs that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs:
		June 30, 2014
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	24,088	$	6,437	$	277,431	$	-	$	34,956	$	342,912
Commercial Mortgage Loans			30,672		12,884		74,939		-		19,124		137,619
Commercial and Industrial Loans:			7,666		4,885		33,216		3,100		54,671		103,538
Construction Loans:
Land			834		214		1,634		-		554		3,236
Construction-commercial			-		-		3,848		-		-		3,848
Construction-residential			6,155		160		3,142		-		432		9,889
Consumer Loans - Auto			-		544		8,662		-		4,904		14,110
Finance Leases			-		510		1,652		-		-		2,162
Consumer Loans - Other			642		178		8,407		130		1,562		10,919
Total Troubled Debt Restructurings (2)		$	70,057	$	25,812	$	412,931	$	3,230	$	116,203	$	628,233
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.
(2)	Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

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		December 31, 2013
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	23,428	$	6,059	$	274,562	$	-	$	33,195	$	337,244
Commercial Mortgage Loans			36,543		12,985		83,993		7		20,048		153,576
Commercial and Industrial Loans			12,099		11,341		12,835		3,122		52,554		91,951
Construction Loans:
Land			878		2,012		1,760		-		675		5,325
Construction-commercial			-		-		3,924		-		-		3,924
Construction-residential			6,054		160		3,173		994		513		10,894
Consumer Loans - Auto			-		706		8,350		-		5,066		14,122
Finance Leases			-		1,286		1,072		-		-		2,358
Consumer Loans - Other			227		256		8,638		-		1,743		10,864
Total Troubled Debt Restructurings (2)		$	79,229	$	34,805	$	398,307	$	4,123	$	113,794	$	630,258
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.
(2)	Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

The following table presents the Corporation's TDR activity:
(In thousands)	Quarter Ended		Six-Month Period Ended
	June 30, 2014
Beginning balance of TDRs	$	622,320	$	630,258
New TDRs		34,810		54,745
Increases to existing TDRs - additional
disbursements		107		134
Charge-offs post modification		(18,666)		(26,648)
Foreclosures		(1,527)		(2,601)
Paid-off and partial payments		(8,811)		(27,655)
Ending balance of TDRs	$	628,233	$	628,233

TDRs are classified as either accrual or nonaccrual loans. A loan on nonaccrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure, generally for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loans being returned to accrual at the time of the restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan. Loan modifications increase the Corporation’s interest income by returning a non-performing loan to performing status, if applicable, increase cash flows by providing for payments to be made by the borrower, and avoid increases in foreclosure and OREO costs. The Corporation continues to consider a modified loan as an impaired loan for purposes of estimating the allowance for loan and lease losses. A TDR loan that specifies an interest rate that at the time of the restructuring is greater than or equal to the rate the Corporation is willing to accept for a new loan with comparable risk may not be reported as a TDR or an impaired loan in the calendar years subsequent to the restructuring if it is in compliance with its modified terms. The Corporation did not remove loans from the TDR classification during the first half of 2014.

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The following table provides a breakdown between accrual and nonaccrual status of TDRs:
(In thousands)		June 30, 2014
		Accrual		Nonaccrual (1) (2)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	256,948	$	85,964	$	342,912
Commercial Mortgage Loans			77,795		59,824		137,619
Commercial and Industrial Loans			53,249		50,289		103,538
Construction Loans:
Land			811		2,425		3,236
Construction-commercial			-		3,848		3,848
Construction-residential			3,301		6,588		9,889
Consumer Loans - Auto			8,847		5,263		14,110
Finance Leases			2,060		102		2,162
Consumer Loans - Other			8,859		2,060		10,919
Total Troubled Debt Restructurings		$	411,870	$	216,363	$	628,233
(1)	Included in non-accrual loans are $85.5 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.
(2)	Excludes non-accrual TDRs held for sale with a carrying value of $45.8 million as of June 30, 2014.

(In thousands)		December 31, 2013
		Accrual		Nonaccrual (1) (2)		Total TDRs
Non- FHA/VA Residential Mortgage loans		$	263,919	$	73,324	$	337,243
Commercial Mortgage Loans			84,419		69,156		153,575
Commercial and Industrial Loans			53,509		38,441		91,950
Construction Loans:
Land			1,000		4,325		5,325
Construction-commercial			-		3,924		3,924
Construction-residential			3,332		7,562		10,894
Consumer Loans - Auto			8,512		5,610		14,122
Finance Leases			2,275		85		2,360
Consumer Loans - Other			8,417		2,448		10,865
Total Troubled Debt Restructurings		$	425,383	$	204,875	$	630,258
(1)	Included in non-accrual loans are $95.7 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.
(2)	Excludes non-accrual TDRs held for sale with a carrying value of $45.9 million as of December 31, 2013.

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TDRs exclude restructured mortgage loans that are government guaranteed (i.e., FHA/VA loans) in an amount totaling $76.9 million. The Corporation excludes government guaranteed loans from TDRs given that, in the event that the borrower defaults on the loan, the principal and interest (debenture rate) are guaranteed by the U.S. government; therefore, the risk of loss on these types of loans is very low. The Corporation does not consider loans with government guarantees to be impaired loans for the purpose of calculating the allowance for loan and lease losses.

Loan modifications that are considered TDRs completed during the quarter and six-month period ended June 30, 2014 and 2013 were as follows:

(Dollars in thousands)	Quarter ended June 30, 2014
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	91	$	11,017	$	10,264
Commercial Mortgage Loans	1		410		410
Commercial and Industrial Loans	7		21,114		21,114
Construction Loans:
Land	2		55		57
Construction-commercial	-		-		-
Construction-residential	-		-		-
Consumer Loans - Auto	92		1,408		1,393
Finance Leases	10		174		142
Consumer Loans - Other	313		1,457		1,430
Total Troubled Debt Restructurings	516	$	35,635	$	34,810
(Dollars in thousands)	Six-Month period ended June 30, 2014
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	138	$	18,726	$	17,975
Commercial Mortgage Loans	4		1,244		1,247
Commercial and Industrial Loans	12		29,078		28,744
Construction Loans:
Land	2		55		57
Construction-commercial	-		-		-
Construction-residential	-		-		-
Consumer Loans - Auto	209		3,013		2,998
Finance Leases	20		367		335
Consumer Loans - Other	742		3,416		3,389
Total Troubled Debt Restructurings	1,127	$	55,899	$	54,745

37

(Dollars in thousands)	Quarter ended June 30, 2013
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	40	$	3,335	$	3,335
Commercial Mortgage Loans	1		491		491
Commercial and Industrial Loans	1		1,165		1,165
Construction Loans:
Land	4		208		208
Consumer Loans - Auto	142		1,945		1,945
Finance Leases	19		416		416
Consumer Loans - Other	367		1,675		1,675
Total Troubled Debt Restructurings	574	$	9,235	$	9,235
(Dollars in thousands)	Six-Month period ended June 30, 2013
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	113	$	13,098	$	13,122
Commercial Mortgage Loans	1		491		491
Commercial and Industrial Loans	8		68,051		42,663
Construction Loans:
Land	4		208		208
Construction-residential	1		195		195
Consumer Loans - Auto	285		3,868		3,868
Finance Leases	38		729		729
Consumer Loans - Other	730		3,322		3,322
Total Troubled Debt Restructurings	1,180	$	89,962	$	64,598

38

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-performing loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. The Corporation considers a loan to have defaulted if the borrower has failed to make payments of either principal, interest, or both for a period of 90 days or more.

   Loan modifications considered TDRs that defaulted during the quarters and six-month periods ended June 30, 2014 and June 30, 2013 and had become TDRs during the 12-months preceding the default date were as follows:

	Quarter ended June 30,
(Dollars in thousands)	2014			2013
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	19	$	2,267	19	$	2,090
Commercial Mortgage Loans	-		-	-		-
Commercial and Industrial Loans	-		-	-		-
Construction Loans:
Land	1		46	2		66
Construction-commercial	-		-	-		-
Construction-residential	-		-	1		186
Consumer Loans - Auto	18		286	5		37
Consumer Loans - Other	53		205	35		137
Finance Leases	-		-	2		20
Total	91	$	2,804	64	$	2,536

	Six-Month Period Ended June 30,
(Dollars in thousands)	2014			2013
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	33	$	4,819	64	$	9,615
Commercial Mortgage Loans	-		-	1		46,102
Commercial and Industrial Loans	-		-	2		3,829
Construction Loans:
Land	1		46	2		66
Construction-commercial	-		-	-		-
Construction-residential	-		-	1		186
Consumer Loans - Auto	22		325	7		54
Consumer Loans - Other	98		381	40		219
Finance Leases	-		-	2		20
Total	154	$	5,571	119	$	60,091

39

For certain TDRs, the Corporation splits the loans into two new notes, A and B notes. The A note is restructured to comply with the Corporation’s lending standards at current market rates, and is tailored to suit the customer’s ability to make timely interest and principal payments. The B note includes the granting of the concession to the borrower and varies by situation. The B note is charged off but the obligation is not forgiven to the borrower, and any payments collected are accounted for as recoveries. At the time of restructuring, the A note is identified and classified as a TDR. If the loan performs for at least six months according to the modified terms, the A note may be returned to accrual status. The borrower’s payment performance prior to the restructuring is included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of the restructuring. In the periods following the calendar year in which a loan is restructured, the A note may no longer be reported as a TDR if it is on accrual, is in compliance with its modified terms, and yields a market rate (as determined and documented at the time of the restructuring).

The recorded investment in loans held for investment restructured using the A/B note restructure workout strategy was approximately $62.2 million at June 30, 2014. The following table provides additional information about the volume of this type of loan restructuring and the effect on the allowance for loan and lease losses in the first half of 2014 and 2013:

(In thousands)	June 30, 2014			June 30, 2013
Principal balance deemed collectible at end of period	$	62,159	$	93,451
Amount (recovery) charged off	$	(4,106)	$	25,389
(Reductions) charges to the provision for loan losses	$	(4,725)	$	2,318
Allowance for loan losses at end of period	$	942	$	3,339

Of the loans comprising the $62.2 million that have been deemed collectible, approximately $60.5 million were placed in accrual status as the borrowers have exhibited a period of sustained performance. These loans continue to be individually evaluated for impairment purposes.

40

NOTE 7 – ALLOWANCE FOR LOAN AND LEASE LOSSES

The changes in the allowance for loan and lease losses were as follows:
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended June 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	30,508	$	66,512	$	79,590	$	27,411	$	62,757	$	266,778
Charge-offs		(4,987)		(13,423)		(19,452)		(2,661)		(18,531)		(59,054)
Recoveries		300		4,297		416		55		1,641		6,709
Provision (release)		3,934		(8,808)		16,336		(3,513)		18,795		26,744
Ending balance	$	29,755	$	48,578	$	76,890	$	21,292	$	64,662	$	241,177
Ending balance: specific reserve for impaired loans	$	16,464	$	16,317	$	22,745	$	8,962	$	3,870	$	68,358
Ending balance: purchased credit-impaired loans	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance	$	13,291	$	32,261	$	54,145	$	12,330	$	60,792	$	172,819
Loans held for investment:
Ending balance	$	2,795,159	$	1,813,930	$	2,647,478	$	148,266	$	2,062,268	$	9,467,101
Ending balance: impaired loans	$	414,448	$	238,997	$	179,764	$	46,721	$	28,928	$	908,858
Ending balance: purchased credit-impaired loans	$	99,997	$	3,447	$	-	$	-	$	2,176	$	105,620
Ending balance: loans with general allowance	$	2,280,714	$	1,571,486	$	2,467,714	$	101,545	$	2,031,164	$	8,452,623
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Six-Month period ended June 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	33,110	$	73,138	$	85,295	$	35,814	$	58,501	$	285,858
Charge-offs		(11,409)		(19,233)		(41,911)		(3,631)		(36,577)		(112,761)
Recoveries		369		4,332		1,079		672		2,969		9,421
Provision (release)		7,685		(9,659)		32,427		(11,563)		39,769		58,659
Ending balance	$	29,755	$	48,578	$	76,890	$	21,292	$	64,662	$	241,177
Ending balance: specific reserve for impaired loans	$	16,464	$	16,317	$	22,745	$	8,962	$	3,870	$	68,358
Ending balance: purchased credit-impaired loans	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance	$	13,291	$	32,261	$	54,145	$	12,330	$	60,792	$	172,819
Loans held for investment:
Ending balance	$	2,795,159	$	1,813,930	$	2,647,478	$	148,266	$	2,062,268	$	9,467,101
Ending balance: impaired loans	$	414,448	$	238,997	$	179,764	$	46,721	$	28,928	$	908,858
Ending balance: purchased credit-impaired loans	$	99,997	$	3,447	$	-	$	-	$	2,176	$	105,620
Ending balance: loans with general allowance	$	2,280,714	$	1,571,486	$	2,467,714	$	101,545	$	2,031,164	$	8,452,623

41

(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended June 30, 2013
Allowance for loan and lease losses:
Beginning balance		$	64,722	$	78,053	$	97,363	$	45,033	$	57,360	$	342,531
Charge-offs			(5,956)		(3,271)		(6,488)		(2,387)		(16,350)		(34,452)
Charge-offs related to bulk sale			(97,941)		-		-		(31)		-		(97,972)
Recoveries			479		18		968		50		1,961		3,476
Provision (release)			74,277		2,522		5,274		(6,686)		12,077		87,464
Reclassification (1)			-		10,691		(9,440)		(1,251)		-		-
Ending balance		$	35,581	$	88,013	$	87,677	$	34,728	$	55,048	$	301,047
Ending balance: specific reserve for impaired loans		$	20,406	$	33,219	$	36,503	$	21,884	$	2,941	$	114,953
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance		$	15,175	$	54,794	$	51,174	$	12,844	$	52,107	$	186,094
Loans held for investment:
Ending balance		$	2,511,206	$	1,916,509	$	2,775,791	$	194,912	$	2,047,368	$	9,445,786
Ending balance: impaired loans		$	384,062	$	212,983	$	206,932	$	76,483	$	27,785	$	908,245
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	8,285	$	8,285
Ending balance: loans with general allowance		$	2,127,144	$	1,703,526	$	2,568,859	$	118,429	$	2,011,298	$	8,529,256
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Six-Month period ended June 30, 2013
Allowance for loan and lease losses:
Beginning balance		$	68,354	$	97,692	$	146,900	$	61,600	$	60,868	$	435,414
Charge-offs			(16,653)		(19,270)		(47,430)		(28,246)		(31,114)		(142,713)
Charge-offs related to bulk sale			(98,972)		(40,057)		(44,678)		(12,784)		-		(196,491)
Recoveries			627		38		1,759		147		3,679		6,250
Provision			82,225		38,919		40,566		15,262		21,615		198,587
Reclassification (1)			-		10,691		(9,440)		(1,251)		-		-
Ending balance		$	35,581	$	88,013	$	87,677	$	34,728	$	55,048	$	301,047
Ending balance: specific reserve for impaired loans		$	20,406	$	33,219	$	36,503	$	21,884	$	2,941	$	114,953
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance		$	15,175	$	54,794	$	51,174	$	12,844	$	52,107	$	186,094
Loans held for investment:
Ending balance		$	2,511,206	$	1,916,509	$	2,775,791	$	194,912	$	2,047,368	$	9,445,786
Ending balance: impaired loans		$	384,062	$	212,983	$	206,932	$	76,483	$	27,785	$	908,245
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	8,285	$	8,285
Ending balance: loans with general allowance		$	2,127,144	$	1,703,526	$	2,568,859	$	118,429	$	2,011,298	$	8,529,256
(1)	During the second quarter of 2013, after a comprehensive review of substantially all of the loans in our commercial portfolios, the classification of certain loans was revised to more accurately depict the nature of the underlying loans. This reclassification resulted in a net increase of $269.0 million in commercial mortgage loans, since the principal source of repayment for such loans is derived primarily from the operation of the underlying real estate, with a corresponding decrease of $246.8 million in commercial and industrial loans and $22.2 million decrease in construction loans. The Corporation evaluated the impact of this reclassification on the provision for loan losses and determined that the effect of this adjustment was not material to any previously reported results.

42

During the second quarter of 2014, the Corporation made certain enhancements to the general allowance estimation process for commercial loans which mainly consisted of the following:

Utilization of longer historical loss periods to better reflect the level of incurred losses in portfolio. Historical charge-off rates are calculated by the Corporation on a quarterly basis by tracking cumulative charge-offs experienced over a two year loss period on loans according to their internal risk rating (referred to as “base rate” for the quarter). Prior to the second quarter enhancements, the Corporation would use the base rate of the current quarter or the average of the last 4 quarters, if greater. During the second quarter of 2014, the Corporation eliminated the use of the “greater of” approach and adopted the utilization of the base rate average of the last 8 quarters. This change captures a longer historical period that would help mitigate period to period volatility in the loss rates.

Enhancements of the environmental factors adjustment. Prior to the second quarter enhancements, these adjustments were applied in the form of basis points additions to the loss ratio based on changes in credit and economic indicators observed in the most recent periods. During the second quarter of 2014, the resulting factor derived from a set of risk-based ratings and weights assigned to credit and economic indicators activity over a reasonable period is now applied to a developed expected range of historical losses, in order to adjust the base loss rates. These enhancements result in a framework that can be applied more consistently, by having a more granular analysis that better captures trends in economic conditions and the impact in the Corporation’s portfolio.

In addition, the calculation of loss rates for asset classifications with limited or zero loss history was improved to consider these loans’ migration experience.

The Corporation maintained a parallel computation of the general reserve for commercial loans. The enhancements to the general allowance estimation process resulted in a net decrease to the allowance for loan losses of $4.8 million as of the implementation date of May 31, 2014.

The bulk sale of approximately $217.7 million of adversely classified assets in the first quarter of 2013, mainly commercial loans, resulted in charge-offs of approximately $98.5 million. In determining the historical loss rate for the computation of the general reserve for commercial loans, the Corporation includes the portion of these charge-offs that was related to the acceleration of previously reserved credit losses amounting to approximately $39.9 million.  The Corporation considered that the portion not deemed to be credit-related losses was not indicative of the ultimate losses that may have occurred had the assets been resolved on an individual basis, over time and not in a steeply discounted bulk sale.  A transaction, such as this one, entered into to expedite the reduction of non-performing and adversely classified assets, can result in charge-offs that are not reflective of true credit-related charge-off history since there is a component related to the discounted value realized on a bulk sale basis. Accordingly, the Corporation concluded that it is reasonable to exclude the component related to the discounted value from its historical charge-off analysis used in estimating its allowance for loan losses.

As of June 30, 2014, the Corporation maintained a $0.2 million reserve for unfunded loan commitments mainly related to outstanding construction and commercial and industrial loan commitments. The reserve for unfunded loan commitments is an estimate of the losses inherent in off-balance sheet loan commitments to borrowers that are experiencing financial difficulties at the balance sheet date. It is calculated by multiplying an estimated loss factor by an estimated probability of funding, and then by the period-end amounts for unfunded commitments. The reserve for unfunded loan commitments is included as part of accounts payable and other liabilities in the consolidated statement of financial condition.

NOTE 8 – LOANS HELD FOR SALE

The Corporation’s loans held-for-sale portfolio was composed of:

	June 30, 2014		December 31, 2013
	(In thousands)
Residential mortgage loans	$	17,350	$	21,168
Construction loans		47,802		47,802
Commercial mortgage loans		6,953		6,999
Total	$	72,105	$	75,969

Non-performing loans held for sale totaled $54.8 million ($7.0 million commercial mortgage and $47.8 million construction loans) as of June 30, 2014 and December 31, 2013.  

43

NOTE 9 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

One of the market risks facing the Corporation is interest rate risk, which includes the risk that changes in interest rates will result in changes in the value of the Corporation’s assets or liabilities and the risk that net interest income from its loan and investment portfolios will be adversely affected by changes in interest rates.  The overall objective of the Corporation’s interest rate risk management activities is to reduce the variability of earnings caused by changes in interest rates.

The Corporation designates a derivative as a fair value hedge, a cash flow hedge or an economic undesignated hedge when it enters into the derivative contract.  As of June 30, 2014 and December 31, 2013, all derivatives held by the Corporation were considered economic undesignated hedges.  These undesignated hedges are recorded at fair value with the resulting gain or loss recognized in current earnings.

The following summarizes the principal derivative activities used by the Corporation in managing interest rate risk:

Interest rate cap agreements - Interest rate cap agreements provide the right to receive cash if a reference interest rate rises above a contractual rate. The value increases as the reference interest rate rises. The Corporation enters into interest rate cap agreements for protection from rising interest rates.

Interest rate swaps - Interest rate swap agreements generally involve the exchange of fixed and floating-rate interest payment obligations without the exchange of the underlying notional principal amount. As of June 30, 2014 and December 31, 2013, most of the interest rate swaps outstanding are used for protection against rising interest rates. Similar to unrealized gains and losses arising from changes in fair value, net interest settlements on interest rate swaps are recorded as an adjustment to interest income or interest expense depending on whether an asset or liability is being economically hedged.

Forward Contracts - Forward contracts are sales of to-be-announced (“TBA”) mortgage-backed securities that will settle over the standard delivery date and do not qualify as “regular way” security trades. Regular-way security trades are contracts that have no net settlement provision and no market mechanism to facilitate net settlement and provide for delivery of a security within the time generally established by regulations or conventions in the market place or exchange in which the transaction is being executed. The forward sales are considered derivative instruments that need to be marked to market. These securities are used to economically hedge the FHA/VA residential mortgage loan securitizations of the mortgage-banking operations. Unrealized gains (losses) are recognized as part of mortgage banking activities in the Consolidated Statements of Income (Loss).

To satisfy the needs of its customers, the Corporation may enter into nonhedging transactions. On these transactions, generally, the Corporation participates as a buyer in one of the agreements and as a seller in the other agreement under the same terms and conditions.

In addition, the Corporation enters into certain contracts with embedded derivatives that do not require separate accounting as these are clearly and closely related to the economic characteristics of the host contract. When the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, it is bifurcated, carried at fair value, and designated as a trading or non-hedging derivative instrument.

The following table summarizes the notional amounts of all derivative instruments:
	Notional Amounts
	As of		As of
	June 30,		December 31,
	2014		2013
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements	$	30,859	$	31,080
Written interest rate cap agreements		37,769		38,391
Purchased interest rate cap agreements		37,769		38,391
Forward Contracts:
Sale of TBA GNMA MBS pools		17,000		25,000
	$	123,397	$	132,862
Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

44

The following table summarizes the fair value of derivative instruments and the location in the statement of financial condition:
	Asset Derivatives					Liability Derivatives
	Statement of	June 30,		December 31,			June 30,		December 31,
	Financial	2014		2013			2014		2013
	Condition Location	Fair Value		Fair Value		Statement of Financial Condition Location	Fair Value		Fair Value
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements	Other assets	$	99	$	162	Accounts payable and other liabilities	$	3,328	$	3,965
Written interest rate cap agreements	Other assets		-		-	Accounts payable and other liabilities		16		58
Purchased interest rate cap agreements	Other assets		16		58	Accounts payable and other liabilities		-		-
Forward Contracts:
Sales of TBA GNMA MBS pools	Other assets		-		174	Accounts payable and other liabilities		228		-
		$	115	$	394		$	3,572	$	4,023

The following table summarizes the effect of derivative instruments on the statement of income (loss):
		Gain (or Loss)				Gain (or Loss)
	Location of  Gain or (loss)	Quarter Ended				Six-Month Period Ended
	Recognized in Income on	June 30,				June 30,
(In thousands)	Derivatives	2014		2013		2014		2013
		(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements used to hedge fixed-rate loans	Interest income - Loans	$	261	$	709	$	574	$	1,099
Written and purchased interest rate cap agreements	Interest income - Loans		-		(1)		-		9
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage banking activities		(237)		971		(402)		866
Total gain on derivatives		$	24	$	1,679	$	172	$	1,974

Derivative instruments, such as interest rate swaps, are subject to market risk.  As is the case with investment securities, the market value of derivative instruments is largely a function of the financial market’s expectations regarding the future direction of interest rates.  Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on earnings.  This will depend, for the most part, on the shape of the yield curve, the level of interest rates, as well as the expectations for rates in the future. 

   A summary of interest rate swaps follows:

		As of		As of
		June 30,		December 31,
		2014		2013
			(Dollars in thousands)
Pay fixed/receive floating :
Notional amount		$	30,859	$	31,080
Weighted-average receive rate at period end			1.84%		1.85%
Weighted-average pay rate at period end			6.77%		6.77%
Floating rates range from 167 to 187 basis points over 3-month LIBOR
	As of June 30, 2014, the Corporation has not entered into any derivative instrument containing credit-risk related contingent features.

45

NOTE 10 – OFFSETTING OF ASSETS AND LIABILITIES

The Corporation enters into master agreements with counterparties that may allow for netting of exposures in the event of default, primarily related to derivatives and repurchase agreements. In an event of default, each party has a right of set-off against the other party for the amounts owed in the related agreement and any other amount or obligation owed in respect of any other agreement or transaction between them. The following table presents information about the offsetting of financial assets and liabilities as well as derivative assets and liabilities:

Offsetting of Financial Assets and Derivative Assets
(In thousands)
As of June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized  Assets		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
											Net Amount
Description
Derivatives	$	16	$	-	$	16	$	(16)	$	-	$	-
As of December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized  Assets		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
											Net Amount
Description
Derivatives	$	58	$	-	$	58	$	(58)	$	-	$	-

46

Offsetting of Financial Liabilities and Derivative Liabilities
(In thousands)
As of June 30,  2014
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized  Liabilities		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
											Net Amount
Description
Derivatives	$	3,328	$	-	$	3,328	$	(3,328)	$	-	$	-
Repurchase agreements		600,000		-		600,000		(600,000)		-		-
Total	$	603,328	$	-	$	603,328	$	(603,328)	$	-	$	-
As of December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized  Liabilities		Gross Amounts Offset in the Statement of Financial Position
							Financial Instruments		Cash Collateral
											Net Amount
Description
Derivatives
	$	3,965	$	-	$	3,965	$	(3,965)	$	-	$	-
Repurchase agreements		600,000		-		600,000		(600,000)		-		-
Total	$	603,965	$	-	$	603,965	$	(603,965)	$	-	$	-

47

NOTE 11 – GOODWILL AND OTHER INTANGIBLES

Goodwill as of June 30, 2014 and December 31, 2013 amounted to $28.1 million, recognized as part of “Other Assets” in the consolidated statement of financial condition. The Corporation conducted its annual evaluation of goodwill and intangibles during the fourth quarter of 2013.

The Corporation bypassed the qualitative assessment in 2013 and proceeded directly to perform the first step of the two-step goodwill impairment test. The Step 1 evaluation of goodwill allocated to the Florida reporting unit under both valuation approaches (market and discounted cash flow analysis) indicated that the fair value of the unit was above the carrying amount of its equity book value as of the valuation date (October 1); therefore, the completion of Step 2 was not required. Based on the analysis under both the market and discounted cash flow analysis, the estimated fair value of the equity of the reporting unit exceeded the carrying amount of the entity, including goodwill at the evaluation date. There have been no events related to the Florida reporting unit that could indicate potential goodwill impairment since the date of the last evaluation; therefore, no goodwill impairment evaluation was performed during the first six months of 2014. Goodwill and other indefinite life intangibles are reviewed at least annually for impairment.

In connection with the acquisition of the FirstBank-branded credit card loan portfolio in the second quarter of 2012, the Corporation recognized a purchased credit card relationship intangible of $24.5 million, which is being amortized over 7.5 years on an accelerated basis based on the estimated attrition rate of the purchased credit card accounts, which reflects the pattern in which the economic benefits of the intangible asset are consumed. These benefits are consumed as the revenue stream generated by the cardholder relationship is realized.

The following table shows the gross amount and accumulated amortization of the Corporation’s intangible assets recognized as part of Other Assets in the consolidated statement of financial condition:
	As of		As of
	June 30,		December 31,
	2014		2013
(Dollars in thousands)
Core deposit intangible:
Gross amount	$	45,844	$	45,844
Accumulated amortization		(39,644)		(38,863)
Net carrying amount	$	6,200	$	6,981
Remaining amortization period		8.9 years		9.8 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization		(6,385)		(4,678)
Net carrying amount	$	18,080	$	19,787
Remaining amortization period		7.5 years		8.0 years

For the quarter and six-month period ended June 30, 2014, the amortization expense of core deposit intangibles amounted to $0.4 million and $0.8 million, respectively (2013 - $0.6 million and $1.2 million). For the quarter and six-month period ended June 30, 2014, the amortization expense of the purchased credit card relationship intangible amounted to $0.9 million and $1.7 million, respectively (2013 - $0.9 million and $1.9 million).

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NOTE 12 – NON CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

The Corporation transfers residential mortgage loans in sale or securitization transactions in which it has continuing involvement, including servicing responsibilities and guarantee arrangements. All such transfers have been accounted for as sales as required by applicable accounting guidance.

When evaluating transfers and other transactions with Variable Interest Entities (“VIEs”) for consolidation, the Corporation first determines if the counterparty is an entity for which a variable interest exists. If no scope exception is applicable and a variable interest exists, the Corporation then evaluates if it is the primary beneficiary of the VIE and whether the entity should be consolidated or not.

Below is a summary of transfers of financial assets to VIEs for which the Corporation has retained some level of continuing involvement:

Ginnie Mae

The Corporation typically transfers first lien residential mortgage loans in conjunction with GNMA securitization transactions in which the loans are exchanged for cash or securities that are readily redeemed for cash proceeds and servicing rights. The securities issued through these transactions are guaranteed by the issuer and, as such, under seller/servicer agreements, the Corporation is required to service the loans in accordance with the issuers’ servicing guidelines and standards. As of June 30, 2014, the Corporation serviced loans securitized through GNMA with a principal balance of $1.1 billion.

Trust Preferred Securities

In 2004, FBP Statutory Trust I, a financing subsidiary of the Corporation, sold to institutional investors $100 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.1 million of FBP Statutory Trust I variable rate common securities, were used by FBP Statutory Trust I to purchase $103.1 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures. Also in 2004, FBP Statutory Trust II, a statutory trust that is wholly owned by the Corporation, sold to institutional investors $125 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.9 million of FBP Statutory Trust II variable rate common securities, were used by FBP Statutory Trust II to purchase $128.9 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures. The debentures are presented in the Corporation’s consolidated statement of financial condition as Other Borrowings, net of related issuance costs. The variable rate trust-preferred securities are fully and unconditionally guaranteed by the Corporation. The $100 million Junior Subordinated Deferrable Debentures issued by the Corporation in April 2004 and the $125 million issued in September 2004 mature on June 17, 2034 and September 20, 2034, respectively; however, under certain circumstances, the maturity of Junior Subordinated Deferrable Debentures may be shortened (such shortening would result in a mandatory redemption of the variable rate trust-preferred securities). The trust-preferred securities, subject to certain limitations, qualify as Tier I regulatory capital under current applicable rules and regulations. The Collins Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act eliminates certain trust-preferred securities from Tier 1 Capital. Bank Holding Companies, such as the Corporation, must fully phase out these instruments from Tier I capital by January 1, 2016 (25% allowed in 2015 and 0% in 2016); however, these instruments may remain in Tier 2 capital until the instruments are redeemed or mature.

Grantor Trusts

During 2004 and 2005, a third party to the Corporation, from now on identified as the seller, established a series of statutory trusts to effect the securitization of mortgage loans and the sale of trust certificates. The seller initially provided the servicing for a fee, which is senior to the obligations to pay trust certificate holders.

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The seller then entered into a sales agreement through which it sold and issued the trust certificates in favor of the Corporation’s banking subsidiary. Currently, the Bank is the sole owner of the trust certificates; the servicing of the underlying residential mortgages that generate the principal and interest cash flows is performed by another third party, which receives a servicing fee. The securities are variable rate securities indexed to 90-day LIBOR plus a spread. The principal payments from the underlying loans are remitted to a paying agent (servicer) who then remits interest to the Bank; interest income is shared to a certain extent with the FDIC, which has an interest only strip (“IO”) tied to the cash flows of the underlying loans and is entitled to receive the excess of the interest income less a servicing fee over the variable rate income that the Bank earns on the securities. This IO is limited to the weighted average coupon of the securities. The FDIC became the owner of the IO upon the intervention of the seller, a failed financial institution. No recourse agreement exists and the risk from losses on non accruing loans and repossessed collateral is absorbed by the Bank as the sole holder of the certificates.  As of June 30, 2014, the amortized balance and carrying value of Grantor Trusts amounted to $51.2 million and $38.1 million, respectively, with a weighted average yield of 2.21%.

Investment in unconsolidated entity

On February 16, 2011, FirstBank sold an asset portfolio consisting of performing and non-performing construction, commercial mortgage and commercial and industrial loans with an aggregate book value of $269.3 million to CPG/GS, an entity organized under the laws of the Commonwealth of Puerto Rico and majority owned by PRLP Ventures LLC ("PRLP"), a company created by Goldman, Sachs & Co. and Caribbean Property Group.  In connection with the sale, the Corporation received $88.5 million in cash and a 35% interest in CPG/GS, and made a loan in the amount of $136.1 million representing seller financing provided by FirstBank. The loan had a seven-year maturity and bears variable interest at 30-day LIBOR plus 300 basis points and is secured by a pledge of all of the acquiring entity's assets as well as the PRLP's 65% ownership interest in CPG/GS. As of June 30, 2014, the carrying amount of the loan was $39.2 million, which was included in the Corporation's Commercial and Industrial loans held for investment portfolio. FirstBank’s equity interest in CPG/GS is accounted for under the equity method and included as part of Investment in unconsolidated entity in the Consolidated Statements of Financial Condition. When applying the equity method, the Bank follows the Hypothetical Liquidation Book Value method (“HLBV”) to determine its share of CPG/GS’s earnings or loss. Under HLBV, the Bank determines its share of CPG/GS’s earnings or loss by determining the difference between its “claim on CPG/GS’s book value” at the end of the period as compared to the beginning of the period. This claim is calculated as the amount the Bank would receive if CPG/GS were to liquidate all of its assets at recorded amounts determined in accordance with GAAP and distribute the resulting cash to the investors, PRLP and FirstBank, according to their respective priorities as provided in the contractual agreement. The Bank reports its share of CPG/GS’s operating results on a one-quarter lag basis. In addition, as a result of using HLBV, the difference between the Bank’s investment in CPG/GS and its claim on the book value of CPG/GS at the date of the investment, known as the basis difference, is amortized over the estimated life of the investment, or five years.  CPG/GS records its loans receivable under the fair value option. Equity in loss of unconsolidated entity for the six month period ended June 30, 2014 of $7.3 million includes $1.8 million related to the amortization of the basis differential, compared to equity in loss of unconsolidated entity of $4.9 million for the first six months of 2013. The loss recorded in 2014 reduced to zero the carrying amount of the Bank’s investment in CPG/GS. No negative investment needs to be reported as the Bank has no legal obligation or commitment to provide further financial support to this entity; thus, no further losses will be recorded on this investment. Any potential increase in the carrying value of the investment in CPG/GS, under the HLBV method, would depend upon how better off the Bank is at the end of the period than it was at the beginning of the period after the waterfall calculation performed to determine the amount of gain allocated to the investors.

    FirstBank also provided an $80 million advance facility to CPG/GS to fund unfunded commitments and costs to complete projects under construction, which was fully disbursed in 2011, and a $20 million working capital line of credit to fund certain expenses of CPG/GS. During 2013, the working capital line of credit was renewed and reduced to $7 million for a period of two years expiring September 2015.

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During 2012, CPG/GS repaid the outstanding balance of the advance facility to fund unfunded commitments, and the funds became available to redraw under a one-time revolver agreement. These loans bear variable interest at 30-day LIBOR plus 300 basis points. As of June 30, 2014, the carrying value of the revolver agreement and working capital line was $34.1 million and $0, respectively, which was included in the Corporation's commercial and industrial loans held for investment portfolio.

Cash proceeds received by CPG/GS are first used to cover operating expenses and debt service payments, including the note receivable, the advance facility, and the working capital line, described above, which must be substantially repaid before proceeds can be used for other purposes, including the return of capital to both PRLP and FirstBank. FirstBank will not receive any return on its equity interest until PRLP receives an aggregate amount equivalent to its initial investment and a priority return of at least 12%, resulting in FirstBank’s interest in CPG/GS being subordinate to PRLP’s interest. CPG/GS will then begin to make payments pro rata to PRLP and FirstBank, 35% and 65%, respectively, until FirstBank has achieved a 12% return on its invested capital and the aggregate amount of distributions is equal to FirstBank’s capital contributions to CPG/GS.

The Bank has determined that CPG/GS is a VIE in which the Bank is not the primary beneficiary.  In determining the primary beneficiary of CPG/GS, the Bank considered applicable guidance that requires the Bank to qualitatively assess the determination of the primary beneficiary (or consolidator) of CPG/GS based on whether it has both the power to direct the activities of CPG/GS that most significantly impact the entity's economic performance and the obligation to absorb losses of CPG/GS that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

The Bank determined that it does not have the power to direct the activities that most significantly impact the economic performance of CPG/GS as it does not have the right to manage the loan portfolio, impact foreclosure proceedings, or manage the construction and sale of the property; therefore, the Bank concluded that it is not the primary beneficiary of CPG/GS. As a creditor to CPG/GS, the Bank has certain rights related to CPG/GS; however, these are intended to be protective in nature and do not provide the Bank with the ability to manage the operations of CPG/GS. Since CPG/GS is not a consolidated subsidiary of the Bank and the transaction met the criteria for sale accounting under authoritative guidance, the Bank accounted for this transaction as a true sale, recognizing the cash received, the notes receivable, and the interest in CPG/GS and derecognizing the loan portfolio sold.

The following table shows summarized unaudited income statement information of CPG/GS for the quarters and six-month periods ended June 30, 2014 and 2013:
	Quarter Ended				Six-Month Period Ended
	June 30,		June 30,		June 30,		June 30,
	2014		2013		2014		2013
	(In thousands)				(In thousands)
Revenues, including net realized gains on sale of
investments in loans and OREO	$	2,118	$	1,040	$	2,869	$	1,719
Gross (loss) profit	$	(455)	$	(1,893)	$	(1,963)	$	(3,668)
Net (loss) income	$	(2,355)	$	(3,877)	$	(4,802)	$	2,193

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Servicing Assets

The Corporation is actively involved in the securitization of pools of FHA-insured and VA-guaranteed mortgages for issuance of GNMA mortgage-backed securities. Also, certain conventional conforming loans are sold to FNMA or FHLMC with servicing retained. The Corporation recognizes as separate assets the rights to service loans for others, whether those servicing assets are originated or purchased.

The changes in servicing assets are shown below:
		Quarter ended				Six-Month period ended
		June 30,				June 30,
		2014		2013		2014		2013
		(In thousands)
Balance at beginning of period		$	22,026	$	18,717	$	21,987	$	17,524
Capitalization of servicing assets			1,017		2,094		2,069		3,814
Amortization			(790)		(796)		(1,573)		(1,586)
Adjustment to fair value			39		277		(180)		557
Other (1)			(22)		(313)		(33)		(330)
Balance at end of period		$	22,270	$	19,979	$	22,270	$	19,979
(1)	Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

Impairment charges are recognized through a valuation allowance for each individual stratum of servicing assets. The valuation allowance is adjusted to reflect the amount, if any, by which the cost basis of the servicing asset for a given stratum of loans being serviced exceeds its fair value. Any fair value in excess of the cost basis of the servicing asset for a given stratum is not recognized.

Changes in the impairment allowance related to servicing assets were as follows:
	Quarter ended				Six-Month Period Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at beginning of period	$	431	$	392	$	212	$	672
Temporary impairment charges		24		75		243		115
Recoveries		(63)		(352)		(63)		(672)
Balance at end of period	$	392	$	115	$	392	$	115

	The components of net servicing income are shown below:
		Quarter ended				Six-Month Period Ended
		June 30,				June 30,
		2014		2013		2014		2013
		(In thousands)
Servicing fees		$	1,689	$	2,096	$	3,360	$	3,613
Late charges and prepayment penalties			177		218		341		431
Adjustment for loans repurchased			(22)		(313)		(33)		(330)
Other (1)			(689)		(148)		(1,047)		(148)
Servicing income, gross			1,155		1,853		2,621		3,566
Amortization and impairment of servicing assets			(751)		(519)		(1,753)		(1,029)
Servicing income, net		$	404	$	1,334	$	868	$	2,537
(1)	Mainly consisted of compensatory fees imposed by GSEs and losses related to representations and warranties.

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The Corporation’s servicing assets are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale ranged as follows:
	Maximum		Minimum
Six-Month Period Ended June 30, 2014:
Constant prepayment rate:
Government guaranteed mortgage loans	9.6	%	9.1	%
Conventional conforming mortgage loans	9.4	%	8.9	%
Conventional non-conforming mortgage loans	13.4	%	12.7	%
Discount rate:
Government guaranteed mortgage loans	11.5	%	11.5	%
Conventional conforming mortgage loans	9.5	%	9.5	%
Conventional non-conforming mortgage loans	13.9	%	13.8	%
Six-Month Period Ended June 30, 2013:
Constant prepayment rate:
Government guaranteed mortgage loans	10.5	%	9.1	%
Conventional conforming mortgage loans	10.9	%	9.4	%
Conventional non-conforming mortgage loans	14.3	%	13.5	%
Discount rate:
Government guaranteed mortgage loans	12.0	%	12.0	%
Conventional conforming mortgage loans	10.0	%	10.0	%
Conventional non-conforming mortgage loans	14.3	%	14.3	%

     As of June 30, 2014, fair values of the Corporation’s servicing assets were based on a valuation model that incorporates market driven assumptions regarding discount rates and mortgage prepayment rates, adjusted by the particular characteristics of the Corporation’s servicing portfolio. The weighted-averages of the key economic assumptions used by the Corporation in its valuation model and the sensitivity of the current aggregate fair value to immediate 10% and 20% adverse changes in those assumptions for mortgage loans as of June 30, 2014 were as follows:

	(Dollars in thousands)
Carrying amount of servicing assets	$	22,270
Fair value	$	24,917
Weighted-average expected life (in years)		9.15
Constant prepayment rate (weighted-average annual rate)		9.78%
Decrease in fair value due to 10% adverse change	$	953
Decrease in fair value due to 20% adverse change	$	1,846
Discount rate (weighted-average annual rate)		10.62%
Decrease in fair value due to 10% adverse change	$	1,045
Decrease in fair value due to 20% adverse change	$	2,009

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10% variation in assumptions generally cannot be extrapolated because the relationship between the change in assumption and the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the servicing asset is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the sensitivities.

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NOTE 13 – DEPOSITS

The following table summarizes deposit balances:
	June 30,			December 31,
	2014		2013
	(In thousands)
Type of account:
Non-interest bearing checking accounts	$	851,038	$	851,212
Savings accounts		2,387,743		2,334,831
Interest-bearing checking accounts		1,079,843		1,167,480
Certificates of deposit		2,215,263		2,384,378
Brokered CDs		3,096,901		3,142,023
	$	9,630,788	$	9,879,924

Brokered CDs mature as follows:
	June 30,
	2014
	(In thousands)
Three months or less	$	547,506
Over three months to six months		475,447
Over six months to one year		757,172
One to three years		1,164,461
Three to five years		116,314
Over five years		36,001
Total	$	3,096,901

The following are the components of interest expense on deposits:
	Quarter Ended				Six-Month Period Ended
	June 30,				June 30,
	2014			2013	2014			2013
	(In thousands)				(In thousands)
Interest expense on deposits	$	17,750	$	21,891	$	36,264	$	45,280
Amortization of broker placement fees		1,716		2,027		3,501		4,182
Interest expense on deposits	$	19,466	$	23,918	$	39,765	$	49,462

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NOTE 14 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase (repurchase agreements) consist of the following:
		June 30,		December 31,
		2014 (1)		2013
		(Dollars in thousands)
Repurchase agreements, interest rates ranging from 2.45% to 3.31%
(December 31, 2013 - 2.45% to 3.32%)		$	900,000	$	900,000
(1)	As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

Repurchase agreements mature as follows:
		June 30, 2014
		(In thousands)
	Over one year to three years	$	600,000
	Three to five years		300,000
	Total	$	900,000

As of June 30, 2014 and December 31, 2013, the securities underlying such agreements were delivered to the dealers with which the repurchase agreements were transacted.

Repurchase agreements as of June 30, 2014, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	Citigroup Global Markets	$	300,000	28
	JP Morgan Chase		200,000	32
	Dean Witter / Morgan Stanley		100,000	40
	Credit Suisse First Boston		300,000	42
		$	900,000

NOTE 15 – ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

The following is a summary of the advances from the FHLB:
		June 30,		December 31,
		2014		2013
		(Dollars in thousands)
	Fixed-rate advances from FHLB, with a weighted-
	average interest rate of 1.07%	$	320,000	$	300,000

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Advances from FHLB mature as follows:
		June 30,
		2014
		(In thousands)
	One to thirty days	$	20,000
	Over one year to three years		100,000
	Over three years		200,000
	Total	$	320,000

As of June 30, 2014, the Corporation had additional capacity of approximately $396.8 million on this credit facility based on collateral pledged at the FHLB, including a haircut reflecting the perceived risk associated with holding the collateral.

NOTE 16 – OTHER BORROWINGS

 Other borrowings consist of:

	June 30,		December 31,
	2014		2013
	(In thousands)
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (2.98% as of June 30, 2014
and 2.99% as of December 31, 2013)	$	103,093	$	103,093
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (2.73% as of June 30, 2014
and 2.75% as of December 31, 2013)		128,866		128,866
	$	231,959	$	231,959

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NOTE 17 – STOCKHOLDERS’ EQUITY

Common Stock

As of June 30, 2014 and December 31, 2013, the Corporation had 2,000,000,000 authorized shares of common stock with a par value of $0.10 per share. As of June 30, 2014 and December 31, 2013, there were 213,399,037 and 207,635,157 shares issued, respectively, and 212,760,158 and 207,068,978 shares outstanding, respectively. On July 30, 2009, the Corporation announced the suspension of common and preferred stock dividends effective with the preferred dividend for the month of August 2009.

In April 2014 the Corporation awarded 210,840 shares of restricted stock under the Omnibus Plan to the independent directors, subject to a one-year vesting period. Also in the first half of 2014, the Corporation granted 810,138 shares of restricted stock to certain senior officers and certain other employees. The restrictions on such restricted stock will lapse with respect to 50% over a two-year period and 50% over a three-year period. Included in the 810,138 shares of restricted stock are 653,138 shares granted to certain senior officers consistent with the requirements of TARP. In addition, in 2014, the Corporation issued 147,781 shares of common stock as increased compensation to certain executive officers. As of June 30, 2014 and December 31, 2013, there were 2,328,840 and 1,411,185 shares of unvested restricted stock outstanding. During the first six months of 2014, 2,000 shares of restricted stock were forfeited and the restrictions on 101,323 shares of restricted stock lapsed.  Refer to Note 3 for additional details.

Preferred Stock

The Corporation has 50,000,000 authorized shares of preferred stock with a par value of $1, redeemable at the Corporation’s option subject to certain terms. This stock may be issued in series and the shares of each series will have such rights and preferences as are fixed by the Board of Directors when authorizing the issuance of that particular series. As of June 30, 2014, the Corporation has five outstanding series of non-convertible, non-cumulative preferred stock: 7.125% non-cumulative perpetual monthly income preferred stock, Series A; 8.35% non-cumulative perpetual monthly income preferred stock, Series B; 7.40% non-cumulative perpetual monthly income preferred stock, Series C; 7.25% non-cumulative perpetual monthly income preferred stock, Series D; and 7.00% non-cumulative perpetual monthly income preferred stock, Series E.  The liquidation value per share is $25.

Effective January 17, 2012, the Corporation delisted all of its outstanding series of non-convertible, non-cumulative preferred stock from the New York Stock Exchange. The Corporation has not arranged for listing and/or registration on another national securities exchange or for quotation of the Series A through E Preferred Stock in a quotation medium.

   In the first six months of 2014, the Corporation issued an aggregate of 4,597,121 shares of its common stock in exchange for an aggregate of 1,077,726 shares of the Corporation’s Series A through E Preferred Stock, having an aggregate liquidation value of $26.9 million. The shares of common stock were issued to holders of the Series A through E Preferred Stock in separate and unrelated transactions in reliance upon the exemption set forth in Section 3(a)(9) of the Securities Act of 1933, as amended, for securities exchanged by an issuer with existing security holders where no commission or other remuneration is paid or given directly or indirectly by the issuer for soliciting such exchange. The carrying (liquidation) value of the Series A through E preferred stock exchanged, or $26.9 million, was reduced, and common stock and additional paid-in capital was increased in the amount of the fair value of the common stock issued. The Corporation recorded the par value of the shares issued as common stock ($0.10 per common share) or $0.5 million. The excess of the common stock fair value over the par value, or $23.9 million, was recorded in additional paid-in capital. The excess of the carrying amount of the shares of preferred stock over the fair value of the shares of common stock, or $1.7 million, was recorded as an increase to retained earnings and an increase in earnings per common share computation.

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The results of the exchange with respect to Series A through E preferred stock were as follows:
			Shares of		Shares of	Aggregate
			preferred		preferred	liquidation
			stock	Shares of	stock	preference		Shares of
		Liquidation	outstanding	preferred	outstanding	after		common
		preference	prior to	stock	after	exchange		stock
		per share	exchange	exchanged	exchange	(in thousands)		issued
Title of Securities
7.125% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series A	$	25	450,195	252,809	197,386	$	4,935	1,081,652
8.35% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series B	$	25	475,987	179,841	296,146		7,404	769,379
7.40% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series C	$	25	460,611	210,759	249,852		6,246	890,830
7.25% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series D	$	25	510,592	225,070	285,522		7,138	961,724
7.00% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series E	$	25	624,487	209,247	415,240		10,381	893,536
			2,521,872	1,077,726	1,444,146	$	36,104	4,597,121

Treasury stock

   During the first six months of 2014, the Corporation withheld an aggregate of 72,700 shares of the common stock paid to certain senior officers as additional compensation and of the restricted stock that vested during 2014 to cover employees’ payroll and income tax withholding liabilities; these shares are also held as treasury shares. As of June 30, 2014 and December 31, 2013, the Corporation had 638,879 and 566,179 shares held as treasury stock, respectively.

FirstBank Statutory Reserve (Legal Surplus)

   The Banking Law of the Commonwealth of Puerto Rico requires that a minimum of 10% of FirstBank’s net income for the year be transferred to legal surplus until such surplus equals the total of paid-in-capital on common and preferred stock. Amounts transferred to the legal surplus account from the retained earnings account are not available for distribution to the stockholders without the prior consent of the Puerto Rico Commissioner of Financial Institutions. The net loss experienced in 2013 exhausted FirstBank’s statutory reserve fund. The Puerto Rico Banking Law provides that when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over receipts shall be charged against the undistributed profits of the bank, and the balance, if any, shall be charged against the reserve fund, as a reduction thereof. If there is no reserve fund sufficient to cover such balance in whole or in part, the outstanding amount shall be charged against the capital account and the Bank cannot pay dividends until it can replenish the reserve fund to an amount of at least 20% of the original capital contributed.

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NOTE 18 - INCOME TAXES

Income tax expense includes Puerto Rico and Virgin Islands income taxes as well as applicable U.S. federal and state taxes. The Corporation is subject to Puerto Rico income tax on its income from all sources. As a Puerto Rico corporation, First BanCorp. is treated as a foreign corporation for U.S. income tax purposes and is generally subject to United States income tax only on its income from sources within the United States or income effectively connected with the conduct of a trade or business within the United States. Any such tax paid is also creditable against the Corporation’s Puerto Rico tax liability, subject to certain conditions and limitations.

Under the Puerto Rico Internal Revenue Code of 2011, as amended (the “2011 PR Code”), the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns and, thus, the Corporation is not able to utilize losses from one subsidiary to offset gains in another subsidiary. Accordingly, in order to obtain a tax benefit from a NOL, a particular subsidiary must be able to demonstrate sufficient taxable income within the applicable carry forward period. The 2011 PR Code provides a dividend received deduction of 100% on dividends received from “controlled” subsidiaries subject to taxation in Puerto Rico and 85% on dividends received from other taxable domestic corporations.

On June 30, 2013, the Puerto Rico Government approved Act No. 40 (“Act 40”), known as the “Tax Burden Adjustment and Redistribution Act”, which amended the 2011 PR Code, and Act No. 46 (“Act 46”), which bring changes to the sales and use tax regime. The main provisions of Act 40 that impact financial institutions are:

(i)A new national gross receipts tax that in the case of financial institutions is 1% of gross income that is not deductible for purposes of computing net taxable income and is not part of the alternative minimum tax (“AMT”).  This provision was retroactive to January 1, 2013.  The national gross receipts tax expense for the quarter and six-month period ended June 30, 2014 amounted to $1.4 million and $2.8 million, respectively, compared to $3.2 million recorded for the second quarter of 2013 ($1.6 million of such charge corresponded to the first quarter of 2013 and was recorded in the second quarter of 2013 upon enactment of Act 40, which was retroactive to January 1, 2013). This expense is included as part of “Taxes, other than income taxes” in the consolidated statement of income (loss). Subject to certain limitations, a financial institution will be able to claim a credit of 0.5% of its gross income against its regular income tax or the AMT. A benefit related to this credit of $0.7 million and $1.4 million was recorded as a reduction to the provision for income taxes in the second quarter and first half of 2014, respectively, compared to the benefit of $1.6 million recorded in the second quarter of 2013.

(ii)A decrease in the deduction available to corporations for the computation of the additional surtax from $750,000 to $25,000 and a change in the surtax rate to rates that range from 5% to 19%, resulting in an increase in the maximum statutory tax rate from 30% to 39%.  This provision was also retroactive to January 1, 2013.

(iii)A higher AMT rate (30% of the alternative minimum net income, as compared to 20% previously) and various parallel computations required to be made before determining whether an AMT liability exists. 

(iv)The NOL carryover period increased from 10 years to 12 years for losses incurred in taxable years that commenced after December 31, 2004 and ended before January 1, 2013.  The carryover period for NOLs incurred during taxable years commencing after December 31, 2012 is 10 years. The NOL deduction is now limited to 90% of taxable income for regular income tax purposes and 80% for AMT purposes.

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Significant changes to the sales and use tax regime include adjustments to the Business to Business exclusion.  The business to business exclusion applicable to services rendered from one registered business to another registered business remains in effect, except for certain services that will be taxable, including, among others, service charges imposed by financial institutions on other businesses (commercial clients), collection services, repairs and maintenance services of real and personal property, and computer programming services, including modifications to previously designed systems.  The sales and use tax provisions were effective beginning on July 1, 2013.

    On October 14, 2013, the Governor of Puerto Rico signed into law Act No. 117 (“Act 117”) providing additional changes and transitional provisions in connection with Act 40.  In relation to the national gross receipts tax, Act 117 clarifies, among other things, that gross income subject to the special tax does not include the following:

(i)Dividends received from a 100% controlled domestic subsidiary. During the first half of 2014, no dividends subject to this exception were received by any of the Corporation’s entities.

(ii)Income attributable to a trade or business outside of Puerto Rico.

The Corporation has maintained an effective tax rate lower than the maximum statutory rate mainly by investing in government obligations and mortgage-backed securities exempt from U.S. and Puerto Rico income taxes and by doing business through an International Banking Entity (“IBE”) of the Bank and through the Bank’s subsidiary, FirstBank Overseas Corporation, whose interest income and gain on sales is exempt from Puerto Rico and U.S. income taxation. The IBE and FirsBank Overseas Corporation were created under the International Banking Entity Act of Puerto Rico, which provides for total Puerto Rico tax exemption on net income derived by IBEs operating in Puerto Rico on the specific activities identified in the IBE Act. An IBE that operates as a unit of a bank pays income taxes at normal rates to the extent that the IBE’s net income exceeds 20% of the bank’s total net taxable income.

For the quarter and six-month period ended June 30, 2014, the Corporation recorded an income tax benefit of $0.3 million and an income tax expense of $0.6 million compared to an income tax benefit of $1.0 million and an income tax expense of $0.6 million for the same periods in 2013. The variance in the second quarter of 2014 compared to the same period in 2013 mainly reflects the impact of the amendments to the 2011 PR Code during the second quarter of 2013 when the Corporation recognized a $1.6 million benefit related to the national gross receipts tax credit ($0.8 million of such benefit corresponded to the first quarter of 2013 and was recorded in the second quarter of 2013 upon enactment of Act 40 which was retroactive to January 1, 2013) compared to the $0.7 million benefit related to the national gross receipts tax credit recorded in 2014. In addition, the variance reflects a net benefit in the 2013 second quarter of $0.5 million related to the increase in the deferred tax asset of profitable subsidiaries due to changes in statutory tax rates. Further, there was an increase of $1.0 million in the AMT expense recorded in the second quarter of 2014. These variances were partially offset by a $1.8 million reduction to the liability for certain tax positions related to prior year’s tax positions, as further discussed below. The income tax in the interim financial statements is calculated based on the income of the individual subsidiaries and the currently valid tax rates as a best possible estimate. As of June 30, 2014, the deferred tax asset, net of a valuation allowance of $510.8 million, amounted to $8.7 million compared to $7.6 million as of December 31, 2013. The decrease in the valuation allowance to $510.8 million from $522.7 million as of December 31, 2013 was mainly due to the reversal of temporary differences primarily attributable to the reduction in the allowance for loan and lease losses during the first half of 2014.

Accounting for income taxes requires that companies assess whether a valuation allowance should be recorded against their deferred tax asset based on an assessment of the amount of the deferred tax asset that is “more likely than not” to be realized. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized.

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In making such assessment, significant weight is given to evidence that can be objectively verified, including both positive and negative evidence. Consideration must be given to all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of the reversal of temporary differences and carry forwards, taxable income in carry back years and tax planning strategies. In estimating taxes, management assesses the relative merits and risks of the appropriate tax treatment of transactions taking into account statutory, judicial and regulatory guidance.

In assessing the weight of positive and negative evidence, a significant negative factor that resulted in the maintenance of the valuation allowance was that the Corporation’s banking subsidiary, FirstBank Puerto Rico, was in a three-year historical cumulative loss position as of June 30, 2014, mainly due to significant charges to the provision for loan and lease losses in prior years as a result of the economic downturn and the bulk sales of assets completed in 2013. As of June 30, 2014, the Corporation had a gross deferred tax asset of $520.6 million, including $373.3 million associated with NOLs. The Bank incurred all of the NOLs on or after 2009. As mentioned before, the Corporation maintained a valuation allowance of $510.8 million as of June 30, 2014 against the deferred tax asset. As of June 30, 2014, management concluded that $8.7 million of the deferred tax asset will be realized as it relates to profitable subsidiaries and to amounts that can be realized through future reversals of existing taxable temporary differences. To the extent the realization of a portion, or all, of the tax asset becomes “more likely than not” based on changes in circumstances (such as, improved earnings, changes in tax laws or other relevant changes), a reversal of that portion of the deferred tax asset valuation allowance will then be recorded.

The authoritative accounting guidance prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken on income tax returns. Under this guidance, income tax benefits are recognized and measured based upon a two-step analysis: 1) a tax position must be more likely than not to be sustained based solely on its technical merits in order to be recognized, and 2) the benefit is measured as the largest dollar amount of that position that is more likely than not to be sustained upon settlement. The difference between the benefit recognized under this analysis and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit (“UTB”).              

	The following table reconciles the balance of UTBs:
		Six-Month Period Ended June 30, 2014		Six-Month Period Ended June 30, 2013
(In thousands)
Balance beginning of the year		$	4,310	$	2,374
Decrease related to positions taken during prior years			(1,763)		-
Balance at end of period		$	2,547	$	2,374

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  As of June 30, 2014, the Corporation had UTBs of approximately $2.5 million, all of which would, if recognized, affect the Corporation’s effective tax rate. The Corporation classifies all interest and penalties, if any, related to tax uncertainties as income tax expense. As of June 30, 2014, the Corporation’s accrued interest that relates to tax uncertainties amounted to $2.4 million and there was no need to accrue for the payment of penalties. The years 2007 through 2009 were examined by the United States Internal Revenue Service (“IRS”) and disputed issues were taken to administrative appeals during 2011. Based on feasible settlement with the IRS Appeals office in June 2014, the Corporation released a portion of its reserve for uncertain tax positions, resulting in a tax benefit of approximately $1.8 million. Based on such agreement management believes that the amounts of unrecognized tax benefits will decrease within the next twelve months by approximately $2.5 million. Such change will not have an impact on the effective tax rate.

The Corporation’s liability for income taxes includes its liability for UTBs, and interest that relates to tax years still subject to review by taxing authorities. The UTBs are recorded as a liability instead of a reduction to the deferred tax asset as the Corporation’s NOLs and tax credit carryfowards are not available to settle any income tax that would result from the disallowance of the Corporation’s UTBs. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the 2011 PR Code is 4 years; the statute of limitations for Virgin Islands and U.S. income tax purposes are each three years after a tax return is due or filed, whichever is later. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Corporation’s liability for income taxes. Any such adjustment could be material to results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. For Puerto Rico, Virgin Islands and U.S income tax purposes, all tax years subsequent to 2009 remain open to examination. Tax year 2010 is currently under examination by the Puerto Rico Department of Treasury.

Recent Developments. On July 1, 2014, the Puerto Rico Government approved Act No. 77 (“Act 77”), Act for Adjustments to Tax System, which amended the 2011 PR Code.  Some of the main provisions that impact corporations follow:

(i)Long Term Capital Gain Tax Rate is increased from 15% to 20% and Long Term Capital Treatment was amended to apply only to assets held for a period of 1 year or more (previously 6 month or more) for transactions completed after June 30, 2014.

(ii)New Capital Loss carryover limitation, of up to 90% of Capital Gains and the carryover period of NOL’s attributable to capital losses incurred during taxable years commencing after December 31, 2013 was increased from 5 years to 7 years.

(iii)The credit for AMT paid in previous years will be limited to 25% of the excess of the regular income tax over the tentative minimum tax.

(iv)The national gross receipts tax rate for financial institutions was not affected by Act 77 and remains at 1% and financial institutions continue to claim 0.5% of their gross income as a credit against regular income tax or the AMT. However, tax credits purchased or generated by the institution are not allowed as a credit against the national gross receipts tax obligation.

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 NOTE 19 – FAIR VALUE

Fair Value Measurement

The FASB authoritative guidance for fair value measurement defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  This guidance also establishes a fair value hierarchy for classifying financial instruments.  The hierarchy is based on whether the inputs to the valuation techniques used to measure fair value are observable or unobservable.  Three levels of inputs may be used to measure fair value: 

Level 1	Valuations of Level 1 assets and liabilities are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 1 assets and liabilities include equity securities that trade in an active exchange market, as well as certain U.S. Treasury and other U.S. government and agency securities and corporate debt securities that are traded by dealers or brokers in active markets.
Level 2	Valuations of Level 2 assets and liabilities are based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include (i) mortgage-backed securities for which the fair value is estimated based on the value of identical or comparable assets, (ii) debt securities with quoted prices that are traded less frequently than exchange-traded instruments, and (iii) derivative contracts and financial liabilities (e.g., medium-term notes elected to be measured at fair value) whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.
Level 3	Valuations of Level 3 assets and liabilities are based on unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models for which the determination of fair value required significant management judgments estimation.

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For 2014, there were no transfers into or out of Level 1, Level 2 or Level 3 measurement of the fair value hierarchy.

Financial Instruments Recorded at Fair Value on a Recurring Basis

Investment securities available for sale

The fair value of investment securities was the market value based on quoted market prices (as is the case with equity securities, U.S. Treasury notes, and non-callable U.S. Agency debt securities), when available (Level 1), or market prices for identical or comparable assets (as is the case with MBS and callable U.S. agency debt) that are based on observable market parameters, including benchmark yields, reported trades, quotes from brokers or dealers, issuer spreads, bids, offers and reference data including market research operations (Level 2). Observable prices in the market already consider the risk of nonperformance. If listed prices or quotes are not available, fair value is based upon models that use unobservable inputs due to the limited market activity of the instrument, as is the case with certain private label mortgage-backed securities held by the Corporation (Level 3).

Private label MBS are collateralized by fixed-rate mortgages on single-family residential properties in the United States; the interest rate on the securities is variable, tied to three-month LIBOR and limited to the weighted-average coupon of the underlying collateral. The market valuation represents the estimated net cash flows over the projected life of the pool of underlying assets applying a discount rate that reflects market observed floating spreads over LIBOR, with a widening spread based on a nonrated security. The market valuation is derived from a model that utilizes relevant assumptions such as prepayment rate, default rate, and loss severity on a loan level basis. The Corporation modeled the cash flow from the fixed-rate mortgage collateral using a static cash flow analysis according to collateral attributes of the underlying mortgage pool (i.e. loan term, current balance, note rate, rate adjustment type, rate adjustment frequency, rate caps, and others) in combination with prepayment forecasts obtained from a commercially available prepayment model (ADCO). The variable cash flow of the security is modeled using the 3-month LIBOR forward curve. Loss assumptions were driven by the combination of default and loss severity estimates, taking into account loan credit characteristics (loan-to-value, state, origination date, property type, occupancy loan purpose, documentation type, debt-to-income ratio, and other) to provide an estimate of default and loss severity.

Refer to the table below for further information regarding qualitative information for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

Derivative instruments

The fair value of most of the Corporation’s derivative instruments is based on observable market parameters and takes into consideration the credit risk component of paying counterparties when appropriate, except when collateral is pledged. That is, on interest rate swaps, the credit risk of both counterparties is included in the valuation; and, on options and caps, only the seller's credit risk is considered.  The derivative instruments, namely swaps and caps, were valued based on a discounted cash flow approach using the related LIBOR and swap rate for each cash flow. Derivatives include interest rate swaps used for protection against rising interest rates. For these interest rate swaps, a credit component was not considered in the valuation since the Corporation has fully collateralized with investment securities any marked-to-market loss with the counterparty and, if there were market gains, the counterparty had to deliver additional collateral to the Corporation.

Although most of the derivative instruments are fully collateralized, a credit spread is considered for those that are not secured in full. The cumulative mark-to-market effect of credit risk in the valuation of derivative instruments for the quarter and six-month period ended June 30, 2014 was immaterial.

The information about the estimated fair value of financial instruments required by GAAP is presented hereunder.  The fair value amounts presented do not necessarily represent management’s estimate of the underlying value of the Corporation.   

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Assets and liabilities measured at fair value on a recurring basis, are summarized below:
	As of June 30, 2014								As of December 31, 2013
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value		Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value
Assets:
Securities available for sale :
Equity securities	$	9	$	-	$	-	$	9	$	33	$	-	$	-	$	33
U.S. Treasury Securities		7,497		-		-		7,497		7,499		-		-		7,499
Noncallable U.S. agency debt		-		207,377		-		207,377		-		200,903		-		200,903
Callable U.S. agency debt and MBS		-		1,699,358		-		1,699,358		-		1,677,651		-		1,677,651
Puerto Rico government obligations		-		42,248		2,734		44,982		-		48,904		2,426		51,330
Private label MBS		-		-		38,184		38,184		-		-		40,866		40,866
Derivatives, included in assets:
Interest rate swap agreements		-		99		-		99		-		162		-		162
Purchased interest rate cap agreements		-		16		-		16		-		58		-		58
Forward contracts		-		-		-		-		-		174		-		174
Liabilities:
Derivatives, included in liabilities:
Interest rate swap agreements		-		3,328		-		3,328		-		3,965		-		3,965
Written interest rate cap agreement		-		16		-		16		-		58		-		58
Forward contracts		-		228		-		228		-		-		-		-

The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters and six-month period ended June 30, 2014 and 2013:

		Quarter ended June 30,
		2014		2013
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	47,510	$	52,047
Total gains or losses (realized/unrealized):
Included in other comprehensive income			729		29
Sales			(4,855)		-
Principal repayments and amortization			(2,466)		(3,416)
Ending balance		$	40,918	$	48,660
(1)	Amounts mostly related to private label mortgage-backed securities.

		Six-Month Period Ended June 30,
		2014		2013
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	43,292	$	54,617
Total gains or losses (realized/unrealized):
Included in earnings			-		(117)
Included in other comprehensive income			1,693		860
Purchases			5,123		-
Sales			(4,855)		-
Principal repayments and amortization			(4,335)		(6,700)
Ending balance		$	40,918	$	48,660
(1)	Amounts mostly related to private label mortgage-backed securities.

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The table below presents qualitative information for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at June 30, 2014:
	June 30, 2014
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	38,184	Discounted cash flow	Discount rate	14.5%
				Prepayment rate	18.15% -100% (Weighted Average 32%)
				Projected cumulative loss rate	0.90% -80.00% (Weighted Average 8.5%)
Puerto Rico Government Obligations		2,734	Discounted cash flow	Prepayment speed	5.57%

Information about Sensitivity to Changes in Significant Unobservable Inputs

Private label MBS: The significant unobservable inputs in the valuation include probability of default, the loss severity assumption and the prepayment rates. Shifts in those inputs would result in different fair value measurements. Increases in the probability of default, loss severity assumptions, and prepayment rates in isolation would generally result in an adverse effect in the fair value of the instruments. Meaningful and possible shifts of each input were modeled to assess the effect on the fair value estimation.

Puerto Rico Government Obligations: The significant unobservable input used in the fair value measurement is the assumed prepayment rate. A significant increase (decrease) in the assumed rate would lead to a higher (lower) fair value estimate. Loss severity and probability of default are not included as significant unobservable variables because the obligations are guaranteed by the Puerto Rico Housing Finance Authority (“PRHFA”). The PRHFA credit risk is modeled by discounting the cash flows using a curve appropriate to the PRHFA credit rating.

The tables below summarize changes in unrealized gains and losses recorded in earnings for the quarters and six-month periods ended June 30, 2014 and 2013 for Level 3 assets and liabilities that are still held at the end of each period:
	Changes in Unrealized Losses		Changes in Unrealized Losses
	Quarter ended June 30, 2014		Quarter ended June 30, 2013
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	-	$	-

		Changes in Unrealized Losses		Changes in Unrealized Losses
		Six-Month Period Ended June 30, 2014		Six-Month Period Ended June 30, 2013
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	-	$	(117)

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Additionally, fair value is used on a nonrecurring basis to evaluate certain assets in accordance with GAAP. Adjustments to fair value usually result from the application of lower-of-cost or market accounting (e.g., loans held for sale carried at the lower-of-cost or fair value and repossessed assets) or write downs of individual assets (e.g., goodwill, loans).

As of June 30, 2014, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of June 30, 2014						(Losses) Gain recorded for the Quarter Ended June 30, 2014		(Losses) Gain recorded for the Six-Month Period Ended June 30, 2014
		Level 1		Level 2		Level 3
			(In thousands)
Loans receivable (1)		$	-	$	-	$	484,381	$	(3,742)	$	(34,193)
OREO (2)			-		-		121,842		(4,481)		(8,958)
Mortgage servicing rights (3)			-		-		22,270		39		(180)
Loans Held For Sale (4)			-		-		54,755		-		-
(1)	Mainly impaired commercial and construction loans.  The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates, net operating income of income producing properties) which are not market observable.  Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to mortgage servicing rights were mainly due to assumptions associated with mortgage prepayment rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis.  Assumptions for the value of mortgage servicing rights include:  Prepayment rate 9.78%, Discount Rate 10.62%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

As of June 30, 2013, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of June 30, 2013						(Losses) Gain recorded for the Quarter Ended June 30, 2013		(Losses) Gain recorded for the Six-Month Period Ended June 30, 2013
		Level 1		Level 2		Level 3
		(In thousands)
Loans receivable (1)		$	-	$	-	$	409,056	$	(3,534)	$	(14,192)
Other Real Estate Owned (2)			-		-		139,257		(9,181)		(12,106)
Mortgage servicing rights (3)			-		-		19,979		277		557
Loans Held For Sale (4)			-		142,632		94,951		(6,103)		(11,325)
(1)	Mainly impaired commercial and construction loans.  The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates, net operating income of income producing properties) which are not market observable.  Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to the mortgage servicing rights were mainly due to assumptions associated with mortgage prepayments rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment Rate 9.40%, Discount Rate 11.06%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and, for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

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Qualitative information regarding the fair value measurements for Level 3 financial instruments are as follows:
	June 30, 2014
	Method	Inputs
Loans	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
OREO	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Mortgage servicing rights	Discounted Cash Flow	Weighted average prepayment rate 9.78%; weighted average discount rate 10.62%

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The following is a description of the valuation methodologies used for instruments that are not measured and reported at fair value on a recurring basis or reported at fair value on a non-recurring basis. The estimated fair value was calculated using certain facts and assumptions, which vary depending on the specific financial instrument.

 Cash and due from banks and money market investments

The carrying amounts of cash and due from banks and money market investments are reasonable estimates of their fair value. Money market investments include held-to-maturity securities, which have a contractual maturity of three months or less. The fair value of these securities is based on quoted market prices in active markets that incorporate the risk of nonperformance.

Other equity securities

Equity or other securities that do not have a readily available fair value are stated at their net realizable value, which management believes is a reasonable proxy for their fair value. This category is principally composed of stock that is owned by the Corporation to comply with FHLB regulatory requirements. The realizable value of the FHLB stock equals its cost as this stock can be freely redeemed at par.

Loans receivable, including loans held for sale

The fair value of loans held for investment and for mortgage loans held for sale was estimated using discounted cash flow analyses, based on interest rates currently being offered for loans with similar terms and credit quality and with adjustments that the Corporation’s management believes a market participant would consider in determining fair value. Loans were classified by type, such as commercial, residential mortgage, and automobile. These asset categories were further segmented into fixed- and adjustable-rate categories.  Valuations are carried out based on categories and not on a loan-by-loan basis.  The fair values of performing fixed-rate and adjustable-rate loans were calculated by discounting expected cash flows through the estimated maturity date. This fair value is not currently an indication of an exit price as that type of assumption could result in a different fair value estimate. The fair value of credit card loans was estimated using a discounted cash flow method and excludes any value related to a customer account relationship. Other loans with no stated maturity, like credit lines, were valued at book value. Prepayment assumptions were considered for non-residential loans. For residential mortgage loans, prepayment estimates were based on a prepayments model that combined both a historical calibration and current market prepayment expectations.  Discount rates were based on the Treasury and LIBOR/Swap Yield Curves at the date of the analysis, and included appropriate adjustments for expected credit losses and liquidity. For impaired collateral dependent loans, the impairment was primarily measured based on the fair value of the collateral, which is derived from appraisals that take into consideration prices in observable transactions involving similar assets in similar locations.  The market valuation of the loans acquired from Doral was derived from a model that utilizes relevant assumptions such as prepayment rate, default rate, and loss severity on a loan level basis. The cash flows were modeled using a static cash flow analysis discounted by yields observed in the secondary market and in combination with prepayment forecasts. Loss assumptions were driven by the combination of default and loss severity estimates, taking into account loan credit characteristics (loan-to-value, Puerto Rico market, loan type, delinquency status, loan terms, and other), with higher default rates applied to loans acquired with evidence of credit deterioration.

Deposits

The estimated fair value of demand deposits and savings accounts, which are deposits with no defined maturities, equals the amount payable on demand at the reporting date. The fair values of retail fixed-rate time deposits, with stated maturities, are based on the present value of the future cash flows expected to be paid on the deposits. The cash flows were based on contractual maturities; no early repayments were assumed. Discount rates were based on the LIBOR yield curve.

   The estimated fair value of total deposits excludes the fair value of core deposit intangibles, which represent the value of the customer relationship measured by the value of demand deposits and savings deposits that bear a low or zero rate of interest and do not fluctuate in response to changes in interest rates. The fair value of brokered CDs, which are included within deposits, is determined using discounted cash flow analyses over the full term of the CDs.               

    The fair value of the CDs is computed using the outstanding principal amount. The discount rates used were based on brokered CD market rates as of June 30, 2014.  The fair value does not incorporate the risk of nonperformance, since interests in brokered CDs are generally sold by brokers in amounts of less than $250,000 and, therefore, insured by the FDIC.

Securities sold under agreements to repurchase

Some repurchase agreements reprice at least quarterly, and their outstanding balances are estimated to be their fair value. Where longer commitments are involved, fair value is estimated using exit price indications of the cost of unwinding the transactions as of the

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end of the reporting period. The brokers who are the counterparties provide these indications. Securities sold under agreements to repurchase are fully collateralized by investment securities.

Advances from FHLB

The fair value of advances from FHLB with fixed maturities is determined using discounted cash flow analyses over the full term of the borrowings, using indications of the fair value of similar transactions. The cash flows assume no early repayment of the borrowings. Discount rates are based on the LIBOR yield curve.   Advances from FHLB are fully collateralized by mortgage loans and, to a lesser extent, investment securities.

Other borrowings

Other borrowings consist of junior subordinated debentures. Projected cash flows from the debentures were discounted using the Bloomberg BB Finance curve plus a credit spread. This credit spread was estimated using the difference in yield curves between Swap rates and a yield curve that considers the industry and credit rating of the Corporation as issuer of the note at a tenor comparable to the time to maturity of the debentures.

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The following table presents the estimated fair value and carrying value of financial instruments as of June 30, 2014 and December 31, 2013:
	Total Carrying Amount in Statement of Financial Condition June 30, 2014		Fair Value Estimate June 30, 2014		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	677,662	$	677,662	$	677,662	$	-	$	-
Investment securities available
for sale		1,997,408		1,997,408		7,506		1,948,984		40,918
Other equity securities		29,141		29,141		-		29,141		-
Loans held for sale		72,105		72,807		-		18,052		54,755
Loans, held for investment		9,467,101
Less: allowance for loan and lease losses		(241,177)
Loans held for investment, net of allowance	$	9,225,924		8,892,011		-		-		8,892,011
Derivatives, included in assets		115		115		-		115		-
Liabilities:
Deposits		9,630,788		9,644,647		-		9,644,647		-
Securities sold under agreements to repurchase		900,000		977,620		-		977,620		-
Advances from FHLB		320,000		319,505		-		319,505		-
Other borrowings		231,959		115,954		-		-		115,954
Derivatives, included in liabilities		3,572		3,572		-		3,572		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2013		Fair Value Estimate December 31, 2013		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	655,671	$	655,671	$	655,671	$	-	$	-
Investment securities available
for sale		1,978,282		1,978,282		7,532		1,927,458		43,292
Other equity securities		28,691		28,691		-		28,691		-
Loans held for sale		75,969		76,684		-		21,883		54,801
Loans, held for investment		9,636,170
Less: allowance for loan and lease losses		(285,858)
Loans held for investment, net of allowance	$	9,350,312		9,127,234		-		-		9,127,234
Derivatives, included in assets		394		394		-		394		-
Liabilities:
Deposits		9,879,924		9,898,615		-		9,898,615		-
Securities sold under agreements to repurchase		900,000		976,151		-		976,151		-
Advances from FHLB		300,000		297,523		-		297,523		-
Other borrowings		231,959		106,772		-		-		106,772
Derivatives, included in liabilities		4,023		4,023		-		4,023		-

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NOTE 20 – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

	Six-Month Period Ended June 30,
	2014		2013
	(In thousands)
Cash paid for:
Interest on borrowings	$	51,817	$	64,075
Income tax		2,524		2,141
Non-cash investing and financing activities:
Additions to other real estate owned		13,267		42,526
Additions to auto and other repossessed assets		43,091		31,236
Capitalization of servicing assets		2,069		3,814
Loan securitizations		104,236		159,140
Loans held for investment transferred to held for sale		-		181,620

NOTE 21 – SEGMENT INFORMATION

Based upon the Corporation’s organizational structure and the information provided to the Chief Executive Officer of the Corporation and, to a lesser extent, the Board of Directors, the operating segments are driven primarily by the Corporation’s lines of business for its operations in Puerto Rico, the Corporation’s principal market, and by geographic areas for its operations outside of Puerto Rico.  As of June 30, 2014, the Corporation had six reportable segments: Commercial and Corporate Banking; Mortgage Banking; Consumer (Retail) Banking; Treasury and Investments; United States Operations, and Virgin Islands Operations.  Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Others factors such as the Corporation’s organizational chart, nature of the products, distribution channels, and the economic characteristics of the product were also considered in the determination of the reportable segments.

The Commercial and Corporate Banking segment consists of the Corporation’s lending and other services for large customers represented by specialized and middle-market clients and the public sector. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, and floor plan financings, as well as other products, such as cash management and business management services. The Mortgage Banking segment consists of the origination, sale, and servicing of a variety of residential mortgage loans. The Mortgage Banking segment also acquires and sells mortgages in the secondary markets.  In addition, the Mortgage Banking segment includes mortgage loans purchased from other local banks and mortgage bankers.  The Consumer (Retail) Banking segment consists of the Corporation’s consumer lending and deposit-taking activities conducted mainly through its branch network and loan centers. The Treasury and Investments segment is responsible for the Corporation’s investment portfolio and treasury functions executed to manage and enhance liquidity.  This segment lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending activities and borrows from those segments and from the United States Operations segment.  The Consumer (Retail) Banking and the United States Operations segments also lend funds to other segments. The interest rates charged or credited by Treasury and Investments, the Consumer (Retail) Banking and the United States Operations segments are allocated based on market rates. The difference between the allocated interest income or expense and the Corporation’s actual net interest income from centralized management of funding costs is reported in the Treasury and Investments segment. The United States Operations segment consists of all banking activities conducted by FirstBank in the United States mainland, including commercial and retail banking services.  The Virgin Islands Operations segment consists of all banking activities conducted by the Corporation in the USVI and BVI, including commercial and retail banking services and insurance activities. 

The accounting policies of the segments are the same as those referred to in Note 1- “Nature of Business and Summary of Significant Accounting Policies.”

The Corporation evaluates the performance of the segments based on net interest income, the estimated provision for loan and lease losses, non-interest income and direct non-interest expenses. The segments are also evaluated based on the average volume of their interest-earning assets less the allowance for loan and lease losses.

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The following table presents information about the reportable segments:
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended June 30, 2014:
Interest income	$	27,444	$	54,869	$	40,825	$	13,988	$	10,879	$	10,418	$	158,423
Net (charge) credit for transfer of funds		(8,736)		4,136		(3,049)		4,584		3,065		-		-
Interest expense		-		(5,882)		-		(16,783)		(4,855)		(996)		(28,516)
Net interest income		18,708		53,123		37,776		1,789		9,089		9,422		129,907
(Provision) release for loan and lease losses		(4,089)		(19,475)		(14,179)		-		10,481		518		(26,744)
Non-interest income		2,701		10,005		1,150		344		711		1,690		16,601
Direct non-interest expenses		(10,340)		(31,510)		(14,694)		(1,514)		(7,269)		(8,664)		(73,991)
Segment income	$	6,980	$	12,143	$	10,053	$	619	$	13,012	$	2,966	$	45,773
Average earnings assets	$	2,029,859	$	2,031,391	$	3,683,746	$	2,714,179	$	883,822	$	670,692	$	12,013,689
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended June 30, 2013:
Interest income	$	27,469	$	57,984	$	42,476	$	12,584	$	9,055	$	11,102	$	160,670
Net (charge) credit for transfer of funds		(9,631)		(681)		(3,592)		11,552		2,352		-		-
Interest expense		-		(6,992)		-		(20,212)		(5,583)		(995)		(33,782)
Net interest income		17,838		50,311		38,884		3,924		5,824		10,107		126,888
(Provision) release for loan and lease losses		(68,944)		(12,142)		(6,221)		-		3,943		(4,100)		(87,464)
Non-interest income (loss)		238		9,555		1,330		(65,565)		275		1,856		(52,311)
Direct non-interest expenses		(16,570)		(30,198)		(13,993)		(1,549)		(7,532)		(15,358)		(85,200)
Segment (loss) income	$	(67,438)	$	17,526	$	20,000	$	(63,190)	$	2,510	$	(7,495)	$	(98,087)
Average earnings assets	$	2,093,238	$	2,021,367	$	3,971,083	$	2,774,670	$	746,384	$	657,946	$	12,264,688

	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Six-month period ended June 30, 2014:
Interest income	$	53,192	$	110,681	$	83,124	$	29,571	$	21,775	$	20,651	$	318,994
Net (charge) credit for transfer of funds		(17,282)		7,771		(6,048)		10,384		5,175		-		-
Interest expense		-		(12,678)		-		(33,544)		(9,652)		(1,893)		(57,767)
Net interest income		35,910		105,774		77,076		6,411		17,298		18,758		261,227
(Provision) release for loan and lease losses		(7,473)		(39,970)		(27,524)		-		16,440		(132)		(58,659)
Non-interest income		5,803		20,635		2,917		397		1,152		3,657		34,561
Direct non-interest expenses		(20,172)		(63,525)		(27,272)		(2,640)		(14,489)		(17,688)		(145,786)
Segment income	$	14,068	$	22,914	$	25,197	$	4,168	$	20,401	$	4,595	$	91,343
Average earnings assets	$	1,993,129	$	1,951,587	$	3,869,311	$	2,712,564	$	865,091	$	663,172	$	12,054,854
	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Six-month period ended June 30, 2013:
Interest income	$	55,689	$	116,243	$	85,805	$	24,044	$	17,704	$	21,410	$	320,895
Net (charge) credit for transfer of funds		(19,902)		(1,719)		(7,740)		24,515		4,846		-		-
Interest expense		-		(13,841)		-		(41,975)		(11,700)		(1,998)		(69,514)
Net interest income		35,787		100,683		78,065		6,584		10,850		19,412		251,381
(Provision) release for loan and lease losses		(77,532)		(22,323)		(92,332)		-		2,434		(8,834)		(198,587)
Non-interest income (loss)		4,588		20,297		2,789		(65,733)		887		4,028		(33,144)
Direct non-interest expenses		(28,218)		(59,866)		(31,581)		(3,955)		(14,254)		(24,494)		(162,368)
Segment (loss) income	$	(65,375)	$	38,791	$	(43,059)	$	(63,104)	$	(83)	$	(9,888)	$	(142,718)
Average earnings assets	$	2,096,464	$	1,943,173	$	4,150,227	$	2,732,539	$	713,072	$	667,587	$	12,303,062

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The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
		Quarter Ended				Six-Month Period Ended
		June 30,				June 30,
		2014		2013		2014		2013
Net income (loss):
Total income (loss) for segments and other		$	45,773	$	(98,087)	$	91,343	$	(142,718)
Other non-interest (loss) income (1)			(670)		648		(7,280)		(4,890)
Other operating expenses (2)			(24,154)		(26,123)		(45,144)		(46,965)
Income (loss) before income taxes			20,949		(123,562)		38,919		(194,573)
Income tax benefit (expense)			276		979		(611)		(643)
Total consolidated net income (loss)		$	21,225	$	(122,583)	$	38,308	$	(195,216)
Average assets:
Total average earning assets for segments		$	12,013,689	$	12,264,688	$	12,054,854	$	12,303,062
Other average earning assets (1)			152		17,841		3,343		20,797
Average non-earning assets			640,718		654,304		656,179		681,489
Total consolidated average assets		$	12,654,559	$	12,936,833	$	12,714,376	$	13,005,348
(1)	The activities related to the Bank's equity interest in CPG/GS are presented as an Other non-interest income (loss) and as Other average earning assets in the table above.
(2)	Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

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NOTE 22 – REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

The Corporation is subject to various regulatory capital requirements imposed by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets and liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgment and adjustment by the regulators with respect to minimum capital requirements, components, risk weightings and other factors.

Capital standards established by regulations require the Corporation to maintain minimum amounts and ratios for Leverage (Tier 1 capital to average total assets) and ratios of Tier 1 Capital to Risk-Weighted Assets and Total Capital to Risk-Weighted Assets as defined in the regulations. The total amount of risk-weighted assets is computed by applying risk-weighting factors to the Corporation’s assets and certain off-balance sheet items, which generally vary from 0% to 100% depending on the nature of the asset.

Effective June 2, 2010, FirstBank, by and through its Board of Directors, entered into a Consent Order (the “FDIC Order”) with the FDIC and OCIF. The FDIC Order provides for various things, including (among other things) the following: (1) having and retaining qualified management; (2) increased participation in the affairs of FirstBank by its Board of Directors; (3) development and implementation by FirstBank of a capital plan to attain a leverage ratio of at least 8%, a Tier 1 risk-based capital ratio of at least 10% and a total risk-based capital ratio of at least 12%; (4) adoption and implementation of strategic, liquidity and fund management and profit and budget plans and related projects within certain timetables set forth in the FDIC Order and on an ongoing basis; (5) adoption and implementation of plans for reducing FirstBank’s positions in certain classified assets and delinquent and non-accrual loans within timeframes set forth in the FDIC Order; (6) refraining from lending to delinquent or classified borrowers already obligated to FirstBank on any extensions of credit so long as such credit remains uncollected, except where FirstBank’s failure to extend further credit to a particular borrower would be detrimental to the best interests of FirstBank, and any such additional credit is approved by FirstBank’s Board of Directors; (7) refraining from accepting, increasing, renewing or rolling over brokered CDs without the prior written approval of the FDIC; (8) establishment of a comprehensive policy and methodology for determining the allowance for loan and lease losses and the review and revision of FirstBank’s loan policies, including the non-accrual policy; and (9) adoption and implementation of adequate and effective programs of independent loan review, appraisal compliance, and an effective policy for managing FirstBank’s sensitivity to interest rate risk. The foregoing summary is not complete and is qualified in all respects by reference to the actual language of the FDIC Order. Although all of FirstBank’s regulatory capital ratios exceeded the minimum capital ratios for “well capitalized” levels, as well as the minimum capital ratios required by the FDIC Order, as of June 30, 2014, FirstBank cannot be treated as a “well capitalized” institution under regulatory guidance because it is operating under the FDIC Order.

Effective June 3, 2010, First BanCorp. entered into the Written Agreement with the New York FED. The Written Agreement provides, among other things, that the holding company must serve as a source of strength to FirstBank, and that, except with the consent generally of the New York FED and the Federal Reserve Board, (1) the holding company may not pay dividends to stockholders or receive dividends from FirstBank, (2) the holding company and its nonbank subsidiaries may not make payments on trust-preferred securities or subordinated debt, and (3) the holding company cannot incur, increase, or guarantee debt or repurchase any capital securities. The Written Agreement also requires that the holding company submit a capital plan that reflects sufficient capital at First BanCorp. on a consolidated basis, which must be acceptable to the New York FED, and follow certain guidelines with respect to the appointment or change in responsibilities of senior officers. The foregoing summary is not complete and is qualified in all respects by reference to the actual language of the Written Agreement.

   The Corporation submitted its capital plan setting forth how it plans to improve capital positions to comply with the FDIC Order and the Written Agreement over time.

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In addition to the Capital Plan, the Corporation has submitted to its regulators a liquidity and brokered CD plan, including a contingency funding plan, a non-performing asset reduction plan, a budget and profit plan, a strategic plan, and a plan for the reduction of classified and special mention assets.  As of June 30, 2014, the Corporation had completed all of the items included in the Capital Plan and is continuing to work on reducing non-performing loans.  Further, the Corporation has reviewed and enhanced the Corporation’s loan review program, various credit policies, the Corporation’s treasury and investment policy, the Corporation’s asset classification and allowance for loan and lease losses and non-accrual policies, the Corporation’s charge-off policy and the Corporation’s appraisal program. The Regulatory Agreements also require the submission to the regulators of quarterly progress reports.

The FDIC Order imposes no other restrictions on FirstBank’s products or services offered to customers, nor does it or the Written Agreement impose any type of penalties or fines upon FirstBank or the Corporation. Concurrent with the FDIC Order, the FDIC has granted FirstBank temporary waivers to enable it to continue accessing the brokered CD market through September 30, 2014. FirstBank will request approvals for future periods, although no assurance can be given that future approvals will be given.

In July 2013, U.S. banking regulators approved a revised regulatory capital framework for U.S. banking organizations (the “Basel 3 rules”) that is based on international regulatory capital requirements adopted by the Basel Committee on Banking Supervision over the past several years. The Basel 3 rules introduce new minimum capital ratios and capital conservation buffer requirements, change the composition of regulatory capital, require a number of new adjustments to and deductions from regulatory capital, and introduce a new “Standardized Approach” for the calculation of risk-weighted assets that will replace the risk-weighting requirements under the current U.S. regulatory capital rules. The new minimum regulatory capital requirements and the Standardized Approach for the calculation of risk-weighted assets will become effective for the Corporation and FirstBank on January 1, 2015.  The capital conservation buffer requirements, and the regulatory capital adjustments and deductions under the Basel 3 rules will be phased-in over several years ending as of December 31, 2018.

The Basel 3 rules introduce a new and separate ratio of Common Equity Tier 1 capital (“CET1”) to risk-weighted assets. CET1, a component of total Tier 1 capital, generally consists of common stock and related surplus, retained earnings, accumulated other comprehensive income (“AOCI”), and qualifying minority interests.  In addition, the Basel 3 rules also will require the Corporation to maintain an additional CET1 capital conservation buffer of 2.5%.  Thus, when the Basel 3 rules are fully phased in as of January 1, 2019, the Corporation will be required to maintain: (i) a minimum CET1 to risk-weighted assets ratio of at least 4.5%, plus the 2.5% “capital conservation buffer,” resulting in a required minimum CET1 ratio of at least 7% upon full implementation, (ii) a minimum ratio of total Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum Tier 1 capital ratio of 8.5% upon full implementation, (iii) a minimum ratio of total Tier 1 plus Tier 2 capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum total capital ratio of 10.5% upon full implementation, and (iv) a required minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average on-balance sheet (non-risk adjusted) assets.  The phase-in of the capital conversation buffer will begin on January 1, 2016 with a first year requirement of 0.625% of additional CET1, which will be progressively increased over a four-year period, increasing by that same percentage amount on each subsequent January 1 until it reaches the fully-phased in 2.5% CET1 requirement on January 1, 2019.

In addition, the Basel 3 rules require a number of new deductions from and adjustments to CET1, including deductions from CET1 for mortgage servicing rights, and deferred tax assets dependent upon future taxable income.  In the case of mortgage servicing assets and deferred tax assets, among others, these items would be required to be deducted to the extent that any one such category exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1.  Under current regulatory capital requirements, the effect of AOCI is excluded for the purposes of calculating the required regulatory capital ratios.  By comparison, under the Basel 3 rules, the effects of certain AOCI items are not excluded.  Certain banking organizations, however, including the Corporation and FirstBank, will be allowed to make a one-time permanent election in early 2015 to continue to exclude AOCI items. 

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The Corporation and FirstBank expect to make this election in order to avoid significant variations in the level of capital depending upon the impact of interest rate fluctuations on the fair value of the securities portfolio.

In addition, the Basel 3 rules will require that certain non-qualifying capital instruments, including cumulative preferred stock and Trust Preferred Securities (“TRuPs”), be excluded from Tier 1 capital.  In general, banking organizations such as the Corporation and the Bank, must begin to phase out TRuPs from Tier 1 capital by January 1, 2015.  The Corporation will be allowed to include 25% of the $225 million outstanding qualifying TRuPs as Tier 1 capital in 2015 and the TRuPs must be fully phased out from Tier 1 capital by January 1, 2016.  However, the Corporation’s TRuPs may continue to be included in Tier 2 capital until the instruments are redeemed or mature.  

The Basel 3 rules also revise the “prompt corrective action” (“PCA”) regulations that apply to depository institutions, including FirstBank, pursuant to Section 38 of the Federal Deposit Insurance Act by (i) introducing a separate CET1 ratio requirement for each PCA capital category (other than critically undercapitalized), with the required CET1 ratio being 6.5% for well-capitalized status; (ii) increasing the minimum Tier 1 capital ratio requirement for each PCA capital category, with the minimum Tier 1 capital ratio for well-capitalized status being 8% (as compared to the current 6%); and (iii) eliminating the current provision that allows a bank with a composite supervisory rating of 1 to have a 3% leverage ratio and still be adequately capitalized and maintaining the minimum leverage ratio for well-capitalized status at 5%. The Basel 3 rules do not change the total risk-based capital requirement (10% for well-capitalized status) for any PCA capital category.  The new PCA requirements become effective on January 1, 2015.

The Basel 3 rules separately impose a Standardized Approach for risk-weightings that expands the risk-weighting categories from the four major risk-weighting categories under the current regulatory capital rules (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets.  In a number of cases, the Standardized Approach will result in higher risk weights for a variety of asset categories. Specific changes to the risk-weightings of assets under the current regulatory capital rules include, among other things: (i) applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans, (ii) assigning a 150% risk weight to exposures that are 90 days past due (other than qualifying residential mortgage exposures, which remain at an assigned risk-weighting of 100%),  and (iii) establishing a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable, in contrast to the 0% risk-weighting under the current rules.

The Corporation’s total capital, Tier I and leverage ratios as of June 30, 2014 were 18.06%, 16.80% and 12.04%, respectively. Meanwhile, the total capital, Tier I capital, and leverage ratios as of June 30, 2014 of the banking subsidiary, FirstBank Puerto Rico, were 17.70%, 16.43% and 11.79%, respectively.

The Corporation enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments may include commitments to extend credit and commitments to sell mortgage loans at fair value. As of June 30, 2014, commitments to extend credit amounted to approximately $1.1 billion, of which $685.3 million relates to credit card loans.  Commercial and Financial standby letters of credit amounted to approximately $44.8 million. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses.  For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements.  In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause. Generally, the Corporation’s mortgage banking activities do not enter into interest rate lock agreements with prospective borrowers.

As of June 30, 2014, First BanCorp and its subsidiaries were defendants in various legal proceedings arising in the ordinary course of business. Management believes that the final disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on the Corporation’s financial position, results of operations or cash flows.

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NOTE 23 – FIRST BANCORP. (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

The following condensed financial information presents the financial position of the Holding Company only as of June 30, 2014 and December 31, 2013 and the results of its operations for the quarters and six month periods ended June 30, 2014 and 2013.

Statements of Financial Condition
	As of June 30,			As of December 31,
	2014		2013
	(In thousands)
Assets
Cash and due from banks	$	30,862	$	31,957
Money market investments		6,111		6,111
Investment securities available for sale, at market:
Equity investments		9		33
Other investment securities		285		285
Loans held for investment, net		345		356
Investment in First Bank Puerto Rico, at equity		1,496,636		1,403,612
Investment in First Bank Insurance Agency, at equity		11,215		9,834
Investment in FBP Statutory Trust I		3,093		3,093
Investment in FBP Statutory Trust II		3,866		3,866
Other assets		4,186		4,101
Total assets	$	1,556,608	$	1,463,248
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	231,959	$	231,959
Accounts payable and other liabilities		18,648		15,431
Total liabilities		250,607		247,390
Stockholders' equity		1,306,001		1,215,858
Total liabilities and stockholders' equity	$	1,556,608	$	1,463,248

	Quarter Ended				Six-Month Period Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(In thousands)				(In thousands)
Income:
Interest income on money market investments	$	5	$	6	$	10	$	11
Other income		55		72		108		124
		60		78		118		135
Expense:
Notes payable and other borrowings		1,786		1,763		3,546		3,509
Other operating expenses		768		806		1,274		2,609
		2,554		2,569		4,820		6,118
Impairment on equity securities		-		(42)		-		(42)
Loss before income taxes and equity
in undistributed earnings (losses) of subsidiaries		(2,494)		(2,533)		(4,702)		(6,025)
Income tax provision		(2)		-		(4)		-
Equity in undistributed earnings (losses) of subsidiaries		23,721		(120,050)		43,014		(189,191)
Net income (loss)	$	21,225	$	(122,583)	$	38,308	$	(195,216)
Other Comprehensive income (loss), net of tax		27,790		(59,964)		50,329		(68,574)
Comprehensive income (loss)	$	49,015	$	(182,547)	$	88,637	$	(263,790)

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NOTE 24 – SUBSEQUENT EVENTS

The Corporation has performed an evaluation of events occurring subsequent to June 30, 2014; management has determined that there are no additional events occurring in this period that require disclosure in or adjustment to the accompanying financial statements.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

SELECTED FINANCIAL DATA
		Quarter ended					Six-Month Period Ended
(In thousands, except for per share and financial ratios)		June 30,				June 30,
		2014		2013		2014		2013
Condensed Income Statements:
	Total interest income	$	158,423	$	160,670	$	318,994	$	320,895
	Total interest expense		28,516		33,782		57,767		69,514
	Net interest income		129,907		126,888		261,227		251,381
	Provision for loan and lease losses		26,744		87,464		58,659		198,587
	Non-interest income (loss)		15,931		(51,663)		27,281		(38,034)
	Non-interest expenses		98,145		111,323		190,930		209,333
	Income (loss) before income taxes		20,949		(123,562)		38,919		(194,573)
	Income tax expense		276		979		(611)		(643)
	Net income (loss)		21,225		(122,583)		38,308		(195,216)
	Net income (loss) attributable to common stockholders		22,505		(122,583)		39,967		(195,216)
Per Common Share Results:
	Net earnings (loss) per share basic	$	0.11	$	(0.60)	$	0.19	$	(0.95)
	Net earnings (loss) per share diluted	$	0.11	$	(0.60)	$	0.19	$	(0.95)
	Cash dividends declared	$	-	$	-	$	-	$	-
	Average shares outstanding		208,202		205,490		206,974		205,477
	Average shares outstanding diluted		210,144		205,490		208,517		205,477
	Book value per common share	$	5.97	$	5.60	$	5.97	$	5.60
	Tangible book value per common share (1)	$	5.72	$	5.32	$	5.72	$	5.32
Selected Financial Ratios (In Percent):
Profitability:
	Return on Average Assets		0.67		(3.80)		0.61		(3.03)
	Interest Rate Spread (2)		4.19		3.91		4.22		3.84
	Net Interest Margin (2)		4.37		4.12		4.40		4.06
	Return on Average Total Equity		6.66		(35.65)		6.12		(27.51)
	Return on Average Common Equity		6.95		(37.36)		6.41		(28.78)
	Average Total Equity to Average Total Assets		10.10		10.66		9.93		11.00
	Tangible common equity ratio (1)		9.76		8.64		9.76		8.64
	Dividend payout ratio		-		-		-		-
	Efficiency ratio (3)		67.30		147.99		66.18		98.12
Asset Quality:
	Allowance for loan and lease losses to total loans held for investment		2.55		3.19		2.55		3.19
	Net charge-offs (annualized) to average loans (4) (5) (6)		2.19		5.25		2.15		6.69
	Provision for loan and lease losses to net charge-offs (7) (8)		51.09		67.83		56.76		59.64
	Non-performing assets to total assets (6)		6.05		5.87		6.05		5.87
	Non-performing loans held for investment to total loans held for investment (8)		5.96		5.36		5.96		5.36
	Allowance to total non-performing loans held for investment		42.71		59.47		42.71		59.47
	Allowance to total non-performing loans held for investment
	excluding residential real estate loans		61.96		80.87		61.96		80.87
Other Information:
	Common Stock Price: End of period	$	5.44	$	7.08	$	5.44	$	7.08
		As of June 30, 2014		As of December 31, 2013
Balance Sheet Data:
	Loans, including loans held for sale	$	9,539,206	$	9,712,139
	Allowance for loan and lease losses		241,177		285,858
	Money market and investment securities		2,043,501		2,208,342
	Intangible assets		52,378		54,866
	Deferred tax asset, net		8,738		7,644
	Total assets		12,523,251		12,656,925
	Deposits		9,630,788		9,879,924
	Borrowings		1,451,959		1,431,959
	Total preferred equity		36,104		63,047
	Total common equity		1,298,304		1,231,547
	Accumulated other comprehensive loss, net of tax		(28,407)		(78,736)
	Total equity		1,306,001		1,215,858
______________
(1)	Non-GAAP measure. Refer to "Capital" discussion below for additional information about the components and a reconciliation of these measures.
(2)	On a tax-equivalent basis and excluding the changes in fair value of derivative instruments (see "Net Interest Income" discussion below for a reconciliation of this non-GAAP measure).
(3)	Non-interest expense to the sum of net interest income and non-interest income. The denominator includes non-recurring income and changes in the fair value of derivative instruments.
(4)	The net charge-offs to average loans ratio, excluding the impact associated with the acquisition of mortgage loans from Doral Financial Corporation ("Doral"), was 1.90% and 2.01% for the quarter and six-month period ended June 30, 2014, respectively.
(5)	The net charge-offs to average loans ratio, excluding the impact with the bulk sales of assets and the transfer of loans to held for sale in 2013, was 1.29% and 2.11% for the quarter and six-month period ended June 30, 2013, respectively.
(6)	Loans used in the denominator in calculating net charge-offs, non-performing loan and non-performing asset rates include purchased credit-impaired ("PCI") loans. However, the Corporation separately tracks and reports PCI loans and excludes these from non-performing loan and non-performing asset statistics.
(7)	The provision for loan and lease losses to net charge-offs ratio, excluding the impact associated with the acquisition of mortgage loans from Doral, was 55.72% and 59.35% for the quarter and six-month period ended June 30, 2014, respectively.
(8)	The provision for loan and lease losses to net charge-offs ratio, excluding the impact associated with the bulk sales of assets and the transfer of loans to held for sale in 2013, was 63.19% and 66.25% for the quarter and six-month period ended June 30, 2013, respectively.

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to the accompanying consolidated unaudited financial statements of First BanCorp. (the “Corporation” or “First BanCorp.”) and should be read in conjunction with such financial statements and the notes thereto.

EXECUTIVE SUMMARY

First BanCorp. is a diversified financial holding company headquartered in San Juan, Puerto Rico offering a full range of financial products to consumers and commercial customers through various subsidiaries. First BanCorp. is the holding company of FirstBank Puerto Rico (“FirstBank” or the “Bank”) and FirstBank Insurance Agency. Through its wholly-owned subsidiaries, the Corporation operates offices in Puerto Rico, the United States Virgin Islands and British Virgin Islands, and the State of Florida (USA), concentrating in commercial banking, residential mortgage loan originations, finance leases, credit cards, personal loans, small loans, auto loans, insurance agency and broker-dealer activities.

As described in Note 22 to the consolidated unaudited financial statements, Regulatory Matters, Commitment and Contingencies, FirstBank is currently operating under a Consent Order (the “FDIC Order”) with the Federal Deposit Insurance Corporation (“FDIC”), and the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico and First BanCorp. has entered into a Written Agreement (the “Written Agreement” and collectively with the FDIC Order, (the “Regulatory Agreements”) with the Federal Reserve Bank of New York (the “New York FED” or “Federal Reserve”).

RECENT EVENTS

Acquisition of Mortgage Loans from Doral Financial Corporation

On May 30, 2014, FirstBank purchased from Doral all of its rights, title and interests in first and second mortgage loans having an unpaid principal balance of approximately $241.7 million for an aggregate price of approximately $232.9 million.  Doral had pledged the mortgage loans to FirstBank as collateral for secured borrowings pursuant to a series of credit agreements between the parties entered into in 2006.  As consideration for the purchase of the mortgage loans, FirstBank credited approximately $232.9 million as full satisfaction of the outstanding balance of the Doral secured borrowing plus interest owed to FirstBank. The estimated fair value of the mortgage loans at acquisition was $226.0 million. This transaction resulted in a loss of $6.9 million derived from the difference between the fair value of the mortgage loans acquired, $226.0 million, and the book value of the secured borrowings of $232.9 million. Approximately $5.5 million of the loss was part of the general allowance for loan losses established for commercial loans in prior periods; thus, an additional charge of $1.4 million to the provision was recorded in the second quarter of 2014.  In addition, the Corporation recorded $0.6 million of professional service fees in the second quarter of 2014 specifically related to this transaction.

Acquired loans are recorded at fair value at the date of acquisition. The Corporation concluded that loans with a contractual unpaid principal balance of $119.2 million and an estimated fair value at acquisition of $102.8 million were acquired with evidence of credit quality deterioration and, as purchased credit impaired (“PCI”) loans, have been accounted for under ASC 310-30, while loans with a contractual unpaid principal balance of $122.5 million and an estimated fair value at acquisition of $123.2 million are non-credit impaired purchased loans that have been accounted for under ASC 310-20.  The following tables reflect the accounting for the acquired mortgage loans:

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Impact (at acquisition)	Non-Credit Impaired (ASC 310-20)		Purchased  Credit Impaired (ASC 310-30)		Total Loans
Mortgage Loans, primarily residential mortgage loans at Fair Value	$	123,164	$	102,831	$	225,995
				Less: Book Value of secured borrowings (Commercial loans to a local financial institution collateralized by real estate mortgages)		(232,903)
				Loss	$	(6,908)
				Allowance for Loan Losses previously allocated to commercial secured borrowings		5,480
				Additional charge to the provision for loan losses (second quarter 2014)	$	(1,428)

Purchased Credit Impaired Loans (ASC 310-30) at Acquisition
Contractual cash flows	$	275,842
Less: Nonaccretable difference		(86,252)
Cash flows expected to be collected	$	189,590
Less: Accretable yield		(86,759)
Fair Value of loans acquired	$	102,831

The following table shows a reconciliation of certain non-GAAP financial measures (“adjusted net charge-offs,” “adjusted provision for loan losses,” and “adjusted non-interest expenses”), which reflects the exclusion of the impact of the Doral transaction, at acquisition, with the corresponding measures calculated and presented in accordance with GAAP:

(Dollars in thousands)		As Reported (GAAP)	Loss on Acquisition of Mortgage Loans from Doral and related expenses		Adjusted, excluding Loss on Acquisition of Mortgage Loans from Doral and related expenses (Non-GAAP)
2014 Second Quarter
Total net charge-offs (1)	$	52,345	$	6,908	$	45,437
Total net charge-offs to average loans		2.19%				1.90%
Commercial and Industrial		19,036		6,908		12,128
Commercial and Industrial loans net charge-offs to average loans		2.69%				1.81%
Provision for loan and lease losses	$	26,744	$	1,428	$	25,316
Non-interest expenses	$	98,145	$	576	$	97,569
Professional fees		11,371		565		10,806
Other non-interest expenses		11,061		11		11,050
______________
1 - Charge-off percentages annualized

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OVERVIEW OF RESULTS OF OPERATIONS

First BanCorp.'s results of operations generally depend primarily upon its net interest income, which is the difference between the interest income earned on its interest-earning assets, including investment securities and loans, and the interest expense incurred on its interest-bearing liabilities, including deposits and borrowings. Net interest income is affected by various factors, including: the interest rate scenario; the volumes, mix and composition of interest-earning assets and interest-bearing liabilities; and the re-pricing characteristics of these assets and liabilities. The Corporation's results of operations also depend on the provision for loan and lease losses, which has significantly affected the results of operations in recent years, non-interest expenses (such as personnel, occupancy, deposit insurance premiums and other costs), non-interest income (mainly service charges and fees on deposits, insurance income and revenues from broker-dealer operations), gains (losses) on sales of investments, gains (losses) on mortgage banking activities, and income taxes.

     Net income was $21.2 million, or $0.11 per diluted common share, for the quarter ended June 30, 2014 compared to net loss of $122.6 million, or $0.60 per diluted common share, for the same period in 2013.  The Corporation’s financial results for the second quarter of 2013 were impacted by two significant items: (i) an aggregate loss of $72.9 million (pre-tax) on the bulk sale of non-performing residential assets with a book value of $203.8 million and other real estate owned (“OREO”) properties with a book value of $19.2 million, and (ii) a $66.6 million loss related to the write-off of assets pledged as collateral to Lehman Brothers, Inc. (“Lehman”). 

The key drivers of the Corporation’s financial results for the quarter ended June 30, 2014, compared to the same period in 2013, include the following:

·Net interest income increased $3.0 million to $129.9 million for the quarter ended June 30, 2014 compared to the same period in 2013.  The increase was primarily due to an 18 basis point reduction in the average cost of funding achieved through lower deposit pricing and the maturity of high-cost Federal Home Loan Bank (“FHLB”) advances.  In addition, net interest income and margin were favorably impacted by a higher volume of U.S. agency mortgage-backed securities (“MBS”) and decreases in MBS prepayment activity levels that resulted in lower premium amortization expenses.  The net interest margin, excluding fair value adjustments, increased 18 basis points to 4.20% for the second quarter of 2014 compared to the same period in 2013 as it was favorably impacted by the aforementioned items. For a definition and reconciliation of this non-GAAP measure, refer to “Net Interest Income” discussion below.

·The  provision for loan and lease losses of $26.7 million for the second quarter of 2014, decreased by $60.7 million compared to the same period in 2013. The fair value adjustments related to mortgage loans acquired from Doral added $1.4 million to the provision for loan losses in the second quarter of 2014 and the bulk sale of non-performing residential assets added $67.9 million to the provision for loan losses in the second quarter of 2013.  Adjusted provision for loan losses, excluding the impact of the Doral transaction in 2014 and the bulk sale of non-performing residential assets in 2013, increased by $5.7 million in the second quarter of 2014 compared to the same period in 2013, driven by an increase in the provision for commercial and industrial loans related to a higher migration of loans to adverse classification categories and a higher general reserve for auto loans. 

The Corporation completed two bulk sales of assets in the first half of 2013, including: (i) a bulk sale of non-performing residential mortgage loans with a book value of $203.8 million and OREO properties with a book value of $19.2 million, completed in the second quarter of 2013, and (ii) a bulk sale of adversely classified assets, mainly commercial and construction loans, with a book value of $211.4 million and OREO properties with a book value of $6.3 million, completed in the first quarter of 2013.  In addition, during the first quarter of 2013, the Corporation transferred to held for sale non-performing loans with an aggregate book value of $181.6 million.  The following tables summarize the impact of the bulk sales of assets and the transfer of loans to held for sale completed in 2013 on net charge-offs, provision for loan and lease losses, and non-interest expenses for the quarter and six-month period ended June 30, 2013:

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(Dollars in thousands)		As Reported (GAAP)		Bulk Sale Transaction Impact		Adjusted, excluding Bulk Sale Impact (Non-GAAP)
Quarter Ended June 30, 2013
Total net charge-offs (1)	$	128,948	$	97,972	$	30,976
Total net charge-offs to average loans		5.25%				1.29%
Residential mortgage		103,418		97,941		5,477
Residential mortgage loans net charge-offs to average loans		14.78%				0.84%
Construction		2,368		31		2,337
Construction loans net charge-offs to average loans		3.43%				3.39%
Provision for loan and lease losses	$	87,464	$	67,890	$	19,574
Residential mortgage		74,277		67,859		6,418
Construction		(7,937)		31		(7,968)
Non-interest expenses	$	111,323	$	4,962	$	106,361
Professional fees		13,735		3,060		10,675
Net loss on OREO operations		14,829		1,879		12,950
Other expenses		11,928		23		11,905
______________
1 - Charge-off percentages annualized

(Dollars in thousands)		As Reported (GAAP)		Bulk Sales Transaction Impact		Loans Transferred To Held For Sale Impact		Excluding Bulk Sales and Loans Transferred To Held For Sale Impact (Non-GAAP)
Six-Month Period Ended June 30, 2013
Total net charge-offs (1)	$	332,954	$	196,491	$	35,953	$	100,510
Total net charge-offs to average loans		6.69%						2.11%
Residential mortgage		114,998		98,972		-		16,026
Residential mortgage loans net charge-offs to average loans		8.19%						1.23%
Commercial mortgage		59,289		40,057		14,553		4,679
Commercial mortgage loans net charge-offs to average loans		6.75%						0.56%
Commercial and Industrial		90,349		44,678		-		45,671
Commercial and Industrial loans net charge-offs to average loans		5.93%						3.05%
Construction		40,883		12,784		21,400		6,699
Construction loans net charge-offs to average loans		26.33%						5.34%
Provision for loan and lease losses	$	198,587	$	126,780	$	5,222	$	66,585
Residential mortgage		82,225		68,838		-		13,387
Commercial Mortgage		49,610		29,753		(1,033)		20,890
Commercial & Industrial		31,126		20,766		-		10,360
Construction		14,011		7,423		6,255		333
Non-interest expenses	$	209,333	$	8,840	$	-	$	200,493
Professional fees		24,867		6,938		-		17,929
Net loss on OREO operations		22,139		1,879		-		20,260
Other expenses		14,663		23		-		14,640
1 - Charge-off percentages annualized

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·Net charge-offs totaled $52.3 million for the second quarter of 2014, or 2.19% of average loans on an annualized basis, compared to $128.9 million, or 5.25% of average loans for the same period in 2013. The fair value adjustments related to mortgage loans acquired from Doral and the bulk sale of non-performing residential assets added $6.9 million and $98.0 million in charge-offs in the second quarter of 2014 and 2013, respectively.  Adjusted net charge-offs, excluding the impact of charge-offs resulting from the Doral transaction and the bulk sale of non-performing residential assets, amounted to $45.4 million, or an annualized 1.90% of average loans, an increase of $14.5 million compared to the second quarter of 2013 mainly related to collateral dependent commercial loans in Puerto Rico.  The provision for loan and lease losses and net charge-offs excluding the impact of fair value adjustments related to mortgage loans acquired from Doral in the second quarter of 2014 and the bulk sales of adversely classified and non-performing assets in the first half of 2013 are non-GAAP measures, refer to “Basis of Presentation” discussion below for additional information.  Also refer to the discussions under “Provision for loan and lease losses” and “Risk Management” below for an analysis of the allowance for loan and lease losses and non-performing assets and related ratios.

·The Corporation recorded non-interest income of $15.9 million for the quarter ended June 30, 2014, compared to non-interest loss of $51.7 million for the same period in 2013. The variance was mainly related to the $66.6 million write-off of the collateral pledged to Lehman in 2013.  Excluding the impact of the Lehman collateral write-off, non-interest income increased by $1.0 million in the second quarter as compared to the same period in 2013 primarily reflecting the impact of a $3.4 million loss recorded in the second quarter of 2013 related to the restructuring of a commercial mortgage loan held for sale in which the Corporation received certain properties in partial satisfaction of a debt arrangement and modified the terms of the remaining balance, partially offset by a decrease in revenues from the mortgage-banking business and an adverse variance in equity in earnings (loss) of unconsolidated subsidiary.  Refer to the “Non-Interest Income” discussion below for additional information.

·Non-interest expenses decreased by $13.2 million to $98.1 million for the second quarter of 2014 compared to the same period in 2013.  The decrease was mainly due to: (i) an $8.1 million decrease in losses on OREO operations, including lower write-downs and operating expenses, (ii) a $2.4 million decrease in professional service fees reflecting the impact in the second quarter of 2013 of $3.1 million in professional service fees specifically related to the bulk sale of non-performing residential assets completed in the second quarter of 2013, partially offset by expenses of $0.6 million recorded in the second quarter of 2014 related to the Doral transaction, (iii) a $1.9 million decrease in the FDIC deposit insurance premium expense reflecting, among other things, a decrease in average assets, reduction in reliance of brokered CDs, reductions in high-risk loans, and improved trends in earnings, and (iv) a $1.9 million decrease in the national gross receipts tax (a retroactive charge of $1.6 million that corresponded to the first quarter of 2013 was recorded in the second quarter of 2013 after the enactment on June 30, 2013 of Act No. 40 (“Act 40”), known as the “Tax Burden Adjustment and Redistribution Act”).  These variances were partially offset by a $1.9 million increase in employees’ compensation and benefits including, among other things, $1.1 million for annual merit salary increases, including lump sum payments of approximately $0.2 million, and an increase of $0.5 million in stock-based compensation expense. 

·For the second quarter of 2014, the Corporation recorded an income tax benefit of $0.3 million, compared to an income tax benefit of $1.0 million for the same period in 2013.The variance mainly reflects the impact of the amendments to the Puerto Rico Internal Revenue Code of 2011, as amended (the “2011 PR Code”), during the second quarter of 2013 when the Corporation recognized a $1.6 million benefit related to the national gross receipts tax credit ($0.8 million of such benefit corresponded to the first quarter of 2013 and was recorded in the second quarter of 2013 upon enactment of Act 40 which was retroactive to January 1, 2013) compared to the $0.7 million benefit related to the national gross receipts tax credit recorded in 2014. In addition, the variance reflects a net benefit in the 2013 second quarter of $0.5 million related to the increase in the deferred tax asset of profitable subsidiaries due to changes in statutory tax rates. Refer to the “Income Taxes” discussion below for additional information.

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·As of June 30, 2014, total assets were $12.5 billion, a decrease of $133.7 million, or 1%, from December 31, 2013.  The decrease was mainly related to a $124.4 million decrease in loans held for investment, net of allowance, mainly reflecting large commercial and construction impaired loans paid off, a decrease in outstanding balances of credit facilities granted to the Puerto Rico government, and a $38.4 million decrease in the OREO inventory balance driven by sales and valuation adjustments.  These decreases were partially offset by a $22.0 million increase in cash and cash equivalents, and a $19.1 million increase in available-for-sale securities largely due to purchases of $68.5 million of 15-year U.S. agency MBS (average yield of 2.45%), and an increase in the fair value of U.S. agency MBS and debt securities.  Refer to the “Financial Condition and Operating Data” discussion below for additional information.

·As of June 30, 2014, total liabilities were $11.2 billion, a decrease of $223.8 million, from December 31, 2013.  The decrease was mainly related to a $266.1 million decrease in government deposits, mainly related to withdrawals of $341.6 million by certain public corporations and government agencies in Puerto Rico during the second quarter of 2014, and a $45.1 million decrease in brokered CDs.  These variances were partially offset by a $62.1 million increase in non-brokered deposits, excluding government deposits, mainly due to increases in savings and retail CDs, and a $20.0 million increase related to a FHLB advance entered into at the end of the second quarter of 2014.  Refer to the “Risk Management – Liquidity and Capital Adequacy” discussion below for additional information about the Corporation’s funding sources. 

·As of June 30, 2014, the Corporation’s stockholders’ equity was $1.3 billion, an increase of $90.1 million from December 31, 2013.  The increase was mainly driven by a $50.3 million increase in other comprehensive income mainly attributable to an increase in the fair value of U.S. agency MBS and debt securities and the net income of $38.3 million for the first half of 2014.  The Corporation’s Total Capital, Tier 1 Capital, and Leverage ratios increased to 18.06%, 16.80% and 12.04%, respectively, from 17.06%, 15.78% and 11.71%, respectively, as of December 31, 2013.  Meanwhile, FirstBank’s Total Capital, Tier 1 Capital and Leverage ratios as of June 30, 2014 were 17.70%, 16.43% and 11.79%, respectively, compared to 16.67%, 15.40% and 11.44%, respectively, as of December 31, 2013.  In addition, the Corporation’s tangible common equity ratio increased to 9.76% as of June 30, 2014, from 8.71% as of December 31, 2013, and the Tier 1 common equity to risk weighted-assets ratio increased to 13.92% as of June 30, 2014 from 12.72% as of December 31, 2013.  Refer to the “Risk Management – Capital” section below for additional information including further information about these non-GAAP financial measures and recent regulatory capital changes.  Although all the regulatory capital ratios exceeded the established “well capitalized” levels, as well as the minimum capital ratios required by the FDIC Order, as of June 30, 2014, FirstBank cannot be treated as a “well-capitalized” institution since it is still subject to the FDIC Order. 

·Total loan production, including purchases, refinancings and draws from existing revolving and non-revolving commitments, was $781.3 million for the quarter ended June 30, 2014, excluding the utilization activity of the outstanding credit cards, compared to $924.7 million for the same period in 2013.  The decrease in loan production was mainly related to residential and consumer loans in Puerto Rico. 

·Total non-performing loans, including non-performing loans held for sale, as of June 30, 2014, were $619.4 million, an increase of $69.0 million, or 13%, from December 31, 2013.  This increase primarily reflects the inflow to non-performing of three large commercial relationships totaling $83.8 million.  In addition, the non-performing residential mortgage loan portfolio increased by a net of $14.0 million.  These increases were partially offset by a $20.0 million decrease in non-performing construction loans, mainly driven by the restoration to accrual status of a $10.7 million loan that is current in payments and deemed collectible, certain loans paid-off in the United States, and foreclosures.    

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·Total non-performing assets were $757.3 million as of June 30, 2014, an increase of $31.9 million from December 31, 2013.  The increase was driven by the aforementioned inflow of three large commercial relationships totaling $83.8 million, partially offset by a $38.4 million decrease in OREO, driven by sales and valuation adjustments.  Refer to the “Risk Management - Non-accruing and Non-performing Assets” section below for additional information.

·Adversely classified commercial and construction loans held for investment decreased by $16.6 million to $606.4 million, or 3%, from December 31, 2013.

Critical Accounting Policies and Practices

The accounting principles of the Corporation and the methods of applying these principles conform to generally accepted accounting principles in the United States (“GAAP”). The Corporation’s critical accounting policies relate to; 1) the allowance for loan and lease losses; 2) other-than-temporary impairments (“OTTIs”); 3) income taxes; 4) the classification and values of investment securities; 5) the valuation of financial instruments; 6) income recognition on loans; 7) loans acquired, 8) loans held for sale, and 9) the equity method accounting for investment in unconsolidated entity. These critical accounting policies involve judgments, estimates and assumptions made by management that affect the amounts recorded for assets and liabilities and for contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from estimates, if different assumptions or conditions prevail. Certain determinations inherently require greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than those originally reported.

The Corporation’s critical accounting policies are described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in First BanCorp.’s 2013 Annual Report on Form 10-K. There have not been any material changes in the Corporation’s critical accounting policies since December 31, 2013. Refer to “Credit Risk Management-Allowance for Loan Losses” discussion below for information about enhancements to the allowance for loan losses estimation process implemented during the second quarter of 2014.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the excess of interest earned by First BanCorp. on its interest-earning assets over the interest incurred on its interest-bearing liabilities. First BanCorp.’s net interest income is subject to interest rate risk due to the repricing and maturity mismatch of the Corporation’s assets and liabilities. Net interest income for the quarter and six-month period ended June 30, 2014 was $129.9 million and $261.2 million, respectively, compared to $126.9 million and $251.4 million for the comparable periods in 2013. On a tax-equivalent basis and excluding the changes in the fair value of derivative instruments, net interest income for the quarter and six-month period ended June 30, 2014 was $134.7 million and $270.9 million, respectively, compared to $129.2 million and $254.9 million for the comparable periods in 2013.

The following tables include a detailed analysis of net interest income. Part I presents average volumes and rates on an adjusted tax-equivalent basis and Part II presents, also on an adjusted tax-equivalent basis, the extent to which changes in interest rates and changes in volume of interest-related assets and liabilities have affected the Corporation’s net interest income. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (changes in volume multiplied by prior period rates), and (ii) changes in rate (changes in rate multiplied by prior period volumes). Rate-volume variances (changes in rate multiplied by changes in volume) have been allocated to the changes in volume and rate based upon their respective percentage of the combined totals.

The net interest income is computed on an adjusted tax-equivalent basis and excluding the change in the fair value of derivative instruments. For a definition and reconciliation of this non-GAAP measure, refer to discussions below.

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Part I
		Average Volume				Interest income (1) / expense				Average Rate (1)
	Quarter ended June 30,	2014		2013		2014		2013		2014		2013
	(Dollars in thousands)
	Interest-earning assets:
	Money market & other short-term investments	$	729,302	$	710,561	$	454	$	499	0.25	%	0.28	%
	Government obligations (2)		335,813		342,708		2,101		1,988	2.51	%	2.33	%
	Mortgage-backed securities		1,717,748		1,682,682		14,191		11,571	3.31	%	2.76	%
	FHLB stock		27,995		31,348		273		322	3.91	%	4.12	%
	Equity securities		320		1,360		-		-	0.00	%	0.00	%
	Total investments (3)		2,811,178		2,768,659		17,019		14,380	2.43	%	2.08	%
	Residential mortgage loans		2,635,082		2,799,369		36,707		37,411	5.59	%	5.36	%
	Construction loans		198,665		276,128		1,691		2,274	3.41	%	3.30	%
	C&I and commercial mortgage loans		4,658,776		4,710,448		50,473		48,551	4.35	%	4.13	%
	Finance leases		243,014		239,677		4,985		5,122	8.23	%	8.57	%
	Consumer loans		1,825,255		1,795,159		52,291		55,262	11.49	%	12.35	%
	Total loans (4) (5)		9,560,792		9,820,781		146,147		148,620	6.13	%	6.07	%
	Total interest-earning assets	$	12,371,970	$	12,589,440	$	163,166	$	163,000	5.29	%	5.19	%
	Interest-bearing liabilities:
	Brokered CDs	$	3,124,808	$	3,311,165	$	7,496	$	10,473	0.96	%	1.27	%
	Other interest-bearing deposits		5,838,450		5,774,995		11,970		13,445	0.82	%	0.93	%
	Other borrowed funds		1,131,959		1,131,959		8,217		8,233	2.91	%	2.92	%
	FHLB advances		300,220		365,583		833		1,631	1.11	%	1.79	%
	Total interest-bearing liabilities	$	10,395,437	$	10,583,702	$	28,516	$	33,782	1.10	%	1.28	%
	Net interest income					$	134,650	$	129,218
	Interest rate spread									4.19	%	3.91	%
	Net interest margin									4.37	%	4.12	%

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Part I
		Average Volume				Interest income (1) / expense				Average Rate (1)
	Six-Month Period Ended June 30,	2014		2013		2014		2013		2014		2013
	(Dollars in thousands)
	Interest-earning assets:
	Money market & other short-term investments	$	736,772	$	744,796	$	954	$	1,038	0.26	%	0.28	%
	Government obligations (2)		339,313		334,318		4,159		3,839	2.47	%	2.32	%
	Mortgage-backed securities		1,709,097		1,609,759		30,283		21,086	3.57	%	2.64	%
	FHLB stock		28,199		32,227		614		737	4.39	%	4.61	%
	Equity securities		320		1,362		-		-	0.00	%	0.00	%
	Total investments (3)		2,813,701		2,722,462		36,010		26,700	2.58	%	1.98	%
	Residential mortgage loans		2,592,738		2,807,128		71,665		75,415	5.57	%	5.42	%
	Construction loans		207,553		310,590		3,706		4,891	3.60	%	3.18	%
	C&I and commercial mortgage loans		4,741,613		4,804,270		101,785		96,400	4.33	%	4.05	%
	Finance leases		244,613		238,468		10,175		10,208	8.39	%	8.63	%
	Consumer loans		1,824,966		1,788,178		105,306		110,806	11.64	%	12.50	%
	Total loans (4) (5)		9,611,483		9,948,634		292,637		297,720	6.14	%	6.03	%
	Total interest-earning assets	$	12,425,184	$	12,671,096	$	328,647	$	324,420	5.33	%	5.16	%
	Interest-bearing liabilities:
	Brokered CDs	$	3,154,996	$	3,374,033	$	15,103	$	22,271	0.97	%	1.33	%
	Other interest-bearing deposits		5,881,642		5,723,799		24,662		27,191	0.85	%	0.96	%
	Other borrowed funds		1,131,959		1,131,959		16,345		16,396	2.91	%	2.92	%
	FHLB advances		300,110		387,943		1,657		3,656	1.11	%	1.90	%
	Total interest-bearing liabilities	$	10,468,707	$	10,617,734	$	57,767	$	69,514	1.11	%	1.32	%
	Net interest income					$	270,880	$	254,906
	Interest rate spread									4.22	%	3.84	%
	Net interest margin									4.40	%	4.06	%

(1)	On an adjusted tax-equivalent basis.  The adjusted tax-equivalent yield was estimated by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate of 39.0% and adding to it the cost of interest-bearing liabilities.  The tax-equivalent adjustment recognizes the income tax savings when comparing taxable and tax-exempt assets.  Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread and net interest margin on a fully tax-equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. Changes in the fair value of derivatives are excluded from interest income and interest expense because the changes in valuation do not affect interest paid or received.
(2)	Government obligations include debt issued by government sponsored agencies.
(3)	Unrealized gains and losses on available-for-sale securities are excluded from the average volumes.
(4)	Average loan balances include the average of non-performing loans.
(5)	Interest income on loans includes $2.8 million and $3.5 million for the quarters ended June 30, 2014 and 2013, respectively, and $5.8 million and $7.1 million for the six-month periods ended June 30, 2014 and 2013, respectively, of income from prepayment penalties and late fees related to the Corporation’s loan portfolio.

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Part II
		Quarter ended June 30,						Six-Month Period Ended June 30,
		2014 compared to 2013						2014 compared to 2013
		Increase (decrease)						Increase (decrease)
		Due to:						Due to:
	(In thousands)	Volume		Rate		Total		Volume		Rate		Total
	Interest income on interest-earning assets:
	Money market & other short-term investments	$	13	$	(58)	$	(45)	$	(11)	$	(73)	$	(84)
	Government obligations		(42)		155		113		58		262		320
	Mortgage-backed securities		246		2,374		2,620		1,370		7,827		9,197
	FHLB stock		(33)		(16)		(49)		(89)		(34)		(123)
	Total investments		184		2,455		2,639		1,328		7,982		9,310
	Residential mortgage loans		(2,247)		1,543		(704)		(5,876)		2,126		(3,750)
	Construction loans		(650)		67		(583)		(1,741)		556		(1,185)
	C&I and commercial mortgage loans		(550)		2,472		1,922		(1,334)		6,719		5,385
	Finance leases		70		(207)		(137)		262		(295)		(33)
	Consumer loans		901		(3,872)		(2,971)		2,242		(7,742)		(5,500)
	Total loans		(2,476)		3		(2,473)		(6,447)		1,364		(5,083)
	Total interest income		(2,292)		2,458		166		(5,119)		9,346		4,227
	Interest expense on interest-bearing liabilities:
	Brokered CDs		(563)		(2,414)		(2,977)		(1,370)		(5,798)		(7,168)
	Other interest-bearing deposits		141		(1,616)		(1,475)		722		(3,251)		(2,529)
	Other borrowed funds		-		(16)		(16)		-		(51)		(51)
	FHLB advances		(256)		(542)		(798)		(707)		(1,292)		(1,999)
	Total interest expense		(678)		(4,588)		(5,266)		(1,355)		(10,392)		(11,747)
	Change in net interest income	$	(1,614)	$	7,046	$	5,432	$	(3,764)	$	19,738	$	15,974

Portions of the Corporation’s interest-earning assets, mostly investments in obligations of some U.S. government agencies and sponsored entities, generate interest which is exempt from income tax, principally in Puerto Rico. Also, interest and gains on sales of investments held by the Corporation’s international banking entities (“IBEs”) are tax-exempt under the Puerto Rico tax law (refer to the Income Taxes discussion below for additional information). To facilitate the comparison of all interest data related to these assets, the interest income has been converted to an adjusted taxable equivalent basis. The tax equivalent yield was estimated by dividing the interest rate spread on exempt assets by 1 less the Puerto Rico statutory tax rate as adjusted for changes to enacted tax rates (39.0%) and adding to it the average cost of interest-bearing liabilities. The computation considers the interest expense disallowance required by Puerto Rico tax law.

The presentation of net interest income excluding the effects of the changes in the fair value of the derivative instruments (“valuations”) provides additional information about the Corporation’s net interest income and facilitates comparability and analysis. The changes in the fair value of the derivative instruments have no effect on interest due or interest earned on interest-bearing liabilities or interest-earning assets, respectively, or on interest payments exchanged with interest rate swap counterparties.

     The following table reconciles net interest income in accordance with GAAP to net interest income, excluding valuations, and net interest income on an adjusted tax-equivalent basis.  The table also reconciles net interest spread and net interest margin on a GAAP basis to these items excluding valuations and on an adjusted tax-equivalent basis:

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(Dollars in thousands)
	Quarter Ended						Six-Month Period Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Interest Income - GAAP	$	158,423		$	160,670		$	318,994		$	320,895
Unrealized gain on derivative instruments		(262)			(708)			(575)			(1,108)
Interest income excluding valuations		158,161			159,962			318,419			319,787
Tax-equivalent adjustment		5,005			3,038			10,228			4,633
Interest income on a tax-equivalent basis excluding valuations		163,166			163,000			328,647			324,420
Interest Expense - GAAP		28,516			33,782			57,767			69,514
Net interest income - GAAP	$	129,907		$	126,888		$	261,227		$	251,381
Net interest income excluding valuations	$	129,645		$	126,180		$	260,652		$	250,273
Net interest income on a tax-equivalent basis excluding valuations	$	134,650		$	129,218		$	270,880		$	254,906
Average Balances
Loans and leases	$	9,560,792		$	9,820,781		$	9,611,483		$	9,948,634
Total securities and other short-term investments		2,811,178			2,768,659			2,813,701			2,722,462
Average Interest-Earning Assets	$	12,371,970		$	12,589,440		$	12,425,184		$	12,671,096
Average Interest-Bearing Liabilities	$	10,395,437		$	10,583,702		$	10,468,707		$	10,617,734
Average Yield/Rate
Average yield on interest-earning assets - GAAP		5.14	%		5.12	%		5.18	%		5.11	%
Average rate on interest-bearing liabilities - GAAP		1.10	%		1.28	%		1.11	%		1.32	%
Net interest spread - GAAP		4.04	%		3.84	%		4.07	%		3.79	%
Net interest margin - GAAP		4.21	%		4.04	%		4.24	%		4.00	%
Average yield on interest-earning assets excluding valuations		5.13	%		5.10	%		5.17	%		5.09	%
Average rate on interest-bearing liabilities excluding valuations		1.10	%		1.28	%		1.11	%		1.32	%
Net interest spread excluding valuations		4.03	%		3.82	%		4.06	%		3.77	%
Net interest margin excluding valuations		4.20	%		4.02	%		4.23	%		3.98	%
Average yield on interest-earning assets on a tax-equivalent basis
and excluding valuations		5.29	%		5.19	%		5.33	%		5.16	%
Average rate on interest-bearing liabilities excluding valuations		1.10	%		1.28	%		1.11	%		1.32	%
Net interest spread on a tax-equivalent basis and excluding valuations		4.19	%		3.91	%		4.22	%		3.84	%
Net interest margin on a tax-equivalent basis and excluding valuations		4.37	%		4.12	%		4.40	%		4.06	%

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Interest income on interest-earning assets primarily represents interest earned on loans held for investment and investment securities.

Interest expense on interest-bearing liabilities primarily represents interest paid on brokered CDs, branch-based deposits, repurchase agreements, advances from the FHLB and notes payable.

Unrealized gains or losses on derivatives represent changes in the fair value of derivatives, primarily interest rate swaps and caps used for protection against rising interest rates.

Derivative instruments, such as interest rate swaps, are subject to market risk. While the Corporation does have certain trading derivatives to facilitate customer transactions, the Corporation does not utilize derivative instruments for speculative purposes.  As of June 30, 2014, most of the interest rate swaps outstanding are used for protection against rising interest rates, although not designated as hedges.  Refer to Note 9 of the accompanying unaudited consolidated financial statements for further details concerning the notional amounts of derivative instruments and additional information.   As is the case with investment securities, the market value of derivative instruments is largely a function of the financial market’s expectations regarding the future direction of interest rates. Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on net interest income. This will depend, for the most part, on the shape of the yield curve, the level of interest rates, as well as the expectations for rates in the future.

For the quarter and six-month period ended June 30, 2014, net interest income increased $3.0 million to $129.9 million, and $9.8 million to $261.2 million compared to the same periods in 2013. The increase for the second quarter and first half of 2014 was primarily driven by a reduction in the average cost of funds and improved deposit mix as well as an increase in the yield of U.S. agency MBS.

 For the quarter and six-month period ended June 30, 2014, the net interest margin, excluding valuations, improved by 18 basis points to 4.20%, and 25 basis points to 4.23% compared to the same periods in the prior year.  The improvements in the net interest margin were mainly derived from renewals of maturing brokered CDs at lower rates, improved deposit pricing, an improved deposit mix, funding cost reductions resulting from maturities of high-cost FHLB advances and higher yields on investment securities, in particular higher yields on mortgage-backed securities.

The average cost of brokered CDs decreased by 31 and 36 basis points for the second quarter and six-month period ended June 30, 2014, respectively, as compared to the same periods in 2013, and the average balance of brokered CDs for the quarter and six-month period ended June 30, 2014 decreased by $186.4 million and $219.0 million, respectively, compared to the same periods in 2013. These reductions resulted in a decline of $3.0 million and $7.2 million in interest expense for the quarter and six-month period ended June 30, 2014, respectively, when compared to the same periods in 2013.  Over the past 12 months, the Corporation repaid approximately $1.9 billion of maturing brokered CD’s with an all-in cost of 1.26% and issued $1.7 billion of new brokered CD’s with an all-in cost of 0.81%.

In addition, the Corporation reduced the average cost of funds as result of lower rates paid on certain of its savings, interest-bearing checking accounts and retail CDs. For the quarter and six-month period ended June 30, 2014, the average rate paid on non-brokered deposits declined by 11 basis points to 0.82%, and 11 basis points to 0.85% compared to the same periods in 2013.  These reductions resulted in a decrease of approximately $1.6 million and $3.2 million in interest expense for the quarter and six-month period ended June 30, 2014, respectively, compared to the same periods in 2013. The average balance of non-brokered deposits for the quarter and six-month period ended June 30, 2014 increased $63.5 million to $5.8 billion, and $157.8 million to $5.9 billion compared to the same periods in 2013.  The Corporation’s strategic focus remains to grow non-brokered deposits and improve the overall funding mix.  In addition, the Corporation benefited from the maturities of some high-cost borrowings; over the past 12 months the Corporation repaid approximately $58.4 million of FHLB advances with an all-in cost of 4.88% and issued $20 million of new FHLB advances with an all-in cost of 0.38%.

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The Corporation also benefited from increases in the average yield and average volume of mortgage-backed securities. Lower U.S agency MBS prepayment levels contributed to positive variances of approximately $1.9 million and $5.8 million in interest income for the quarter and six-months ended June 30, 2014, respectively, when compared to the same periods in 2013, due to a reduction in premiums amortization expense. For the quarter and six-month period ended June 30, 2014, the average volume of mortgage-backed securities increased by $35.1 million to $1.7 billion, and $99.3 million to $1.7 billion compared to the same periods in 2013. The higher volume contributed to increases in interest income of approximately $0.2 million and $1.4 million for the quarter and six-month period ended June 30, 2014, respectively, compared to the same periods in 2013. The increase in volume for 2014 periods resulted mainly from the purchase over the last 12 months of approximately $ 224.3 million of 15-30 year U.S. agency MBS with an average yield of 2.61%.

The aforementioned favorable impacts were partially offset by decreases of $3.7 million and $7.5 million in interest income on loans for the quarter and six-month period ended June 30, 2014, respectively, when compared to the same periods in 2013, mainly related to a decrease in the average volume and yield of credit cards that resulted in decreases in interest income of $3.3 million and $6.5 million for the quarter and six-month period ended June 30, 2014, respectively, when compared to the same periods in 2013. Further declines in the average yield of the credit card portfolio could be observed as the discount recorded at acquisition was fully accreted during the second quarter of 2014.  The decreases were partially offset by increases in interest income on commercial loans attributable in part to contractual repricing of loan facilities.  

On an adjusted tax-equivalent basis, net interest income for the quarter and six-month period ended June 30, 2014 increased $5.4 million and $16.0 million to $134.7 million, and $270.9 million when compared to the same periods in 2013, respectively.The increases were mainly due to reductions in the overall cost of funding, and higher-yields on mortgage-backed securities and C&I and commercial mortgage loans as discussed above.  The increase for the 2014 periods also includes increases of $2.0 million and $5.6 million in the tax-equivalent adjustments for the quarter and six-month period ended June 30, 2014 when compared to the same periods in 2013.  The tax-equivalent adjustment increases interest income on tax-exempt securities and loans by an amount that makes tax-exempt income comparable, on a pre-tax basis, to the Corporation’s taxable income as previously stated.  This increase was mainly related to a higher volume of tax-exempt securities.

Provision and Allowance for Loan and Lease Losses

The provision for loan and lease losses is charged to earnings to maintain the allowance for loan and lease losses at a level that the Corporation considers adequate to absorb probable losses inherent in the portfolio. The adequacy of the allowance for loan and lease losses is also based upon a number of additional factors, including trends in charge-offs and delinquencies, current economic conditions, the fair value of the underlying collateral and the financial condition of the borrowers, and, as such, includes amounts based on judgments and estimates made by the Corporation. Although the Corporation believes that the allowance for loan and lease losses is adequate, factors beyond the Corporation’s control, including factors affecting the economies of Puerto Rico, the United States, the U.S. Virgin Islands and the British Virgin Islands, may contribute to delinquencies and defaults, thus necessitating additional reserves.

For the second quarter and six-month period ended June 30, 2014, the Corporation recorded a provision for loan and lease losses of $26.7 million and $58.7 million, respectively, compared to $87.5 million and $198.6 million for the comparable periods in 2013. The fair value adjustments related to mortgage loans acquired from Doral added $1.4 million to the provision for loan losses in the second quarter and first half of 2014, and the bulk sales of assets and transfer of certain commercial loans to held for sale during 2013 added $67.9 million and $132.0 million to the provision for loan losses in the second quarter and first half of 2013, respectively. 

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 The adjusted provision for loan losses, excluding the impact of the Doral transaction in 2014 and the bulk sales of assets and transfer of certain commercial loans to held for sale, increased by $5.7 million in the second quarter of 2014 as compared to the same period in 2013, mainly due to a higher migration of loans to adverse classification categories and a higher general reserve for auto loans.  Meanwhile, the adjusted provision for loan and lease losses decreased by $9.4 million in the first half of 2014, as compared to the same period in 2013, mainly reflecting lower provisions for commercial mortgage and construction loans in the United States driven by recoveries on impaired loans paid-off, reductions related to updated appraisals, and the overall decrease in these portfolios size.  In addition, the decrease for the first half of 2014 reflects lower provision requirements for the Puerto Rico residential mortgage loan portfolio driven by an improved portfolio composition following the sale of non-performing residential assets completed in the second quarter of 2013.

In terms of geography and categories, in Puerto Rico, the Corporation recorded a provision of $37.7 million and $75.0 million for the quarter and six-month period ended June 30, 2014, respectively, compared to $87.3 million and $192.2 million for the comparable periods in 2013.  Excluding the impact of fair value adjustments related to mortgage loans acquired from Doral in 2014 and bulk sales of assets and the transfer of loans to held for sale in 2013, the adjusted provision for loan and lease losses in Puerto Rico increased by $11.7 million and $1.9 million for the second quarter and first half of 2014, compared to the same periods in 2013. The increases in the 2014 periods were mainly due to a higher general reserve for auto loans, due to both higher loss rates and the increase in the size of this portfolio, and a higher migration of commercial and industrial loans to adverse classification categories, including the adverse classification during the second quarter of 2014 of a $75.0 million direct exposure to government public corporations as further discussed below.  These increases were partially offset by lower provisions for residential mortgage loans driven by an improved portfolio composition following the sale of non-performing residential assets completed in the second quarter of 2013, and a reduction related to updated appraisals in commercial mortgage loans.

With respect to the portfolio in the United States, the Corporation recorded a reserve release of $10.5 million and $16.4 million for the second quarter and six-month period ended June 30, 2014, respectively, compared to a reserve release of $3.9 million and $2.4 million for the comparable periods in 2013. The higher reserve releases in the 2014 periods were mainly driven by recoveries on commercial mortgage impaired loans paid-off, reductions related to updated appraisals, and the decrease in non-performing loans and the overall size of these portfolios in the United States.

The Virgin Islands region recorded a reserve release of $0.5 million for the second quarter of 2014 and a provision of $0.1 million for the first six months of 2014, compared to a provision of $4.1 million for the second quarter of 2013 and a provision of $8.8 million for the first six months of 2013. The decreases in the provision for loan losses for the second quarter and first half of 2014 were mainly due to the portion of losses of the bulk sale of non-performing residential assets and the transfer of loans to held for sale attributable to the Virgin Islands portfolio. Excluding the impact of the bulk sale of non-performing residential assets and the transfer of loans to held for sale, the provision for loans and lease losses for the second quarter and first half of 2014 increased by $0.6 million and $2.8 million, respectively, compared to the same periods in 2013, mainly related to the commercial and industrial loan portfolio. 

Refer to the discussions under “Credit Risk Management” below for an analysis of the allowance for loan and lease losses, non-performing assets, impaired loans and related information, including information about enhancements to the allowance for loan losses estimation process implemented during the second quarter of 2014, and refer to the discussions under “Financial Condition and Operating Analysis – Loan Portfolio” and under “Risk Management — Credit Risk Management” below for additional information concerning the Corporation’s loan portfolio exposure in the geographic areas where the Corporation does business.

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Non-Interest Income (Loss)
		Quarter Ended June 30,				Six-Month Period Ended June 30,
		2014		2013		2014		2013
			(In thousands)
	Service charges on deposit accounts	$	3,290	$	3,098	$	6,493	$	6,478
	Mortgage banking activities		3,036		4,823		6,404		9,403
	Insurance income		1,467		1,508		4,038		3,528
	Broker-dealer income		-		-		459		-
	Other operating income		8,517		4,876		16,876		14,180
	Non-interest income before net gain (loss) on investments,
	equity in (loss) earnings of unconsolidated entity,
	and write-off of collateral pledged to Lehman		16,310		14,305		34,270		33,589
	Net gain on sale of investments		291		-		291		-
	OTTI on equity securities		-		(42)		-		(42)
	OTTI on debt securities		-		-		-		(117)
	Net gain (loss) on investments		291		(42)		291		(159)
	Impairment - collateral pledged to Lehman		-		(66,574)		-		(66,574)
	Equity in (loss) earnings of unconsolidated entity		(670)		648		(7,280)		(4,890)
	Total	$	15,931	$	(51,663)	$	27,281	$	(38,034)

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Non-interest income primarily consists of service charges on deposit accounts; commissions derived from various banking, securities and insurance activities; gains and losses on mortgage banking activities; interchange and other fees related to debit and credit cards; equity in earnings (losses) of unconsolidated entities; and net gains and losses on investments and impairments.

Service charges on deposit accounts include monthly fees, overdraft fees and other fees on deposit accounts.

Income from mortgage banking activities includes gains on sales and securitization of loans, revenues earned for administering residential mortgage loans originated by the Corporation and subsequently sold with servicing retained, and unrealized gains and losses on forward contracts used to hedge the Corporation’s securitization pipeline. In addition, lower-of-cost-or-market valuation adjustments to the Corporation’s residential mortgage loans held for sale portfolio and servicing rights portfolio, if any, are recorded as part of mortgage banking activities.

Insurance income consists of insurance commissions earned by the Corporation’s subsidiary, FirstBank Insurance Agency, Inc.

Broker-dealer income consists of commissions earned from the Corporation’s broker-dealer subsidiary activities, FirstBank Puerto Rico Securities.

The other operating income category is composed of miscellaneous fees such as debit, credit card and point of sale (POS) interchange fees and check and cash management fees.

The net gain (loss) on investment securities reflects gains or losses as a result of sales that are consistent with the Corporation’s investment policies as well as OTTI charges on the Corporation’s investment portfolio.

Equity in earnings (losses) of unconsolidated entity relates to FirstBank’s investment in CPG/GS, the entity that purchased $269 million of loans from FirstBank during the first quarter of 2011. The Bank holds a 35% subordinated ownership interest in CPG/GS. The majority owner of CPG/GS is entitled to recover its initial investment and a priority return of 12% prior to any return paid to the Bank. The adjustment of $0.7 million recorded in the second quarter of 2014 reduced to zero the book value of the Bank’s investment in CPG/GS as of June 30, 2014. No negative investments needs to be reported as the Bank has no legal obligation or commitment to provide further financial support to this entity; thus, no further losses will be recorded on this investment. Any potential increase in the carrying value of the investment in CPG/GS, under the Hypothetical Liquidation Book Value method, would depend upon how better off the Bank is at the end of the period than it was at the beginning of the period after the waterfall calculation performed to determine the amount of gain allocated to the investors. Refer to Note 12 of the Corporation’s unaudited financial statements for the quarter ended June 30, 2014 for additional information about the Bank’s investment in CPG/GS.

    Non-interest income for the second quarter of 2014 amounted to $15.9 million, compared to a non-interest loss of $51.7 million for the second quarter of 2013. The increase was mainly related to the $66.6 million write-off of the collateral pledged to Lehman recorded in the second quarter of 2013. Adjusted non-interest income, excluding the Lehman collateral write-off, increased $1.0 million compared to the second quarter of 2013 primarily due to the following:

·A $3.6 million positive variance in other operating income mainly due to the impact in the second quarter of 2013 of a $3.4 million loss related to the restructuring of a commercial mortgage loan held for sale in which the Corporation received foreclosed real estate in partial satisfaction of a debt arrangement and modified the terms of the remaining balance. This loss is included as part of “Other operating income” for the second quarter of 2013 in the table above.

·A $0.3 million gain on sale of investments related to a $4.6 million Puerto Rico government agency bond sold.

This was partially offset by: 

·A $1.8 million decrease in revenues from mortgage banking activities driven by a $2.7 million decrease in net gains as a result of a lower volume of sales and securitizations partially offset by the positive variance resulting from the impact in the second quarter of 2013 of a $1.8 million lower of cost or market valuation charge on residential mortgage loans held for sale. Loan sales and securitizations for the second quarter of 2014 of $83.1 million resulted in a gain of $2.6 million, compared to sales and securitizations of $150.9 million and a related gain of $5.3 million recorded in the first quarter of 2013. In addition, there was a decrease of $0.5 million related to higher representation and warranties losses and compensatory fees imposed by government-sponsored agencies and a $0.4 million decrease in servicing fees due to the expiration of the interim servicing on loans included in the bulk sales of 2013.

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·A $1.3 million negative variance in the equity in (losses) earnings of unconsolidated entity, as the Corporation recorded equity in loss of $0.7 million for the second quarter of 2014 compared to equity in earnings of $0.6 million for the second quarter of 2013. The adjustment of $0.7 million recorded in the second quarter of 2014 reduced to zero the book value of the Bank’s investment in CPG/GS as of June 30, 2014.   

Non-interest income for the six-month period ended June 30, 2014 amounted to $27.3 million, compared to non-interest loss of $38.0 million for the same period in 2013, including the $66.6 million write-off of the collateral pledged to Lehman that was recorded in the second quarter of 2013.  Adjusted non-interest income, excluding the Lehman collateral write-off, decreased $1.3 million for the first six months of 2014 compared to the same period in 2013 primarily due to:

·A $3.0 million decrease in revenues from mortgage banking activities driven by a $3.2 million decrease in net gains as a result of a lower volume of sales and securitizations and a $0.9 million increase in expenses related to representations and warranties losses and compensatory fees imposed by government-sponsored agencies. In addition, there was a $0.3 million decrease in servicing fees reflecting the expiration of the interim servicing on loans included in the bulk sales of 2013 and a $0.4 million decrease related to changes in the valuation allowance of servicing assets. These variances were  partially offset by the positive variance  resulting from the impact in the second quarter of 2013 of a $1.8 million  lower of cost or market valuation charge on residential mortgage loans held for sale. Loan sales and securitizations for the first half of 2014 of $169.3 million resulted in a realized gain of $5.5 million, compared to sales and securitizations of $280.4 million and a related realized gain of $8.7 million recorded in the first half of 2013. 

·A $2.4 million negative variance in equity in earnings (losses) of unconsolidated entities, as the Corporation recorded equity in loss of $7.3 million for the first half of 2014 compared to a loss of $4.9 million for the first half of 2013.

Partially offsetting these decreases was the aforementioned $3.4 million loss related to the restructuring of a commercial mortgage loan held for sale recorded in the second quarter of 2013 in which the Corporation received foreclosed real estate in partial satisfaction of a debt arrangement and modified the terms of the remaining balance. This loss is included as part of “Other operating income” in the table above for the first half of 2013. In addition, there was an increase related to the $0.3 million gain on sale of a $4.6 million Puerto Rico government agency bond and a $0.5 million increase related to fee income from the broker-dealer subsidiary related to underwriting fees on a bond issuance of the Puerto Rico government in the first quarter of 2014.

Non-Interest Expenses
The following table presents the detail of non-interest expenses for the periods indicated:
		Quarter Ended June 30,				Six-Month Period Ended June 30,
		2014		2013		2014		2013
		(In thousands)
	Employees' compensation and benefits	$	35,023	$	33,116	$	67,965	$	66,670
	Occupancy and equipment		14,509		14,946		28,855		30,016
	Insurance and supervisory fees		10,784		12,699		21,774		25,505
	Taxes, other than income taxes		4,477		6,239		9,024		9,228
	Professional fees:
	Collections, appraisals and other credit related fees		2,594		3,971		3,939		6,343
	Outsourcing technology services		4,610		4,258		8,824		5,604
	Other professional fees		4,167		5,506		8,648		12,921
	Credit and debit card processing expenses		3,882		2,281		7,706		5,358
	Business promotion		4,142		3,831		8,115		7,188
	Communications		1,894		1,885		3,773		3,699
	Net loss on OREO and OREO operations		6,778		14,829		12,615		22,139
	Other		5,285		7,762		9,692		14,662
		$	98,145	$	111,323	$	190,930	$	209,333

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Non-interest expenses decreased by $13.2 million to $98.1 million for the second quarter of 2014 compared to $111.3 million for the second quarter of 2013. The decrease was principally attributable to:

·An $8.1 million decrease in the net loss on OREO and OREO operations driven by lower write-downs and losses on the sale of OREO properties and, to a lesser extent, lower OREO operating expenses.  Total write-downs and losses on sales in the second quarter of 2014 amounted to $4.9 million compared to $11.2 million for the second quarter of 2013, a decrease of $6.3 million. This variance primarily reflects a decrease in valuation adjustments to OREO properties of approximately $5.0 million mainly driven by the impact in the second quarter of 2013 of $5.3 million in write-downs to the value of certain commercial OREO properties in the Virgin Islands and the impact in 2013 of a $1.9 million loss on the sale of certain OREO properties as part of the bulk sale of non-performing residential assets. In addition, a decrease of $1.8 million in OREO operations expenses contributed to the overall decrease; this positive variance is mainly attributable to lower taxes, repairs and maintenance expenses, and higher rental income.

·A $2.4 million decrease in professional fees. This variance reflects the impact of $3.1 million in professional fees related to the bulk sale of non-performing residential assets completed in the second quarter of 2013, partially offset by professional fees specifically attributable to the acquisition of mortgage loans from Doral in 2014.

·A $1.9 million decrease in the FDIC deposit insurance premium expense reflecting, among other things, a decrease in total average assets, improvements in earnings trend, a reduction in reliance on brokered CDs, and a decrease in high-risk loans as defined in regulatory guidelines. This expense is included as part of “Insurance and supervisory fees” in the table above.

·A $1.8 million decrease in taxes, other than income taxes, driven by the impact in the second quarter of 2013 of the $3.2 million charge related to Puerto Rico national gross receipts tax ($1.6 million of such charge corresponded to the first quarter of 2013 and was recorded in the second quarter of 2013 upon the enactment of the tax law which was retroactive to January 1, 2013).

These decreases were partially offset by:

·A $1.9 million increase in employee compensation and benefits primarily driven by annual merit salary increases and higher stock based compensation expense. 

·A $ 1.6 million increase in credit and debit card processing fees attributable to higher credit card processing costs. The increase mainly reflects the impact in the second quarter of 2013 of $1.4 million of contractual discounts provided for under the previous interim servicing contract of the credit card portfolio purchased in May 2012. The Corporation completed the conversion of the credit card platform in the third quarter of 2013.

Non-interest expenses decreased $18.4 million for the first half of 2014, compared to the first half of 2013, primarily due to:

·A $9.5 million decrease in the net loss on OREO and OREO operations mainly related to lower write-downs and losses on the sale of OREO properties and to a lesser extent lower net operation expenses.  Total write-downs and losses on sales amounted to $9.5 million for the first half of 2014 compared to $16.7 million for the same period in 2013, a decrease of $7.2 million. This variance reflects a decrease in valuation adjustments to OREO properties of approximately $4.4 million, the impact of the $1.9 million loss on the sale of certain OREO properties as part of the bulk sale of non-performing residential assets in 2013, and a decrease of approximately $0.9 million in net losses realized on the sale of properties. 

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The decrease in valuation adjustments was driven by the impact in the second quarter of 2013 of the aforementioned $5.3 million write-downs to the value of certain commercial OREO properties in the Virgin Islands. In addition, a decrease of $2.3 million in OREO operations expenses contributed to the overall decrease; this positive variance is mainly attributable to lower taxes, repairs and maintenance expenses, and higher rental income.

·A $3.5 million decrease in professional fees. This variance reflects the impact of $6.9 million in professional fees related to the bulk sales of assets completed during the first and second quarter of 2013 and the impact of $1.2 million in professional fees associated with a terminated preferred stock exchange offer in the first quarter of 2013. These decreases were partially offset by an increase of $3.2 million in professional services related to the outsourcing of technology services, mainly due to services provided by FIS under a multi-year technology outsourcing agreement executed by the Corporation at the beginning of the second quarter of 2013 and to a lesser extent increases in consulting fees including $0.6 million incurred in the acquisition of the mortgage loans from Doral.

·A $3.5 million decrease in the FDIC deposit insurance premium expense reflecting, among other things, a decrease in total average assets, improvements in earnings trend, a reduction in reliance on brokered CDs, and a decrease in high-risk loans as defined in regulatory guidelines. This expense is included as part of “Insurance and supervisory fees” in the table above.

·A $1.2 million decrease in occupancy and equipment mainly related to a decrease in the depreciation expense attributable to assets fully depreciated, and a $0.5 million decrease in property tax expenses related to a tax debt settlement.

These decreases were partially offset by:

·A $2.3 million increase in credit and debit card processing fees attributable to higher credit card processing costs. The increase mainly reflects the impact in the second quarter of 2013 of the aforementioned $1.4 million of contractual discounts provided for under the previous interim servicing contract of the credit card portfolio purchased in May 2012. The Corporation completed the conversion of the credit card platform in the third quarter of 2013.

·A $1.3 million increase in employee’s compensation and benefits due to salary merit increases, higher stock-based compensation expense, and lower capitalized costs associated with loan originations. 

Income Taxes

Income tax expense includes Puerto Rico and Virgin Islands income taxes as well as applicable U.S. federal and state taxes. The Corporation is subject to Puerto Rico income tax on its income from all sources. As a Puerto Rico corporation, First BanCorp. is treated as a foreign corporation for U.S. income tax purposes and is generally subject to United States income tax only on its income from sources within the United States or income effectively connected with the conduct of a trade or business within the United States. Any such tax paid is also creditable against the Corporation’s Puerto Rico tax liability, subject to certain conditions and limitations.

Under the 2011 PR Code, the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns and, thus, the Corporation is not able to utilize losses from one subsidiary to offset gains in another subsidiary.

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Accordingly, in order to obtain a tax benefit from a Net Operating Loss (“NOL”), a particular subsidiary must be able to demonstrate sufficient taxable income within the applicable carry forward period. The 2011 PR Code provides a dividend received deduction of 100% on dividends received from “controlled” subsidiaries subject to taxation in Puerto Rico and 85% on dividends received from other taxable domestic corporations.

On June 30, 2013, the Puerto Rico Government approved Act 40, which amended the 2011 PR Code, and Act No. 46 (“Act 46”), which bring changes to the sales and use tax regime. The main provisions of Act 40 that impact financial institutions are:

(i)A new national gross receipts tax that in the case of financial institutions is 1% of gross income that is not deductible for purposes of computing net taxable income and is not part of the alternative minimum tax (“AMT”).  This provision was retroactive to January 1, 2013.  The national gross receipts tax expense for the quarter and six-month period ended June 30, 2014 amounted to $1.4 million and $2.8 million, respectively, compared to $3.2 million recorded for the second quarter of 2013 ($1.6 million of such charge corresponded to the first quarter of 2013 and was recorded in the second quarter of 2013 upon enactment of Act 40, which was retroactive to January 1, 2013). This expense is included as part of “Taxes, other than income taxes” in the consolidated statement of income (loss). Subject to certain limitations, a financial institution will be able to claim a credit of 0.5% of its gross income against its regular income tax or the AMT. A benefit related to this credit of $0.7 million and $1.4 million was recorded as a reduction to the provision for income taxes in the second quarter and first half of 2014, respectively, compared to the benefit of $1.6 million recorded in the second quarter of 2013.

(ii)A decrease in the deduction available to corporations for the computation of the additional surtax from $750,000 to $25,000 and a change in the surtax rate to rates that range from 5% to 19%, resulting in an increase in the maximum statutory tax rate from 30% to 39%.  This provision was also retroactive to January 1, 2013.

(iii)A higher AMT rate (30% of the alternative minimum net income, as compared to 20% previously) and various parallel computations required to be made before determining whether an AMT liability exists. 

(iv)The NOL carryover period increased from 10 years to 12 years for losses incurred in taxable years that commenced after December 31, 2004 and ended before January 1, 2013.  The carryover period for NOLs incurred during taxable years commencing after December 31, 2012 is 10 years. The NOL deduction is now limited to 90% of taxable income for regular income tax purposes and 80% for AMT purposes.

Significant changes to the sales and use tax regime include adjustments to the Business to Business exclusion.  The business to business exclusion applicable to services rendered from one registered business to another registered business remains in effect, except for certain services that will be taxable, including, among others, service charges imposed by financial institutions on other businesses (commercial clients), collection services, repairs and maintenance services of real and personal property, and computer programming services, including modifications to previously designed systems.  The sales and use tax provisions were effective beginning on July 1, 2013.

    On October 14, 2013, the Governor of Puerto Rico signed into law Act No. 117 (“Act 117”) providing additional changes and transitional provisions in connection with Act 40.  In relation to the national gross receipts tax, Act 117 clarifies, among other things, that gross income subject to the special tax does not include the following:

(i)Dividends received from a 100% controlled domestic subsidiary. During the first half of 2014, no dividends subject to this exception were received by any of the Corporation’s entities.

(ii)Income attributable to a trade or business outside of Puerto Rico.

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  The Corporation has maintained an effective tax rate lower than the maximum statutory rate mainly by investing in government obligations and mortgage-backed securities exempt from U.S. and Puerto Rico income taxes and by doing business through an International Banking Entity (“IBE”) of the Bank and through the Bank’s subsidiary, FirstBank Overseas Corporation, whose interest income and gain on sales is exempt from Puerto Rico and U.S. income taxation. The IBE and FirsBank Overseas Corporation were created under the International Banking Entity Act of Puerto Rico, which provides for total Puerto Rico tax exemption on net income derived by IBEs operating in Puerto Rico on the specific activities identified in the IBE Act. An IBE that operates as a unit of a bank pays income taxes at normal rates to the extent that the IBE’s net income exceeds 20% of the bank’s total net taxable income.

   For the quarter and six-month period ended June 30, 2014, the Corporation recorded an income tax benefit of $0.3 million and an income tax expense of $0.6 million compared to an income tax benefit of $1.0 million and an income tax expense of $0.6 million for the same periods in 2013. The variance in the second quarter of 2014 compared to the same period in 2013 mainly reflects the impact of the amendments to the 2011 PR Code during the second quarter of 2013 when the Corporation recognized a $1.6 million benefit related to the national gross receipts tax credit ($0.8 million of such benefit corresponded to the first quarter of 2013 and was recorded in the second quarter of 2013 upon enactment of Act 40 which was retroactive to January 1, 2013) compared to the $0.7 million benefit related to the national gross receipts tax credit recorded in 2014. In addition, the variance reflect a net benefit in the 2013 second quarter of $0.5 million related to the increase in the deferred tax asset of profitable subsidiaries due to changes in statutory tax rates. Further, there was an increase of $1.0 million in the AMT expense recorded in the second quarter of 2014. These variances were partially offset by a $1.8 million reduction to the liability for certain tax positions related to prior year’s tax positions, as further discussed below. The income tax in the interim financial statements is calculated based on the income of the individual subsidiaries and the currently valid tax rates as a best possible estimate. As of June 30, 2014, the deferred tax asset, net of a valuation allowance of $510.8 million, amounted to $8.7 million compared to $7.6 million as of December 31, 2013. The decrease in the valuation allowance to $510.8 million from $522.7 million as of December 31, 2013 was mainly due to the reversal of temporary differences primarily attributable to the reduction in the allowance for loan and lease losses during the first half of 2014.

Accounting for income taxes requires that companies assess whether a valuation allowance should be recorded against their deferred tax asset based on an assessment of the amount of the deferred tax asset that is “more likely than not” to be realized. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. In making such assessment, significant weight is given to evidence that can be objectively verified, including both positive and negative evidence. Consideration must be given to all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of the reversal of temporary differences and carry forwards, taxable income in carry back years and tax planning strategies. In estimating taxes, management assesses the relative merits and risks of the appropriate tax treatment of transactions taking into account statutory, judicial and regulatory guidance.

In assessing the weight of positive and negative evidence, a significant negative factor that resulted in the maintenance of the valuation allowance was that the Corporation’s banking subsidiary, FirstBank Puerto Rico, was in a three-year historical cumulative loss position as of June 30, 2014, mainly due to significant charges to the provision for loan and lease losses in prior years as a result of the economic downturn and the bulk sales of assets completed in 2013. As of June 30, 2014, the Corporation had a gross deferred tax asset of $520.6 million, including $373.3 million associated with NOLs. The Bank incurred all of the NOLs on or after 2009. As mentioned before, the Corporation maintained a valuation allowance of $510.8 million as of June 30, 2014 against the deferred tax asset. As of June 30, 2014, management concluded that $8.7 million of the deferred tax asset will be realized as it relates to profitable subsidiaries and to amounts that can be realized through future reversals of existing taxable temporary differences.

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To the extent the realization of a portion, or all, of the tax asset becomes “more likely than not” based on changes in circumstances (such as, improved earnings, changes in tax laws or other relevant changes), a reversal of that portion of the deferred tax asset valuation allowance will then be recorded.

The authoritative accounting guidance prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken on income tax returns. Under this guidance, income tax benefits are recognized and measured based upon a two-step analysis: 1) a tax position must be more likely than not to be sustained based solely on its technical merits in order to be recognized, and 2) the benefit is measured as the largest dollar amount of that position that is more likely than not to be sustained upon settlement. The difference between the benefit recognized under this analysis and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit (“UTB”).

  As of June 30, 2014, the Corporation had UTBs of approximately $2.5 million, all of which would, if recognized, affect the Corporation’s effective tax rate. The Corporation classifies all interest and penalties, if any, related to tax uncertainties as income tax expense. As of June 30, 2014, the Corporation’s accrued interest that relates to tax uncertainties amounted to $2.4 million and there was no need to accrue for the payment of penalties. The years 2007 through 2009 were examined by the United States Internal Revenue Service (“IRS”) and disputed issues were taken to administrative appeals during 2011.  Based on feasible settlement with the IRS Appeals office in June 2014, the Corporation released a portion of its reserve for uncertain tax positions, resulting in a tax benefit of approximately $1.8 million. Based on such agreement management believes that the amounts of unrecognized tax benefits will decrease within the next twelve months by approximately $2.5 million. Such change will not have an impact on the effective tax rate.

The Corporation’s liability for income taxes includes its liability for UTBs, and interest that relates to tax years still subject to review by taxing authorities. The UTBs are recorded as a liability instead of a reduction to the deferred tax asset as the Corporation’s NOLs and tax credit carryfowards are not available to settle any income tax that would result from the disallowance of the Corporation’s UTBs. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the 2011 PR Code is 4 years; the statute of limitations for Virgin Islands and U.S. income tax purposes are each three years after a tax return is due or filed, whichever is later. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Corporation’s liability for income taxes. Any such adjustment could be material to results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. For Puerto Rico, Virgin Islands and U.S income tax purposes, all tax years subsequent to 2009 remain open to examination. Tax year 2010 is currently under examination by the Puerto Rico Department of Treasury.

Recent Developments. On July 1, 2014, the Puerto Rico Government approved Act No. 77 (“Act 77”), Act for Adjustments to Tax System, which amended the 2011 PR Code.  Some of the main provisions that impact corporations follow:

(i)Long Term Capital Gain Tax Rate is increased from 15% to 20% and Long Term Capital Treatment was amended to apply only to assets held for a period of 1 year or more (previously 6 month or more) for transactions completed after June 30, 2014.

(ii)New Capital Loss carryover limitation, of up to 90% of Capital Gains and the carryover period of NOL’s attributable to capital losses incurred during taxable years commencing after December 31, 2013 was increased from 5 years to 7 years.

(iii)The credit for AMT paid in previous years will be limited to 25% of the excess of the regular income tax over the tentative minimum tax.

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(iv)The national gross receipts tax rate for financial institutions was not affected by Act 77 and remains at 1% and financial institutions continue to claim 0.5% of their gross income as a credit against regular income tax or the AMT. However, tax credits purchased or generated by the institution are not allowed as a credit against the national gross receipts tax obligation.

FINANCIAL CONDITION AND OPERATING DATA ANALYSIS

Assets

Total assets were $12.5 billion, a decrease of $133.7 million, or 1%, from December 31, 2013.  The decrease was mainly related to a $124.4 million decrease in loans held for investment, net of allowance, mainly reflecting large commercial and construction loans paid off, a decrease in outstanding balances of credit facilities granted to the Puerto Rico government, and a $38.4 million decrease in the OREO inventory balance driven by sales and valuation adjustments.  There were two large commercial loans paid off in Puerto Rico totaling approximately $52.0 million and four impaired commercial and construction loans paid off in the United States totaling $26.4 million. In addition, the outstanding balance of loans granted to government entities in Puerto Rico decreased $57.1 million during the first half of 2014.These decreases were partially offset by a $22.0 million increase in cash and cash equivalents, and a $19.1 million increase in available-for-sale securities largely due to purchases of $68.5 million of 15-year U.S. agency MBS (average yield of 2.45%), and an increase in the fair value of U.S. agency MBS and debt securities.

Loan Portfolio
The following table presents the composition of the Corporation’s loan portfolio, including loans held for sale, as of the dates indicated:
		June 30,		December 31,
(In thousands)		2014		2013
Residential mortgage loans		$	2,795,159	$	2,549,008
Commercial loans:
Commercial mortgage loans			1,813,930		1,823,608
Construction loans			148,266		168,713
Commercial and Industrial loans (1)			2,647,478		2,788,250
Loans to a local financial institution collateralized by real estate mortgages  (2)			-		240,072
Total commercial loans			4,609,674		5,020,643
Finance leases			240,593		245,323
Consumer loans			1,821,675		1,821,196
Total loans held for investment			9,467,101		9,636,170
Less:
Allowance for loan and lease losses			(241,177)		(285,858)
Total loans held for investment, net		$	9,225,924	$	9,350,312
Loans held for sale			72,105		75,969
Total loans, net		$	9,298,029	$	9,426,281
(1)	As of June 30, 2014 and December 31, 2013, includes $1.1 billion and 1.2 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.
(2)	On May 30, 2014, FirstBank acquired from Doral mortgage loans, mainly residential mortgage loans, having an unpaid principal balance of $241.7 million (estimated fair value at acquisition of $226.0 million) in full satisfaction of secured borrowings with a book value of $232.9 million owed by Doral to FirstBank.

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    As of June 30, 2014, the Corporation’s total loans held for investment, net of allowance, decreased by $124.4 million, when compared with the balance as of December 31, 2013. The decrease mainly reflects a $57.1 million reduction in the outstanding balance of credit facilities granted to the government entities in Puerto Rico, a $37.1 million adversely classified commercial and industrial loan in Puerto Rico that was paid-off in the first quarter of 2014, a $16.2 million restructured commercial mortgage loan paid-in full in the United States, for which a recovery of previously amounts charged-off of $4.1 million was recorded in the second quarter of 2014, and three adversely classified construction loans paid off in the United States totaling $10.2 million.      

As shown in the table above, the 2014 loans held for investment portfolio was comprised of commercial loans (49%), residential real estate loans (30%), and consumer and finance leases (21%). Of the total gross loan portfolio held for investment of $9.5 billion as of June 30, 2014, approximately 83% has credit risk concentration in Puerto Rico, 10% in the United States (mainly in the state of Florida) and 7% in the Virgin Islands, as shown in the following table:

As of June 30, 2014	Puerto Rico		Virgin  Islands		United  States		Total
		(In thousands)
Residential mortgage loans	$	2,132,586	$	342,516	$	320,057	$	2,795,159
Commercial mortgage loans		1,423,948		72,262		317,720		1,813,930
Construction loans		94,979		30,855		22,432		148,266
Commercial and Industrial loans		2,260,456		149,884		237,138		2,647,478
Total commercial loans		3,779,383		253,001		577,290		4,609,674
Finance leases		240,593		-		-		240,593
Consumer loans		1,738,203		49,737		33,735		1,821,675
Total loans held for investment, gross	$	7,890,765	$	645,254	$	931,082	$	9,467,101
Loans held for sale		31,168		40,153		784		72,105
Total loans	$	7,921,933	$	685,407	$	931,866	$	9,539,206
As of December 31, 2013	Puerto Rico		Virgin  Islands		United  States		Total
		(In thousands)
Residential mortgage loans	$	1,906,982	$	348,816	$	293,210	$	2,549,008
Commercial mortgage loans		1,464,085		74,271		285,252		1,823,608
Construction loans		105,830		33,744		29,139		168,713
Commercial and Industrial loans		2,436,709		125,757		225,784		2,788,250
Loans to a local financial institution collateralized by real
estate mortgages		240,072		-		-		240,072
Total commercial loans		4,246,696		233,772		540,175		5,020,643
Finance leases		245,323		-		-		245,323
Consumer loans		1,739,478		49,689		32,029		1,821,196
Total loans held for investment, gross	$	8,138,479	$	632,277	$	865,414	$	9,636,170
Loans held for sale		35,394		40,575		-		75,969
Total loans	$	8,173,873	$	672,852	$	865,414	$	9,712,139

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Loan Production

First BanCorp. relies primarily on its retail network of branches to originate residential and consumer loans. The Corporation supplements its residential mortgage originations with wholesale servicing released mortgage loan purchases from mortgage bankers.  The Corporation manages its construction and commercial loan originations through centralized units and most of its originations come from existing customers as well as through referrals and direct solicitations.

The following table details First BanCorp’s loan production, including purchases, refinancings, and draws from existing revolving and non-revolving commitments for the periods indicated:
	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
		(In thousands)
Residential real estate	$	160,964	$	262,472	$	312,088	$	492,189
C&I and commercial mortgage		440,214		431,527		861,067		696,655
Construction		8,914		14,522		15,396		42,897
Finance leases		16,160		27,118		40,747		52,267
Consumer		244,962		280,706		495,224		534,550
Total loan production	$	871,214	$	1,016,345	$	1,724,522	$	1,818,558

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     The Corporation is experiencing continued loan demand and has continued its targeted origination strategies. During the second quarter and six-month period ended on June 30, 2014, total loan originations, including purchases, refinancings and draws from existing revolving and non-revolving commitments, amounted to approximately $871.2 million and $1.7 billion, respectively, compared to $1.0 billion and $1.8 billion, respectively, for the comparable periods in 2013.  Residential mortgage loan originations and purchases for the quarter and six-month period ended June 30, 2014 amounted to $161.0 million and $312.1 million, respectively, compared to $262.5 million and $492.2 million, respectively, for the comparable periods in 2013, adversely affected by a decrease in refinancings and the current economic environment in Puerto Rico.  Originations of auto loans (including finance leases) for the quarter and six month period ended June 30, 2014 amounted to $121.7 million and $265.9 million, respectively, compared to $157.1 million and $303.2 million, respectively, for the comparable periods in 2013, and other personal loan originations for the quarter and six-month period ended June 30, 2014 amounted to $49.6 million and $97.5 million, respectively, compared to $59.1 million and $105.1 million, respectively, for the comparable periods in 2013.  C&I loan originations (excluding government loans) for the quarter and six-month period ended June 30, 2014 amounted to $188.9 million and $370.0 million, respectively, compared to $200.1 million and $309.2 million, respectively, for the comparable periods in 2013.  The increase in the first half of 2014 was mainly related to disbursements on existing credit facilities.  Government loan originations for the quarter and six-month period ended on June 30, 2014 amounted to $151.4 million and $265.5 million, respectively, compared to $115.8 million and $167.9 million, respectively, for the comparable periods in 2013, also primarily attributable to disbursements on existing facilities. The total loan originations statistics, based on regulatory guidance, include the utilization activity on the outstanding credit card portfolio for the quarter and six-month period ended June 30, 2014 of approximately $89.9 million and $172.6 million, respectively, compared to $91.6 million and $178.5 million, respectively, for the comparable periods in 2013. The statistics in the table above exclude the loans acquired from Doral in 2014. 

Residential Real Estate Loans

As of June 30, 2014, the Corporation’s residential real estate loan portfolio held for investment increased by $246.2 million as compared to the balance as of December 31, 2013, mainly reflecting the impact of mortgage loans acquired from Doral in the second quarter of 2014 in full satisfaction of secured borrowings owed by such entity to FirstBank.  Mortgage loans acquired from Doral include residential mortgage loans with an unpaid principal balance of $229.0 million, recorded at its estimated fair value at acquisition of $213.7 million. The remaining increase is mainly related to the origination of non-conforming loans during the period of approximately $88.0 million, which are generally retained in the inventory. These variances were partially offset by charge-offs, foreclosures and principal repayments.  The majority of the Corporation’s outstanding balance of residential mortgage loans consists of fixed-rate, fully amortizing, full documentation loans. In accordance with the Corporation’s underwriting guidelines, residential real estate loans are mostly fully documented loans, and the Corporation is not actively involved in the origination of negative amortization loans.  Refer to the “Contractual Obligations and Commitments” discussion below for additional information about outstanding commitments to sell mortgage loans.

Commercial and Construction Loans

As of June 30, 2014, the Corporation’s commercial and construction loan portfolio held for investment decreased by $411.0 million, as compared to the balance as of December 31, 2013. The reduction primarily reflects the effect of the Doral transaction explained above and the impact of certain large loans paid off during the first half of 2014 and charge-offs, including two large commercial loans paid off in Puerto Rico totaling approximately $52.0 million, a $16.2 million restructured commercial mortgage loan paid-in full in the United States, and $10.2 million related to three adversely classified construction loans paid off in the United States.  In addition, the outstanding balance of credit facilities granted to government entities in Puerto Rico decreased by $57.1 million. 

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These variances were partially offset by a $43.8 million increase in the commercial and industrial and commercial mortgage portfolio of the United States.  As part of the United States strategy, the Corporation has expanded its resources in the middle market and corporate areas in light of lending growth opportunities in this sector.  The Corporation’s commercial loans are primarily variable- and adjustable-rate loans.

As of June 30, 2014, the Corporation had $385.3 million outstanding in credit facilities granted to the Puerto Rico government, its municipalities and public corporations, of which $340.7 million was outstanding, compared to $397.8 million outstanding as of December 31, 2013, and $80.2 million granted to the government of the Virgin Islands, compared to $60.6 million as of December 31, 2013. Approximately $205.7 million of the outstanding credit facilities consists of loans to municipalities in Puerto Rico. Municipal debt exposure is secured by ad valorem taxation without limitation as to rate or amount on all taxable property within the boundaries of each municipality. The good faith, credit, and unlimited taxing power of the applicable municipality have been pledged to the repayment of all outstanding bonds and notes. Approximately $46.4 million consists of loans to units of the central government, and approximately $88.6 million consists of loans to public corporations that receive revenues from the rates they charge for services or products. Main public corporations have varying degrees of independence from the central government and many receive appropriations or other payments from the Puerto Rico’s government general fund. Debt issued by the central government can either carry the full faith, credit and taxing power of the Commonwealth of Puerto Rico or represent an obligation that is subject to annual budget appropriations. Furthermore, the Corporation had $200.2 million outstanding as of June 30, 2014 in financing to the hotel industry in Puerto Rico guaranteed by the Puerto Rico Tourism Development Fund (“TDF”). The TDF is a subsidiary of the GDB that works with private-sector financial institutions to structure financings for new hospitality projects.

On June 28, 2014, the governor of Puerto Rico signed into law The Puerto Rico Public Corporations Debt Enforcement and Recovery Act (the “Recovery Act”) to provide a legislative framework for certain public corporations that are experiencing severe financial stress to address their financial obstacles through an orderly, statutory process that allows them to handle their debts, while ensuring the continuity of essential services to citizens and infrastructure upgrades. As of June 30, 2014, the Corporation had an exposure to public corporations covered by the Recovery Act amounting to $84.7 million, including a direct exposure of $75.0 million related to a line of credit extended to the Puerto Rico Electric Power Authority (“PREPA”), which has priority over senior bonds and other debt of this entity.  On July 31, 2014, lenders, including FirstBank, who provide revolving lines of credit to PREPA to pay for purchased power, fuel and other expenses, agreed to not exercise remedies as a result of PREPA credit downgrades until August 14, 2014, unless otherwise extended by the parties, the second extension granted in July. As a result of the enactment of the Recovery Act, the most recent credit downgrades, the forbearance granted, and the risk of deterioration of the repayment prospects, the Corporation adversely classified its direct exposure to public corporations during the second quarter of 2014.

The Corporation has significantly reduced its exposure to construction loans and originations are mainly draws from existing commitments, including construction facilities tied to financings to the hotel industry guaranteed by TDF. 

    The decrease in the construction loan portfolio held for investment was driven by the aforementioned adversely classified loans paid off in Florida, foreclosures and charge-offs. 

The composition of the Corporation’s construction loan portfolio held for investment as of June 30, 2014 by category and geographic location is as follows:

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As of June 30, 2014
		Puerto Rico		Virgin Islands		United  States		Total
			(In thousands)
Loans for residential housing projects:
Mid-rise (1)		$	31,444	$	4,216	$	36	$	35,696
Single-family, detached			15,664		-		10,214		25,878
Total for residential housing projects			47,108		4,216		10,250		61,574
Construction loans to individuals secured by residential properties			1,590		2,557		-		4,147
Loans for commercial projects			3,193		3,849		11,790		18,832
Bridge loans - residential			254		-		-		254
Bridge loans - commercial			-		13,322		-		13,322
Land loans - residential			24,943		7,056		392		32,391
Land loans - commercial			17,563		-		-		17,563
Total before net deferred fees and allowance for loan losses		$	94,651	$	31,000	$	22,432	$	148,083
Net deferred fees			328		(145)		-		183
Total construction loan portfolio, gross			94,979		30,855		22,432		148,266
Allowance for loan losses			(14,908)		(5,509)		(875)		(21,292)
Total construction loan portfolio, net		$	80,071	$	25,346	$	21,557	$	126,974
____________________
(1)	Mid-rise relates to buildings of up to 7 stories.

The following table presents further information on the Corporation’s construction portfolio as of and for the six-month period ended June 30, 2014:
	(In thousands)
	Total undisbursed funds under existing commitments	$	60,292
	Construction loans held for investment in non-accrual status	$	38,830
	Construction loans held for sale in non-accrual status	$	47,802
	Net charge offs - Construction loans	$	2,959
	Allowance for loan losses - Construction loans	$	21,292
	Non-performing construction loans to total construction loans, including held for sale		44.18%
	Allowance for loan losses - construction loans to total construction loans held for investments		14.36%
	Net charge-offs (annualized) to total average construction loans		2.85%

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The following summarizes the construction loans for residential housing projects in Puerto Rico segregated by the  estimated selling price of the units:
		(In Thousands)
	Under $300k	$	12,370
	Over $600k (1)		34,738
		$	47,108
_____________
(1)	Mainly composed of three residential housing projects in Puerto Rico.

Consumer Loans and Finance Leases

As of June 30, 2014, the Corporation’s consumer loan and finance lease portfolio decreased by $4.3 million, as compared to the portfolio balance as of December 31, 2013.  The decrease was mainly the result of charge-offs and repayments, including a $6.1 million decrease in the credit card portfolio balance and a $4.0 million decrease in boat loans.    

Investment Activities

As part of its liquidity, revenue diversification and interest rate risk strategies, First BanCorp. maintains an investment portfolio that is classified as available for sale. The Corporation’s total available-for-sale investment securities portfolio as of June 30, 2014 amounted to $2.0 billion, an increase of $19.1 million from December 31, 2013, mainly due to purchases in 2014 of $68.5 million of 15-year U.S. agency MBS (average yield of 2.45%) and an increase of $45.6 million in the fair value of U.S. agency MBS and debt securities, partially offset by regular MBS repayments, and sales and maturities of Puerto Rico government agency securities.   

Approximately 96% of the Corporation’s available-for-sale securities portfolio is invested in U.S. Government and Agency debentures and fixed-rate U.S. government sponsored-agency MBS (mainly GNMA, FNMA and FHLMC fixed-rate securities). The Corporation’s investment in equity securities classified as available for sale is minimal, approximately $9 thousand, which consists of common stock of another financial institution in Puerto Rico. 

As of June 30, 2014, the Corporation had outstanding $61.1 million in obligations of the Puerto Rico government, mainly bonds of the Government Development Bank for Puerto Rico (“GDB”) and the Puerto Rico Building Authority, as part of its available-for-sale investment securities portfolio, carried on its books at a fair value of $45.0 million.  During the second quarter of 2014, the Corporation sold $4.6 million of Puerto Rico government agency bonds and received proceeds of $10.0 million from matured Puerto Rico government securities. The fair value of the Puerto Rico government obligations held by the Corporation increased by approximately $3.5 million during the first half of 2014.

In mid-August 2013, the 30-year general obligation bonds of the Puerto Rico government, which are widely held by mutual funds, carried a yield of about 7.1%, which increased during the latter part of the third quarter of 2013, surpassing 10% at one point in September amid a general run-up in interest rates and significant selling by investors after Detroit filed for the largest municipal bankruptcy in United States history. The debt carried a yield of approximately 8.18% as of June 30, 2014. On February 4, 2014, S&P downgraded the Commonwealth of Puerto Rico’s debt to BB+, one level below investment grade. S&P also downgraded to levels below investment grade the credit rating of the GDB and other government entities. On February 7, 2014, Moody’s downgraded the Commonwealth of Puerto Rico general obligation bonds to Ba2, two notches below investment grade. Moody’s also downgraded to Ba2 the Public Building Authority Bonds, the Pension Funding Bonds, the GDB senior notes, the Municipal Finance Authority Bonds, the Puerto Rico Infrastructure Finance Authority Special Tax Revenue Bonds, the Convention Center District Authority Hotel Occupancy Tax Revenue Bonds, the Puerto Rico Highway and Transportation Authority Transportation Revenue Bonds, various ratings of the Puerto Rico Aqueduct and Sewer Authority, and the Puerto Rico Electric Power Authority. In addition, the Puerto Rico Sales Tax Financing Corporation’s senior-lien bonds were downgraded by Moody’s to Baa1 from A2, retaining investment grade status. Following the downgrades by S&P and Moody’s, Fitch became the third agency to downgrade the Commonwealth of Puerto Rico debt to BB, two notches below investment grade. In July 2014, the Puerto Rico debt was downgraded further into speculative grade by these credit agencies after the enactment of the Recovery Act that provides a legislative framework for certain public corporations that are experiencing severe financial stress to address their financial obstacles through an orderly statutory process that allows them to handle their debts.  S&P now rates Puerto Rico’s general obligation bonds at BB, two notches below investment grade, Moody’s at B2 a highly speculative rate, and Fitch at BB-, three notches below investment grade.  The ultimate impact of the downgrades is unpredictable and may not be immediately apparent.

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The decrease in value during 2013 of the Puerto Rico government and agencies bonds held by the Corporation was mainly the result of the decrease in prices in the municipal bonds market caused by the Detroit default and subsequent significant sales of municipal bonds. The price declines also showed a correlation to benchmark interest rate movements. The Corporation believes that the declines in value in 2013 resulted from the above factors and not a change in expected cash flows. The issuers of Puerto Rico government and agencies bonds held by the Corporation have not defaulted, and the contractual payments on these securities have been made as scheduled. Despite the recent downgrades of Puerto Rico’s debt, the risk profile has not changed materially taking into account progress on different elements such as increases in tax collections, reforms of the retirement systems, current negotiation on debt repayment acceleration clauses, and spending control efforts. On March 11, 2014, the Commonwealth of Puerto Rico sold $3.5 billion in general obligation bonds at a yield of 8.73% to refinance short-term liabilities and to address liquidity needs, and, on July 1, 2014, the Governor of Puerto Rico signed a balanced budget for fiscal year 2015, the first balanced budget in more than a decade.  The budget allocates $4.9 billion for operational costs and calls for the fusion of several government agencies as a way to cut costs. The budget is down $205 million from last year’s budget.  Based on these facts and the Corporation’s ability and intent to hold these securities until a recovery of the fair value occurs, the unrealized losses are considered temporary. The Corporation will continue to closely monitor Puerto Rico’s political and economic status and evaluate the portfolio for any declines in value that could be considered other-than-temporary.

The following table presents the carrying value of investment securities at the indicated dates:
	As of		As of
	June 30,		December 31,
	2014		2013
		(In thousands)
Money market investments	$	16,953	$	201,369
Investment securities available for sale, at fair value:
U.S. Government and agencies obligations		264,353		256,994
Puerto Rico government obligations		44,982		51,330
Mortgage-backed securities		1,688,064		1,669,925
Equity securities		9		33
Total investment securities available for sale, at fair value		1,997,408		1,978,282
Other equity securities, including $28.9 million and $28.4 million
of FHLB stock as of  June 30, 2014 and December 31, 2013, respectively		29,141		28,691
Total money market investments and investment securities	$	2,043,502	$	2,208,342

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Mortgage-backed securities at the indicated dates consist of:
	As of		As of
	June 30,		December 31,
(In thousands)	2014		2013
Available-for-sale:
FHLMC certificates	$	333,545	$	322,187
GNMA certificates		418,531		445,008
FNMA certificates		897,795		861,783
Collateralized Mortgage Obligations issued or
guaranteed by FHLMC		9		81
Other mortgage pass-through certificates		38,184		40,866
Total mortgage-backed securities	$	1,688,064	$	1,669,925

The carrying values of investment securities classified as available for sale as of June 30, 2014 by contractual maturity (excluding mortgage-backed securities and equity securities) are shown below:
	Carrying		Weighted
(Dollars in thousands)	Amount		Average Yield %
U.S. Government and agencies obligations
Due within one year	$	7,497	0.11
Due after one year through five years		49,479	1.05
Due after five years through ten years		207,377	1.31
		264,353	1.23
Puerto Rico Government obligations
Due after one year through five years		29,000	4.49
Due after five years through ten years		886	5.20
Due after ten years		15,096	5.82
		44,982	4.95
Total		309,335	1.91
Mortgage-backed securities		1,688,064	2.69
Equity securities		9	-
Total investment securities available for sale	$	1,997,408	2.56

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Net interest income of future periods could be affected by prepayments of mortgage-backed securities. Acceleration in the prepayments of mortgage-backed securities would lower yields on these securities, as the amortization of premiums paid upon acquisition of these securities would accelerate. Conversely, acceleration of the prepayments of mortgage-backed securities would increase yields on securities purchased at a discount, as the amortization of the discount would accelerate. These risks are directly linked to future period market interest rate fluctuations. Also, net interest income in future periods might be affected by the Corporation’s investment in callable securities. As of June 30, 2014, the Corporation has approximately $53.1 million in debt securities (U.S. Agencies and Puerto Rico government securities) with embedded calls and with an average yield of 1.48%. Refer to the “Risk Management” section below for further analysis of the effects of changing interest rates on the Corporation’s net interest income and of the interest rate risk management strategies followed by the Corporation. Also refer to Note 4 to the accompanying unaudited consolidated financial statements for additional information regarding the Corporation’s investment portfolio.

RISK MANAGEMENT

Risks are inherent in virtually all aspects of the Corporation’s business activities and operations. Consequently, effective risk management is fundamental to the success of the Corporation. The primary goals of risk management are to ensure that the Corporation’s risk-taking activities are consistent with the Corporation’s objectives and risk tolerance, and that there is an appropriate balance between risk and reward in order to maximize stockholder value.

The Corporation has in place a risk management framework to monitor, evaluate and manage the principal risks assumed in conducting its activities. First BanCorp.’s business is subject to nine broad categories of risks: (1) liquidity risk, (2) interest rate risk, (3) market risk, (4) credit risk, (5) operational risk, (6) legal and compliance risk, (7) reputational risk, (8) model risk, and (9) capital risk.  First BanCorp. has adopted policies and procedures designed to identify and manage risks to which the Corporation is exposed. 

The Corporation’s risk management policies are described below as well as in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of First BanCorp.’s 2013 Annual Report on Form 10-K.

Liquidity Risk and Capital Adequacy

Liquidity is the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet the needs for liquidity and accommodate fluctuations in asset and liability levels due to changes in the Corporation’s business operations or unanticipated events.

The Corporation manages liquidity at two levels. The first is the liquidity of the parent company, which is the holding company that owns the banking and non-banking subsidiaries. The second is the liquidity of the banking subsidiary. As of June 30, 2014, FirstBank could not pay any dividend to the parent company except upon receipt of prior approval by the New York FED and the Federal Reserve Board because of the Regulatory Agreements. 

The Asset and Liability Committee of the Board of Directors is responsible for establishing the Corporation’s liquidity policy as well as approving operating and contingency procedures, and monitoring liquidity on an ongoing basis. The Management’s Investment and Asset Liability Committee (“MIALCO”), using measures of liquidity developed by management, which involve the use of several assumptions, reviews the Corporation’s liquidity position on a monthly basis.  The MIALCO oversees liquidity management, interest rate risk and other related matters.

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The MIALCO, which reports to the Board of Directors’ Asset and Liability Committee, is composed of senior management officers, including the Chief Executive Officer, the Chief Financial Officer, the Chief Risk Officer, the Retail Financial Services Director, the Risk Manager of the Treasury and Investments Division, the Financial Analysis and Asset/Liability Director and the Treasurer.  The Treasury and Investments Division is responsible for planning and executing the Corporation’s funding activities and strategy, monitoring liquidity availability on a daily basis and reviewing liquidity measures on a weekly basis.  The Treasury and Investments Accounting and Operations area of the Comptroller’s Department is responsible for calculating the liquidity measurements used by the Treasury and Investment Division to review the Corporation’s liquidity position on a monthly basis; the Financial Analysis and Asset/Liability Director estimates the liquidity gap for longer periods.

In order to ensure adequate liquidity through the full range of potential operating environments and market conditions, the Corporation conducts its liquidity management and business activities in a manner that will preserve and enhance funding stability, flexibility and diversity. Key components of this operating strategy include a strong focus on the continued development of customer-based funding, the maintenance of direct relationships with wholesale market funding providers, and the maintenance of the ability to liquidate certain assets when, and if, requirements warrant.

The Corporation develops and maintains contingency funding plans. These plans evaluate the Corporation’s liquidity position under various operating circumstances and allow the Corporation to ensure that it will be able to operate through periods of stress when access to normal sources of funds is constrained. The plans project funding requirements during a potential period of stress, specify and quantify sources of liquidity, outline actions and procedures for effectively managing through a difficult period, and define roles and responsibilities.  Under the contingency funding plan, the Corporation stresses the balance sheet and the liquidity position to critical levels that imply difficulties in getting new funds or even maintaining the current funding position of the Corporation and the Bank, thereby ensuring the ability of the Corporation and the Bank to honor their respective commitments, and establishing liquidity triggers monitored by the MIALCO in order to maintain the ordinary funding of the banking business. Four different scenarios are defined in the contingency funding plan: local market event, credit rating downgrade, an economic cycle downturn event, and a concentration event. They are reviewed and approved annually by the Board of Directors’ Asset and Liability Committee.

The Corporation manages its liquidity in a proactive manner, and maintains a sound liquidity position. Multiple measures are utilized to monitor the Corporation’s liquidity position, including core liquidity, basic liquidity, and time-based reserve measures. As of June 30, 2014, the estimated core liquidity reserve (which includes cash and free liquid assets) was $1.4 billion or 10.9% of total assets. The basic liquidity ratio (which adds available secured lines of credit to the core liquidity) was approximately 14.1% of total assets. As of June 30, 2014, the Corporation had $396.8 million available for additional credit from the FHLB NY. Unpledged liquid securities as of June 30, 2014 mainly consisted of fixed-rate MBS and U.S. agency debentures amounting to approximately $695.8 million. The Corporation does not rely on uncommitted inter-bank lines of credit (federal funds lines) to fund its operations and does not include them in the basic liquidity measure. Most of the cash balances are deposited with the Federal Reserve Bank and in money market instruments generating interest income between 0.25% and 0.35%. As of June 30, 2014, the holding company had $37.0 million of cash and cash equivalents. Cash and cash equivalents at the Bank level as of June 30, 2014 were approximately $670.8 million. The Bank has $3.1 billion in brokered CDs as of June 30, 2014, of which approximately $1.8 billion mature over the next twelve months.  Liquidity at the Bank level is highly dependent on bank deposits, which fund 77% of the Bank’s assets (or 53% excluding brokered CDs). The Corporation has continued to issue brokered CDs pursuant to temporary approvals received from the FDIC to renew or roll over brokered CDs up to certain amounts through September 30, 2014. 

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Sources of Funding

The Corporation utilizes different sources of funding to help ensure that adequate levels of liquidity are available when needed.  Diversification of funding sources is of great importance to protect the Corporation’s liquidity from market disruptions. The principal sources of short-term funds are deposits, including brokered CDs, securities sold under agreements to repurchase, and lines of credit with the FHLB. 

   The Asset Liability Committee of the Board of Directors reviews credit availability on a regular basis. The Corporation has also securitized and sold mortgage loans as a supplementary source of funding. Long-term funding has also been obtained through the issuance of notes and, to a lesser extent, long-term brokered CDs. The cost of these different alternatives, among other things, is taken into consideration.

The Corporation has continued reducing the amounts of brokered CDs. The reduction in brokered CDs is consistent with the requirements of the FDIC Order that preclude the issuance of brokered CDs without FDIC approval and require a plan to reduce the amount of brokered CDs. As of June 30, 2014, brokered CDs decreased $45.1 million to $3.1 billion from December 31, 2013.  At the same time as the Corporation focuses on reducing its reliance on brokered deposits, it is seeking to add core deposits. During the first half of 2014, the Corporation increased non-brokered deposits, excluding government deposits, by $62.1 million.

The Corporation continues to have the support of creditors, including counterparties to repurchase agreements, the FHLB, and other agents such as wholesale funding brokers.  While liquidity is an ongoing challenge for all financial institutions, management believes that the Corporation’s available borrowing capacity and efforts to grow retail deposits will be adequate to provide the necessary funding for the Corporation’s business plans in the foreseeable future. 

The Corporation’s principal sources of funding are:

Brokered CDs – A large portion of the Corporation’s funding has been retail brokered CDs issued by FirstBank. Total brokered CDs decreased by $45.1 million to $3.1 billion as of June 30, 2014. Because of the FDIC Order, FirstBank cannot replace maturing brokered CDs without the prior approval of the FDIC. Since the issuance of the FDIC Order, the FDIC has granted the Bank temporary waivers to enable it to continue accessing the brokered deposit market in specified amounts. The most recent waiver is effective through September 30, 2014. The Bank will request approvals for future periods. The Corporation used proceeds from repayments of loans and investments to pay down maturing borrowings, including brokered CDs. Also, the Corporation successfully implemented its core deposit growth strategy that resulted in an increase of $62.1 million in non-brokered deposits, excluding government deposits, during the first half of 2014. 

     The average remaining term to maturity of the retail brokered CDs outstanding as of June 30, 2014 is approximately 1.1 years.

The use of brokered CDs has been particularly important for the growth of the Corporation. The Corporation encounters intense competition in attracting and retaining regular retail deposits in Puerto Rico. The brokered CDs market is very competitive and liquid, and has enabled the Corporation to obtain substantial amounts of funding in short periods of time. This strategy has enhanced the Corporation’s liquidity position, since the brokered CDs are insured by the FDIC up to regulatory limits and can be obtained faster compared to regular retail deposits. During the first half of 2014, the Corporation issued $662.5 million in brokered CDs with an average cost of 0.76% to renew maturing brokered CDs. Management believes it will continue to obtain waivers from the restrictions on the issuance of brokered CDs under the FDIC Order to meet its obligations and execute its business plans.

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The following table presents a maturity summary of brokered and retail CDs with denominations of $100,000 or higher as of June 30, 2014:
			Total
			(In thousands)
	Three months or less	$	757,313
	Over three months to six months		611,524
	Over six months to one year		1,110,254
	Over one year		1,998,311
	Total	$	4,477,402

Certificates of deposit in denominations of $100,000 or higher include brokered CDs of $3.1 billion issued to deposit brokers in the form of large ($100,000 or more) certificates of deposit that are generally participated out by brokers in shares of less than $100,000 and are therefore insured by the FDIC. Certificates of deposit with denominations of $100,000 or higher also include $3.0 million of deposits through the Certificate of Deposit Account Registry Service (CDARS).

Government deposits - As of June 30, 2014, the Corporation had $252.6 million of Puerto Rico public sector deposits ($228.9 million in transactional accounts and $23.6 million in time deposits) compared to $546.5 million as of December 31, 2013. Approximately 61% came from municipalities in Puerto Rico and 39% came from public corporations and the central government and agencies.

In 2014, Act 24-2014 was approved by the Puerto Rico Legislature, seeking to further strengthen the liquidity of the GDB and the GDB’s oversight over public funds.  Among other measures, Act 24-2014 grants the GDB the ability to exercise additional oversight of certain public funds deposited at private financial institutions and grants the GDB the legal authority, subject to an entity’s ability to request waivers under certain specified circumstances, to require such public funds (other than funds of the Legislative Branch, the Judicial Branch, the University of Puerto Rico, governmental pension plans, municipalities and certain other independent agencies) to be deposited at the GDB, which is expected to result in a more efficient management of public resources in an effort to maximize liquidity and efficient use of public resources. The GDB expected to capture a portion of public funds deposited in private financial institutions. As anticipated, certain public corporations and agencies withdrew approximately $341.6 million during the second quarter of 2014.  The Corporation will continue to focus on transactional accounts and capture deposits from entities excluded from Act 24-2014.

In addition, as of June 30, 2014, the Corporation had $187.2 million of government deposits in the Virgin Islands, compared to $159.3 million as of December 31, 2013.

Retail deposits- The Corporation’s deposit products also include regular savings accounts, demand deposit accounts, money market accounts and retail CDs. Total deposits, excluding brokered CDs and government deposits, increased by $62.1 million to $6.1 billion from $6.0 billion as of December 31, 2013, reflecting increases in core-deposit products such as savings and retail CDs primarily in Puerto Rico.  Refer to Note 13 in the accompanying unaudited financial statements for further details.

Refer to the “Net Interest Income” discussion above for information about average balances of interest-bearing deposits, and the average interest rate paid on deposits for the quarters and six-month periods ended June 30, 2014 and 2013.

Securities sold under agreements to repurchase - The Corporation’s investment portfolio is funded in part with repurchase agreements. The Corporation’s outstanding repurchase agreements amounted to $900 million as of June 30, 2014 and December 31, 2013.  One of the Corporation’s strategies has been the use of structured repurchase agreements and long-term repurchase agreements to reduce exposure to interest rate risk by lengthening the final maturities of its liabilities while keeping funding costs at reasonable levels. All of the $900 million of repurchase agreements outstanding as of June 30, 2014 consist of structured repurchase agreements. In addition to these repurchase agreements, the Corporation has been able to maintain access to credit by using cost-effective sources such as FHLB advances. Refer to Note 14 in the Corporation’s unaudited financial statements for the quarter and six-month period ended June 30, 2014 for further details about repurchase agreements outstanding by counterparty and maturities.

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Under the Corporation’s repurchase agreements, as is the case with derivative contracts, the Corporation is required to pledge cash or qualifying securities to meet margin requirements. To the extent that the value of securities previously pledged as collateral declines due to changes in interest rates, a liquidity crisis or any other factor, the Corporation is required to deposit additional cash or securities to meet its margin requirements, thereby adversely affecting its liquidity.

 Given the quality of the collateral pledged, the Corporation has not experienced significant margin calls from counterparties arising from credit-quality-related write-downs in valuations and, as of June 30, 2014, it had only $0.2 million of cash equivalent instruments deposited in connection with collateralized interest rate swap agreements.

Advances from the FHLB – The Bank is a member of the FHLB system and obtains advances to fund its operations under a collateral agreement with the FHLB that requires the Bank to maintain qualifying mortgages as collateral for advances taken. As of June 30, 2014 and December 31, 2013, the outstanding balance of FHLB advances was $320.0 million and $300.0 million, respectively. The Corporation entered into a FHLB advance of $20 million at the end of the second quarter of 2014.  As of June 30, 2014, the Corporation had $396.8 million available for additional credit on FHLB lines of credit.

Though currently not in use, other sources of short-term funding for the Corporation include commercial paper and federal funds purchased. Furthermore, in previous years, the Corporation entered into several financing transactions to diversify its funding sources, including the issuance of notes payable and junior subordinated debentures as part of its longer-term liquidity and capital management activities.  No assurance can be given that these sources of liquidity will be available and, if available, will be on acceptable terms. 

In 2004, FBP Statutory Trust I, a statutory trust that is wholly owned by the Corporation and not consolidated in the Corporation’s financial statements, sold to institutional investors $100 million of its variable rate trust preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.1 million of FBP Statutory Trust I variable rate common securities, were used by FBP Statutory Trust I to purchase $103.1 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures.

Also in 2004, FBP Statutory Trust II, a statutory trust that is wholly-owned by the Corporation and not consolidated in the Corporation’s financial statements, sold to institutional investors $125 million of its variable rate trust preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.9 million of FBP Statutory Trust II variable rate common securities, were used by FBP Statutory Trust II to purchase $128.9 million aggregate principal amount of the Corporation’s Junior Subordinated Deferrable Debentures.

The cumulative trust preferred debentures are presented in the Corporation’s consolidated statement of financial condition as Other Borrowings. The variable rate trust preferred securities are fully and unconditionally guaranteed by the Corporation. The $100 million Junior Subordinated Deferrable Debentures issued by the Corporation in April 2004 and the $125 million issued in September 2004 mature on June 17, 2034 and September 20, 2034, respectively; however, under certain circumstances, the maturity of Junior Subordinated Debentures may be shortened (such shortening would result in a mandatory redemption of the variable rate trust preferred securities). The trust preferred securities, subject to certain limitations, qualify as Tier I regulatory capital under current applicable rules and regulations. The Collins Amendment to the Dodd-Frank Act eliminates certain trust-preferred securities from Tier 1 Capital. Bank Holding Companies such as the Corporation must fully phase out these instruments of Tier I capital by January 1, 2016, however, they may remain in Tier 2 capital until the instruments are redeemed or mature. At June 30, 2014, the Corporation had $225 million in trust preferred securities that are subject to the phase-out from Tier 1 Capital under the Basel 3 Final Rule.

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With respect to the outstanding subordinated debentures, the Corporation elected to defer the interest payments that were due in March 2012, June 2012, September 2012, December 2012, March 2013, June 2013, September 2013, December 31, 2013, March 31, 2014, and June 30, 2014. The aggregate amount of payments deferred and accrued approximates $18.2 million as of June 30, 2014. Future interest payments are subject to Federal Reserve approval.

  The Corporation’s principal uses of funds are the origination of loans and the repayment of maturing deposits and borrowings. The Corporation has committed substantial resources to its mortgage-banking subsidiary, FirstMortgage Inc. As a result, the ratio of residential real estate loans to total loans has increased over time. Commensurate with the increase in its mortgage banking activities, the Corporation has also invested in technology and personnel to enhance the Corporation’s secondary mortgage market capabilities.

The enhanced capabilities improve the Corporation’s liquidity profile as they allow the Corporation to derive liquidity, if needed, from the sale of mortgage loans in the secondary market. The U.S. (including Puerto Rico) secondary mortgage market is still highly liquid in large part because of the sale of mortgages through guarantee programs of the FHA, VA, HUD, FNMA and FHLMC. The Corporation obtained commitment authority to issue GNMA mortgage-backed securities from GNMA and, under this program, the Corporation completed the securitization of approximately $104.2 million of FHA/VA mortgage loans into GNMA MBS during the first half of 2014. Any regulatory actions affecting GNMA, FNMA or FHLMC could adversely affect the secondary mortgage market.  

Impact of Credit Ratings on Access to Liquidity

The Corporation’s liquidity is contingent upon its ability to obtain external sources of funding to finance its operations. The Corporation’s current credit ratings and any further downgrades in credit ratings can hinder the Corporation’s access to new forms of external funding and/or cause external funding to be more expensive, which could in turn adversely affect results of operations. Also, changes in credit ratings may further affect the fair value of unsecured derivatives that consider the Corporation’s own credit risk as part of the valuation.

The Corporation does not have any outstanding debt or derivative agreements that would be affected by credit downgrades. Furthermore, given our non-reliance on corporate debt or other instruments directly linked in terms of pricing or volume to credit ratings, the liquidity of the Corporation so far has not been affected in any material way by downgrades. The Corporation’s ability to access new non-deposit sources of funding, however, could be adversely affected by credit downgrades.

The Corporation’s credit as a long-term issuer is currently rated B+ by S&P and B- by Fitch.  At the FirstBank subsidiary level, long-term issuer ratings are currently B3 by Moody’s, six notches below their definition of investment grade; B+ by S&P four notches below their definition of investment grade, and B- by Fitch, six notches below their definition of investment grade. 

Cash Flows

Cash and cash equivalents were $677.7 million as of June 30, 2014, an increase of $22.0 million when compared to the balance as of December 31, 2013, while, as of June 30, 2013 the total balance of cash and cash equivalents amounted to $835.0 million, a decrease of $111.9 million from December 31, 2012. The following discussion highlights the major activities and transactions that affected the Corporation’s cash flows during the first half of 2014 and 2013.

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Cash Flows from Operating Activities

     First BanCorp’s operating assets and liabilities vary significantly in the normal course of business due to the amount and timing of cash flows. Management believes cash flows from operations, available cash balances and the Corporation’s ability to generate cash through short- and long-term borrowings will be sufficient to fund the Corporation’s operating liquidity needs.

For the first half of 2014 and 2013, net cash provided by operating activities was $150.1 million and $87.2 million, respectively. Net cash generated from operating activities was higher than net income reported largely as a result of adjustments for operating items such as the provision for loan and lease losses, depreciation and amortization, proceed from sales of loans held for sale, and impairments.

Cash Flows from Investing Activities

The Corporation’s investing activities primarily relate to originating loans to be held for investment and purchasing, selling and repayments of available-for-sale investment securities. For the six-month period ended June 30, 2014, net cash provided by  investing activities was $104.9 million, primarily reflecting principal repayments on loans held for investment and available-for-sale investment securities.

For the six-month period ended June 30, 2013, net cash used by investing activities was $157.8 million, primarily reflecting purchases of investment securities.

Cash Flows from Financing Activities

The Corporation’s financing activities primarily include the receipt of deposits and issuance of brokered CDs, the issuance and payments of long-term debt, the issuance of equity instruments and activities related to its short-term funding. During the six-month period ended June 30, 2014, net cash used in financing activities was $233.1 million, mainly due to the reduction in brokered CDs and deposit withdrawals by certain government entities and public corporations in Puerto Rico. 

In the six-month period ended June 30, 2013, net cash used by financing activities was $41.3 million mainly due to repayments of maturing FHLB advances and brokered CDs.

Capital

As of June 30, 2014, the Corporation’s stockholders’ equity was $1.3 billion, an increase of $90.1 million from December 31, 2013.  The increase was mainly driven by a $50.3 million increase in other comprehensive income, mainly attributable to an increase of $45.6 million in the fair value of U.S. agency MBS and debt securities, and the net income of $38.3 million for the first half of 2014.  As a result of the Written Agreement with the New York FED, currently neither First BanCorp., nor FirstBank, is permitted to pay dividends on capital securities without prior approval.

Although all of the regulatory capital ratios of the Bank exceeded the established “well capitalized” levels, as well as the minimum capital ratios required by the FDIC Order, as of June 30, 2014, FirstBank cannot be treated as a “well capitalized” institution since it is still subject to the FDIC Order. Set forth below are First BanCorp.’s, and FirstBank’s regulatory capital ratios as of June 30, 2014 and December 31, 2013, based on existing established guidelines.

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		Banking Subsidiary
	First BanCorp	FirstBank	To be well capitalized	Consent Order Requirements over time
As of June 30, 2014
Total capital (Total capital to risk-weighted assets)	18.06%	17.70%	10.00%	12.00%
Tier 1 capital ratio (Tier 1 capital to risk-weighted assets)	16.80%	16.43%	6.00%	10.00%
Leverage ratio	12.04%	11.79%	5.00%	8.00%
As of December 31, 2013
Total capital (Total capital to risk-weighted assets)	17.06%	16.67%	10.00%	12.00%
Tier 1 capital ratio (Tier 1 capital to risk-weighted assets)	15.78%	15.40%	6.00%	10.00%
Leverage ratio	11.71%	11.44%	5.00%	8.00%

The increase in capital ratios was primarily related to earnings recorded in the first half of 2014 and a reduction in risk-weighted assets mainly related to the decrease in commercial and construction loans.

In July 2013, U.S. banking regulators approved a revised regulatory capital framework for U.S. banking organizations (the “Basel 3 rules”) that is based on international regulatory capital requirements adopted by the Basel Committee on Banking Supervision over the past several years.  The Basel 3 rules introduce new minimum capital ratios and capital conservation buffer requirements, change the composition of regulatory capital, require a number of new adjustments to and deductions from regulatory capital, and introduce a new “Standardized Approach” for the calculation of risk-weighted assets that will replace the risk-weighting requirements under the current U.S. regulatory capital rules.  The new minimum regulatory capital requirements and the Standardized Approach for the calculation of risk-weighted assets will become effective for the Corporation and FirstBank on January 1, 2015.  The capital conservation buffer requirements, and the regulatory capital adjustments and deductions under the Basel 3 rules will be phased-in over several years ending as of December 31, 2018. 

The Basel 3 rules introduce a new and separate ratio of Common Equity Tier 1 capital (“CET1”) to risk-weighted assets. CET1, a component of total Tier 1 capital, generally consists of common stock and related surplus, retained earnings, accumulated other comprehensive income (“AOCI”), and qualifying minority interests.  In addition, the Basel 3 rules also will require the Corporation to maintain an additional CET1 capital conservation buffer of 2.5%.  Thus, when the Basel 3 rules are fully phased in as of January 1, 2019, the Corporation will be required to maintain;   (i) a minimum CET1 to risk-weighted assets ratio of at least 4.5%, plus the 2.5% “capital conservation buffer,” resulting in a required minimum CET1 ratio of at least 7% upon full implementation, (ii) a minimum ratio of total Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum Tier 1 capital ratio of 8.5% upon full implementation, (iii) a minimum ratio of total Tier 1 plus Tier 2 capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum total capital ratio of 10.5% upon full implementation, and (iv) a required minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average on-balance sheet (non-risk adjusted) assets.  The phase-in of the capital conversation buffer will begin on January 1, 2016 with a first year requirement of 0.625% of additional CET1, which will be progressively increased over a four-year period, increasing by that same percentage amount on each subsequent January 1 until it reaches the fully-phased in 2.5% CET1 requirement on January 1, 2019.

In addition, the Basel 3 rules require a number of new deductions from and adjustments to CET1, including deductions from CET1 for mortgage servicing rights, and deferred tax assets dependent upon future taxable income.  In the case of mortgage servicing assets and deferred tax assets, among others, these items would be required to be deducted to the extent that any one such category exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1.  Under current regulatory capital requirements, the effect of AOCI is excluded for the purposes of calculating the required regulatory capital ratios.  By comparison, under the Basel 3 rules, the effects of certain AOCI items are not excluded.  Certain banking organizations, however, including the Corporation and FirstBank, will be allowed to make a one-time permanent election in early 2015 to continue to exclude AOCI items.  The Corporation and FirstBank expect to make this election in order to avoid significant variations in the level of capital depending upon the impact of interest rate fluctuations on the fair value of the securities portfolio.

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In addition, the Basel 3 rules will require that certain non-qualifying capital instruments, including cumulative preferred stock and Trust Preferred Securities (“TRuPs”), be excluded from Tier 1 capital.  In general, banking organizations such as the Corporation and the Bank, that are not advanced approaches banks, must begin to phase out TRuPs from Tier 1 capital by January 1, 2015.  The Corporation will be allowed to include 25% of the $225 million outstanding qualifying TRuPs as Tier 1 capital in 2015 and the TRuPs must be fully phased out from Tier 1 capital by January 1, 2016.  However, the Corporation’s TRuPs may continue to be included in Tier 2 capital until the instruments are redeemed or mature.  

    The Basel 3 rules also revise the “prompt corrective action” (“PCA”) regulations that apply to depository institutions, including FirstBank, pursuant to Section 38 of the Federal Deposit Insurance Act by (i) introducing a separate CET1 ratio requirement for each PCA capital category (other than critically undercapitalized) with the required CET1 ratio being 6.5% for well-capitalized status; (ii) increasing the minimum Tier 1 capital ratio requirement for each PCA capital category with the minimum Tier 1 capital ratio for well-capitalized status being 8% (as compared to the current 6%); and (iii) eliminating the current provision that allows a bank with a composite supervisory rating of 1 to have a 3% leverage ratio and still be adequately capitalized and maintaining the minimum leverage ratio for well-capitalized status at 5%. The Basel 3 rules do not change the total risk-based capital requirement (10% for well-capitalized status) for any PCA capital category.  The new PCA requirements become effective on January 1, 2015.

The Basel 3 rules separately impose a Standardized Approach for risk-weightings that expands the risk-weighting categories from the four major risk-weighting categories under the current regulatory capital rules (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets.  In a number of cases, the Standardized Approach will result in higher risk weights for a variety of asset categories. Specific changes to the risk-weightings of assets under the current regulatory capital rules include, among other things: (i) applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans, (ii) assigning a 150% risk weight to exposures that are 90 days past due (other than qualifying residential mortgage exposures, which remain at an assigned risk-weighting of 100%),  and (iii) establishing a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable, in contrast to the 0% risk-weighting under the current rules.

The Corporation’s estimated pro-forma CET1 ratio, Tier 1 capital ratio, total capital ratio, and leverage ratio under the Basel 3 rules, giving effect as of June 30, 2014 to all the provisions that will be phased-in between January 1, 2015 and January 2019, was 12.5%, 12.8%, 16.4%, and 10.1%, respectively.  These ratios would exceed the fully phased-in minimum capital ratios under Basel 3.  Future estimates of the regulatory capital ratios under the Basel 3 rules may change over time as a result of further federal banking agency rulemaking or clarification. 

The tangible common equity ratio and tangible book value per common share are non-GAAP measures generally used by the financial community to evaluate capital adequacy. Tangible common equity is total equity less preferred equity, goodwill, core deposit intangibles, and purchased credit card relationship intangible assets. Tangible assets are total assets less goodwill, core deposit intangibles, and purchased credit card relationship intangible assets.  Refer to “Basis of Presentation” section below for additional information.

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The following table is a reconciliation of the Corporation’s tangible common equity and tangible assets for the periods ended June 30, 2014 and December 31, 2013, respectively:
		June 30,		December 31,
	(In thousands, except ratios and per share information)	2014		2013
	Total equity - GAAP	$	1,306,001	$	1,215,858
	Preferred equity		(36,104)		(63,047)
	Goodwill		(28,098)		(28,098)
	Purchased credit card relationship		(18,080)		(19,787)
	Core deposit intangible		(6,200)		(6,981)
	Tangible common equity	$	1,217,519	$	1,097,945
	Total assets - GAAP	$	12,523,251	$	12,656,925
	Goodwill		(28,098)		(28,098)
	Purchased credit card relationship		(18,080)		(19,787)
	Core deposit intangible		(6,200)		(6,981)
	Tangible assets	$	12,470,873	$	12,602,059
	Common shares outstanding		212,760		207,069
	Tangible common equity ratio		9.76%		8.71%
	Tangible book value per common share	$	5.72	$	5.30

The Tier 1 common equity to risk-weighted assets ratio is calculated by dividing (a) Tier 1 capital less capital other than common stock, including qualifying perpetual preferred stock and qualifying trust preferred securities, by (b) risk-weighted assets, which assets are calculated in accordance with applicable bank regulatory requirements. The Tier 1 common equity ratio is not required by GAAP or on a recurring basis by applicable bank regulatory requirements. Management is currently monitoring this ratio, along with the other ratios discussed above, in evaluating the Corporation’s capital levels and believes that, at this time, the ratio may continue to be of interest to investors.

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The following table reconciles stockholders' equity (GAAP) to Tier 1 common equity based on current applicable bank regulatory requirements (known as "Basel I"):
		June 30,		December 31,
	(In thousands)	2014		2013
	Total equity - GAAP	$	1,306,001	$	1,215,858
	Qualifying preferred stock		(36,104)		(63,047)
	Unrealized loss on available-for-sale securities (1)		28,381		78,734
	Goodwill		(28,098)		(28,098)
	Core deposit intangible		(6,200)		(6,981)
	Other disallowed assets		(23)		(23)
	Tier 1 common equity	$	1,263,957	$	1,196,443
	Total risk-weighted assets	$	9,079,164	$	9,405,798
	Tier 1 common equity to risk-weighted assets ratio		13.92%		12.72%
(1)	Tier 1 capital excludes net unrealized gains (losses) on available-for-sale debt securities and net unrealized gains on available-for-sale equity securities with readily determinable fair values, in accordance with regulatory risk-based capital guidelines. In arriving at Tier 1 capital, institutions are required to deduct net unrealized losses on available-for-sale equity securities with readily determinable fair values, net of tax.

In the first six months of 2014, the Corporation issued an aggregate of 4,597,121 shares of its common stock in exchange for an aggregate of 1,077,726 shares of the Corporation’s Series A through E Preferred Stock, having an aggregate liquidation value of $26.9 million. The shares of common stock were issued to holders of the Series A through E Preferred Stock in reliance upon the exemption set forth in Section 3(a)(9) of the Securities Act of 1933, as amended, for securities exchanged by an issuer with existing security holders where no commission or other remuneration is paid or given directly or indirectly by the issuer for soliciting such exchange.

Off -Balance Sheet Arrangements

In the ordinary course of business, the Corporation engages in financial transactions that are not recorded on the balance sheet, or may be recorded on the balance sheet in amounts that are different from the full contract or notional amount of the transaction. These transactions are designed to (1) meet the financial needs of customers, (2) manage the Corporation’s credit, market or liquidity risks, (3) diversify the Corporation’s funding sources and (4) optimize capital.

As a provider of financial services, the Corporation routinely enters into commitments with off-balance sheet risk to meet the financial needs of its customers. These financial instruments may include loan commitments and standby letters of credit. These commitments are subject to the same credit policies and approval process used for on-balance sheet instruments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial position. As of June 30, 2014, commitments to extend credit and commercial and financial standby letters of credit amounted to approximately $1.1 billion (including $685.3 million pertaining to credit card loans) and $44.8 million, respectively. Commitments to extend credit are agreements to lend to customers as long as the conditions established in the contract are met. Generally, the Corporation does not enter into interest rate lock agreements with prospective borrowers in connection with mortgage banking activities.

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Contractual Obligations, Commitments and Contingencies
The following table presents a detail of the maturities of the Corporation’s contractual obligations and commitments, which consist of CDs, long-term contractual debt obligations, commitments to sell mortgage loans and commitments to extend credit:
		Contractual Obligations and Commitments
		As of June 30, 2014
		Total		Less than 1 year		1-3 years		3-5 years		After 5 years
		(In thousands)
Contractual obligations (1):
Certificates of deposit		$	5,312,164	$	2,880,053	$	2,106,766	$	274,721	$	50,624
Securities sold under agreements to repurchase			900,000		-		600,000		300,000		-
Advances from FHLB			320,000		20,000		100,000		200,000		-
Other borrowings			231,959		-		-		-		231,959
Total contractual obligations		$	6,764,123	$	2,900,053	$	2,806,766	$	774,721	$	282,583
Commitments to sell mortgage loans		$	121,825	$	121,825
Standby letters of credit		$	8,438	$	8,438
Commitments to extend credit:
Lines of credit		$	1,064,188	$	1,064,188
Letters of credit			36,336		36,336
Commitments to originate loans			63,626		63,626
Total commercial commitments		$	1,164,150	$	1,164,150
___________
(1)	$2.5 million of tax liability associated with unrecognized tax benefits and related interest of $2.4 million have been excluded in the table above but management believes that the amounts of unrecognized tax benefits will decrease within the next twelve months by approximately $2.5 million.

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The Corporation has obligations and commitments to make future payments under contracts, such as debt and lease agreements, and under other commitments to sell mortgage loans at fair value and to extend credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Other contractual obligations result mainly from contracts for the rental and maintenance of equipment. Since certain commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. There have been no significant or unexpected draws on existing commitments.  In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause.

Interest Rate Risk Management

First BanCorp. manages its asset/liability position in order to limit the effects of changes in interest rates on net interest income and to maintain stability of profitability under varying interest rate scenarios. The MIALCO oversees interest rate risk and MIALCO meetings focus on, among other things, current and expected conditions in world financial markets, competition and prevailing rates in the local deposit market, liquidity, securities market values, recent or proposed changes to the investment portfolio, alternative funding sources and related costs, hedging and the possible purchase of derivatives such as swaps and caps, and any tax or regulatory issues which may be pertinent to these areas. The MIALCO approves funding decisions in light of the Corporation’s overall strategies and objectives.

On a quarterly basis, the Corporation performs a consolidated net interest income simulation analysis to estimate the potential change in future earnings from projected changes in interest rates. These simulations are carried out over a one-to-five-year time horizon, assuming upward and downward yield curve shifts. The rate scenarios considered in these simulations reflect gradual upward and downward interest rate movements of 200 basis points, during a twelve-month period. Simulations are carried out in two ways:

(1) Using a static balance sheet, as the Corporation had on the simulation date, and

(2) Using a dynamic balance sheet based on recent patterns and current strategies.

The balance sheet is divided into groups of assets and liabilities detailed by maturity or re-pricing structure and their corresponding interest yields and costs. As interest rates rise or fall, these simulations incorporate expected future lending rates, current and expected future funding sources and costs, the possible exercise of options, changes in prepayment rates, deposits decay and other factors which may be important in projecting net interest income.

The Corporation uses a simulation model to project future movements in the Corporation’s balance sheet and income statement. The starting point of the projections generally corresponds to the actual values on the balance sheet on the date of the simulations.

These simulations are highly complex, and are based on many assumptions that are intended to reflect the general behavior of the balance sheet components over the period in question. It is unlikely that actual events will match these assumptions in all cases. For this reason, the results of these forward-looking computations are only approximations of the true sensitivity of net interest income to changes in market interest rates. Several benchmark and market rate curves were used in the modeling process, primarily the LIBOR/SWAP curve, Prime, Treasury, FHLB rates, brokered CDs rates, repurchase agreements rates and the mortgage commitment rate of 30 years. 

The 12-month net interest income is forecasted assuming June 30, 2014 interest rate curves remain constant. Then net interest income is estimated under rising and falling rate scenarios. For rising rate scenarios, a gradual (ramp) parallel upward shift of the yield curves is assumed during the first twelve months (the “+200 ramp” scenario). Conversely, for the falling rate scenarios, a gradual (ramp) parallel downward shift of the yield curves is assumed during the first twelve months (the “-200 ramp” scenario). However, given the current low levels of interest rates, a full downward shift of 200 basis points would represent an unrealistic scenario. Therefore, under the falling rate scenario, rates move downward up to 200 basis points, but without reaching zero. The resulting scenario shows interest rates close to zero in most cases, reflecting a flattening yield curve instead of a parallel downward scenario. 

The Libor/Swap curve for June 2014, as compared to December 2013, decreased by 2 basis points in the short term horizon, that is, between one to twelve months, while market rates increased by 4 basis points in the medium term, that is, between 2 to 5 years.  In the long term, that is, an over 5 year-term horizon, market rates decreased by almost 42 basis points,  The Treasury curve decreased by 2 basis point in the short and medium term horizon, while in the long term horizon decreased by almost 52 basis points, as compared to December 2013 end of month levels.

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The following table presents the results of the simulations as of June 30, 2014 and December 31, 2013.  Consistent with prior years, these exclude non-cash changes in the fair value of derivatives and liabilities measured at fair value:
	June 30, 2014								December 31, 2013
	Net Interest Income Risk								Net Interest Income Risk
	(Projected for the next 12 months)								(Projected for the next 12 months)
	Static Simulation				Growing Balance Sheet				Static Simulation				Growing Balance Sheet
(Dollars in millions)	Change		% Change		Change		% Change		Change		% Change		Change		% Change
+ 200 bps ramp	$	13.9	2.65	%	$	12.5	2.32	%	$	14.6	2.76	%	$	12.1	2.23	%
- 200 bps ramp	$	(6.7)	(1.27)	%	$	(6.5)	(1.22)	%	$	(10.6)	(2.00)	%	$	(10.8)	(1.99)	%

      The Corporation continues to manage its balance sheet structure to control the overall interest rate risk. Among the major drivers behind the slight shift in interest income sensitivity to interest rate shifts are the increase of $22.0 million in cash and cash equivalents, and the purchase of $68.5 million of 15-Year U.S. agency MBS. The liabilities side was affected mainly by the net decrease of $266.1 million in government deposits, the reduction of $45.1 million in brokered CDs, and the $20.0 million increase in FHLB advances. 

 Taking into consideration the above-mentioned facts for modeling purposes, the net interest income for the next twelve months under a non-static or growing balance sheet scenario, is estimated to increase by $12.5 million in the rising rates scenario when compared against the Corporation’s flat or unchanged interest rate forecast scenario. Under the falling rate, non-static scenario, the net interest income is estimated to decrease by $6.5 million.

Derivatives

First BanCorp. uses derivative instruments and other strategies to manage its exposure to interest rate risk caused by changes in interest rates beyond management’s control.

The following summarizes major strategies, including derivative activities, used by the Corporation in managing interest rate risk:

Interest rate cap agreements - Interest rate cap agreements provide the right to receive cash if a reference interest rate rises above a contractual rate. The value increases as the reference interest rate rises. The Corporation enters into interest rate cap agreements for protection from rising interest rates. 

Interest rate swaps - Interest rate swap agreements generally involve the exchange of fixed and floating-rate interest payment obligations without the exchange of the underlying notional principal amount. As of June 30, 2014, most of the interest rate swaps outstanding are used for protection against rising interest rates. Similar to unrealized gains and losses arising from changes in fair value, net interest settlements on interest rate swaps are recorded as an adjustment to interest income or interest expense depending on whether an asset or liability is being economically hedged.

Forward Contracts - Forward contracts are sales of to-be-announced (“TBA”) mortgage-backed securities that will settle over the standard delivery date and do not qualify as “regular way” security trades. Regular-way security trades are contracts that have no net settlement provision and no market mechanism to facilitate net settlement and provide for delivery of a security within the time generally established by regulations or conventions in the market place or exchange in which the transaction is being executed. The forward sales are considered derivative instruments that need to be marked to market. These securities are used to hedge the FHA/VA residential mortgage loan securitizations of the mortgage-banking operations. Unrealized gains (losses) are recognized as part of mortgage banking activities in the consolidated statement of income (loss).

For detailed information regarding the volume of derivative activities (e.g. notional amounts), location and fair values of derivative instruments in the Statement of Financial Condition and the amount of gains and losses reported in the Statement of Income (Loss), refer to Note 9 in the accompanying unaudited consolidated financial statements.

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The following tables summarize the fair value changes in the Corporation’s derivatives as well as the sources of the fair values:
	Asset Derivatives		Liability Derivatives
	Six-Month Period Ended		Six-Month Period Ended
(In thousands)	June 30, 2014		June 30, 2014
Fair value of contracts outstanding at the beginning of the period	$	394	$	(4,023)
Fair value of new contracts entered into during the period		-		-
Changes in fair value during the period		(279)		451
Fair value of contracts outstanding as of  June 30, 2014	$	115	$	(3,572)

Sources of Fair Value
	Payment Due by Period
	Maturity   Less Than One Year			Maturity     1-3 Years		Maturity    3-5 Years		Maturity      in Excess      of 5 Years		Total Fair Value
(In thousands)
As of June 30, 2014
Pricing from observable market inputs - Asset Derivatives		$	99	$	16	$	-	$	-	$	115
Pricing from observable market inputs - Liability Derivatives			(328)		(3,244)		-		-		(3,572)
		$	(229)	$	(3,228)	$	-	$	-	$	(3,457)

Derivative instruments, such as interest rate swaps, are subject to market risk.  As is the case with investment securities, the market value of derivative instruments is largely a function of the financial market’s expectations regarding the future direction of interest rates.  Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on earnings.  This will depend, for the most part, on the level of interest rates, as well as the expectations for rates in the future. 

As of June 30, 2014 and December 31, 2013, all of the derivative instruments held by the Corporation were considered economic undesignated hedges.

The use of derivatives involves market and credit risk. The market risk of derivatives stems principally from the potential for changes in the value of derivative contracts based on changes in interest rates. The credit risk of derivatives arises from the potential of default from the counterparty.  To manage this credit risk, the Corporation deals with counterparties of good credit standing, enters into master netting agreements whenever possible and, when appropriate, obtains collateral. Master netting agreements incorporate rights of set-off that provide for the net settlement of contracts with the same counterparty in the event of default.  All of the Corporation’s interest rate swaps are supported by securities collateral agreements, which allow the delivery of securities to and from the counterparties depending on the fair value of the instruments, to minimize credit risk.

Refer to Note 19 of the accompanying unaudited consolidated financial statements for additional information regarding the fair value determination of derivative instruments.

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Set forth below is a detailed analysis of the Corporation's credit exposure by counterparty with respect to derivative instruments
outstanding as of June 30, 2014 and December 31, 2013.
(In thousands)		As of June 30, 2014
	Rating(1)	Notional		Total Exposure at Fair Value(2)		Negative Fair Value		Total Fair Value		Accrued interest receivable (payable)
Counterparty
Interest rate swaps with rated
counterparties:
JP Morgan	A	$	25,419	$	-	$	(3,228)	$	(3,228)	$	(116)
Other derivatives (3):
Interest rate swaps			5,440		99		(100)		(1)		(11)
Written and purchase interest
rate caps			75,538		16		(16)		-		-
Forward contracts			17,000		-		(228)		(228)		-
Total		$	123,397	$	115	$	(3,572)	$	(3,457)	$	(127)

(In thousands)		As of December 31, 2013
				Total Exposure at Fair Value(2)		Negative Fair Value		Total Fair Value		Accrued Interest receivable (payable)
Counterparty	Rating(1)	Notional
Interest rate swaps with rated
counterparties:
JP Morgan	A	$	25,640	$	-	$	(3,802)	$	(3,802)	$	(121)
Other derivatives (3):
Interest rate swaps			5,440		162		(163)		(1)		(11)
Written and purchase interest
rate caps			76,782		58		(58)		-		-
Forward contracts			25,000		174		-		174		-
Total		$	132,862	$	394	$	(4,023)	$	(3,629)	$	(132)
____________
(1)    Based on the S&P and Fitch Long Term Issuer Credit Ratings.
(2)    For each counterparty, this amount includes derivatives with positive fair value excluding the related accrued interest receivable/payable.
(3)    Credit exposure with several counterparties for which a credit rating is not readily available and forward contracts.

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Credit Risk Management

First BanCorp. is subject to credit risk mainly with respect to its portfolio of loans receivable and off-balance sheet instruments, mainly derivatives and loan commitments. Loans receivable represents loans that First BanCorp. holds for investment and, therefore, First BanCorp. is at risk for the term of the loan. Loan commitments represent commitments to extend credit, subject to specific conditions, for specific amounts and maturities. These commitments may expose the Corporation to credit risk and are subject to the same review and approval process as for loans. Refer to “Contractual Obligations and Commitments” above for further details. The credit risk of derivatives arises from the potential of the counterparty’s default on its contractual obligations. To manage this credit risk, the Corporation deals with counterparties of good credit standing, enters into master netting agreements whenever possible and, when appropriate, obtains collateral. For further details and information on the Corporation’s derivative credit risk exposure, refer to “Interest Rate Risk Management” above. The Corporation manages its credit risk through its credit policy, underwriting, independent loan review and quality control procedures, statistical analysis, comprehensive financial analysis, and established management committees.  The Corporation also employs proactive collection and loss mitigation efforts. Furthermore, personnel performing structured loan workout functions are responsible for mitigating defaults and minimizing losses upon default within each region and for each business segment. In the case of the C&I, commercial mortgage and construction loan portfolios, the Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO.  In addition to the management of the resolution process for problem loans, the SAG oversees collection efforts for all loans to prevent migration to the non-performing and/or adversely classified status.  The SAG utilizes relationship officers, collection specialists and attorneys. In the case of residential construction projects, the workout function monitors project specifics, such as project management and marketing, as deemed necessary.

The Corporation may also have risk of default in the securities portfolio. The securities held by the Corporation are principally fixed-rate U.S. agency mortgage-backed securities and U.S. Treasury and agency securities. Thus, a substantial portion of these instruments is backed by mortgages, a guarantee of a U.S. government-sponsored entity or the full faith and credit of the U.S. government.

Management, consisting of the Corporation’s Commercial Credit Risk Officer, Retail Credit Risk Officer, Chief Lending Officer and other senior executives, has the primary responsibility for setting strategies to achieve the Corporation’s credit risk goals and objectives. These goals and objectives are documented in the Corporation’s Credit Policy.

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Allowance for Loan and Lease Losses and Non-performing Assets

Allowance for Loan and Lease Losses

The allowance for loan and lease losses represents the estimate of the level of reserves appropriate to absorb inherent credit losses. The amount of the allowance was determined by empirical analysis and judgments regarding the quality of each individual loan portfolio. All known relevant internal and external factors that affected loan collectability were considered, including analyses of historical charge-off experience, migration patterns, changes in economic conditions, and changes in loan collateral values. For example, factors affecting the economies of Puerto Rico, Florida (USA), the US Virgin Islands and the British Virgin Islands may contribute to delinquencies and defaults above the Corporation’s historical loan and lease losses. Such factors are subject to regular review and may change to reflect updated performance trends and expectations, particularly in times of severe stress. The process includes judgments and quantitative elements that may be subject to significant change. There is no certainty that the allowance will be adequate over time to cover credit losses in the portfolio because of continued adverse changes in the economy, market conditions, or events adversely affecting specific customers, industries or markets. To the extent actual outcomes differ from our estimates, the credit quality of our customer base materially decreases, the risk profile of a market, industry, or group of customers changes materially, or the allowance is determined to not be adequate, additional provisions for credit losses could be required, which could adversely affect our business, financial condition, liquidity, capital, and results of operations in future periods.

The allowance for loan and lease losses provides for probable losses that have been identified with specific valuation allowances for individually evaluated impaired loans and probable losses believed to be inherent in the loan portfolio that have not been specifically identified. Internal risk ratings are assigned to each business loan at the time of approval and are subject to subsequent periodic reviews by the Corporation’s senior management. The allowance for loan and lease losses is reviewed on a quarterly basis as part of the Corporation’s continued evaluation of its asset quality.

During the second quarter of 2014, the Corporation made certain enhancements to the general allowance estimation process for commercial loans which mainly consisted of the following:

Utilization of longer historical loss periods to better reflect the level of incurred losses in the portfolio.  Historical charge-off rates are calculated by the Corporation on a quarterly basis by tracking cumulative charge-offs experienced over a two year loss period on loans according to their internal risk rating (referred to as “base rate” for the quarter). Prior to the second quarter enhancements, the Corporation would use the base rate of the current quarter or the average of the last 4 quarters, if greater.  During the second quarter of 2014, the Corporation eliminated the use of the “greater of” approach and adopted the utilization of the base rate average of the last 8 quarters. This change captures a longer historical period that would help mitigate period to period volatility in the loss rates.  

Enhancements of the environmental factors adjustment. Prior to the second quarter enhancements, these adjustments were applied in the form of basis points additions to the loss ratio based on changes in credit and economic indicators observed in the most recent periods. During the second quarter of 2014, the resulting factor derived from a set of risk-based ratings and weights assigned to credit and economic indicators activity over a reasonable period is now applied to a developed expected range of historical losses, in order to adjust the base loss rates. These enhancements result in a framework that can be applied more consistently, by having a more granular analysis that better captures trends in economic conditions and the impact in the Corporation’s portfolio.

In addition, the calculation of loss rates for asset classifications with limited or zero loss history was improved to consider these loans’ migration experience.

The Corporation maintained a parallel computation of the general reserve for commercial loans. The enhancements to the general allowance estimation process resulted in a net decrease to the allowance for loan losses of $4.8 million as of the implementation date of May 31, 2014.

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The ratio of allowance for loan losses to total loans held for investment decreased to 2.55% as of June 30, 2014 from 2.97% as of December 31, 2013 primarily due to charge-offs on certain collateral-dependent commercial loans that did not require additional reserves, updated appraisals, reserve releases on non-performing and adversely classified construction and commercial loans paid off, and, to a lesser extent, the enhancements to the allowance estimation process discussed above.  In addition, the reserve required for the non-impaired mortgage loans acquired from Doral was lower than the portion of the general reserve of commercial loans related to the secured borrowings, and the purchased credit impaired loans acquired from Doral, with an estimated fair value at acquisition of $102.8 million, required no allowance as of June 30, 2014.  The allowance to total loans for the C&I portfolio increased from 2.82% as of December 31, 2013 to 2.90% at June 30, 2014; the allowance to total loans for each of the Corporation’s categories of loans changed as follows: the allowance to total loans for the commercial mortgage portfolio decreased from 4.10% at December 31, 2013 to 2.68% at June 30, 2014; the allowance to total loans for the construction loans portfolio decreased from 21.23% at December 31, 2013 to 14.36% at June 30, 2014; the allowance to total loans for the residential mortgage portfolio decreased from 1.30% at December 31, 2013 to 1.06% at June 30, 2014; and the allowance to total consumer and finance leases increased from 2.83% as of December 31, 2013 to 3.14%  as of June 30, 2014.

Substantially all of the Corporation’s loan portfolio is located within the boundaries of the U.S. economy. Whether the collateral is located in Puerto Rico, the U.S. and British Virgin Islands or the U.S. mainland (mainly in the state of Florida), the performance of the Corporation’s loan portfolio and the value of the collateral supporting the transactions are dependent upon the performance of and conditions within each specific area’s real estate market. The real estate market in Puerto Rico has experienced readjustments in value over the last few years driven by the loss of income due to higher unemployment, reduced demand and general adverse economic conditions. The Corporation sets adequate loan-to-value ratios upon original approval following its regulatory and credit policy standards. The real estate market for the U.S. Virgin Islands has declined mostly due to the effect of the slow stateside economy and due to the increase in inventory after the closing in 2012 of the Hovensa refinery in St Croix. In Florida, we operate mostly in Miami, where home prices have improved, mostly driven by a higher demand from foreign investors, and a decrease in distressed property sales.

As shown in the following table, the allowance for loan and lease losses amounted to $241.2 million as of June 30, 2014, or 2.55% of total loans, compared with $285.9 million, or 2.97% of total loans, as of December 31, 2013. Refer to the “Provision for Loan and Lease Losses” above for additional information.

130

		Quarter Ended						Six-Month Period Ended
		June 30,						June 30,
(Dollars in thousands)		2014			2013			2014			2013
Allowance for loan and lease losses, beginning of period		$	266,778		$	342,531		$	285,858		$	435,414
Provision (release) for loan and lease losses:
Residential Mortgage (1)			3,934			74,277			7,685			82,225
Commercial Mortgage (2) (3)			(8,808)			13,213			(9,659)			49,610
Commercial and Industrial (2) (4) (5)			16,336			(4,166)			32,427			31,126
Construction (2) (6)			(3,513)			(7,937)			(11,563)			14,011
Consumer and Finance Leases			18,795			12,077			39,769			21,615
Provision for loan and lease losses (7)			26,744			87,464			58,659			198,587
Charge-offs
Residential Mortgage (8)			(4,987)			(103,897)			(11,409)			(115,625)
Commercial Mortgage (9)			(13,423)			(3,271)			(19,233)			(59,327)
Commercial and Industrial (10) (11)			(19,452)			(6,488)			(41,911)			(92,108)
Construction (12)			(2,661)			(2,418)			(3,631)			(41,030)
Consumer and Finance Leases			(18,531)			(16,350)			(36,577)			(31,114)
			(59,054)			(132,424)	(13)		(112,761)			(339,204)	(13)
Recoveries:
Residential Mortgage			300			479			369			627
Commercial Mortgage			4,297			18			4,332			38
Commercial and Industrial			416			968			1,079			1,759
Construction			55			50			672			147
Consumer and Finance Leases			1,641			1,961			2,969			3,679
			6,709			3,476			9,421			6,250
Net Charge-Offs			(52,345)			(128,948)			(103,340)			(332,954)
Allowance for loan and lease losses, end of period		$	241,177		$	301,047		$	241,177		$	301,047
Allowance for loan and lease losses to period end total loans held for
investment			2.55	%		3.19	%		2.55	%		3.19	%
Net charge-offs (annualized) to average loans outstanding during the
period			2.19	%		5.25	%		2.15	%		6.69	%
Net charge-offs (annualized), excluding charge-offs related to the acquisition
of mortgage loans from Doral, bulk loan sales and loans transferred
to held for sale, to average loans outstanding during the period			1.90	%		1.29	%		2.01	%		2.11	%
Provision for loan and lease losses to net charge-offs during the
period			0.51x			0.68x			0.57x			0.60x
Provision for loan and lease losses to net charge-offs during the period,
excluding impact of the acquisition of mortgage loans from
Doral, bulk loan sales, and the transfer of loans to held for sale			0.56x			0.63x			0.59x			0.66x
___________
(1)	For the quarter and six-month period ended June 30, 2013, includes a provision totaling $67.9 million and $68.8 million, respectively, associated with the bulk loan sales.
(2)	During the second quarter of 2013, after a comprehensive review of substantially all of the loans in our commercial portfolios, the classification of certain loans was revised to more accurately depict the nature of the underlying loans. This reclassification resulted in a net increase of $269.0 million and $10.7 million in commercial mortgage loans and the related allowance, respectively, since the principal source of repayment of such loans is derived from the operations of the underlying real estate, with a corresponding decrease of $246.8 million and $9.4 million in commercial and industrial loans and the related allowance, respectively, and a $22.2 million and $1.3 million decrease in construction loans and the related allowance, respectively.
(3)	For the six-month period ended June 30, 2013, includes a provision of $28.7 million associated with the bulk loan sales and the transfer of loans to held for sale.
(4)	For the quarter and six-month period ended June 30, 2014, includes a provision totaling $1.4 million associated with the acquisition of mortgage loans from Doral.
(5)	For the six-month period ended June 30, 2013, includes a provision totaling $20.8 million associated with the bulk loan sales.
(6)	For the quarter and six-month period ended June 30, 2013, includes a provision totaling $31 thousand and $13.6 million, respectively, associated with the bulk loan sales.
(7)	For the quarter and six-month period ended June 30, 2014, includes a provision of $1.4 million associated with the acquisition of mortgage loans from Doral. For the quarter and six-month period ended June 30, 2013, includes a provision totaling $67.9 million and $132.0 million, respectively, associated with the acquisition of mortgage loans from Doral, bulk loan sales and the transfer of loans to held for sale.
(8)	For the quarter and six-month period ended June 30, 2013, includes charge-offs totaling $97.9 million and $99.0 million, respectively, associated with the bulk loan sales.
(9)	For the six-month period ended June 30, 2013, includes charge-offs totaling $54.6 million associated with the bulk loan sales and the transfers of loans to held for sale.
(10)	For the six-month period ended June 30, 2013, includes charge-offs totaling $44.7 million associated with the bulk loan sales.
(11)	For the quarter and six-month period ended June 30, 2014, includes charge-offs totaling $6.9 million associated with the acquisition of mortgage loans from Doral.
(12)	For the quarter and six-month period ended June 30, 2013, includes charge-offs totaling $31 thousand and $34.2 million, respectively, associated with the bulk loan sales and the transfer of loans to held for sale.
(13)	For the quarter and six-month period ended June 30, 2014, includes charge-offs totaling $6.9 million associated with the acquisition of mortgage loans from Doral. For the quarter and six-month period ended June 30, 2013, includes charge-offs totaling $98.0 million and $232.4 million, respectively, associated with the acquisition of mortgage loans from Doral, bulk loan sales and the transfer of loans to held for sale.

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The following table sets forth information concerning the allocation of the allowance for loan and lease losses by loan category
and the percentage of loan balances in each category to the total of such loans as of the dates indicated:
	As of					As of
	June 30, 2014					December 31, 2013
(In thousands)	Amount		Percent of loans to total loans			Amount		Percent of loans to total loans
Residential mortgage	$	29,755		29	%	$	33,110		27	%
Commercial mortgage loans		48,578		19	%		73,138		19	%
Construction loans		21,292		2	%		35,814		2	%
Commercial and Industrial loans (including loan to a local
financial institution in 2013)		76,890		28	%		85,295		31	%
Consumer loans and finance leases		64,662		22	%		58,501		21	%
	$	241,177		100	%	$	285,858		100	%

The following table sets forth information concerning the composition of the Corporation's allowance for loan and lease losses as of June 30, 2014 and December 31, 2013 by loan category and by whether the allowance and related provisions were calculated individually or through a general valuation allowance.
As of June 30, 2014	Residential Mortgage Loans			Commercial Mortgage Loans									Consumer and Finance Leases
										Construction Loans
(Dollars in thousands)							C&I Loans									Total
Impaired loans without specific reserves:
Principal balance of loans, net of charge-offs	$	263,024		$	84,909		$	39,507		$	6,669		$	4,882		$	398,991
Impaired loans with specific reserves:
Principal balance of loans, net of charge-offs		151,424			154,088			140,257			40,052			24,046			509,867
Allowance for loan and lease losses		16,464			16,317			22,745			8,962			3,870			68,358
Allowance for loan and lease losses to principal
balance		10.87	%		10.59	%		16.22	%		22.38	%		16.09	%		13.41	%
PCI loans:
Carrying value of PCI loans		99,997			3,447			-			-			2,176			105,620
Allowance for PCI loans		-			-			-			-			-			-
Allowance for PCI loans to carrying value		-			-			-			-			-			-
Loans with general allowance:
Principal balance of loans		2,280,714			1,571,486			2,467,714			101,545			2,031,164			8,452,623
Allowance for loan and lease losses		13,291			32,261			54,145			12,330			60,792			172,819
Allowance for loan and lease losses to principal
balance		0.58	%		2.05	%		2.19	%		12.14	%		2.99	%		2.04	%
Total loans held for investment:
Principal balance of loans	$	2,795,159		$	1,813,930		$	2,647,478		$	148,266		$	2,062,268		$	9,467,101
Allowance for loan and lease losses		29,755			48,578			76,890			21,292			64,662			241,177
Allowance for loan and lease losses to principal
balance (1)		1.06	%		2.68	%		2.90	%		14.36	%		3.14	%		2.55	%

132

		Residential Mortgage Loans			Commercial Mortgage Loans									Consumer and Finance Leases
											Construction Loans
(Dollars in thousands)								C&I Loans									Total
As of December 31, 2013
Impaired loans without specific reserves:
Principal balance of loans, net of charge-offs		$	220,428		$	69,484		$	32,418		$	15,120		$	4,035		$	341,485
Impaired loans with specific reserves:
Principal balance of loans, net of charge-offs			190,566			149,888			154,686			57,597			24,890			577,627
Allowance for loan and lease losses			18,125			32,189			26,686			22,144			3,457			102,601
Allowance for loan and lease losses to principal
balance			9.51	%		21.48	%		17.25	%		38.45	%		13.89	%		17.76	%
PCI loans:
Carrying value of PCI loans			-			-			-			-			4,791			4,791
Allowance for PCI loans			-			-			-			-			-			-
Allowance for PCI loans to carrying value			-			-			-			-			-			-
Loans with general allowance:
Principal balance of loans			2,138,014			1,604,236			2,841,218			95,996			2,032,803			8,712,267
Allowance for loan and lease losses			14,985			40,949			58,609			13,670			55,044			183,257
Allowance for loan and lease losses to principal
balance			0.70	%		2.55	%		2.06	%		14.24	%		2.71	%		2.10	%
Total loans held for investment:
Principal balance of loans		$	2,549,008		$	1,823,608		$	3,028,322		$	168,713		$	2,066,519		$	9,636,170
Allowance for loan and lease losses			33,110			73,138			85,295			35,814			58,501			285,858
Allowance for loan and lease losses to principal
balance (1)			1.30	%		4.01	%		2.82	%		21.23	%		2.83	%		2.97	%
__________
(1)	Loans used in the denominator include PCI loans of $105.6 million and $4.8 million as of June 30, 2014 and December 31, 2013, respectively. However, the Corporation separately tracks and reports PCI loans and excludes these loans from non-performing loans, impaired loans, TDRs and non-performing assets statistics.

133

The following tables show the activity for impaired loans held for investment and the related specific reserve during the quarter and six-month period ended June 30, 2014:
		Quarter Ended		Six-month period ended
		June 30, 2014
		(In thousands)
	Impaired Loans:
	Balance at beginning of period	$	879,388	$	919,112
	Loans determined impaired during the period		98,966		153,243
	Net charge-offs		(32,646)		(64,685)
	Increase to impaired loans - additional disbursements		294		919
	Foreclosures		(4,134)		(8,140)
	Loans no longer considered impaired		(14,003)		(17,731)
	Paid in full or partial payments		(19,007)		(73,860)
	Balance at end of period	$	908,858	$	908,858
		June 30, 2014
		(In thousands)
	Specific Reserve:
	Balance at beginning of period	$	85,016	$	102,601
	Provision for loan losses		15,988		30,442
	Net charge-offs		(32,646)		(64,685)
	Balance at end of period	$	68,358	$	68,358

134

Credit Quality

    As of June 30, 2014, total non-performing assets were $757.3 million, an increase of $31.9 million from December 31, 2013.  Total non-performing loans, including non-performing loans held for sale, increased by $69.0 million, or 13%, from December 31, 2013.  The increase was primarily reflected in the non-performing commercial mortgage and commercial and industrial loan portfolios, driven by the inflow of three large commercial relationships totaling $83.8 million.  An increase in the specific reserve related to these collateral dependent loans was not necessary in the first half of 2014.  In addition, the non-performing residential mortgage loan portfolio increased by a net $14.0 million.  While inflows to non-performing status decreased the amount of loans restored to accrual status also decreased, when compared to the fourth quarter of 2013. The increases were partially offset by a $20.0 million decrease in non-performing construction loans, mainly driven by the restoration to accrual status of a $10.7 million loan that is current in payments and deemed collectible, and loans paid off in Florida and foreclosures. 

The level of adversely classified commercial and construction loans, including non-performing loans held for sale, decreased by $16.6 million to $661.2 million, or a 2% decrease, compared to the balance as of December 31, 2013, driven by certain loans paid off in both Puerto Rico and the United States, and the upgrade of the $10.7 million construction loan in Puerto Rico restored to accrual status during the second quarter. Inflows of non-performing loans held for investment decreased by $29.2 million, or 11%, compared to inflows in the first half of 2014.  The decrease was primarily reflected in the commercial mortgage and residential mortgage loan portfolios. The net charge-off activity decreased to $103.3 million in the first half of 2014, compared to net charge-offs of $333.0 million for the same period in 2013.  The fair value adjustments related to mortgage loans acquired from Doral in 2014 and the bulk sales of assets and the transfer of certain loans to held for sale in 2013 added $6.9 million and $232.4 million in charge-offs in the first half of 2014 and 2013, respectively. Adjusted net charge-offs, excluding the impact of charge-offs resulting from the Doral transaction, the bulk sales of assets and the transfer of loans to held for sale, amounted to $96.4 million, or an annualized 2.01% of average loans, a decrease of $4.2 million compared to the first half of 2013, mainly reflecting the impact in 2013 of a $25.4 million charge-off related to a single commercial relationship restructured through a loan split.  The OREO portfolio decreased by $38.4 million from December 31, 2013, driven by sales of $38.6 million and adjustments to value of $13.1 million, partially offset by additions.  Given the prolonged recession and uncertainties in the economic environment in Puerto Rico, the Corporation continued to face pressures related to its non-performing loans and charge-off levels.  The Corporation continues to emphasize its loan resolution and liquidation strategies.

Non-performing Loans and Non-performing Assets

Total non-performing assets consist of non-performing loans (generally loans held for investment or loans held for sale on which the recognition of interest income has been discontinued when the loan became 90 days past due or earlier if the full and timely collection of interest or principal is uncertain), foreclosed real estate and other repossessed properties. When a loan is placed in non-performing status, any interest previously recognized and not collected is reversed and charged against interest income.

Non-performing Loans Policy

Residential Real Estate Loans — The Corporation classifies real estate loans in non-performing status when interest and principal have not been received for a period of 90 days or more.

Commercial and Construction Loans — The Corporation places commercial loans (including commercial real estate and construction loans) in non-performing status when interest and principal have not been received for a period of 90 days or more or when collection of all of the principal or interest is not expected due to deterioration in the financial condition of the borrower.     

135

Finance Leases — Finance leases are classified in non-performing status when interest and principal have not been received for a period of 90 days or more.

Consumer Loans — Consumer loans are classified in non-performing status when interest and principal have not been received for a period of 90 days or more. Credit card loans continue to accrue finance charges and fees until charged-off at 180 days delinquent.

PCI Loans — PCI loans were recorded at fair value at acquisition. Since the initial fair value of these loans included an estimate of credit losses expected to be realized over the remaining lives of the loans, the subsequent accounting for PCI loans differs from the accounting for non-PCI loans. The Corporation, therefore, separately tracks and reports PCI loans and excludes these from its non-performing loans, impaired loans, Troubled Debt Restructurings (“TDRs”), and non-performing assets statistics.

Cash payments received on certain loans that are impaired and collateral dependent are recognized when collected in accordance with the contractual terms of the loans.  The principal portion of the payment is used to reduce the principal balance of the loan, whereas the interest portion is recognized on a cash basis (when collected). However, when management believes that the ultimate collectability of principal is in doubt, the interest portion is applied to principal.  The risk exposure of this portfolio is diversified as to individual borrowers and industries, among other factors. In addition, a large portion is secured with real estate collateral.

Other Real Estate Owned

OREO acquired in settlement of loans is carried at the lower of cost (carrying value of the loan) or fair value less estimated costs to sell the real estate. Appraisals are obtained periodically, generally, on an annual basis.

Other Repossessed Property

The other repossessed property category generally includes repossessed boats and autos acquired in settlement of loans. Repossessed boats and autos are recorded at the lower of cost or estimated fair value.

Past Due Loans 90 days and still accruing

These are accruing loans that are contractually delinquent 90 days or more. These past due loans are either current as to interest but delinquent as to the payment of principal or are insured or guaranteed under applicable FHA and VA programs.  Also includes PCI loans with individual delinquencies over 90 days, primarily related to mortgage loans acquired from Doral.

TDRs are classified as either accrual or nonaccrual loans. A loan on nonaccrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure, generally for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loans being returned to accrual at the time of the restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan.

136

The following table presents non-performing assets as of the dates indicated:
		June 30,			December 31,
(Dollars in thousands)		2014			2013
Non-performing loans held for investment:
Residential mortgage		$	175,404		$	161,441
Commercial mortgage			166,218			120,107
Commercial and Industrial			143,669			114,833
Construction			38,830			58,866
Finance leases			3,414			3,082
Consumer			37,096			37,220
Total non-performing loans held for investment		$	564,631		$	495,549
OREO			121,842			160,193
Other repossessed property			16,114			14,865
Total non-performing assets, excluding loans held for sale		$	702,587		$	670,607
Non-performing loans held for sale			54,755			54,801
Total non-performing assets, including loans held for sale (1)		$	757,342		$	725,408
Past due loans 90 days and still accruing (2) (3)		$	143,916		$	120,082
Non-performing assets to total assets			6.05	%		5.73	%
Non-performing loans held for investment to total loans held for investment			5.96	%		5.14	%
Allowance for loan and lease losses		$	241,177		$	285,858
Allowance to total non-performing loans held for investment			42.71	%		57.69	%
Allowance to total non-performing loans held for investment,
excluding residential real estate loans			61.96	%		85.56	%
___________
(1)	Purchased credit impaired loans accounted for under ASC 310-30 of $105.6 million and $4.8 million as of June 30, 2014 and December 31, 2013, respectively, are excluded and not considered non-performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of  residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.
(3)	Amount includes purchased credit impaired loans with individual delinquencies over 90 days and still accruing with a carrying value as of June 30, 2014 of approximately $12.1 million, primarily related to loans acquired from Doral.

137

The following table shows non-performing assets by geographic segment:
		June 30,		December 31,
(Dollars in thousands)		2014		2013
Puerto Rico:
Non-performing loans held for investment:
Residential mortgage		$	149,946	$	139,771
Commercial mortgage			142,417		101,255
Commercial and Industrial			137,046		109,224
Construction			30,229		43,522
Finance leases			3,414		3,082
Consumer			34,768		34,660
Total non-performing loans held for investment			497,820		431,514
OREO			101,051		123,851
Other repossessed property			16,056		14,806
Total non-performing assets, excluding loans held for sale		$	614,927	$	570,171
Non-performing loans held for sale			14,750		14,796
Total non-performing assets, including loans held for sale (1)		$	629,677	$	584,967
Past due loans 90 days and still accruing (2)		$	139,173	$	118,097
Virgin Islands:
Non-performing loans held for investment:
Residential mortgage		$	12,797	$	8,439
Commercial mortgage			7,708		6,827
Commercial and Industrial			6,623		5,609
Construction			8,442		11,214
Consumer			876		514
Total non-performing loans held for investment			36,446		32,603
OREO			14,597		14,894
Other repossessed property			-		5
Total non-performing assets, excluding loans held for sale		$	51,043	$	47,502
Non-performing loans held for sale			40,005		40,005
Total non-performing assets, including loans held for sale		$	91,048	$	87,507
Past due loans 90 days and still accruing		$	4,743	$	1,985
United States:
Non-performing loans held for investment:
Residential mortgage		$	12,661	$	13,231
Commercial mortgage			16,093		12,025
Construction			159		4,130
Consumer			1,452		2,046
Total non-performing loans held for investment			30,365		31,432
OREO			6,194		21,448
Other repossessed property			58		54
Total non-performing assets, excluding loans held for sale		$	36,617	$	52,934
Non-performing loans held for sale			-		-
Total non-performing assets, including loans held for sale		$	36,617	$	52,934
____________
(1)	Purchased credit impaired loans accounted for under ASC 310-30 of $105.6 million and $4.8 million as of June 30, 2014 and December 31, 2013, respectively, are excluded and not considered non-performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
(2)	Amount includes purchased credit impaired loans with individual delinquencies over 90 days and still accruing with a carrying value as of June 30, 2014 of approximately $12.1 million, primarily related to loans acquired from Doral.

138

Total non-performing loans, including non-performing loans held for sale, were $619.4 million as of June 30, 2014.  This represents an increase of $69.0 million, or 13%, from $550.4 million as of December 31, 2013.  The increase was primarily reflected in the non-performing commercial mortgage and commercial and industrial loan portfolios, driven by the inflow of three large commercial relationships totaling $83.8 million.

Non-performing commercial mortgage loans, including non-performing commercial mortgage loans held for sale, increased by $46.1 million, or 36%, from December 31, 2013. The increase was primarily driven by the inflow of two large relationships totaling $53.1 million in Puerto Rico. The inflow of these collateral dependent loans did not require an increase in the related specific reserve assigned to this loan.  In addition, there were inflows of three loans in Florida totaling $4.1 million.  These increases were partially offset by charge-offs, including charge-offs of $13.4 million on two commercial mortgage relationships in Puerto Rico.  Non-performing commercial mortgage loans increased by $41.2 million, $4.1 million, and $0.9 million in Puerto Rico, the United States, and the Virgin Islands, respectively, from December 31, 2013 levels.  Total inflows of non-performing commercial mortgage loans of $68.1 million during the first half of 2014 decreased by $29.7 million compared to $97.9 million for the same period in 2013. 

Non-performing C&I loans increased by $28.8 million compared to December 31, 2013, driven by the inflow of a $21.2 million loan in Puerto Rico, and inflows of seven loans individually in excess of $2 million totaling $33.1 million, also in Puerto Rico.  This was partially offset by charge-offs and principal repayments, including charge-offs amounting to $22.1 million related to nine collateral dependent loans in Puerto Rico. Total inflows of non-performing C&I loans increased to $75.2 million during the first half of 2014 compared to inflows of $26.9 million for the same period in 2013. 

Non-performing construction loans, including non-performing construction loans held for sale, decreased by $20.0 million, or 19%, from December 31, 2013, primarily reflecting the restoration to accrual status of a $10.7 million loan in Puerto Rico that is current in payments and deemed collectible, two loans paid off in the United States totaling $4.1 million, a $1.7 million loan transferred to the OREO portfolio in the Virgin Islands, and a loan of $1.0 million paid off in Puerto Rico.  The inflows of non-performing construction loans of $1.9 million during the first half of 2014 decreased compared to inflows of $16.9 million for the same period in 2013. 

139

The following table presents the activity of commercial and construction non-performing loans held for investment:
			Commercial Mortgage		Commercial & Industrial		Construction
(In thousands)
Quarter ended June 30, 2014
Beginning balance		$	145,535	$	113,996	$	50,387
Plus:
	Additions to non-performing		36,039		54,557		1,791
Less:
	Non-performing loans transferred to REO		(575)		(2,041)		(45)
	Non-performing loans charged-off		(13,422)		(12,449)		(2,509)
	Loans returned to accrual status/loan collections		(1,359)		(10,394)		(10,794)
Ending balance		$	166,218	$	143,669	$	38,830
			Commercial Mortgage		Commercial & Industrial		Construction
(In thousands)
Six-Month Period Ended June 30, 2014
Beginning balance		$	120,107	$	114,833	$	58,866
Plus:
	Additions to non-performing		68,123		75,212		1,902
Less:
	Non-performing loans transferred to REO		(806)		(2,041)		(2,219)
	Non-performing loans charged-off		(19,232)		(26,871)		(3,380)
	Loans returned to accrual status/loan collections		(3,149)		(16,289)		(16,339)
	Reclassification		1,175		(1,175)		-
Ending balance		$	166,218	$	143,669	$	38,830

140

Non-performing commercial and construction loans held for sale remained flat at $54.8 million as of June 30, 2014.

Total non-performing commercial and construction loans, including non-performing loans held for sale, with a book value of $403.5 million as of June 30, 2014 are being carried at 59.9% of unpaid principal balance, net of reserves and accumulated charge-offs.

Non-performing residential mortgage loans increased by $14.0 million, or 9%, from December 31, 2013.  The increase was mainly driven by inflows of $64.9 million during the first half of 2014, partially offset by loans brought current, foreclosures, and charge-offs.  The inflows of non-performing residential mortgage loans of $64.9 million during the first half of 2014 decreased compared to inflows of $101.4 million for the same period in 2013. Most of the loans included in the bulk sale of non-performing residential assets that was completed in the second quarter of 2013 were at a late stage of the foreclosure process; thus, foreclosures and charge-offs that in the past offset the inflows of loans to non-performing status significantly decreased since the completion of the bulk sale. Approximately $106.2 million, or 61% of total non-performing residential mortgage loans, have been written down to their net realizable value. 

The following table presents the activity of residential non-performing loans held for investment:
			Quarter Ended		Six-Month Period Ended
			June 30, 2014
			(In thousands)
Beginning balance		$	172,796	$	161,441
Plus:
	Additions to non-performing		29,981		64,864
Less:
	Non-performing loans transferred to REO		(1,083)		(3,051)
	Non-performing loans charged-off		(3,965)		(9,187)
	Loans returned to accrual status/loan collections		(22,325)		(38,663)
Ending balance		$	175,404	$	175,404

The amount of non-performing consumer loans, including finance leases, showed a $0.2 million increase during the first half of 2014.  The inflows of non-performing consumer loans of $34.2 million increased by $3.7 million compared to inflows of $30.5 million for the same period in 2013.

As of June 30, 2014, approximately $201.5 million of the loans placed in non-accrual status, mainly construction and commercial loans, were current, or had delinquencies of less than 90 days in their interest payments, including $85.5 million of TDRs maintained in nonaccrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability. Collections on these loans are being recorded on a cash basis through earnings, or on a cost-recovery basis, as conditions warrant.

During the six-month period ended June 30, 2014, interest income of approximately $2.9 million related to non-performing loans with a carrying value of $360.3 million as of June 30, 2014, mainly non-performing construction and commercial loans, was applied against the related principal balances under the cost-recovery method.

141

The allowance to non-performing loans held for investment ratio as of June 30, 2014 was 42.71%, compared to 57.69% as of December 31, 2013. As of June 30, 2014, approximately $194.0 million, or 34.35%, of total non-performing loans are carried at their net realizable value, as shown in the following table:
(Dollars in thousands)	Residential Mortgage Loans			Commercial Mortgage Loans			C&I Loans			Construction Loans			Consumer and Finance Leases			Total
As of June 30, 2014
Non-performing loans held for investment
charged-off to realizable value	$	106,155		$	44,368		$	39,070		$	3,048		$	1,318		$	193,959
Other non-performing loans held
for investment		69,249			121,850			104,599			35,782			39,192			370,672
Total non-performing loans held
for investment	$	175,404		$	166,218		$	143,669		$	38,830		$	40,510		$	564,631
Allowance to non-performing loans held for
investment		16.96	%		29.23	%		53.52	%		54.83	%		159.62	%		42.71	%
Allowance to non-performing loans held for
investment, excluding non-performing loans
charged-off to realizable value		42.97	%		39.87	%		73.51	%		59.50	%		164.99	%		65.06	%
As of December 31, 2013
Non-performing loans held for investment
charged-off to realizable value	$	100,181		$	32,961		$	29,769		$	11,603		$	1,192		$	175,706
Other non-performing loans held
for investment		61,260			87,146			85,064			47,263			39,110			319,843
Total non-performing loans held
for investment	$	161,441		$	120,107		$	114,833		$	58,866		$	40,302		$	495,549
Allowance to non-performing loans held for
investment		20.51	%		60.89	%		74.28	%		60.84	%		145.16	%		57.69	%
Allowance to non-performing loans held for
investment, excluding non-performing loans
charged-off to realizable value		54.05	%		83.93	%		100.27	%		75.78	%		149.58	%		89.37	%

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The Corporation provides homeownership preservation assistance to its customers through a loss mitigation program in Puerto Rico that is similar to the U.S. government’s Home Affordable Modification Program guidelines. Depending upon the nature of borrowers’ financial condition, restructurings or loan modifications through this program as well as other restructurings of individual commercial, commercial mortgage, construction, and residential mortgage loans in the U.S. mainland fit the definition of a TDR. A restructuring of a debt constitutes a TDR if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Modifications involve changes in one or more of the loan terms that bring a defaulted loan current and provide sustainable affordability. Changes may include the refinancing of any past-due amounts, including interest and escrow, the extension of the maturity of the loan and modifications of the loan rate. As of June 30, 2014, the Corporation’s total TDR loans held for investment of $628.2 million consisted of $342.9 million of residential mortgage loans, $103.5 million of commercial and industrial loans, $137.6 million of commercial mortgage loans, $17.0 million of construction loans, and $27.2 million of consumer loans. Outstanding unfunded commitments on TDR loans amounted to $0.4 million as of June 30, 2014.

The Corporation’s loss mitigation programs for residential mortgage and consumer loans can provide for one or a combination of the following: movement of interest past due to the end of the loan, extension of the loan term, deferral of principal payments for a significant period of time, and reduction of interest rates either permanently (offered up to 2010) or for a period of up to two years (step-up rates). Additionally, in certain cases, the restructuring may provide for the forgiveness of contractually due principal or interest. Uncollected interest is added to the end of the loan term at the time of the restructuring and not recognized as income until collected or when the loan is paid off. These programs are available only to those borrowers who have defaulted, or are likely to default, permanently on their loan and would lose their homes in a foreclosure action absent some lender concession. Nevertheless, if the Corporation is not reasonably assured that the borrower will comply with its contractual commitment, properties are foreclosed.

Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers. Trial modifications generally represent a six-month period during which the borrower makes monthly payments under the anticipated modified payment terms prior to a formal modification. Upon successful completion of a trial modification, the Corporation and the borrower enter into a permanent modification. TDR loans that are participating in or that have been offered a binding trial modification are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification. As of June 30, 2014, we classified an additional $8.2 million of residential mortgage loans as TDRs that were participating in or had been offered a trial modification.

For the commercial real estate, commercial and industrial, and construction portfolios, at the time of a restructuring, the Corporation determines, on a loan-by-loan basis, whether a concession was granted for economic or legal reasons related to the borrower’s financial difficulty. Concessions granted for commercial loans could include: reductions in interest rates to rates that are considered below market; extension of repayment schedules and maturity dates beyond original contractual terms; waivers of borrower covenants; forgiveness of principal or interest; or other contract changes that would be considered a concession. The Corporation mitigates loan defaults for its commercial loan portfolios through its collections function. The function’s objective is to minimize both early stage delinquencies and losses upon default of commercial loans. In the case of the commercial and industrial,  commercial mortgage and construction loan portfolios, the Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO.  In addition to the management of the resolution process for problem loans, the SAG oversees collection efforts for all loans to prevent migration to the non-performing and/or adversely classified status.  The SAG utilizes relationship officers, collection specialists, and attorneys. In the case of residential construction projects, the workout function monitors project specifics, such as project management and marketing, as deemed necessary.

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  The SAG utilizes its collections infrastructure of workout collection officers, credit work-out specialists, in-house legal counsel, and third-party consultants. In the case of residential construction projects and large commercial loans, the function also utilizes third-party specialized consultants to monitor the residential and commercial construction projects in terms of construction, marketing and sales, and assists with the restructuring of large commercial loans. In addition, the Corporation extends, renews, and restructures loans with satisfactory credit profiles. Many commercial loan facilities are structured as lines of credit, which are mainly one year in term and therefore are required to be renewed annually. Other facilities may be restructured or extended from time to time based upon changes in the borrower’s business needs, use of funds, timing of completion of projects, and other factors. If the borrower is not deemed to have financial difficulties, extensions, renewals, and restructurings are done in the normal course of business and not considered concessions, and the loans continue to be recorded as performing.

TDRs are classified as either accrual or nonaccrual loans. A loan on nonaccrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure, generally for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loans being returned to accrual at the time of the restructuring or after a shorter performance period. If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan. Loan modifications increase the Corporation’s interest income by returning a non-performing loan to performing status, if applicable, increase cash flows by providing for payments to be made by the borrower, and avoid increases in foreclosure and OREO costs. The Corporation continues to consider a modified loan as an impaired loan for purposes of estimating the allowance for loan and lease losses.

The following table provides a breakdown between accrual and nonaccrual status of TDRs:
(In thousands)		June 30, 2014
		Accrual		Nonaccrual (1)(2)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	256,948	$	85,964	$	342,912
Commercial Mortgage Loans			77,795		59,824		137,619
Commercial and Industrial Loans			53,249		50,289		103,538
Construction Loans:
	Land		811		2,425		3,236
	Construction-commercial		-		3,848		3,848
	Construction-residential		3,301		6,588		9,889
Consumer Loans - Auto			8,847		5,263		14,110
Finance Leases			2,060		102		2,162
Consumer Loans - Other			8,859		2,060		10,919
Total Troubled Debt Restructurings		$	411,870	$	216,363	$	628,233
(1)	Included in non-accrual loans are $85.5 million in loans that are performing under the terms of the restructuring agreement but are reported  in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.
(2)	Excludes non-accrual TDRs held for sale with a carrying value of $45.8 million as of June 30, 2014.

The OREO portfolio, which is part of non-performing assets, decreased by $38.4 million. The following table shows the activity during the six-month period ended June 30, 2014 of the OREO portfolio by geographic region and type of property:

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(In thousands)	As of June 30, 2014
	Puerto Rico						Virgin Islands						Florida						Consolidated
	Residential		Commercial		Construction		Residential		Commercial		Construction		Residential		Commercial		Construction
Beginning Balance	$	34,875	$	72,845	$	16,131	$	2,184	$	2,002	$	10,708	$	3,227	$	15,625	$	2,596	$	160,193
Additions		6,987		2,866		426		322		113		1,794		760		-		-		13,268
Sales		(9,738)		(6,749)		(4,803)		(400)		(1,829)		-		(1,158)		(13,321)		(570)		(38,568)
Fair value
adjustments		(3,776)		(7,143)		(870)		(176)		(55)		(66)		(102)		(560)		(303)		(13,051)
Ending balance	$	28,348	$	61,819	$	10,884	$	1,930	$	231	$	12,436	$	2,727	$	1,744	$	1,723	$	121,842

Net Charge-offs and Total Credit Losses

Total net charge-offs for the first half of 2014 were $103.3 million, or 2.15% of average loans on an annualized basis, compared to net charge-offs of $333.0 million, or an annualized 6.69%, for the same period in 2013.  The fair value adjustments related to mortgage loans acquired from Doral in 2014 and the bulk sales of assets and the transfer of certain loans to held for sale in 2013 added $6.9 million and $232.4 million in charge-offs in the first half of 2014 and 2013, respectively. Adjusted net charge-offs, excluding the impact of charge-offs resulting from the Doral transaction, the bulk sales of assets and the transfer of loans to held for sale, amounted to $96.4 million, or an annualized 2.01% of average loans, a decrease of $4.2 million compared to the first half of 2013, mainly reflecting the impact in 2013 of a $25.4 million charge-off related to a single commercial relationship restructured through a loan split. 

C&I loans net charge-offs in the first half of 2014 totaled $40.8 million, or an annualized 2.80% of related average loans, compared to $90.3 million, or an annualized 5.93%, for the first half of 2013.  C&I loans net charge-offs in the first quarter of 2014 included $6.9 million associated with the acquisition of mortgage loans from Doral and net charge-offs in the first half of 2013 included $44.7 million of charge-offs related to the bulk sales.  Excluding the impact of charge-offs related to the acquisition of mortgage loans from Doral and the bulk sales, C&I net charge-offs for the first half of 2014 were $11.7 million lower than in the same period in 2013.  Substantially all of the charge-offs recorded in the first half of 2014 were in Puerto Rico, including individual charge-offs in excess of $2 million associated with four collateral dependent loans in Puerto Rico totaling $15.3 million and a $7.0 million charge-off associated with a $37.0 million adversely classified loan paid off in Puerto Rico.  

Commercial mortgage loans net charge-offs in the first half of 2014 were $14.9 million, or an annualized 1.63% of related average loans, compared to $59.3 million, or an annualized 6.75%, for the first half of 2013.  Commercial mortgage loans net charge-offs in the first half of 2013 included $54.6 million of charge-offs related to the bulk sale and the transfer of loans to held for sale in 2013.  Excluding the impact of charge-offs related to the bulk sale and the transfer of loans to held for sale, commercial mortgage loans net charge-offs for the first half of 2014 were $10.2 million higher than in the same period in 2013.  Commercial mortgage loans net charge-offs in the first half of 2014 were primarily in Puerto Rico, including $15.5 million on three relationships, partially offset by a $4.1 million recovery on a restructured comercial mortgage loan paid-in full in the United States.

Construction loans net charge-offs in the first half of 2014 were $3.0 million, or an annualized 2.85% of related average loans, compared to $40.9 million, or an annualized 26.33%, for the first half of 2013.  Construction loans net charge-offs in the first half of 2013 included $34.2 million of charge-offs related to the bulk sale and the transfer of loans to held for sale. Excluding the impact of charge-offs related to the bulk sale and the transfer of loans to held for sale, construction net charge-offs for the first half of 2014 were $3.7 million lower than in the same period in 2013. 

Residential mortgage loans net charge-offs in the first half of 2014 were $11.0 million, or an annualized 0.85% of related average loans, compared to $115.0 million, or an annualized 8.19%, for the first half of 2013.  Residential mortgage loans net charge-offs in the first half of 2013 included $99.0 million of charge-offs related to the bulk sales.  Excluding the impact of charge-offs related to the bulk sales, residential mortgage loans net charge-offs for the first half of 2014 were $5.0 million lower than in the same period in 2013 mainly due to a reduced amount of impaired loans after the bulk sale completed in the second quarter of 2013.

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 Approximately $9.0 million in charge-offs for the first half of 2014 resulted from valuations for impairment purposes of residential mortgage loans considered homogeneous given high delinquency and loan-to-value levels, compared to $8.6 million in the first half of 2013.  Net charge-offs on residential mortgage loans also included $1.6 million related to foreclosures, compared to $5.4 million in the first half of 2013.

Net charge-offs of consumer loans and finance leases in the first half of 2014 were $33.6 million, or an annualized 3.25% of related average loans, compared to $27.4 million, or an annualized 2.71% of average loans, in the first half of 2013.  The increase is mainly attributable to the auto loan portfolio.

The following table presents annualized net charge-offs (recoveries) to average loans held-in-portfolio:
		Quarter Ended				Six-Month Period Ended
		June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Residential mortgage loans (1)		0.71	%	14.78	%	0.85	%	8.19	%
Commercial mortgage (2)		2.00	%	0.79	%	1.63	%	6.75	%
Commercial and industrial (3) (4)		2.69	%	0.72	%	2.80	%	5.93	%
Construction loans (5)		5.25	%	3.43	%	2.85	%	26.33	%
Consumer loans (6) (7)		3.27	%	2.83	%	3.25	%	2.71	%
Total loans (8) (9)		2.19	%	5.25	%	2.15	%	6.69	%
_______________
(1)	For the quarter and six-month period ended June 30, 2013, includes net charge-offs totaling $97.9 million and $99.0 million, respectively, associated with the bulk sales of assets. For the quarter and six-month period ended June 30, 2013, the ratio of residential mortgage net-charge offs to average loans, excluding charge-offs associated with the bulk loan sale, was 0.84% and 1.23%, respectively.
(2)	For the six-month period ended June 30, 2013, includes net charge-offs of $54.6 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale in the first quarter of 2013. The ratio of commercial mortgage net-charge offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale, was 0.56%.
(3)	For the quarter and six-month period ended June 30, 2014, includes net charge-offs totaling $6.9 million associated with the acquisition of mortgage loans from Doral. The ratio of commercial and industrial net charge-offs to average loans, excluding charge-offs associated with the acquisition of mortgage loans from Doral, was 1.81% and 2.49%, respectively.
(4)	For the six-month period ended June 30, 2013, includes net charge-offs totaling $44.7 million associated with the bulk sale of adversely classified commercial assets. The ratio of commercial and industrial net-charge offs to average loans, excluding charge-offs associated with the bulk sale of adversely classified commercial assets, was 3.05%.
(5)	For the quarter and six-month period ended June 30, 2013, includes net charge-offs totaling $31 thousand and $34.2 million, respectively, associated with the bulk sales of assets. For the quarter and six-month period ended June 30, 2013, the ratio of construction net-charge offs to average loans, excluding charge-offs associated with the bulk loan sales and the transfer of loans to held for sale, was 3.39% and 5.34%, respectively.
(6)	Includes lease financing.
(7)	Loans used in the denominator calculating the ratio include PCI loans.
(8)	For the quarter and six-month period ended June 30, 2014, includes net charge-offs totaling $6.9 million associated with the acquisition of mortgage loans from Doral. The ratio of commercial and industrial net charge-offs to average loans, excluding charge-offs associated with the acquisition of mortgage loans from Doral, was 1.90% and 2.01%, respectively.
(9)	For the quarter and six-month period ended June 30, 2013, includes net charge-offs totaling $98.0 and $232.4 million, respectively, associated with the bulk loan sales and the transfer of loans to held for sale. For the quarter and six-month period ended June 30, 2013, the ratio of total net-charge offs to average loans, excluding charge-offs associated with the bulk loan sales and the transfer of loans to held for sale, was 1.29% and 2.11%, respectively.

The above ratios are based on annualized charge-offs and are not necessarily indicative of the results expected for the entire year or in subsequent periods.

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The following table presents annualized net charge-offs (recoveries) to average loans held-in-portfolio by geographic segment:
		Quarter Ended		Six-Month Period Ended
		June 30,	June 30,	June 30,	June 30,
		2014	2013	2014	2013
PUERTO RICO:
Residential mortgage (1)		0.95%	18.03%	1.11%	10.00%
Commercial mortgage (2)		3.55%	1.03%	2.56%	8.69%
Commercial and Industrial (3) (4)		3.07%	0.76%	3.17%	6.26%
Construction  (5)		9.56%	1.98%	4.84%	24.44%
Consumer and finance leases		3.42%	2.90%	3.37%	2.77%
Total loans (6) (7)		2.80%	5.76%	2.64%	7.23%
VIRGIN ISLANDS:
Residential mortgage (8)		0.00%	6.91%	0.11%	3.49%
Commercial mortgage		0.00%	0.00%	0.20%	0.00%
Commercial and Industrial		0.10%	0.00%	0.11%	2.06%
Construction (9)		0.54%	1.08%	2.16%	34.88%
Consumer and finance leases		0.27%	0.49%	0.40%	0.49%
Total loans (10)		0.10%	3.95%	0.36%	6.72%
FLORIDA:
Residential mortgage (11)		-0.02%	0.24%	0.05%	0.46%
Commercial mortgage (12)		-4.34%	-0.02%	-2.28%	-0.02%
Commercial and Industrial		0.00%	0.43%	0.00%	0.28%
Construction (13)		-0.35%	18.29%	-3.80%	10.43%
Consumer and finance leases (14)		-1.32%	2.36%	0.14%	2.17%
Total loans (15)		-1.63%	0.91%	-0.89%	0.62%
__________
(1)	For the second quarter and six-month period ended June 30, 2013, includes net charge-offs totaling $91.9 million and $92.9 million, respectively, associated with the bulk loan sales. For the second quarter and six-month period ended June 30, 2013, the ratio of residential mortgage net-charge offs to average loans in Puerto Rico, excluding charge-offs associated with the bulk sales, was 1.02% and 1.52%, respectively.
(2)	For the six-month period ended June 30, 2013, includes net charge-offs totaling $54.6 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale. For the six-month period ended June 30, 2013, the ratio of commercial mortgage net-charge offs to average loans in Puerto Rico, excluding charge-offs associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale, was 0.74%.
(3)	For the quarter and six-month period ended June 30, 2014, includes net charge-offs totaling $6.9 million associated with the acquisition of mortgage loans from Doral. The ratio of commercial and industrial net charge-offs to average loans in Puerto Rico, excluding charge-offs associated with the acquisition of mortgage loans from Doral, was 0.99% and 2.85%, respectively.
(4)	For the six-month period ended June 30, 2013, includes net charge-offs totaling $44.7 million associated with the bulk sale of adversely classified commercial assets. For the six-month period ended June 30, 2013, the ratio of commercial and industrial net-charge offs to average loans in Puerto Rico, excluding charge-offs associated with the bulk sale of adversely classified commercial assets, was 3.18%.
(5)	For the six-month period ended June 30, 2013, includes net charge-offs totaling $19.0 million associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale. For the six-month period ended June 30, 2013, the ratio of construction net-charge offs to average loans in Puerto Rico, excluding charge-offs associated with the bulk sale of adversely classified commercial assets and the transfer of loans to held for sale, was 7.60%.
(6)	For the quarter and six-month period ended June 30, 2014, includes net charge-offs totaling $6.9 million associated with the acquisition of mortgage loans from Doral. The ratio of total net charge-offs to average loans in Puerto Rico, excluding charge-offs associated with the acquisition of mortgage loans from Doral for each of the quarter and six-month period ended June 30, 2014, was 2.46%.
(7)	For the second quarter and six-month period ended June 30, 2013, includes net charge-offs totaling $91.9 million and $211.2 million, respectively, associated with the bulk loan sales and the transfer of loans to held for sale. For the quarter and six-month period ended June 30, 2013, the ratio of total net-charge offs to average loans in Puerto Rico, excluding charge-offs associated with the bulk loan sales and the transfer of loans to held for sale, was 1.40% and 2.37%, respectively.
(8)	For the second quarter and six-month period ended June 30, 2013, includes net charge-offs totaling $6.1 million associated with the bulk sale of non-performing residential assets. For the second quarter and six-month period ended June 30, 2013, the ratio of residential mortgage net-charge offs to average loans in the Virgin Islands, excluding charge-offs associated with the bulk sale of non-performing residential assets, was 0.35% and 0.26%, respectively.
(9)	For the second quarter and six-month period ended June 30, 2013, includes net charge-offs totaling $31 thousand and $15.2 million, respectively, associated with the bulk loan sales and the transfer of loans to held for sale. For the second quarter and six-month period ended June 30, 2013, the ratio of construction loans net-charge offs to average loans in the Virgin Islands, excluding charge-offs associated with the bulk loan sales and the transfer of loans to held for sale, was 0.93% and 0.42%, respectively.
(10)	For the second quarter and six-month period ended June 30, 2013, includes net charge-offs totaling $6.1 million and $21.3 million, respectively, associated with the bulk loan sales and the transfer of loans to held for sale. For the second quarter and six-month period ended June 30, 2013, the ratio of total net-charge offs to average loans in the Virgin Islands, excluding charge-offs associated with the bulk loan sales and the transfer of loans to held for sale, was 0.34% and 0.57%, respectively.
(11)	For the second quarter of 2014, recoveries in residential mortgage loans in Florida exceeded charge-offs.
(12)	For second quarter and six-month period ended June 30, 2014 and 2013, recoveries in commercial mortgage loans in Florida exceeded charge-offs.
(13)	For the second quarter and six-month period ended June 30, 2014, recoveries in construction loans in Florida exceeded charge-offs.
(14)	For the second quarter of 2014, recoveries in consumer and finance leases in Florida exceeded charge-offs.
(15)	For the second quarter and six-month period ended June 30, 2014, recoveries in total loans in Florida exceeded charge-offs.

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Total credit losses (equal to net charge-offs plus losses on OREO operations) for the first half of 2014 amounted to $116.0 million, or 2.37% on an annualized basis to average loans and repossessed assets in contrast to credit losses of $355.1 million, or a loss rate of 7.00%, for the same period in 2013, including the results of the bulk sales.

The following table presents a detail of the OREO inventory and credit losses for the periods indicated:
	Quarter Ended						Six-Month Period Ended
	June 30,						June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
OREO
REO balances, carrying value:
Residential	$	33,005		$	47,824		$	33,005		$	47,824
Commercial		63,794			56,208			63,794			56,208
Construction		25,043			35,225			25,043			35,225
Total	$	121,842		$	139,257		$	121,842		$	139,257
OREO activity (number of properties):
Beginning property inventory,		500			720			496			716
Properties acquired		28			112			97			231
Properties disposed		(60)			(299)			(125)			(414)
Ending property inventory		468			533			468			533
Average holding period (in days)
Residential		540			280			540			280
Commercial		448			352			448			352
Construction		744			355			744			355
		534			328			534			328
OREO operations (loss) gain:
Market adjustments and (losses) gain on sale:
Residential	$	(1,308)		$	(4,253)		$	(3,181)		$	(7,399)
Commercial		(3,547)			(1,859)			(5,804)			(3,011)
Construction		(87)			(5,122)			(537)			(6,314)
		(4,942)			(11,234)			(9,522)			(16,724)
Other OREO operations expenses		(1,836)			(3,595)			(3,093)			(5,415)
Net Loss on OREO operations	$	(6,778)		$	(14,829)		$	(12,615)		$	(22,139)
CHARGE-OFFS
Residential charge-offs, net		(4,687)			(103,418)			(11,040)			(114,998)
Commercial charge-offs, net		(28,162)			(8,773)			(55,733)			(149,638)
Construction charge-offs, net		(2,606)			(2,368)			(2,959)			(40,883)
Consumer and finance leases charge-offs, net		(16,890)			(14,389)			(33,608)			(27,435)
Total charge-offs, net		(52,345)			(128,948)			(103,340)			(332,954)
TOTAL CREDIT LOSSES (1)	$	(59,123)		$	(143,777)		$	(115,955)		$	(355,093)
LOSS RATIO PER CATEGORY (2)
Residential		0.90	%		15.01	%		1.08	%		8.51	%
Commercial		2.68	%		0.89	%		2.55	%		6.27	%
Construction		4.72	%		9.44	%		3.05	%		27.58	%
Consumer		3.24	%		2.81	%		3.22	%		2.69	%
TOTAL CREDIT LOSS RATIO (3)		2.44	%		5.75	%		2.37	%		7.00	%
(1) Equal to OREO operations (losses) gains plus charge-offs, net.
(2) Calculated as net charge-offs plus market adjustments and gains (losses) on sale of OREO divided by average loans and repossessed assets.
(3) Calculated as net charge-offs plus net loss on OREO operations divided by average loans and repossessed assets.

148

Operational Risk

The Corporation faces ongoing and emerging risk and regulatory pressure related to the activities that surround the delivery of banking and financial products. Coupled with external influences such as market conditions, security risks, and legal risk, the potential for operational and reputational loss has increased. In order to mitigate and control operational risk, the Corporation has developed, and continues to enhance, specific internal controls, policies and procedures that are designated to identify and manage operational risk at appropriate levels throughout the organization. The purpose of these mechanisms is to provide reasonable assurance that the Corporation’s business operations are functioning within the policies and limits established by management.

The Corporation classifies operational risk into two major categories: business specific and corporate-wide affecting all business lines. For business specific risks, a risk assessment group works with the various business units to ensure consistency in policies, processes and assessments. With respect to corporate-wide risks, such as information security, business recovery, and legal and compliance, the Corporation has specialized groups, such as the Legal Department, Information Security, Corporate Compliance, and Operations. These groups assist the lines of business in the development and implementation of risk management practices specific to the needs of the business groups.

Legal and Compliance Risk

Legal and compliance risk includes the risk of noncompliance with applicable legal and regulatory requirements, the risk of adverse legal judgments against the Corporation, and the risk that a counterparty’s performance obligations will be unenforceable. The Corporation is subject to extensive regulation in the different jurisdictions in which it conducts its business, and this regulatory scrutiny has been significantly increasing over the last several years. The Corporation has established and continues to enhance procedures based on legal and regulatory requirements that are designed to ensure compliance with all applicable statutory and regulatory requirements. The Corporation has a Compliance Director who reports to the Chief Risk Officer and is responsible for the oversight of regulatory compliance and implementation of an enterprise-wide compliance risk assessment process. The Compliance division has officer roles in each major business areas with direct reporting relationships to the Corporate Compliance Group.

Concentration Risk

The Corporation conducts its operations in a geographically concentrated area, as its main market is Puerto Rico. However, the Corporation has diversified its geographical risk as evidenced by its operations in the Virgin Islands and in Florida. Of the total gross loans held for investment of $9.5 billion as of June 30, 2014, approximately 83% have credit risk concentration in Puerto Rico, 10% in the United States and 7% in the Virgin Islands.

Exposure to Puerto Rico Government

As of June 30, 2014, the Corporation had $385.3 million in credit facilities granted to the Puerto Rico Government, its municipalities and public corporations, of which $340.7 million was outstanding, compared to $397.8 million outstanding as of December 31, 2013. Approximately $205.7 million of the granted credit facilities outstanding consisted of loans to municipalities in Puerto Rico for which, in most cases, the good faith, credit and unlimited taxing power of the applicable municipality have been pledged to their repayment.  Approximately $46.4 million consisted of loans to units of the central government, and approximately $88.6 million consisted of loans to public corporations. In addition, the Corporation had $200.2 million outstanding in financings to the hotel industry in Puerto Rico guaranteed by the TDF.

149

On June 28, 2014, the governor of Puerto Rico signed into law The Puerto Rico Public Corporations Debt Enforcement and Recovery Act (the “Recovery Act”) to provide a legislative framework for certain public corporations that are experiencing severe financial stress to address their financial obstacles through an orderly, statutory process that allows them to handle their debts, while ensuring the continuity of essential services to citizens and infrastructure upgrades. As of June 30, 2014, the Corporation had an exposure to public corporations covered by the Recovery Act amounting to $84.7 million, including a direct exposure of $75.0 million related to a line of credit extended to PREPA, which has priority over senior bonds and other debt of this entity.  On July 31, 2014, lenders, including FirstBank, who provide revolving lines of credit to PREPA to pay for purchased power, fuel and other expenses, agreed to not exercise remedies as a result of PREPA credit downgrades until August 14, 2014, unless otherwise extended by the parties, the second extension granted in July. As a result of the enactment of the Recovery Act, the most recent credit downgrades, the forbearance granted, and the risk of deterioration of the repayment prospects, the Corporation adversely classified its direct exposure to public corporations during the second quarter of 2014.

In addition, the Corporation had outstanding $61.1 million in obligations of the Puerto Rico government as part of its available-for-sale investment securities portfolio carried on its books at a fair value of $45.0 million as of June 30, 2014.  During the second quarter of 2014, the Corporation sold $4.6 million of Puerto Rico government agency bonds and received proceeds of $10.0 million from matured Puerto Rico government securities.

As of June 30, 2014, the Corporation had $252.5 million of public sector deposits in Puerto Rico, compared to $546.5 million as of December 31, 2013. Approximately 61% came from municipalities in Puerto Rico and 39% came from public corporations and the central government and agencies. As mentioned above, certain public corporations and agencies withdrew approximately $341.6 million during the second quarter.     

Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in conformity with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.

Unlike most industrial companies, substantially all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a greater impact on a financial institution’s performance than the effects of general levels of inflation. Interest rate movements are not necessarily correlated with changes in the prices of goods and services.

Basis of Presentation

The Corporation has included in this Form 10-Q the following financial measures that are not recognized under generally accepted accounting principles, which are referred to as non-GAAP financial measures: (i) the calculation of net interest income, interest rate spread and net interest margin rate on a tax-equivalent basis and excluding changes in the fair value of derivative instruments; (ii) the calculation of the tangible common equity ratio and the tangible book value per common share; (iii) the Tier 1 common equity to risk-weighted assets ratio; and (iv) certain other financial measures adjusted to exclude the effect of the acquisition of mortgage loans from Doral in 2014 and the bulk sales of assets and the transfer of loans to held for sale in 2013. Investors should be aware that non-GAAP financial measures have inherent limitations and should be read only in conjunction with the Corporation’s consolidated financial data prepared in accordance with GAAP.

150

Net interest income, interest rate spread and net interest margin are reported excluding changes in the fair value of derivative instruments (“valuations”) and on a tax-equivalent basis. The presentation of net interest income excluding valuations provides additional information about the Corporation’s net interest income and facilitates comparability and analysis. The changes in the fair value of derivative instruments have no effect on interest due or interest earned on interest-bearing liabilities or interest-earning assets, respectively.

   The tax-equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a marginal income tax rate. Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at statutory rates. Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread and net interest margin on a fully tax-equivalent basis. This adjustment puts all earning assets, most notably tax-exempt securities and certain loans, on a common basis that facilitates comparison of results to results of peers. Refer to Net Interest Income above for the table that reconciles the non-GAAP financial measure “net interest income on a tax-equivalent basis and excluding fair value changes” with net interest income calculated and presented in accordance with GAAP. The table also reconciles the non-GAAP financial measures “net interest spread and margin on a tax-equivalent basis and excluding fair value changes” with net interest spread and margin calculated and presented in accordance with GAAP.

The tangible common equity ratio and tangible book value per common share are non-GAAP measures generally used by the financial community to evaluate capital adequacy. Tangible common equity is total equity less preferred equity, goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible. Tangible assets are total assets less goodwill, core deposit intangibles, and other intangibles, such as the purchased credit card relationship intangible. Management and many stock analysts use the tangible common equity ratio and tangible book value per common share in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase method of accounting for mergers and acquisitions. Neither tangible common equity nor tangible assets, or the related measures should be considered in isolation or as a substitute for stockholders’ equity, total assets, or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Corporation calculates its tangible common equity, tangible assets, and any other related measures may differ from that of other companies reporting measures with similar names. Refer to Risk Management-Capital above for a reconciliation of the Corporation’s tangible common equity and tangible assets.

The Tier 1 common equity to risk-weighted assets ratio is calculated by dividing (a) Tier 1 capital less non-common elements including qualifying perpetual preferred stock and qualifying trust preferred securities by (b) risk-weighted assets, which assets are calculated in accordance with current applicable bank regulatory requirements (Basel 1). The Tier 1 common equity ratio is not required by GAAP or on a recurring basis by applicable bank regulatory requirements. Management is currently monitoring this ratio, along with the other ratios discussed above, in evaluating the Corporation’s capital levels and believes that, at this time, the ratio may be of interest to investors. Refer to Risk Management-Capital above for a reconciliation of stockholders’ equity (GAAP) to Tier 1 common equity.

To supplement the Corporation’s financial statements presented in accordance with GAAP, the Corporation provides additional measures of provision for loan and lease losses, provision for loan and lease losses to net charge-offs, net charge-offs, and net charge-offs to average loans, that exclude the impact of the mortgage loans acquired from Doral in 2014 and the bulk sales of assets and the transfer of non-performing loans to held for sale in 2013.  In addition, the Corporation provides an additional measure of adjusted non-interest expenses. 

151

Adjusted non-interest expenses excluded the expenses related to the acquisition of mortgage loans from Doral in 2014 and the bulk sales of assets completed in 2013.  Management believes that these non-GAAP measures enhance the ability of analysts and investors to analyze trends in the Corporation’s business and to better understand the performance of the Corporation. In addition, the Corporation may utilize these non-GAAP financial measures as a guide in its budgeting and long-term planning process. Any analysis of these non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.

Refer to Overview of Results of Operations discussion above for the reconciliation of these non-GAAP financial measures to the GAAP financial measures, except for the reconciliation with respect to the non-GAAP financial measure “provision for loan and lease losses to net charge-offs ratio, excluding the impact of the mortgage loans acquired from Doral and the bulk sales of assets and loans transferred to held for sale” with the provision for loan losses to net charge-offs ratio calculated and presented in accordance with GAAP, which is set forth below:

	Provision for loan and lease losses to Net Charge-Offs
	(Non-GAAP to GAAP reconciliation)
	Quarter Ended				Six-Month Period Ended
	June 30, 2014				June 30, 2014
	Provision for Loan and Lease Losses		Net Charge-Offs		Provision for Loan and Lease Losses		Net Charge-Offs
Provision for loan and lease losses and net charge-offs,
excluding special items (Non-GAAP)	$	25,316	$	45,437	$	57,231		96,432
Special Items:
Loss on acquisition of mortgage loans from Doral in full
satisfaction of secured borrowings owned by Doral to
FirstBank		1,428		6,908		1,428		6,908
Provision for loan and lease losses and net charge-offs
(GAAP)	$	26,744	$	52,345	$	58,659	$	103,340
Provision for loan and lease losses to net charge-offs,
excluding special items (Non-GAAP)		55.72%				59.35%
Provision for loan and lease losses to net charge-offs
(GAAP)		51.09%				56.76%

152

	Provision for loan and lease losses to Net Charge-Offs
	(Non-GAAP to GAAP reconciliation)
	Quarter Ended				Six-Month Period Ended
	June 30, 2013				June 30, 2013
	Provision for Loan and Lease Losses		Net Charge-Offs		Provision for Loan and Lease Losses		Net Charge-Offs
Provision for loan and lease losses and net charge-offs,
excluding special items (Non-GAAP)	$	19,574	$	30,976	$	66,585		100,510
Special Items:
Bulk sales of assets and loans transferred to held for sale		67,890		97,972		132,002		232,444
Provision for loan and lease losses and net charge-offs
(GAAP)	$	87,464	$	128,948	$	198,587	$	332,954
Provision for loan and lease losses to net charge-offs,
excluding special items (Non-GAAP)		63.19%				66.25%
Provision for loan and lease losses to net charge-offs
(GAAP)		67.83%				59.64%

153

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding market risk to which the Corporation is exposed, see the information contained in “Part I – Item 2 -“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.”

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Control and Procedures

First BanCorp’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of First BanCorp.’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2014. Based on this evaluation, as of the end of the period covered by this Form10-Q, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective.

Internal Control over Financial Reporting

There have been no changes to the Corporation’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

154

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In the opinion of the Corporation’s management, the pending and threatened legal proceedings of which management is aware will not have a material adverse effect on the financial condition, results of operations or cash flows of the Corporation.

ITEM 1A.  RISK FACTORS

The Corporation’s business, operating results and/or the market price of our common and preferred stock may be significantly affected by a number of factors.  For a detailed discussion of certain risk factors that could affect the Corporation’s future operations, financial condition or results for future periods see the risk factors below and in Item 1A, “Risk Factors,” in the Corporation’s 2013 Annual Report on Form 10-K.  These factors could also cause actual results to differ materially from historical results or the results contemplated by the forward-looking statements contained in this report.  Also refer to the discussion in “Part I – Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report for additional information that may supplement or update the discussion of  risk factors in the Corporation’s 2013 Form 10-K.

  Additional risks and uncertainties not currently known to the Corporation or currently deemed by the Corporation to be immaterial also may materially adversely affect the Corporation’s business, financial condition or results of operations. 

The Corporation’s credit quality may be adversely affected by Puerto Rico’s current economic condition.

A significant portion of our financial activities and credit exposure is concentrated in the Commonwealth of Puerto Rico, which has endured a prolonged period of economic and fiscal challenges. Based on the first six months of fiscal year 2013-2014, the main economic indicators suggest that the Puerto Rico economy remains weak. According to the Puerto Rico Planning Board, the Commonwealth’s gross national product (“GNP”) contracted (in real terms) from 2006 through 2011, reflecting its first period of slight economic growth in 2012 and 2013 when GNP grew 0.9% and 0.3%, respectively. For the fiscal years ending June 30, 2014 and 2015, the Puerto Rico Planning Board projects a slight economic growth in real gross national product of 0.1% and 0.2%, respectively. This continued period of economic stagnation may have an adverse effect on employment and could have an adverse effect on Commonwealth tax revenues.

The Government has implemented a multi-year budget plan for reducing the deficit, as its access to the municipal bond market. Some of the measures implemented by the government include increasing corporate taxes and reforming the employee retirement systems of the Commonwealth. Since the government is an important source of employment in Puerto Rico, these measures had a temporary adverse effect on the island’s already weak economy.  The seasonally adjusted unemployment rate in Puerto Rico decreased to 13.1% in June 2014, compared to 13.7% a year ago. On July 1, 2014, the Governor of Puerto Rico signed a balanced budget for fiscal year 2015, the first balanced budget in more than a decade.  The budget allocates $4.9 billion for operational costs and calls for the fusion of several government agencies as a way to cut costs. The budget is down $205 million from last year’s budget.

The payroll non-farm employment decreased by 1.5% in June 2014, compared to June 2013. The economy of Puerto Rico is highly sensitive to global oil prices since the island does not have a significant mass transit system available to the public and most of its electricity is powered by oil, making it highly vulnerable to fluctuations in oil prices. A substantial increase in the price of oil could adversely impact the economy by reducing disposable income and increasing the operating costs for most businesses and government operations. Consumer spending is particularly sensitive to wide fluctuations in oil prices. Several bills have been filed at the Legislative Assembly that address energy costs in Puerto Rico. One bill supported by the Governor proposes to transform the Telecommunications Regulatory Board into the Energy and Telecommunications Commission, which will be responsible for all energy and telecommunications regulatory matters. This new entity would also be responsible for all tariff-related issues. Another bill recently approved by the Senate proposes the creation of a regulatory agency that will approve or reject energy rates for all energy producers in Puerto Rico and would be responsible for opening Puerto Rico’s energy market to competition. Both proposals are intended to substantially reduce Puerto Rico’s energy costs.

155

The decline in Puerto Rico’s economy since 2006 has resulted, among other things, in a decline in our loan originations, an increase in the level of our non-performing assets, loan loss provisions and charge-offs, particularly in our construction and commercial loan portfolios, an increase in the rate of foreclosure loss on mortgage loans, and a reduction in the value of our loan portfolio, all of which have adversely affected our profitability. Any further potential deterioration of economic activity could result in further adverse effects on our profitability.

On February 4, 2014, S&P downgraded the Commonwealth of Puerto Rico’s debt to BB+, one level below investment grade. S&P also downgraded to levels below investment grade the credit rating of the GDB and other government entities. On February 7, 2014, Moody’s downgraded the Commonwealth of Puerto Rico general obligation bonds to Ba2, two notches below investment grade. Moody’s also downgraded to Ba2 the Public Building Authority Bonds, the Pension Funding Bonds, the GDB senior notes, the Municipal Finance Authority Bonds, the Puerto Rico Infrastructure Finance Authority Special Tax Revenue Bonds, the Convention Center District Authority Hotel Occupancy Tax Revenue Bonds, the Puerto Rico Highway and Transportation Authority Transportation Revenue Bonds, various ratings of the Puerto Rico Aqueduct and Sewer Authority, and the Puerto Rico Electric Power Authority. In addition, the Puerto Rico Sales Tax Financing Corporation’s senior-lien bonds were downgraded by Moody’s to Baa1 from A2, retaining investment grade status. Following the downgrades by S&P and Moody’s, Fitch became the third agency to downgrade the Commonwealth of Puerto Rico debt to BB, two notches below investment grade.

As of June 30, 2014, the Corporation had $385.3 million in credit facilities granted to the Puerto Rico government, its municipalities and public corporations, of which $340.7 million was outstanding, compared to $397.8 million outstanding as of December 31, 2013. Approximately $205.7 million of the outstanding credit facilities consists of loans to municipalities in Puerto Rico. Municipal debt exposure is secured by ad valorem taxation without limitation as to rate or amount on all taxable property within the boundaries of each municipality. The good faith, credit, and unlimited taxing power of the applicable municipality have been pledged to the repayment of all outstanding bonds and notes. Approximately $46.4 million consists of loans to units of the central government, and approximately $88.6 million consists of loans to public corporations that receive revenues from the rates they charge for services or products, such as electric power services. Main public corporations have varying degrees of independence from the central government and many receive appropriations or other payments from the Puerto Rico’s government general fund. Debt issued by the central government can either carry the full faith, credit and taxing power of the Commonwealth of Puerto Rico or represent an obligation that is subject to annual budget appropriations. Furthermore, the Corporation had $200.2 million outstanding as of June 30, 2014 in financing to the hotel industry in Puerto Rico guaranteed by the Puerto Rico Tourism Development Fund. The TDF is a subsidiary of the GDB that works with private-sector financial institutions to structure financings for new hospitality projects.

On June 28, 2014, the governor of Puerto Rico signed into law The Puerto Rico Public Corporations Debt Enforcement and Recovery Act (the “Recovery Act”) to provide a legislative framework for certain public corporations that are experiencing severe financial stress to address their financial obstacles through an orderly, statutory process that allows them to handle their debts, while ensuring the continuity of essential services to citizens and infrastructure upgrades. As of June 30, 2014, the Corporation had an exposure to public corporations covered by the Recovery Act amounting to $84.7 million, including a direct exposure of $75.0 million related to a line of credit extended to PREPA, which has priority over senior bonds and other debt of this entity.  On July 31, 2014, lenders, including FirstBank, who provide revolving lines of credit to PREPA to pay for purchased power, fuel and other expenses, agreed to not exercise remedies as a result of PREPA credit downgrades until August 14, 2014, unless otherwise extended by the parties, the second extension granted in July. As a result of the enactment of the Recovery Act, the most recent credit downgrades, the forbearance granted, and the risk of deterioration of the repayment prospects, the Corporation adversely classified its direct exposure to public corporations during the second quarter of 2014.

156

In addition, as of June 30, 2014, the Corporation had outstanding $61.1 million in obligations of the Puerto Rico government, mainly bonds of the GDB and the Puerto Rico Building Authority, as part of its available-for-sale investment securities portfolio carried on its books at a fair value of $45.0 million.  In mid-August 2013, the 30-year general obligation bonds of the Puerto Rico government, which are widely held by mutual funds, carried a yield of about 7.1%, which increased during the latter part of the third quarter of 2013, surpassing 10% at one point in September amid a general run-up in interest rates and significant selling by investors after Detroit filed for the largest municipal bankruptcy in United States history. The debt carried a yield of approximately 8.18% as of June 30, 2014.

In July 2014, the Puerto Rico debt and the debt of certain public corporation were downgraded further into speculative grade by these credit agencies after the enactment of The Recovery Act. S&P now rates Puerto Rico’s general obligation bonds at BB, two notches below investment grade, Moody’s at B2 a highly speculative rate, and Fitch at BB-, three notches below investment grade. It is uncertain how the financial markets may react to any potential further rating downgrades of Puerto Rico’s debt obligation. However, further deterioration in the fiscal situation, could adversely affect the value of our portfolio of Puerto Rico government and agencies securities.

The decrease in value during 2013 of the Puerto Rico government and agencies bonds held by the Corporation was mainly the result of the decrease in prices in the municipal bonds market caused by the Detroit default and subsequent significant sales of municipal bonds. The price declines also showed a correlation to benchmark interest rate movements. The Corporation believes that the declines in value in 2013 resulted from the above factors and not a change in expected cash flows. The issuers of Puerto Rico government and agencies bonds held by the Corporation have not defaulted, and the contractual payments on these securities have been made as scheduled. On March 11, 2014, the Commonwealth of Puerto Rico sold $3.5 billion in general obligation bonds at a yield of 8.73% to refinance short-term liabilities and to address liquidity needs.

As of June 30, 2014, the Corporation had $252.6 million of Puerto Rico public sector deposits ($228.9 million in transactional accounts and $23.6 million in time deposits) compared to $546.5 million as of December 31, 2013. Approximately 61% came from municipalities in Puerto Rico and 39% came from public corporations and the central government and agencies.

In 2014, Act 24-2014 was approved by the Puerto Rico Legislature, seeking to further strengthen the liquidity of the GDB and the GDB’s oversight over public funds.  Among other measures, Act 24-2014 grants the GDB the ability to exercise additional oversight over certain public funds deposited at private financial institutions and grants the GDB the legal authority, subject to an entity’s ability to request waivers under certain specified circumstances, to require such public funds (other than funds of the Legislative Branch, the Judicial Branch, the University of Puerto Rico, governmental pension plans, municipalities and certain other independent agencies) to be deposited at the GDB, which is expected to result in a more efficient management of public resources in an effort to maximize liquidity and efficient use of public resources. The GDB expected to capture a portion of public funds deposited in private financial institutions. As anticipated, certain public corporations and agencies withdrew deposits with FirstBank of approximately $341.6 million during the second quarter of 2014. The Corporation will continue to focus on transactional accounts and capture deposits from entities excluded from Act 24-2014.

157

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds

a)In the first six months of 2014, the Corporation issued an aggregate of 4,597,121 shares of its common stock in exchange for an aggregate of 1,077,726 shares of the Corporation’s Series A through E Preferred Stock, having an aggregate liquidation value of $26.9 million. The shares of common stock were issued to the holders of the Series A through E Preferred Stock in separate and unrelated transactions in reliance upon the exemption set forth in Section 3(a)(9) of the Securities Act of 1933, as amended, for securities exchanged by an issuer with existing security holders where no commission or other remuneration is paid or given directly or indirectly by the issuer for soliciting such exchange. The shares of Preferred Stock exchanged by the holders were originally registered by the Corporation under the Securities Act of 1933, as amended.

b)Not applicable.

c)Purchase of equity securities by the issuer and affiliated purchases. The following table provides information relating to the Corporation’s purchases of shares of its common stock in the six-month period ended June 30, 2014.

						Maximum
					Total Number of	Number of Shares
					Shares Purchased	That May Yet be
				Average	as Part of Publicly	Purchased Under
		Total number of		Price	Announced Plans	These Plans or
Period		shares purchased (1)		Paid	Or Programs	Programs
January, 2014		6,859	$	5.69	-	-
February, 2014		7,871		4.66	-	-
March, 2014		30,167		5.78	-	-
April, 2014		11,824		5.24	-	-
May, 2014		8,256		5.06	-	-
June, 2014		7,723		5.42	-	-
Total		72,700	$	5.44	-	-
(1)	Reflects shares of common stock withheld from the common stock paid to certain senior officers as additional compensation which the Corporation calls salary stock, and upon vesting of restricted stock to cover minimum tax withholding obligations. The Corporation intends to continue to satisfy statutory tax withholding obligations in connection with shares paid as salary stock to certain senior officers and the vesting of outstanding restricted stock through the withholding of shares. The Corporation's purchase of certain outstanding shares of preferred stock is discussed in (a) above.

158

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.  OTHER INFORMATION

Not applicable.

ITEM 6.  EXHIBITS

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed with this report, which Exhibit Index is incorporated herein by reference.

159

SIGNATURES

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

First BanCorp.

Registrant

Date: August 11, 2014	By:	/s/ Aurelio Alemán
		Aurelio Alemán
		President and Chief Executive Officer

Date: August 11, 2014	By:	/s/ Orlando Berges
		Orlando Berges
		Executive Vice President and Chief Financial Officer

160

Exhibit Index

12.1 – Ratio of Earnings to Fixed Charges.

12.2 – Ratio of Earnings to Fixed Charges and Preference Dividends.

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

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

32.1 – CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 – CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.1 – Interactive Data File (Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, filed in XBRL (eXtensible Business Reporting Language)

161

EX-31

 

EXHIBIT 31.2

I, Orlando Berges, certify that:

1.I have reviewed this Form 10-Q of First BanCorp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 11, 2014	By:	/s/ Orlando Berges
		Orlando Berges
		Executive Vice President and Chief Financial Officer

EX-12

 

		Exhibit 12.1
First BanCorp
Computation of Ratio of Earnings to Fixed Charges
	Six-Month Period Ended
	June 30, 2014
Including Interest on Deposits
Earnings:
Pre-tax income from continuing operations	$	38,919
Plus:
Fixed Charges (excluding capitalized interest)		59,621
Total earnings	$	98,540
Fixed Charges:
Interest expensed and capitalized	$	57,767
An estimate of the interest component within rental expense		1,854
Total Fixed Charges	$	59,621
Ratio of Earnings to Fixed Charges	1.65
Excluding Interest on Deposits
Earnings:
Pre-tax income from continuing operations	$	38,919
Plus:
Fixed Charges (excluding capitalized interest)		19,856
Total earnings	$	58,775
Fixed Charges:
Interest expensed and capitalized	$	18,002
An estimate of the interest component within rental expense		1,854
Total Fixed Charges	$	19,856
Ratio of Earnings to Fixed Charges	2.96

EX-12

 

		Exhibit 12.2
First BanCorp
Computation of Ratio of Earnings to Fixed Charges and Preference Dividends
	Six-Month Period Ended
	June 30, 2014
Including Interest on Deposits
Earnings:
Pre-tax income from continuing operations	$	38,919
Plus:
Fixed Charges (excluding capitalized interest)		59,621
Total earnings	$	98,540
Fixed Charges:
Interest expensed and capitalized	$	57,767
An estimate of the interest component within rental expense		1,854
Total fixed charges before preferred dividends	$	59,621
Preferred dividends		-
Ratio of pre tax income to net income		1.02
Preferred dividend factor		-
Total fixed charges and preferred stock dividends	$	59,621
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends	1.65
Excluding Interest on Deposits
Earnings:
Pre-tax income from continuing operations	$	38,919
Plus:
Fixed Charges (excluding capitalized interest)		19,856
Total earnings	$	58,775
Fixed Charges:
Interest expensed and capitalized	$	18,002
An estimate of the interest component within rental expense		1,854
Total Fixed Charges before preferred dividends	$	19,856
Preferred dividends		-
Ratio of pre tax income to net income		1.02
Preferred dividend factor		-
Total fixed charges and preferred stock dividends	$	19,856
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends	2.96

EX-31

 

EXHIBIT 31.1

I, Aurelio Alemán, certify that:

1.I have reviewed this Form 10-Q of First BanCorp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 11, 2014	By:	/s/ Aurelio Alemán
		Aurelio Alemán
		President and Chief Executive Officer

EX-32

 

 EXHIBIT 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18,
United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of First BanCorp., a Puerto Rico corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

            The Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (the “Form l0-Q”) of the Company fully complies with the requirements of section l3(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2014	/s/ Aurelio Alemán
	Name: Aurelio Alemán
	Title: President and Chief Executive Officer

EX-32

 

EXHIBIT 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18,
United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of First BanCorp., a Puerto Rico corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

             The Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (the “Form l0-Q”) of the Company fully complies with the requirements of section l3(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  August 11, 2014	/s/ Orlando Berges
	Name: Orlando Berges
	Title: Executive Vice President and Chief Financial Officer

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LOANS HELD FOR SALE (Tables)

3 Months Ended

Jun. 30, 2014

Portfolio of Loans Held for Sale

	June 30, 2014		December 31, 2013
	(In thousands)
Residential mortgage loans	$	17,350	$	21,168
Construction loans		47,802		47,802
Commercial mortgage loans		6,953		6,999
Total	$	72,105	$	75,969

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FIRST BANCORP. (Holding Company Only) Financial Information - Statements of Financial Condition (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
ASSETS
Cash and due from banks	$ 660,709	$ 454,302
Money market investments	16,953	201,369	216,374
Investment securities available for sale, at market:
Other investment securities	959,337	935,800
Loans Receivable, net	9,298,029	9,426,281
Other assets	177,021	179,570
Total assets	12,523,251	12,656,925
Liabilities:
Other borrowings	231,959	231,959
Accounts payable and other liabilities	134,503	129,184
Total liabilities	11,217,250	11,441,067
Stockholders Equity	1,306,001	1,215,858	1,222,328
Total liabilities and stockholders' equity	12,523,251	12,656,925
Investment In Banking Subsidiary [Member]
Investment securities available for sale, at market:
Equity Method Investments	1,496,636	1,403,612
Non Banking Subsidiary [Member]
Investment securities available for sale, at market:
Equity Method Investments	11,215	9,834
Statutory Trust One [Member]
Investment securities available for sale, at market:
Equity Method Investments	3,093	3,093
Statutory Trust Two [Member]
Investment securities available for sale, at market:
Equity Method Investments	3,866	3,866
Holding Company [Member]
ASSETS
Cash and due from banks	30,862	31,957
Money market investments	6,111	6,111
Investment securities available for sale, at market:
Equity Investments	9	33
Other investment securities	285	285
Loans Receivable, net	345	356
Other assets	4,186	4,101
Total assets	1,556,608	1,463,248
Liabilities:
Other borrowings	231,959	231,959
Accounts payable and other liabilities	18,648	15,431
Total liabilities	250,607	247,390
Stockholders Equity	1,306,001	1,215,858
Total liabilities and stockholders' equity	$ 1,556,608	$ 1,463,248

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DEPOSITS - Brokered Certificates Of Deposit Mature (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	$ 3,096,901	$ 3,142,023
One to ninety days
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	547,506
Over three month to six months
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	475,447
Over six months to one year
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	757,172
One to three year
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	1,164,461
Three to five years
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	116,314
Over five years
Deposits [Line Items]
Interest Bearing Domestic Deposit Brokered	$ 36,001

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	0 Months Ended
	May 30, 2012
Significant Accounting Policies [Line Items]
Purchased credit cards portfolio	$ 406.0

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Jun. 30, 2014

EquityAbstract

Schedule Of Conversions Of Stock Text Block

The results of the exchange with respect to Series A through E preferred stock were as follows:
			Shares of		Shares of	Aggregate
			preferred		preferred	liquidation
			stock	Shares of	stock	preference		Shares of
		Liquidation	outstanding	preferred	outstanding	after		common
		preference	prior to	stock	after	exchange		stock
		per share	exchange	exchanged	exchange	(in thousands)		issued
Title of Securities
7.125% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series A	$	25	450,195	252,809	197,386	$	4,935	1,081,652
8.35% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series B	$	25	475,987	179,841	296,146		7,404	769,379
7.40% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series C	$	25	460,611	210,759	249,852		6,246	890,830
7.25% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series D	$	25	510,592	225,070	285,522		7,138	961,724
7.00% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series E	$	25	624,487	209,247	415,240		10,381	893,536
			2,521,872	1,077,726	1,444,146	$	36,104	4,597,121

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Advances from FHLB Mature (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	$ 320,000	$ 300,000
One to thirty days
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	20,000
Over one to three years
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	100,000
Over three years
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Federal Home Loan Bank Advances	$ 200,000

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LOAN PORTFOLIO - Loans Held for Investment on Which Accrual of Interest Income had been Discontinued (Parenthetical) (Detail) (USD $)	Jun. 30, 2014	Dec. 31, 2013	May 30, 2012
Accounts Notes And Loans Receivable [Line Items]
Purchased credit impaired loans, fair value			$ 15,700,000
Loans held for sale	72,105,000	75,969,000
Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Purchased credit impaired loans, fair value	105,600,000	4,800,000
Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale	$ 54,800,000	$ 54,800,000

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OTHER BORROWINGS - Components of Other Borrowings (Parenthetical) (Detail)	3 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Seventy Five [Member]
Debt Instrument [Line Items]
Floating Interest rate on junior subordinated debentures	2.98%	2.99%
Callable step-rate notes rate	2.75%
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Fifty Percent [Member]
Debt Instrument [Line Items]
Floating Interest rate on junior subordinated debentures	2.73%	2.75%
Callable step-rate notes rate	2.50%

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EARNINGS PER COMMON SHARE - Calculations of Earnings Per Common Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net Income (Loss):
Net income (loss)	$ 21,225	$ (122,583)	$ 38,308	$ (195,216)
Excess of carrying amount of preferred stock exchanged over fair value of new common stock	1,280	0	1,659	0
Net income (loss) attributable to common stockholders	22,505	(122,583)	39,967	(195,216)
Weighted-Average Shares:
Basic weighted-average common shares outstanding	208,202	205,490	206,974	205,477
Average potential common shares	1,942	0	1,543	0
Diluted weighted-average number of common shares outstanding	210,144	205,490	208,517	205,477
Income (loss) per common share:
Basic	$ 0.11	$ (0.60)	$ 0.19	$ (0.95)
Diluted	$ 0.11	$ (0.60)	$ 0.19	$ (0.95)
Retained Earnings [Member]
Net Income (Loss):
Net income (loss)			38,308	(195,216)
Excess of carrying amount of preferred stock exchanged over fair value of new common stock			$ 1,659	$ 0

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LOAN PORTFOLIO - Activity for Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2013
Impaired Loans:
Balance at beginning of period	$ 879,388	$ 919,112	$ 908,245
Loans determined impaired during the period	98,966	153,243
Charge-offs	(32,646)	(64,685)
Loans sold, net charge-offs	0	0
Increases to impaired loans (disbursements)	294	919
Loans transferred to held for sale	0	0
Foreclosures	(4,134)	(8,140)
Loans no longer considered impaired	(14,003)	(17,731)
Paid in full or partial payments	(19,007)	(73,860)
Balance at end of period	$ 908,858	$ 908,858	$ 908,245

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Additional Information (Detail) (USD $)	0 Months Ended	3 Months Ended	12 Months Ended	1 Months Ended		0 Months Ended	3 Months Ended	0 Months Ended
	Feb. 16, 2011	Jun. 30, 2014	Dec. 31, 2013	Apr. 30, 2004 Fbp Statutory Trust One [Member]	Sep. 30, 2004 Fbp Statutory Trust Two [Member]	Feb. 16, 2011 Cpg Gs [Member]	Jun. 30, 2014 Cpg Gs [Member]	Feb. 16, 2011 Prlp [Member]	Feb. 16, 2011 FirstBank [Member]
Servicing Liabilities At Fair Value [Line Items]
Principal amount of corporation serviced loans securitized through GNMA		$ 1,100,000,000
Variable rate trust preferred securities				100,000,000	125,000,000
Proceeds of the issuance, together with proceeds of the purchase				3,100,000	3,900,000
Principal amount of corporation's junior subordinated deferrable debentures				103,100,000	128,900,000
Balance of amortization with third party		51,200,000
Carrying value with third party		38,100,000
Percentage of weighted average yield with third party		2.21%
Loans Sold to CPG						269,300,000
Cash realized on sale of loan						88,500,000
Acquired Equity interest on disposal of loans held for sale									35.00%
Loans acquired on exchange of loan held for sale						136,100,000
Description of loan						30-day LIBOR plus 300 basis points
Percentage of ownership investment in unconsolidated entity								65.00%
Carrying amount of loan provided							39,200,000
Equity in losses of unconsolidated entities related to the amortization							1,800,000
Line of credit facility provided to fund unfunded commitments						80,000,000
Working capital line of credit to fund certain expenses	20,000,000		7,000,000
Revolver agreement of credit facility provided amount outstanding							34,100,000
Working capital line of credit facility provided amount outstanding							$ 0
Percentage of priority interest to be received on invested capital								12.00%	12.00%
Payment to be made on pro rata basis								35.00%
Percentage of variation in assumptions		10.00%

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) (Tables)

3 Months Ended

Jun. 30, 2014

Summary of Advances from FHLB

The following is a summary of the advances from the FHLB:
		June 30,		December 31,
		2014		2013
		(Dollars in thousands)
	Fixed-rate advances from FHLB, with a weighted-
	average interest rate of 1.07%	$	320,000	$	300,000

Advances from FHLB Mature

Advances from FHLB mature as follows:
		June 30,
		2014
		(In thousands)
	One to thirty days	$	20,000
	Over one year to three years		100,000
	Over three years		200,000
	Total	$	320,000

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Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Allowance For Loan Losses [PolicyTextBlock]

Utilization of longer historical loss periods to better reflect the level of incurred losses in portfolio.Historical charge-off rates are calculated by the Corporation on a quarterly basis by tracking cumulative charge-offs experienced over a two year loss period on loans according to their internal risk rating (referred to as “base rate” for the quarter). Prior to the second quarter enhancements, the Corporation would use the base rate of the current quarter or the average of the last 4 quarters, if greater. During the second quarter of 2014, the Corporation eliminated the use of the “greater of” approach and adopted the utilization of the base rate average of the last 8 quarters. This change captures a longer historical period that would help mitigate period to period volatility in the loss rates.

Enhancements of the environmental factors adjustment. Prior to the second quarter enhancements, these adjustments were applied in the form of basis points additions to the loss ratio based on changes in credit and economic indicators observed in the most recent periods. During the second quarter of 2014, the resulting factor derived from a set of risk-based ratings and weights assigned to credit and economic indicators activity over a reasonable period is now applied to a developed expected range of historical losses, in order to adjust the base loss rates. These enhancements result in a framework that can be applied more consistently, by having a more granular analysis that better captures trends in economic conditions and the impact in the Corporation's portfolio.

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LOAN PORTFOLIO - Activity for Specific Reserve (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2013
Specific Reserve:
Balance at beginning of period	$ 85,016	$ 102,601	$ 114,953
Provision for loan losses	15,988	30,442
Charge-offs	(32,646)	(64,685)
Balance at end of period	$ 68,358	$ 68,358	$ 114,953

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Repurchase Agreements Grouped by Counterparty (Detail) (USD $) In Thousands, unless otherwise specified				3 Months Ended
	Jun. 30, 2014		Dec. 31, 2013	Jun. 30, 2014 Citigroup Global Markets [Member]	Jun. 30, 2014 Jp Morgan Chase [Member]	Jun. 30, 2014 Dean Witter Morgan Stanley [Member]	Jun. 30, 2014 Credit Suisse First Boston [Member]
Repurchase Agreement Counterparty [Line Items]
Repurchase agreements, interest ranging from 2.45% to 3.39% (December 31, 2011 - 2.50% to 4.40%) (1)	$ 900,000	[1]	$ 900,000	$ 300,000	$ 200,000	$ 100,000	$ 300,000
Weighted-Average Maturity				2 years 3 months 18 days	2 years 8 months 12 days	3 years 3 months 18 days	3 years 6 months 0 days

[1] As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

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INCOME TAXES - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended				6 Months Ended		12 Months Ended
	Jul. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
Income Tax Contingency [Line Items]
Percentage of national gross tax receipt		1.00%
National gross receipt expense		$ 1,400,000			$ 1,600,000	$ 2,800,000	$ 3,200,000
Percentage of gross receipt tax credit		0.50%
Gross income credit amount		700,000	800,000			1,400,000	1,600,000
Amount of additional surtax		25,000							750,000
Statutory rate		39.00%							30.00%
Valuation allowance		510,800,000				510,800,000		522,700,000
Percentage of alternative minimum tax	25.00%	30.00%							20.00%
NOL deduction limit		The NOL deduction is now limited to 90% of taxable income for regular income tax purposes and 80% for AMT purposes.
Percentage of dividend received deduction from controlled subsidiaries		100.00%
Percentage of dividend received from other taxable domestic corporations		85.00%
Income tax expense		(276,000)		(979,000)		611,000	643,000
Deferred Tax Assets Net		8,700,000				8,700,000		7,600,000
Deferred tax asset		520,600,000				520,600,000
Net operating loss and carryforwards associated to the deferred tax asset		373,300,000				373,300,000
New unrecognized Tax Benefits (UTBs)		2,547,000		2,374,000		2,547,000	2,374,000	4,310,000	2,374,000
Accrued interest related to UTB		2,400,000				2,400,000
Carry forward period is, extended for taxable income		12 years 0 months 0 days
Minimum percentage of bank net taxable income for paying Income tax at normal rate		20.00%
Net Operating Loss Carryforward Period		10 years 0 months 0 days
Unrecognized Tax Benefit Remaining Period		1 year 0 months 0 days
Threshold For Long Term Capital Treatment	1 year 0 months 0 days	0 years 6 months 0 days
Long Term Capital Gain Tax Rate	20.00%	15.00%
Unrecognized Tax Benefits Projected Decrease Resulting From Prior Period Tax Positions		2,500,000
Cumulative Loss Position Period		3 years 0 months 0 days
Changes In Statutory Tax Rate Net Benefit				$ 500,000
NOL Carryforward Period Attributable To Capital Losses		7 years 0 months 0 days						5 years 0 months 0 days
Minimum [Member]
Income Tax Contingency [Line Items]
Percentage Of Additional Surtax		5.00%
Maximum [Member]
Income Tax Contingency [Line Items]
Percentage Of Additional Surtax		19.00%
Capital Loss CarryOver Threshold	90.00%
Puerto Rico [Member]
Income Tax Contingency [Line Items]
Statute of limitations under income tax act		4 years 0 months 0 days
United States [Member]
Income Tax Contingency [Line Items]
Statute of limitations under income tax act		3 years 0 months 0 days
Virgin Islands [Member]
Income Tax Contingency [Line Items]
Statute of limitations under income tax act		3 years 0 months 0 days

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FAIR VALUE - Impairment of Valuation Adjustments were Recorded for Assets Recognized at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified							3 Months Ended				6 Months Ended				3 Months Ended				6 Months Ended				3 Months Ended				6 Months Ended				3 Months Ended				6 Months Ended
	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2014 Fair Value Measurements Nonrecurring [Member] Loans Receivable [Member]		Jun. 30, 2013 Fair Value Measurements Nonrecurring [Member] Loans Receivable [Member]		Jun. 30, 2014 Fair Value Measurements Nonrecurring [Member] Loans Receivable [Member]		Jun. 30, 2013 Fair Value Measurements Nonrecurring [Member] Loans Receivable [Member]		Jun. 30, 2014 Fair Value Measurements Nonrecurring [Member] Other Real Estate Owned [Member]		Jun. 30, 2013 Fair Value Measurements Nonrecurring [Member] Other Real Estate Owned [Member]		Jun. 30, 2014 Fair Value Measurements Nonrecurring [Member] Other Real Estate Owned [Member]		Jun. 30, 2013 Fair Value Measurements Nonrecurring [Member] Other Real Estate Owned [Member]		Jun. 30, 2014 Fair Value Measurements Nonrecurring [Member] Mortgage Servicing Rights [Member]		Jun. 30, 2013 Fair Value Measurements Nonrecurring [Member] Mortgage Servicing Rights [Member]		Jun. 30, 2014 Fair Value Measurements Nonrecurring [Member] Mortgage Servicing Rights [Member]		Jun. 30, 2013 Fair Value Measurements Nonrecurring [Member] Mortgage Servicing Rights [Member]		Jun. 30, 2014 Fair Value Measurements Nonrecurring [Member] Loans Held For Sale [Member]		Jun. 30, 2013 Fair Value Measurements Nonrecurring [Member] Loans Held For Sale [Member]		Jun. 30, 2014 Fair Value Measurements Nonrecurring [Member] Loans Held For Sale [Member]		Jun. 30, 2013 Fair Value Measurements Nonrecurring [Member] Loans Held For Sale [Member]		Jun. 30, 2014 Fair Value Inputs Level 1 [Member]		Jun. 30, 2013 Fair Value Inputs Level 1 [Member]		Jun. 30, 2014 Fair Value Inputs Level 2 [Member]		Jun. 30, 2013 Fair Value Inputs Level 2 [Member]		Jun. 30, 2014 Fair Value Inputs Level 3 [Member]		Jun. 30, 2013 Fair Value Inputs Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets Fair Value Adjustment							$ (3,742)	[1]	$ (3,534)	[2]	$ (34,193)	[1]	$ (14,192)	[2]	$ (4,481)	[3]	$ (9,181)	[3]	$ (8,958)	[3]	$ (12,106)	[3]	$ 39	[4]	$ 277	[5]	$ (180)	[4]	$ 557	[5]	$ 0	[6]	$ (6,103)	[7]	$ 0	[6]	$ (11,325)	[7]
Loans receivable																																							0	[1]	0	[2]	0	[1]	0	[2]	484,381	[1]	409,056	[2]
Other Real Estate Owned																																							0	[3]	0	[3]	0	[3]	0	[3]	121,842	[3]	139,257	[3]
Mortgage servicing rights	22,270	22,026	21,987	19,979	18,717	17,524																																	0	[4]	0	[5]	0	[4]	0	[5]	22,270	[4]	19,979	[5]
Loans held for sale																																							$ 0	[6]	$ 0	[7]	$ 0	[6]	$ 142,632	[7]	$ 54,755	[6]	$ 94,951	[7]

[1] Mainly impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.

[2]  Mainly impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.

[3] The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates, net operating income of income producing properties) which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.

[4] Fair value adjustments to mortgage servicing rights were mainly due to assumptions associated with mortgage prepayment rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment rate 9.78%, Discount Rate 10.62%.

[5] Fair value adjustments to the mortgage servicing rights were mainly due to assumptions associated with mortgage prepayments rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment Rate 9.40%, Discount Rate 11.06%.

[6] The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

[7] The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and, for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

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LOAN PORTFOLIO - Corporation's Credit Quality Indicators by Loan (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans	$ 1,813,930		$ 1,823,608
Construction loans	148,266		168,713
Commercial and Industrial loans	2,647,478		3,028,322
Land	63,349		80,373
Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	66,088		71,509
Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	18,829		16,831
Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans	295,588		317,365
Commercial and Industrial loans	252,595		205,807
Land	21,134		31,777
Substandard [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	13,343		27,829
Substandard [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	12,490		16,022
Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans	3,133		9,160
Commercial and Industrial loans	2,768		7,998
Land	936		3,308
Doubtful [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	741		2,209
Doubtful [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	3,149		0
Unlikely To Be Collected Financing Receivable [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans	0		234
Commercial and Industrial loans	475		973
Land	0		52
Unlikely To Be Collected Financing Receivable [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	60		241
Unlikely To Be Collected Financing Receivable [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	0		0
Total Adversely Classified [Member]
Financing Receivable Recorded Investment [Line Items]
Commercial mortgage loans	298,721	[1]	326,759	[1]
Commercial and Industrial loans	255,838	[1]	214,778	[1]
Land	22,070	[1]	35,137	[1]
Total Adversely Classified [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	14,144	[1]	30,279	[1]
Total Adversely Classified [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Construction loans	$ 15,639	[1]	$ 16,022	[1]

[1] Excludes $54.8 million ($7.8 million land, $39.1 million construction-commercial, $0.9 million construction-residential and $ 7.0 million commercial mortgage) as of June 30, 2014 and December 31, 2013, of non-performing loans held for sale.

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LOAN PORTFOLIO - Loan Modifications are Considered TDRs (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014 numberofcontracts	Jun. 30, 2013 numberofcontracts	Jun. 30, 2014 numberofcontracts	Jun. 30, 2013 numberofcontracts
Financing Receivable Modifications [Line Items]
Number of Contracts	516	574	1,127	1,180
Pre-Modification Outstanding Recorded Investment	$ 35,635	$ 9,235	$ 55,899	$ 89,962
Post-Modification Outstanding Recorded Investment	34,810	9,235	54,745	64,598
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	91	40	138	113
Pre-Modification Outstanding Recorded Investment	11,017	3,335	18,726	13,098
Post-Modification Outstanding Recorded Investment	10,264	3,335	17,975	13,122
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	1	1	4	1
Pre-Modification Outstanding Recorded Investment	410	491	1,244	491
Post-Modification Outstanding Recorded Investment	410	491	1,247	491
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	7	1	12	8
Pre-Modification Outstanding Recorded Investment	21,114	1,165	29,078	68,051
Post-Modification Outstanding Recorded Investment	21,114	1,165	28,744	42,663
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	92	142	209	285
Pre-Modification Outstanding Recorded Investment	1,408	1,945	3,013	3,868
Post-Modification Outstanding Recorded Investment	1,393	1,945	2,998	3,868
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	10	19	20	38
Pre-Modification Outstanding Recorded Investment	174	416	367	729
Post-Modification Outstanding Recorded Investment	142	416	335	729
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	313	367	742	730
Pre-Modification Outstanding Recorded Investment	1,457	1,675	3,416	3,322
Post-Modification Outstanding Recorded Investment	1,430	1,675	3,389	3,322
Commercial Construction [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	0	0	0	0
Pre-Modification Outstanding Recorded Investment	0	0	0	0
Post-Modification Outstanding Recorded Investment	0	0	0	0
Residential Construction [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	0	0	0	1
Pre-Modification Outstanding Recorded Investment	0	0	0	195
Post-Modification Outstanding Recorded Investment	0	0	0	195
Land Construction [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	2	4	2	4
Pre-Modification Outstanding Recorded Investment	55	208	55	208
Post-Modification Outstanding Recorded Investment	$ 57	$ 208	$ 57	$ 208

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STOCK-BASED COMPENSATION - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended	121 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended				6 Months Ended			3 Months Ended		6 Months Ended	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jan. 21, 2007	Jun. 30, 2014 Reversal [Member]	Mar. 31, 2014 Chief Executive Officer [Member]	Jun. 30, 2014 Senior Executives	Jun. 30, 2014 Omnibus Plan [Member]	Jun. 30, 2014 Omnibus Plan [Member] Board Of Directors [Member]	Jun. 30, 2014 Omnibus Plan [Member] Senior Executives	Jun. 30, 2014 Troubled Asset Relief Program [Member]	Mar. 31, 2014 Troubled Asset Relief Program [Member]	Jun. 30, 2014 Restricted Stock [Member]	Jun. 30, 2013 Restricted Stock [Member]	Jun. 30, 2014 Restricted Stock [Member]	Jun. 30, 2013 Restricted Stock [Member]	Jun. 30, 2014 Restricted Stock [Member] Senior Executives	Jun. 30, 2013 Restricted Stock [Member] Omnibus Plan [Member] Chief Executive Officer [Member]	Jun. 30, 2014 Restricted Stock [Member] Troubled Asset Relief Program [Member]	Jun. 30, 2014 Restricted Stock [Member] Troubled Asset Relief Program [Member]	Jun. 30, 2013 Restricted Stock [Member] Troubled Asset Relief Program [Member] Chief Executive Officer [Member]	Jun. 30, 2014 First Fifty Percentage Restricted Stock Nonvest Awards [Member]	Jun. 30, 2013 First Fifty Percentage Restricted Stock Nonvest Awards [Member]	Jun. 30, 2014 First Fifty Percentage Restricted Stock Nonvest Awards [Member] Omnibus Plan [Member]	Jun. 30, 2014 Other Fifty Percentage Restricted Stock Nonvest Awards [Member]	Jun. 30, 2013 Other Fifty Percentage Restricted Stock Nonvest Awards [Member]	Jun. 30, 2014 Other Fifty Percentage Restricted Stock Nonvest Awards [Member] Omnibus Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Authorized granting up shares				579,740				8,169,807
Percentage of common shares outstanding above which option granted cannot exceed				20.00%
Maximum term to exercise options	10 years 0 months 0 days
Granted shares										147,781
Percentage of Share vest during period																							50.00%	50.00%		50.00%	50.00%
Percentage increments repayment under TARP											25.00%
Share based compensation cost					$ 5,000		$ 800,000						$ 800,000	$ 400,000	$ 1,200,000	$ 600,000
Granted shares of restricted stock			1,020,978			810,138			210,840			653,138						701,405			582,905
Restricted stock vesting period																						2 years 0 months 0 days	2 years 0 months 0 days		3 years 0 months 0 days	3 years 0 months 0 days
Restricted stock granted to Board of Directors			(101,323)
Stock based compensation expense unrecognized related to nonvested shares of restricted stock	$ 4,400,000		$ 4,400,000
Period for cost recognition not yet recognized	1 year 8 months 12 days
Fair Value Of Restricted Stock Granted														$ 6.03						$ 2.63	$ 3.02
Weighted-Average Grant Date Fair Value of Stocks			$ 3.52							$ 5.24
Holding Period By The Us Treasury Of Outstanding Common Stock	2 years 0 months 0 days	2 years 0 months 0 days
Percentage of appreciation																			16.00%		13.00%
Repurchased of common stock										49,145					23,555		72,700

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Key Economic Assumptions Used in Determining Fair Value at Time of Sale of Loans (Detail)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Government Guaranteed Mortgage Loans [Member] | Maximum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	9.60%	10.50%
Discount rate	11.50%	12.00%
Government Guaranteed Mortgage Loans [Member] | Minimum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	9.10%	9.10%
Discount rate	11.50%	12.00%
Conventional Loan [Member] | Maximum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	9.40%	10.90%
Discount rate	9.50%	10.00%
Conventional Loan [Member] | Minimum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	8.90%	9.40%
Discount rate	9.50%	10.00%
Conventional Non Conforming Mortgage Loans [Member] | Maximum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	13.40%	14.30%
Discount rate	13.90%	14.30%
Conventional Non Conforming Mortgage Loans [Member] | Minimum [Member]
Assumption For Fair Value On Securitization Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items]
Constant prepayment rate	12.70%	13.50%
Discount rate	13.80%	14.30%

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FAIR VALUE - Impairment of Valuation Adjustments were Recorded for Assets Recognized at Fair Value (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended	3 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Mortgage Servicing Rights [Member]	Jun. 30, 2013 Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Repayment rate used for the calculation of mortgage servicing rights value	32.00%	29.00%	9.78%	9.40%
Discount rate used for calculation of mortgage servicing rights value	14.50%	14.50%	10.62%	11.06%
Loans held for sale	$ 72,105	$ 75,969

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LOAN PORTFOLIO - Impaired loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Mar. 31, 2014
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	$ 398,991		$ 398,991		$ 341,485
Unpaid Principal Balance with no Related Allowance	446,218		446,218		392,392
Average Recorded Investment No Related Allowance	402,677				352,949
Interest Income with no Related Allowance Accrual Basis	3,340		6,504
Interest Income with No Related Allowance Cash Basis	1,126		1,692
Recorded Investment with Related Allowance	509,867		509,867		577,627
Unpaid Principal Balance with Related Allowance	594,081		594,081		641,834
Related Allowance	68,358	114,953	68,358	114,953	102,601	85,016
Average Recorded Investment With Related Allowance	531,496				592,928
Interest Income with Related Allowance Accrual Basis	3,393		6,590
Interest Income with Realted Allowance Cash Basis	1,267		2,328
Recorded Investment	908,858	908,245	908,858	908,245	919,112	879,388
Unpaid Principal Balance	1,040,299		1,040,299		1,034,226
Average Recorded Investments	934,173				945,877
Interest Income on Impaired Loans Accrual Basis	6,733	6,400	13,094	12,000
Interest Income on Impaired Loans Cash Basis	2,393	1,500	4,020	3,300
Fhava Guaranteed Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0		0
Unpaid Principal Balance with no Related Allowance	0		0		0
Average Recorded Investment No Related Allowance	0				0
Interest Income with no Related Allowance Accrual Basis	0		0
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	0		0		0
Unpaid Principal Balance with Related Allowance	0		0		0
Related Allowance	0		0		0
Average Recorded Investment With Related Allowance	0				0
Interest Income with Related Allowance Accrual Basis	0		0
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	0		0		0
Unpaid Principal Balance	0		0		0
Average Recorded Investments	0				0
Interest Income on Impaired Loans Accrual Basis	0		0
Interest Income on Impaired Loans Cash Basis	0		0
Other Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	263,024		263,024		220,428
Unpaid Principal Balance with no Related Allowance	286,904		286,904		237,709
Average Recorded Investment No Related Allowance	265,285				222,617
Interest Income with no Related Allowance Accrual Basis	2,788		5,357
Interest Income with No Related Allowance Cash Basis	355		749
Recorded Investment with Related Allowance	151,424		151,424		190,566
Unpaid Principal Balance with Related Allowance	172,951		172,951		212,028
Related Allowance	16,464		16,464		18,125
Average Recorded Investment With Related Allowance	153,650				193,372
Interest Income with Related Allowance Accrual Basis	1,393		2,728
Interest Income with Realted Allowance Cash Basis	660		1,040
Recorded Investment	414,448		414,448		410,994
Unpaid Principal Balance	459,855		459,855		449,737
Average Recorded Investments	418,935				415,989
Interest Income on Impaired Loans Accrual Basis	4,181		8,085
Interest Income on Impaired Loans Cash Basis	1,015		1,789
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	84,909		84,909		69,484
Unpaid Principal Balance with no Related Allowance	90,834		90,834		73,723
Average Recorded Investment No Related Allowance	85,642				71,367
Interest Income with no Related Allowance Accrual Basis	423		884
Interest Income with No Related Allowance Cash Basis	484		640
Recorded Investment with Related Allowance	154,088		154,088		149,888
Unpaid Principal Balance with Related Allowance	176,208		176,208		163,656
Related Allowance	16,317		16,317		32,189
Average Recorded Investment With Related Allowance	160,076				153,992
Interest Income with Related Allowance Accrual Basis	471		937
Interest Income with Realted Allowance Cash Basis	162		599
Recorded Investment	238,997		238,997		219,372
Unpaid Principal Balance	267,042		267,042		237,379
Average Recorded Investments	245,718				225,359
Interest Income on Impaired Loans Accrual Basis	894		1,821
Interest Income on Impaired Loans Cash Basis	646		1,239
Commercial And Industrial Loan [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	39,507		39,507		32,418
Unpaid Principal Balance with no Related Allowance	55,335		55,335		56,831
Average Recorded Investment No Related Allowance	40,027				37,946
Interest Income with no Related Allowance Accrual Basis	6		14
Interest Income with No Related Allowance Cash Basis	264		264
Recorded Investment with Related Allowance	140,257		140,257		154,686
Unpaid Principal Balance with Related Allowance	171,068		171,068		170,191
Related Allowance	22,745		22,745		26,686
Average Recorded Investment With Related Allowance	150,374				162,786
Interest Income with Related Allowance Accrual Basis	611		1,177
Interest Income with Realted Allowance Cash Basis	333		390
Recorded Investment	179,764		179,764		187,104
Unpaid Principal Balance	226,403		226,403		227,022
Average Recorded Investments	190,401				200,732
Interest Income on Impaired Loans Accrual Basis	617		1,191
Interest Income on Impaired Loans Cash Basis	597		654
Construction Loans [Member]
Financing Receivable Impaired [Line Items]
Related Allowance	8,962	21,884	8,962	21,884
Recorded Investment	46,721	76,483	46,721	76,483
Consumer Auto Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0		0
Unpaid Principal Balance with no Related Allowance	0		0		0
Average Recorded Investment No Related Allowance	0				0
Interest Income with no Related Allowance Accrual Basis	0		0
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	14,110		14,110		14,121
Unpaid Principal Balance with Related Allowance	14,110		14,110		14,122
Related Allowance	1,980		1,980		1,829
Average Recorded Investment With Related Allowance	14,887				12,937
Interest Income with Related Allowance Accrual Basis	258		498
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	14,110		14,110		14,121
Unpaid Principal Balance	14,110		14,110		14,122
Average Recorded Investments	14,887				12,937
Interest Income on Impaired Loans Accrual Basis	258		498
Interest Income on Impaired Loans Cash Basis	0		0
Finance Leases [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0		0
Unpaid Principal Balance with no Related Allowance	0		0		0
Average Recorded Investment No Related Allowance	0				0
Interest Income with no Related Allowance Accrual Basis	0		0
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	2,162		2,162		2,359
Unpaid Principal Balance with Related Allowance	2,162		2,162		2,359
Related Allowance	91		91		73
Average Recorded Investment With Related Allowance	2,348				2,219
Interest Income with Related Allowance Accrual Basis	58		110
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	2,162		2,162		2,359
Unpaid Principal Balance	2,162		2,162		2,359
Average Recorded Investments	2,348				2,219
Interest Income on Impaired Loans Accrual Basis	58		110
Interest Income on Impaired Loans Cash Basis	0		0
Other Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	4,882		4,882		4,035
Unpaid Principal Balance with no Related Allowance	5,699		5,699		4,450
Average Recorded Investment No Related Allowance	4,962				3,325
Interest Income with no Related Allowance Accrual Basis	75		154
Interest Income with No Related Allowance Cash Basis	18		32
Recorded Investment with Related Allowance	7,774		7,774		8,410
Unpaid Principal Balance with Related Allowance	8,616		8,616		8,919
Related Allowance	1,799		1,799		1,555
Average Recorded Investment With Related Allowance	8,042				8,919
Interest Income with Related Allowance Accrual Basis	589		1,113
Interest Income with Realted Allowance Cash Basis	15		26
Recorded Investment	12,656		12,656		12,445
Unpaid Principal Balance	14,315		14,315		13,369
Average Recorded Investments	13,004				12,244
Interest Income on Impaired Loans Accrual Basis	664		1,267
Interest Income on Impaired Loans Cash Basis	33		58
Commercial Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	0		0		0
Unpaid Principal Balance with no Related Allowance	0		0		0
Average Recorded Investment No Related Allowance	0				0
Interest Income with no Related Allowance Accrual Basis	0		0
Interest Income with No Related Allowance Cash Basis	0		0
Recorded Investment with Related Allowance	15,639		15,639		16,022
Unpaid Principal Balance with Related Allowance	15,639		15,639		16,238
Related Allowance	3,950		3,950		8,873
Average Recorded Investment With Related Allowance	15,881				16,157
Interest Income with Related Allowance Accrual Basis	0		0
Interest Income with Realted Allowance Cash Basis	87		259
Recorded Investment	15,639		15,639		16,022
Unpaid Principal Balance	15,639		15,639		16,238
Average Recorded Investments	15,881				16,157
Interest Income on Impaired Loans Accrual Basis	0		0
Interest Income on Impaired Loans Cash Basis	87		259
Residential Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	4,848		4,848		14,761
Unpaid Principal Balance with no Related Allowance	4,946		4,946		19,313
Average Recorded Investment No Related Allowance	4,917				17,334
Interest Income with no Related Allowance Accrual Basis	42		83
Interest Income with No Related Allowance Cash Basis	2		4
Recorded Investment with Related Allowance	10,865		10,865		13,864
Unpaid Principal Balance with Related Allowance	11,062		11,062		13,973
Related Allowance	1,157		1,157		2,816
Average Recorded Investment With Related Allowance	12,548				13,640
Interest Income with Related Allowance Accrual Basis	0		0
Interest Income with Realted Allowance Cash Basis	0		0
Recorded Investment	15,713		15,713		28,625
Unpaid Principal Balance	16,008		16,008		33,286
Average Recorded Investments	17,465				30,974
Interest Income on Impaired Loans Accrual Basis	42		83
Interest Income on Impaired Loans Cash Basis	2		4
Land Construction [Member]
Financing Receivable Impaired [Line Items]
Recorded Investment with no Related Allowance	1,821		1,821		359
Unpaid Principal Balance with no Related Allowance	2,500		2,500		366
Average Recorded Investment No Related Allowance	1,844				360
Interest Income with no Related Allowance Accrual Basis	6		12
Interest Income with No Related Allowance Cash Basis	3		3
Recorded Investment with Related Allowance	13,548		13,548		27,711
Unpaid Principal Balance with Related Allowance	22,265		22,265		40,348
Related Allowance	3,855		3,855		10,455
Average Recorded Investment With Related Allowance	13,690				28,906
Interest Income with Related Allowance Accrual Basis	13		27
Interest Income with Realted Allowance Cash Basis	10		14
Recorded Investment	15,369		15,369		28,070
Unpaid Principal Balance	24,765		24,765		40,714
Average Recorded Investments	15,534				29,266
Interest Income on Impaired Loans Accrual Basis	19		39
Interest Income on Impaired Loans Cash Basis	$ 13		$ 17

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LOAN PORTFOLIO - Corporation's TDR Activity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014		Jun. 30, 2014
Schedule Of Financing Receivables [Line Items]
Beginning Balance of TDRs	$ 622,320		$ 630,258	[1]
New TDRs	34,810		54,745
Increases to existing TDRs (disbursements)	107		134
Charge-offs post modification	(18,666)		(26,648)
Sales	0		0
Foreclosures	(1,527)		(2,601)
Removed from TDR classification	0		0
TDRs transferred to loans held for sale	0		0
Paid-off and partial payments	(8,811)		(27,655)
Ending balance of TDRs	$ 628,233	[2]	$ 628,233	[2]

[1]  Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

[2]  Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

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LOAN PORTFOLIO- Carrying Value of Purchased Credit Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	$ 105,620	$ 4,791
Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	99,997	0
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	3,447	0
Consumer Credit Card Financing Receivable [Member]
Financing Receivable Impaired [Line Items]
Purchased Credit Impaired Loans	$ 2,176	$ 4,791

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LOAN PORTFOLIO - Breakdown Between Accrual and Nonaccrual Status of TDRs (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Mar. 31, 2014	Dec. 31, 2013
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 628,233	[1]	$ 622,320	$ 630,258	[2]
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	342,912			337,243
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	137,619			153,575
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	103,538			91,950
Construction Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	17,000
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	14,110			14,122
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,162			2,360
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	10,919			10,865
Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	216,363	[3],[4]		204,875	[5],[6]
Non Accrual [Member] | Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	85,964	[3],[4]		73,324	[5],[6]
Non Accrual [Member] | Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	59,824	[3],[4]		69,156	[5],[6]
Non Accrual [Member] | Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	50,289	[3],[4]		38,441	[5],[6]
Non Accrual [Member] | Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	5,263	[3],[4]		5,610	[5],[6]
Non Accrual [Member] | Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	102	[3],[4]		85	[5],[6]
Non Accrual [Member] | Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,060	[3],[4]		2,448	[5],[6]
Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	411,870			425,383
Accrual [Member] | Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	256,948			263,919
Accrual [Member] | Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	77,795			84,419
Accrual [Member] | Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	53,249			53,509
Accrual [Member] | Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	8,847			8,512
Accrual [Member] | Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,060			2,275
Accrual [Member] | Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	8,859			8,417
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	342,912			337,244
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	137,619			153,576
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	103,538			91,951
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	14,110			14,122
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,162			2,358
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	10,919			10,864
Commercial Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,848			3,924
Commercial Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,848	[3],[4]		3,924	[5],[6]
Commercial Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Residential Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	9,889			10,894
Residential Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,588	[3],[4]		7,562	[5],[6]
Residential Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,301			3,332
Land Construction [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,236			5,325
Land Construction [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,425	[3],[4]		4,325	[5],[6]
Land Construction [Member] | Accrual [Member]
Financing Receivable Modifications [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 811			$ 1,000

[1]  Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

[2]  Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

[3] Included in non-accrual loans are $85.5 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

[4] Excludes non-accrual TDRs held for sale with a carrying value of $45.8 million as of June 30, 2014.

[5] Included in non-accrual loans are $95.7 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

[6] Excludes non-accrual TDRs held for sale with a carrying value of $45.9 million as of December 31, 2013.

XML

LOAN PORTFOLIO - Additional Information (Detail) (USD $)	0 Months Ended	1 Months Ended	3 Months Ended					6 Months Ended						3 Months Ended					6 Months Ended		3 Months Ended	6 Months Ended		3 Months Ended					3 Months Ended																																3 Months Ended	6 Months Ended						3 Months Ended		6 Months Ended						3 Months Ended			6 Months Ended						3 Months Ended					3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended	3 Months Ended		3 Months Ended		3 Months Ended
	May 30, 2012	May 30, 2014	Jun. 30, 2014		Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2014		Jun. 30, 2013	Mar. 31, 2014	Dec. 31, 2013		Jun. 30, 2014 Puerto Rico Government and Political Subdivisions [Member]	Jun. 30, 2014 Public Corporations [Member]	Jun. 30, 2014 Government [Member]	Jun. 30, 2014 Puerto Rico Tourism Development Fund [Member]	Jun. 30, 2014 Puerto Rico Electric PowerAuthority [Member]	Jun. 30, 2014 GNMA	Jun. 30, 2014 FNMA and FHLMC	Jun. 30, 2013 Residential Mortgage [Member]	Jun. 30, 2014 Government Guaranteed Loans [Member]	Jun. 30, 2014 Loans in trial [Member]	Mar. 31, 2013 Non Accrual [Member]	Jun. 30, 2014 Non Accrual [Member]		Dec. 31, 2013 Non Accrual [Member]		Jun. 30, 2014 Loans Split [Member]	Jun. 30, 2013 Loans Split [Member]	Jun. 30, 2014 Non Fha Va Residential Mortgage Loans [Member]	Dec. 31, 2013 Non Fha Va Residential Mortgage Loans [Member]	Jun. 30, 2014 Commercial And Industrial Loan [Member]	Dec. 31, 2013 Commercial And Industrial Loan [Member]	Jun. 30, 2014 Commercial Mortgage Loans [Member]	Dec. 31, 2013 Commercial Mortgage Loans [Member]	Jun. 30, 2014 Commercial Construction [Member]	Dec. 31, 2013 Commercial Construction [Member]	Jun. 30, 2014 Residential Construction [Member]	Dec. 31, 2013 Residential Construction [Member]	Jun. 30, 2014 Land Construction [Member]	Dec. 31, 2013 Land Construction [Member]	Jun. 30, 2014 Residential Mortgage [Member]	Jun. 30, 2013 Residential Mortgage [Member]	Jun. 30, 2014 Non Accrual [Member] Troubled Debt Restructurings [Member]	Jun. 30, 2014 Non Accrual [Member] Commercial Construction [Member]		Dec. 31, 2013 Non Accrual [Member] Commercial Construction [Member]		Jun. 30, 2014 Non Accrual [Member] Residential Construction [Member]		Dec. 31, 2013 Non Accrual [Member] Residential Construction [Member]		Jun. 30, 2014 Non Accrual [Member] Land Construction [Member]		Dec. 31, 2013 Non Accrual [Member] Land Construction [Member]		Jun. 30, 2014 Troubled Debt Restructurings [Member]	Dec. 31, 2013 Troubled Debt Restructurings [Member]	Dec. 31, 2013 Troubled Debt Restructurings [Member] Non Accrual [Member]	Mar. 31, 2013 Non Fha Va Residential Mortgage Loans [Member]	Jun. 30, 2014 Non Fha Va Residential Mortgage Loans [Member]	Dec. 31, 2013 Non Fha Va Residential Mortgage Loans [Member]	Jun. 30, 2014 Non Fha Va Residential Mortgage Loans [Member] Non Accrual [Member]		Dec. 31, 2013 Non Fha Va Residential Mortgage Loans [Member] Non Accrual [Member]		Jun. 30, 2014 Commercial And Industrial Loan [Member]	Mar. 31, 2013 Commercial And Industrial Loan [Member]	Jun. 30, 2014 Commercial And Industrial Loan [Member]	Dec. 31, 2013 Commercial And Industrial Loan [Member]	Jun. 30, 2014 Commercial And Industrial Loan [Member] Non Accrual [Member]		Dec. 31, 2013 Commercial And Industrial Loan [Member] Non Accrual [Member]		Jun. 30, 2014 Commercial Mortgage Loans [Member]	Jun. 30, 2013 Commercial Mortgage Loans [Member]	Mar. 31, 2013 Commercial Mortgage Loans [Member]	Jun. 30, 2014 Commercial Mortgage Loans [Member]	Dec. 31, 2013 Commercial Mortgage Loans [Member]	Jun. 30, 2014 Commercial Mortgage Loans [Member] Non Accrual [Member]		Dec. 31, 2013 Commercial Mortgage Loans [Member] Non Accrual [Member]		Mar. 31, 2013 Construction Loans [Member]	Jun. 30, 2014 Construction Loans [Member]	Jun. 30, 2013 Construction Loans [Member]	Jun. 30, 2014 Consumer Loan [Member]	Jun. 30, 2013 Consumer Loan [Member]	Jun. 30, 2014 Commercial Construction [Member]	Jun. 30, 2014 Commercial Construction [Member]	Jun. 30, 2014 Residential Construction [Member]	Jun. 30, 2014 Residential Construction [Member]	Jun. 30, 2014 Land Construction [Member]	Jun. 30, 2014 Land Construction [Member]	Dec. 31, 2013 Other Real Estate Owned [Member]	Jun. 30, 2014 P R	Dec. 31, 2013 P R	Jun. 30, 2014 V I	Dec. 31, 2013 V I	Jun. 30, 2014 U S	Jun. 30, 2014 Credit Impaired Loans [Member]	Dec. 31, 2013 Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Interest Income Impaired Loans						$ 7,900,000				$ 15,300,000
Interest Income on Impaired Loans Accrual Basis			6,733,000			6,400,000		13,094,000		12,000,000																																																										617,000		1,191,000						894,000			1,821,000											0	0	42,000	83,000	19,000	39,000
Purchased credit impaired loans, fair value	15,700,000																																																																																																					105,600,000	4,800,000
Contractually outstanding principal and interest at acquisition	34,600,000		139,300,000					139,300,000				22,700,000
Financing Receivable Significant Purchases																																																														80,500,000
Financing Receivable Significant Sales																						65,100,000
Securitization of mortgage loans into mortgage backed securities								104,200,000
Total gross loans held for investment portfolio			9,467,101,000			9,445,786,000		9,467,101,000		9,445,786,000		9,636,170,000					200,200,000																										2,795,159,000	2,511,206,000																																										148,266,000	194,912,000	2,062,268,000	2,047,368,000
Credit risk concentration																																																																																																	83.00%		7.00%		10.00%
Outstanding of credit facilities granted														205,700,000	88,600,000	46,400,000		75,000,000																																																																															340,700,000	397,800,000	80,200,000	60,600,000
Loans to local financial institutions collateralized by real estate mortgages			0	[1]				0	[1]			240,072,000	[1]
Total TDR loans			628,233,000	[2]				628,233,000	[2]		622,320,000	630,258,000	[3]									76,900,000	8,200,000		216,363,000	[4],[5]	204,875,000	[6],[7]	62,159,000	93,451,000	342,912,000	337,244,000	103,538,000	91,951,000	137,619,000	153,576,000	3,848,000	3,924,000	9,889,000	10,894,000	3,236,000	5,325,000				3,848,000	[4],[5]	3,924,000	[6],[7]	6,588,000	[4],[5]	7,562,000	[6],[7]	2,425,000	[4],[5]	4,325,000	[6],[7]					342,912,000	337,243,000	85,964,000	[4],[5]	73,324,000	[6],[7]	103,538,000		103,538,000	91,950,000	50,289,000	[4],[5]	38,441,000	[6],[7]	137,619,000			137,619,000	153,575,000	59,824,000	[4],[5]	69,156,000	[6],[7]		17,000,000		27,200,000
Outstanding unfunded commitments on TDR loans			400,000					400,000
Financing receivable loans restructured recorded investment accruals																													60,500,000
Loans repurchased																			2,700,000	1,300,000
Classified and non-performing loans sold							211,400,000																	185,000,000																																					1,200,000								100,100,000								40,800,000	68,800,000							41,300,000
Loans transferred to held for sale																																																																																																39,200,000
Other real estate owned sold							6,300,000														19,200,000
Sale price of bulk sale							120,200,000														128,300,000
Reserves allocated to bulk sale							39,900,000														30,100,000
Total charge-offs bulk sale							98,500,000														98,000,000
Incremental losses							58,900,000														69,800,000
Porfessional fees							3,900,000														3,100,000
Charge-offs of loans transferred to loans held for sale							36,000,000
Additional losses loans transferred to loans held for sale							5,200,000
Subsequent Losses Repurchase Of Loans								700,000
Book value of loans transferred to held for sale							181,600,000																																						45,800,000															45,900,000
Residential mortgage loans sold																					203,800,000
Pre-tax loss							62,800,000														72,900,000
Repayment of construction loans held for sale					6,400,000
Line of credit facility provided to fund unfunded commitments														385,300,000
Loans held for sale			72,105,000					72,105,000				75,969,000																																														45,800,000	45,900,000
Servicing Assets Compesatory Fees			300,000
Doral Purchase Unpaid Principal Balance		241,700,000
Doral Purchase Price		232,900,000
Doral Purchase Fair Value		226,000,000
Loss On Acquired Portfolio			6,900,000
Doral Purchase Loss On Allowance			5,500,000
Provision Charge On Doral Purchase			1,400,000
Professional Service Fee On Doral Purchase			600,000
Sop Unpaid Principal Balance		119,200,000
Non Sop Unpaid Principal Balance		122,500,000
Non Sop Fair Value		123,200,000
Payment To Acquire Credit Card Portfolio	406,000,000
Fair Value Of Credit Card Portfolio Acquired	$ 368,900,000

[1] On May 30, 2014, FirstBank acquired from Doral Financial Corporation ("Doral") mortgage loans, mainly residential mortgage loans, having an unpaid principal balance of $241.7 million (estimated fair value at acquisition of $226.0 million) in full satisfaction of secured borrowings with a book value of $232.9 million owed by Doral to FirstBank. Refer to Acquired Loans, including Purchased Credit-Impaired ("PCI") loans discussion below for additional information.

[2]  Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

[3]  Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

[4] Included in non-accrual loans are $85.5 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

[5] Excludes non-accrual TDRs held for sale with a carrying value of $45.8 million as of June 30, 2014.

[6] Included in non-accrual loans are $95.7 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.

[7] Excludes non-accrual TDRs held for sale with a carrying value of $45.9 million as of December 31, 2013.

XML

LOAN PORTFOLIO - Corporation's Aging of Loans Held for Investment Portfolio (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	$ 111,061		$ 122,293
60-89 Days, Past Due	146,558		142,489
90 days or more, Past Due	696,588	[1]	615,631	[2]
Total Past Due	954,207		880,413
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount Net	105,620		4,791
Financing Receivable, Current	8,407,274		8,750,966
Loans held for investment	9,467,101		9,636,170		9,445,786
90 days past due and still accruing	131,957	[3]	120,082	[4]
Fha Va And Other Government Guaranteed Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	0	[3],[5],[6]	0	[4],[7],[8]
60-89 Days, Past Due	10,357	[3],[5],[6]	12,180	[4],[7],[8]
90 days or more, Past Due	79,082	[1],[3],[5],[6]	78,645	[2],[4],[7],[8]
Total Past Due	89,439	[3],[5],[6]	90,825	[4],[7],[8]
Financing Receivable, Current	72,554	[3],[5],[6]	104,401	[4],[7],[8]
Loans held for investment	161,993	[3],[5],[6]	195,226	[4],[7],[8]
90 days past due and still accruing	79,082	[3],[5],[6]	78,645	[4],[7],[8]
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	0	[5]	0	[7]
60-89 Days, Past Due	95,029	[5]	88,898	[7]
90 days or more, Past Due	189,752	[1],[5]	172,286	[2],[7]
Total Past Due	284,781	[5]	261,184	[7]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount Net	99,997		0
Financing Receivable, Current	2,248,388	[5]	2,092,598	[7]
Loans held for investment	2,633,166	[5]	2,353,782	[7]
90 days past due and still accruing	14,348	[3],[5]	10,845	[4],[7]
Commercial And Industrial [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	12,240		21,029
60-89 Days, Past Due	3,015		5,454
90 days or more, Past Due	162,557	[1]	134,233	[2]
Total Past Due	177,812		160,716
Financing Receivable, Current	2,469,666		2,867,606
Loans held for investment	2,647,478		3,028,322
90 days past due and still accruing	18,888	[3]	19,400	[4]
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	0	[5]	0	[7]
60-89 Days, Past Due	5,362	[5]	5,428	[7]
90 days or more, Past Due	179,861	[1],[5]	126,674	[2],[7]
Total Past Due	185,223	[5]	132,102	[7]
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount Net	3,447		0
Financing Receivable, Current	1,625,260	[5]	1,691,506	[7]
Loans held for investment	1,813,930	[5]	1,823,608	[7]
90 days past due and still accruing	13,643	[3],[5]	6,567	[4],[7]
Auto loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	82,018		79,279
60-89 Days, Past Due	20,391		17,944
90 days or more, Past Due	22,005	[1]	21,316	[2]
Total Past Due	124,414		118,539
Financing Receivable, Current	997,700		993,781
Loans held for investment	1,122,114		1,112,320
90 days past due and still accruing	0	[3]	0	[4]
Finance Leases [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	9,664		10,275
60-89 Days, Past Due	3,376		3,536
90 days or more, Past Due	3,414	[1]	3,082	[2]
Total Past Due	16,454		16,893
Financing Receivable, Current	224,139		228,430
Loans held for investment	240,593		245,323
90 days past due and still accruing	0	[3]	0	[4]
Consumer Loan [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	7,139		11,710
60-89 Days, Past Due	8,770		8,691
90 days or more, Past Due	18,713	[1]	20,492	[2]
Total Past Due	34,622		40,893
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Carrying Amount Net	2,176		4,791
Financing Receivable, Current	662,763		663,192
Loans held for investment	699,561		708,876
90 days past due and still accruing	3,622	[3]	4,588	[4]
Commercial Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	0		0
60-89 Days, Past Due	0		0
90 days or more, Past Due	3,849	[1]	3,924	[2]
Total Past Due	3,849		3,924
Financing Receivable, Current	14,980		12,907
Loans held for investment	18,829		16,831
90 days past due and still accruing	0	[3]	0	[4]
Residential Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	0	[5]	0	[7]
60-89 Days, Past Due	0	[5]	0	[7]
90 days or more, Past Due	14,143	[1],[5]	27,108	[2],[7]
Total Past Due	14,143	[5]	27,108	[7]
Financing Receivable, Current	51,945	[5]	44,400	[7]
Loans held for investment	66,088	[5]	71,508	[7]
90 days past due and still accruing	0	[3],[5]	0	[4],[7]
Land Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	0	[5]	0	[7]
60-89 Days, Past Due	258	[5]	358	[7]
90 days or more, Past Due	23,212	[1],[5]	27,871	[2],[7]
Total Past Due	23,470	[5]	28,229	[7]
Financing Receivable, Current	39,879	[5]	52,145	[7]
Loans held for investment	63,349	[5]	80,374	[7]
90 days past due and still accruing	$ 2,374	[3],[5]	$ 37	[4],[7]

[1] Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges fees until charged-off at 180 days.

[2] Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.

[3] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.

[4] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.

[5] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $16.5 million, $160.1 million, $72.1 million, $0.8 million, and $2.5 million, respectively.

[6] As of June 30, 2014, includes $19.8 million of defaulted loans collateralizing Government National Mortgage Association ("GNMA") securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.

[7] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $23.9 million, $166.7 million, $18.4 million, $0.9 million and $2.5 million, respectively.

[8] As of December 31, 2013, includes $11.5 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.

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STOCKHOLDERS' EQUITY

3 Months Ended

Jun. 30, 2014

STOCKHOLDERS' EQUITY

NOTE 17 – STOCKHOLDERS' EQUITY

Common Stock

As of June 30, 2014 and December 31, 2013, the Corporation had 2,000,000,000 authorized shares of common stock with a par value of $0.10 per share. As of June 30, 2014 and December 31, 2013, there were 213,399,037 and 207,635,157 shares issued, respectively, and 212,760,158 and 207,068,978 shares outstanding, respectively. On July 30, 2009, the Corporation announced the suspension of common and preferred stock dividends effective with the preferred dividend for the month of August 2009.

In April 2014 the Corporation awarded 210,840 shares of restricted stock under the Omnibus Plan to the independent directors, subject to a one-year vesting period. Also in the first half of 2014, the Corporation granted 810,138 shares of restricted stock to certain senior officers and certain other employees. The restrictions on such restricted stock will lapse with respect to 50% over a two-year period and 50% over a three-year period. Included in the 810,138 shares of restricted stock are 653,138 shares granted to certain senior officers consistent with the requirements of TARP. In addition, in 2014, the Corporation issued 147,781 shares of common stock as increased compensation to certain executive officers. As of June 30, 2014 and December 31, 2013, there were 2,328,840 and 1,411,185 shares of unvested restricted stock outstanding. During the first six months of 2014, 2,000 shares of restricted stock were forfeited and the restrictions on 101,323 shares of restricted stock lapsed. Refer to Note 3 for additional details.

Preferred Stock

The Corporation has 50,000,000 authorized shares of preferred stock with a par value of $1, redeemable at the Corporation's option subject to certain terms. This stock may be issued in series and the shares of each series will have such rights and preferences as are fixed by the Board of Directors when authorizing the issuance of that particular series. As of June 30, 2014, the Corporation has five outstanding series of non-convertible, non-cumulative preferred stock: 7.125% non-cumulative perpetual monthly income preferred stock, Series A; 8.35% non-cumulative perpetual monthly income preferred stock, Series B; 7.40% non-cumulative perpetual monthly income preferred stock, Series C; 7.25% non-cumulative perpetual monthly income preferred stock, Series D; and 7.00% non-cumulative perpetual monthly income preferred stock, Series E. The liquidation value per share is $25.

Effective January 17, 2012, the Corporation delisted all of its outstanding series of non-convertible, non-cumulative preferred stock from the New York Stock Exchange. The Corporation has not arranged for listing and/or registration on another national securities exchange or for quotation of the Series A through E Preferred Stock in a quotation medium.

In the first six months of 2014, the Corporation issued an aggregate of 4,597,121 shares of its common stock in exchange for an aggregate of 1,077,726 shares of the Corporation's Series A through E Preferred Stock, having an aggregate liquidation value of $26.9 million. The shares of common stock were issued to holders of the Series A through E Preferred Stock in separate and unrelated transactions in reliance upon the exemption set forth in Section 3(a)(9) of the Securities Act of 1933, as amended, for securities exchanged by an issuer with existing security holders where no commission or other remuneration is paid or given directly or indirectly by the issuer for soliciting such exchange. The carrying (liquidation) value of the Series A through E preferred stock exchanged, or $26.9 million, was reduced, and common stock and additional paid-in capital was increased in the amount of the fair value of the common stock issued. The Corporation recorded the par value of the shares issued as common stock ($0.10 per common share) or $0.5 million. The excess of the common stock fair value over the par value, or $23.9 million, was recorded in additional paid-in capital. The excess of the carrying amount of the shares of preferred stock over the fair value of the shares of common stock, or $1.7 million, was recorded as an increase to retained earnings and an increase in earnings per common share computation.

The results of the exchange with respect to Series A through E preferred stock were as follows:
			Shares of		Shares of	Aggregate
			preferred		preferred	liquidation
			stock	Shares of	stock	preference		Shares of
		Liquidation	outstanding	preferred	outstanding	after		common
		preference	prior to	stock	after	exchange		stock
		per share	exchange	exchanged	exchange	(in thousands)		issued
Title of Securities
7.125% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series A	$	25	450,195	252,809	197,386	$	4,935	1,081,652
8.35% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series B	$	25	475,987	179,841	296,146		7,404	769,379
7.40% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series C	$	25	460,611	210,759	249,852		6,246	890,830
7.25% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series D	$	25	510,592	225,070	285,522		7,138	961,724
7.00% Noncumulative Perpetual
Monthly Income Preferred
Stock, Series E	$	25	624,487	209,247	415,240		10,381	893,536
			2,521,872	1,077,726	1,444,146	$	36,104	4,597,121

Treasury stock

During the first six months of 2014, the Corporation withheld an aggregate of 72,700shares of the common stock paid to certain senior officers as additional compensation and of the restricted stock that vested during 2014 to cover employees' payroll and income tax withholding liabilities; these shares are also held as treasury shares. As of June 30, 2014 and December 31, 2013, the Corporation had 638,879 and 566,179 shares held as treasury stock, respectively.

FirstBank Statutory Reserve (Legal Surplus)

The Banking Law of the Commonwealth of Puerto Rico requires that a minimum of 10% of FirstBank's net income for the year be transferred to legal surplus until such surplus equals the total of paid-in-capital on common and preferred stock. Amounts transferred to the legal surplus account from the retained earnings account are not available for distribution to the stockholders without the prior consent of the Puerto Rico Commissioner of Financial Institutions. The net loss experienced in 2013 exhausted FirstBank's statutory reserve fund. The Puerto Rico Banking Law provides that when the expenditures of a Puerto Rico commercial bank are greater than receipts, the excess of the expenditures over receipts shall be charged against the undistributed profits of the bank, and the balance, if any, shall be charged against the reserve fund, as a reduction thereof. If there is no reserve fund sufficient to cover such balance in whole or in part, the outstanding amount shall be charged against the capital account and the Bank cannot pay dividends until it can replenish the reserve fund to an amount of at least 20% of the original capital contributed.

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REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2014	Jun. 02, 2010
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Leverage ratio	12.04%	8.00%
Tier 1 risk based capital ratio		10.00%
Total Risk Based Capital Ratio	18.06%
Tier 1 Common Equity Ratio	16.80%
Tier 1 risk based capital ratio to be considered well capitalzed under PCA	6.00%
Leverage Ratio	3.00%
Leverage Ratio Composite Rating	1.00%
Four Major Risk Weightings Categories	(0%, 20%, 50% and 100%)
Commitments To Extend Credit [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Commitments	$ 1,100.0
Credit Cards [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Commitments	685.3
Commercial And Financial Standby Letters Of Credit [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Commitments	44.8
Minimum [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Percentage of risk weighted assets	0.00%
Maximum [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Percentage of risk weighted assets	100.00%
Well Capitalized [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Total Risk Based Capital Ratio	10.00%
Basel III [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Common Equity Tier 1 Capital Conservation Buffer	2.50%
Common Equity Tier 1 Capital Conservation Buffer First Year	0.625%
Trust Preferred Securities	$ 225
Percentage Of Trust Preferred Securities That Qualify As Tier 1 Capital	25.00%
Risk Weightings	150.00%
Credit Conversion Factor	20.00%
Basel III [Member] | Minimum [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier 1 risk based capital ratio to be considered well capitalzed under PCA	8.00%
Common Equity Tier1 Capital To Risk Weight Assets Ratio	4.50%
Common Equity Tier 1 Capital To Risk Weight Assets Ratio Plus Common Equity Tier 1 Capital Conservation Buffer	7.00%
Total Tier 1 Capital To Risk Weight Assets Ratio	6.00%
Total Tier 1 Capital To Risk Weight Assets Ratio Plus Common Equity Tier 1 Capital Conservation Buffer	8.50%
Total Tier 1 Capital And Tier 2 Capital To Risk Weight Assets Ratio	8.00%
Total Tier 1 Capital And Tier 2 Capital To Risk Weight Assets Ratio Plus Common Equity Tier 1 Capital Conservation Buffer	10.50%
Leverage Ratio	4.00%
Basel III [Member] | Maximum [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Threshold For Deductions Of Certain Items From Common Equity Tier 1 Capital	10.00%
Threshold For Total Deductions From Common Equity Tier 1 Capital	15.00%
Basel III [Member] | Well Capitalized [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier 1 Common equity ratio to be considered well capitalized	6.50%
Leverage Ratio	5.00%
FirstBank [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Leverage ratio	11.79%
Tier 1 risk based capital ratio	16.43%
Total Risk Based Capital Ratio	17.70%

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FAIR VALUE (Tables)

3 Months Ended

Jun. 30, 2014

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, are summarized below:
	As of June 30, 2014								As of December 31, 2013
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value		Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value
Assets:
Securities available for sale :
Equity securities	$	9	$	-	$	-	$	9	$	33	$	-	$	-	$	33
U.S. Treasury Securities		7,497		-		-		7,497		7,499		-		-		7,499
Noncallable U.S. agency debt		-		207,377		-		207,377		-		200,903		-		200,903
Callable U.S. agency debt and MBS		-		1,699,358		-		1,699,358		-		1,677,651		-		1,677,651
Puerto Rico government obligations		-		42,248		2,734		44,982		-		48,904		2,426		51,330
Private label MBS		-		-		38,184		38,184		-		-		40,866		40,866
Derivatives, included in assets:
Interest rate swap agreements		-		99		-		99		-		162		-		162
Purchased interest rate cap agreements		-		16		-		16		-		58		-		58
Forward contracts		-		-		-		-		-		174		-		174
Liabilities:
Derivatives, included in liabilities:
Interest rate swap agreements		-		3,328		-		3,328		-		3,965		-		3,965
Written interest rate cap agreement		-		16		-		16		-		58		-		58
Forward contracts		-		228		-		228		-		-		-		-

Fair Value of Assets and Liabilities Measured on Recurring Basis

		Total Fair Value Measurements
		Quarter ended June 30,
		2014		2013
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	47,510	$	52,047
Total gains or losses (realized/unrealized):
Included in other comprehensive income			729		29
Sales			(4,855)		0
Principal repayments and amortization			(2,466)		(3,416)
Ending balance		$	40,918	$	48,660
(1)	Amounts mostly related to private label mortgage-backed securities.

		Total Fair Value Measurements
		Six-Month Period Ended June 30,
		2014		2013
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	43,292	$	54,617
Total gains or losses (realized/unrealized):
Included in earnings			-		(117)
Included in other comprehensive income			1,693		860
Purchases			5,123		-
Sales			(4,855)		-
Principal repayments and amortization			(4,335)		(6,700)
Ending balance		$	40,918	$	48,660
(1)	Amounts mostly related to private label mortgage-backed securities.

Impairment or Valuation Adjustments were Recorded for Assets Recognized at Fair Value

The tables below summarize changes in unrealized gains and losses recorded in earnings for the quarters and six-month periods ended June 30, 2014 and 2013 for Level 3 assets and liabilities that are still held at the end of each period:
	Changes in Unrealized Losses		Changes in Unrealized Losses
	Quarter ended June 30, 2014		Quarter ended June 30, 2013
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	-	$	0

		Changes in Unrealized Losses		Changes in Unrealized Losses
		Six-Month Period Ended June 30, 2014		Six-Month Period Ended June 30, 2013
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	0	$	(117)

As of June 30, 2014, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of June 30, 2014						(Losses) Gain recorded for the Quarter Ended June 30, 2014		(Losses) Gain recorded for the Six-Month Period Ended June 30, 2014
		Level 1		Level 2		Level 3
			(In thousands)
Loans receivable (1)		$	-	$	-	$	484,381	$	(3,742)	$	(34,193)
OREO (2)			-		-		121,842		(4,481)		(8,958)
Mortgage servicing rights (3)			-		-		22,270		39		(180)
Loans Held For Sale (4)			-		-		54,755		0		0
(1)	Mainly impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates, net operating income of income producing properties) which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to mortgage servicing rights were mainly due to assumptions associated with mortgage prepayment rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment rate 9.78%, Discount Rate 10.62%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

As of June 30, 2013, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of June 30, 2013						(Losses) Gain recorded for the Quarter Ended June 30, 2013		(Losses) Gain recorded for the Six-Month Period Ended June 30, 2013
		Level 1		Level 2		Level 3
		(In thousands)
Loans receivable (1)		$	-	$	-	$	409,056	$	(3,534)	$	(14,192)
Other Real Estate Owned (2)			-		-		139,257		(9,181)		(12,106)
Mortgage servicing rights (3)			-		-		19,979		277		557
Loans Held For Sale (4)			-		142,632		94,951		(6,103)		(11,325)
(1)	Mainly impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates, net operating income of income producing properties) which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to the mortgage servicing rights were mainly due to assumptions associated with mortgage prepayments rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment Rate 9.40%, Discount Rate 11.06%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and, for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

Estimated Fair Value and Carrying Value of Financial Instruments

The following table presents the estimated fair value and carrying value of financial instruments as of June 30, 2014 and December 31, 2013:
	Total Carrying Amount in Statement of Financial Condition June 30, 2014		Fair Value Estimate June 30, 2014		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	677,662	$	677,662	$	677,662	$	-	$	-
Investment securities available
for sale		1,997,408		1,997,408		7,506		1,948,984		40,918
Other equity securities		29,141		29,141		-		29,141		-
Loans held for sale		72,105		72,807		-		18,052		54,755
Loans, held for investment		9,467,101
Less: allowance for loan and lease losses		(241,177)
Loans held for investment, net of allowance	$	9,225,924		8,892,011		-		-		8,892,011
Derivatives, included in assets		115		115		-		115		-
Liabilities:
Deposits		9,630,788		9,644,647		-		9,644,647		-
Securities sold under agreements to repurchase		900,000		977,620		-		977,620		-
Advances from FHLB		320,000		319,505		-		319,505		-
Other borrowings		231,959		115,954		-		-		115,954
Derivatives, included in liabilities		3,572		3,572		-		3,572		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2013		Fair Value Estimate December 31, 2013		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	655,671	$	655,671	$	655,671	$	-	$	-
Investment securities available
for sale		1,978,282		1,978,282		7,532		1,927,458		43,292
Other equity securities		28,691		28,691		-		28,691		-
Loans held for sale		75,969		76,684		-		21,883		54,801
Loans, held for investment		9,636,170
Less: allowance for loan and lease losses		(285,858)
Loans held for investment, net of allowance	$	9,350,312		9,127,234		-		-		9,127,234
Derivatives, included in assets		394		394		-		394		-
Liabilities:
Deposits		9,879,924		9,898,615		-		9,898,615		-
Securities sold under agreements to repurchase		900,000		976,151		-		976,151		-
Advances from FHLB		300,000		297,523		-		297,523		-
Other borrowings		231,959		106,772		-		-		106,772
Derivatives, included in liabilities		4,023		4,023		-		4,023		-

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

Qualitative information regarding the fair value measurements for Level 3 financial instruments are as follows:
	June 30, 2014
	Method	Inputs
Loans	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
OREO	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Mortgage servicing rights	Discounted Cash Flow	Weighted average prepayment rate 9.78%; weighted average discount rate 10.62%

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

The table below presents qualitative information for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at June 30, 2014:
	June 30, 2014
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	38,184	Discounted cash flow	Discount rate	14.5%
				Prepayment rate	18.15% -100% (Weighted Average 32%)
				Projected cumulative loss rate	0.90% -80.00% (Weighted Average 8.5%)
Puerto Rico Government Obligations		2,734	Discounted cash flow	Prepayment speed	5.57%

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GOODWILL AND OTHER INTANGIBLES (Tables)

3 Months Ended

Jun. 30, 2014

Gross Amount and Accumulated Amortization of Other Intangible Assets

The following table shows the gross amount and accumulated amortization of the Corporation’s intangible assets recognized as part of Other Assets in the consolidated statement of financial condition:
	As of		As of
	June 30,		December 31,
	2014		2013
(Dollars in thousands)
Core deposit intangible:
Gross amount	$	45,844	$	45,844
Accumulated amortization		(39,644)		(38,863)
Net carrying amount	$	6,200	$	6,981
Remaining amortization period		8.9 years		9.8 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization		(6,385)		(4,678)
Net carrying amount	$	18,080	$	19,787
Remaining amortization period		7.5 years		8.0 years

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LOAN PORTFOLIO - Credit Risk Payment Activity (Parenthetical) (Detail) (USD $)	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable Recorded Investment [Line Items]
Residential mortgage loans insured by FHA or guaranteed by the VA	$ 40,300,000	$ 37,000,000
Period of residential mortgage loan that are no longer accruing interest	1 year 6 months 0 days	1 year 6 months 0 days
Loans considered to be defaulted if borrower has failed to make payment for a period or more than the period	0 years 2 months 29 days	0 years 2 months 29 days
Loans held for sale	72,105,000	75,969,000
Non Accrual [Member]
Financing Receivable Recorded Investment [Line Items]
Loans held for sale	54,800,000	54,800,000
Non Accrual [Member] | Commercial Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans held for sale	39,100,000	39,100,000
Non Accrual [Member] | Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans held for sale	900,000	900,000
Non Accrual [Member] | Land Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Loans held for sale	7,800,000	7,800,000
Non Accrual [Member] | Commercial mortgage [Member]
Financing Receivable Recorded Investment [Line Items]
Loans held for sale	$ 7,000,000	$ 7,000,000

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Fair Value of Derivative Instruments and Location in Statement of Financial Condition (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivatives Fair Value [Line Items]
Derivatives, included in assets	$ 115	$ 394
Derivatives, included in liabilities	3,572	4,023
Other Assets [Member] | Interest Rate Swap [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in assets	99	162
Other Assets [Member] | Interest Rate Cap [Member] | Purchase
Derivatives Fair Value [Line Items]
Derivatives, included in assets	16	58
Other Assets [Member] | Interest Rate Cap [Member] | Written
Derivatives Fair Value [Line Items]
Derivatives, included in assets	0	0
Other Assets [Member] | Forward Contracts [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in assets	0	174
Other Liabilities [Member] | Interest Rate Swap [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	3,328	3,965
Other Liabilities [Member] | Interest Rate Cap [Member] | Purchase
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	0	0
Other Liabilities [Member] | Interest Rate Cap [Member] | Written
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	16	58
Other Liabilities [Member] | Forward Contracts [Member]
Derivatives Fair Value [Line Items]
Derivatives, included in liabilities	$ 228	$ 0

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LOAN PORTFOLIO (Tables)

3 Months Ended

Jun. 30, 2014

Loan Portfolio Held for Investment

		June 30,		December 31,
		2014		2013
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	2,795,159	$	2,549,008
Commercial loans:
Construction loans			148,266		168,713
Commercial mortgage loans			1,813,930		1,823,608
Commercial and Industrial loans (1)			2,647,478		2,788,250
Loans to a local financial institution collateralized by
real estate mortgages (2)			-		240,072
Commercial loans			4,609,674		5,020,643
Finance leases			240,593		245,323
Consumer loans			1,821,675		1,821,196
Loans held for investment			9,467,101		9,636,170
Allowance for loan and lease losses			(241,177)		(285,858)
Loans held for investment, net		$	9,225,924	$	9,350,312
(1)	As of June 30, 2014 and December 31, 2013, includes $1.1 billion and 1.2 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.
(2)	On May 30, 2014, FirstBank acquired from Doral Financial Corporation ("Doral") mortgage loans, mainly residential mortgage loans, having an unpaid principal balance of $241.7 million (estimated fair value at acquisition of $226.0 million) in full satisfaction of secured borrowings with a book value of $232.9 million owed by Doral to FirstBank. Refer to Acquired Loans, including Purchased Credit-Impaired ("PCI") loans discussion below for additional information.

Loans Held for Investment on Which Accrual of Interest Income had been Discontinued

Loans held for investment on which accrual of interest income had been discontinued were as follows:
(In thousands)		June 30,		December 31,
		2014		2013
Non-performing loans:
Residential mortgage		$	175,404	$	161,441
Commercial mortgage			166,218		120,107
Commercial and Industrial			143,669		114,833
Construction:
Land			20,838		27,834
Construction-commercial			3,849		3,924
Construction-residential			14,143		27,108
Consumer:
Auto loans			22,005		21,316
Finance leases			3,414		3,082
Other consumer loans			15,091		15,904
Total non-performing loans held for investment (1) (2)		$	564,631	$	495,549
_______________
(1)	As of June 30, 2014 and December 31, 2013, excludes $54.8 million of non-performing loans held for sale.
(2)	Amount excludes PCI loans with a carrying value of approximately $105.6 million and $4.8 million as of June 30, 2014 and December 31, 2013, respectively, primarily mortgage loans acquired from Doral in the second quarter of 2014, as further discussed below. These loans are not considered non-performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

Corporation's Aging of Loans Held for Investment Portfolio

The Corporation’s aging of the loans held for investment portfolio is as follows:
										Purchased Credit-Impaired Loans				Total loans held for investment		90 days past due and still accruing (2)
		30-59 Days Past Due		60-89 Days Past Due			90 days or more Past Due (1)	Total Past Due
As of June 30, 2014
(In thousands)																		Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	10,357	$	79,082	$	89,439	$	-	$	72,554	$	161,993	$	79,082
Other residential mortgage loans (4)			-		95,029		189,752		284,781		99,997		2,248,388		2,633,166		14,348
Commercial:
Commercial and Industrial loans			12,240		3,015		162,557		177,812		-		2,469,666		2,647,478		18,888
Commercial mortgage loans (4)			-		5,362		179,861		185,223		3,447		1,625,260		1,813,930		13,643
Construction:
Land (4)			-		258		23,212		23,470		-		39,879		63,349		2,374
Construction-commercial			-		-		3,849		3,849		-		14,980		18,829		-
Construction-residential (4)			-		-		14,143		14,143		-		51,945		66,088		-
Consumer:
Auto loans			82,018		20,391		22,005		124,414		-		997,700		1,122,114		-
Finance leases			9,664		3,376		3,414		16,454		-		224,139		240,593		-
Other consumer loans			7,139		8,770		18,713		34,622		2,176		662,763		699,561		3,622
Total loans held for investment		$	111,061	$	146,558	$	696,588	$	954,207	$	105,620	$	8,407,274	$	9,467,101	$	131,957
_____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.
(3)	As of June 30, 2014, includes $19.8 million of defaulted loans collateralizing Government National Mortgage Association ("GNMA") securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $16.5 million, $160.1 million, $72.1 million, $0.8 million, and $2.5 million, respectively.

As of December 31, 2013		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due(1)								Total loans held for investment		90 days past due and still accruing (2)
(In thousands)											Total Past Due		Purchased Credit- Impaired Loans					Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	12,180	$	78,645	$	90,825	$	-	$	104,401	$	195,226	$	78,645
Other residential mortgage loans (4)			-		88,898		172,286		261,184		-		2,092,598		2,353,782		10,845
Commercial:
Commercial and Industrial loans			21,029		5,454		134,233		160,716		-		2,867,606		3,028,322		19,400
Commercial mortgage loans (4)			-		5,428		126,674		132,102		-		1,691,506		1,823,608		6,567
Construction:
Land (4)			-		358		27,871		28,229		-		52,145		80,374		37
Construction-commercial			-		-		3,924		3,924		-		12,907		16,831		-
Construction-residential (4)			-		-		27,108		27,108		-		44,400		71,508		-
Consumer:
Auto loans			79,279		17,944		21,316		118,539		-		993,781		1,112,320		-
Finance leases			10,275		3,536		3,082		16,893		-		228,430		245,323		-
Other consumer loans			11,710		8,691		20,492		40,893		4,791		663,192		708,876		4,588
Total loans held for investment		$	122,293	$	142,489	$	615,631	$	880,413	$	4,791	$	8,750,966	$	9,636,170	$	120,082
____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.
(3)	As of December 31, 2013, includes $11.5 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $23.9 million, $166.7 million, $18.4 million, $0.9 million and $2.5 million, respectively.

Corporation's Credit Quality Indicators by Loan

The Corporation’s credit quality indicators by loan type as of June 30, 2014 and December 31, 2013 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
June 30, 2014
(In thousands)
Commercial mortgage		$	295,588	$	3,133	$	-	$	298,721	$	1,813,930
Construction:
Land			21,134		936		-		22,070		63,349
Construction-commercial			12,490		3,149		-		15,639		18,829
Construction-residential			13,343		741		60		14,144		66,088
Commercial and Industrial			252,595		2,768		475		255,838		2,647,478
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2013
(In thousands)
Commercial mortgage		$	317,365	$	9,160	$	234	$	326,759	$	1,823,608
Construction
Land			31,777		3,308		52		35,137		80,373
Construction-commercial			16,022		-		-		16,022		16,831
Construction-residential			27,829		2,209		241		30,279		71,509
Commercial and Industrial			205,807		7,998		973		214,778		3,028,322
_________
(1)	Excludes $54.8 million ($7.8 million land, $39.1 million construction-commercial, $0.9 million construction-residential and $ 7.0 million commercial mortgage) as of June 30, 2014 and December 31, 2013, of non-performing loans held for sale.

June 30, 2014		Consumer Credit Exposure-Credit Risk Profile based on payment activity
		Residential Real-Estate				Consumer
		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	161,993	$	2,357,765	$	1,100,109	$	237,179	$	682,294
Purchased Credit-Impaired (2)			-		99,997		-		-		2,176
Non-performing			-		175,404		22,005		3,414		15,091
Total		$	161,993	$	2,633,166	$	1,122,114	$	240,593	$	699,561
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
December 31, 2013		Consumer Credit Exposure-Credit Risk Profile based on payment activity
			Residential Real-Estate			Consumer
		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	195,226	$	2,192,341	$	1,091,004	$	242,241	$	688,181
Purchased Credit-Impaired (2)			-		-		-		-		4,791
Non-performing			-		161,441		21,316		3,082		15,904
Total		$	195,226	$	2,353,782	$	1,112,320	$	245,323	$	708,876
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

Impaired Loans

Impaired Loans
(In thousands)
									Quarter ended				Six-month Period Ended
										June 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment		Interest Income Recognized Accrual Basis		Interest Income Recognized Cash Basis		Interest Income Recognized Accrual Basis		Interest Income Recognized Cash Basis
As of June 30, 2014
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		263,024		286,904		-		265,285		2,788		355		5,357		749
Commercial:
Commercial mortgage loans		84,909		90,834		-		85,642		423		484		884		640
Commercial and Industrial Loans		39,507		55,335		-		40,027		6		264		14		264
Construction:
Land		1,821		2,500		-		1,844		6		3		12		3
Construction-commercial		-		-		-		-		-		-		-		-
Construction-residential		4,848		4,946		-		4,917		42		2		83		4
Consumer:
Auto loans		-		-		-		-		-		-		-		-
Finance leases		-		-		-		-		-		-		-		-
Other consumer loans		4,882		5,699		-		4,962		75		18		154		32
	$	398,991	$	446,218	$	-	$	402,677	$	3,340	$	1,126	$	6,504	$	1,692
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		151,424		172,951		16,464		153,650		1,393		660		2,728		1,040
Commercial:
Commercial mortgage loans		154,088		176,208		16,317		160,076		471		162		937		599
Commercial and Industrial Loans		140,257		171,068		22,745		150,374		611		333		1,177		390
Construction:
Land		13,548		22,265		3,855		13,690		13		10		27		14
Construction-commercial		15,639		15,639		3,950		15,881		-		87		-		259
Construction-residential		10,865		11,062		1,157		12,548		-		-		-		-
Consumer:
Auto loans		14,110		14,110		1,980		14,887		258		-		498		-
Finance leases		2,162		2,162		91		2,348		58		-		110		-
Other consumer loans		7,774		8,616		1,799		8,042		589		15		1,113		26
	$	509,867	$	594,081	$	68,358	$	531,496	$	3,393	$	1,267	$	6,590	$	2,328
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		414,448		459,855		16,464		418,935		4,181		1,015		8,085		1,789
Commercial:
Commercial mortgage loans		238,997		267,042		16,317		245,718		894		646		1,821		1,239
Commercial and Industrial Loans		179,764		226,403		22,745		190,401		617		597		1,191		654
Construction:
Land		15,369		24,765		3,855		15,534		19		13		39		17
Construction-commercial		15,639		15,639		3,950		15,881		-		87		-		259
Construction-residential		15,713		16,008		1,157		17,465		42		2		83		4
Consumer:
Auto loans		14,110		14,110		1,980		14,887		258		-		498		-
Finance leases		2,162		2,162		91		2,348		58		-		110		-
Other consumer loans		12,656		14,315		1,799		13,004		664		33		1,267		58
	$	908,858	$	1,040,299	$	68,358	$	934,173	$	6,733	$	2,393	$	13,094	$	4,020

(In thousands)
	Recorded Investments		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment
As of December 31, 2013
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		220,428		237,709		-		222,617
Commercial:
Commercial mortgage loans		69,484		73,723		-		71,367
Commercial and Industrial Loans		32,418		56,831		-		37,946
Construction:
Land		359		366		-		360
Construction-commercial		-		-		-		-
Construction-residential		14,761		19,313		-		17,334
Consumer:
Auto loans		-		-		-		-
Finance leases		-		-		-		-
Other consumer loans		4,035		4,450		-		3,325
	$	341,485	$	392,392	$	-	$	352,949
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		190,566		212,028		18,125		193,372
Commercial:
Commercial mortgage loans		149,888		163,656		32,189		153,992
Commercial and Industrial Loans		154,686		170,191		26,686		162,786
Construction:
Land		27,711		40,348		10,455		28,906
Construction-commercial		16,022		16,238		8,873		16,157
Construction-residential		13,864		13,973		2,816		13,640
Consumer:
Auto loans		14,121		14,122		1,829		12,937
Finance leases		2,359		2,359		73		2,219
Other consumer loans		8,410		8,919		1,555		8,919
	$	577,627	$	641,834	$	102,601	$	592,928
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		410,994		449,737		18,125		415,989
Commercial:
Commercial mortgage loans		219,372		237,379		32,189		225,359
Commercial and Industrial Loans		187,104		227,022		26,686		200,732
Construction:
Land		28,070		40,714		10,455		29,266
Construction-commercial		16,022		16,238		8,873		16,157
Construction-residential		28,625		33,286		2,816		30,974
Consumer:
Auto loans		14,121		14,122		1,829		12,937
Finance leases		2,359		2,359		73		2,219
Other consumer loans		12,445		13,369		1,555		12,244
	$	919,112	$	1,034,226	$	102,601	$	945,877
Interest income of approximately $7.9 million ($6.4 million on an accrual basis and $1.5 million on a cash basis) and $15.3 million ($12.0 million on an accrual basis and $3.3 million on a cash basis) was recognized on impaired loans for the second quarter and six-month period ended June 30, 2013, respectively.

Activity for Impaired loans

The following tables show the activity for impaired loans and the related specific reserve for the quarter and six-month
period ended June 30, 2014:
	Quarter Ended		Six-Month Period Ended
	June 30, 2014
		(In thousands)
Impaired Loans:
Balance at beginning of period	$	879,388	$	919,112
Loans determined impaired during the period		98,966		153,243
Net charge-offs		(32,646)		(64,685)
Increases to impaired loans- additional disbursements		294		919
Foreclosures		(4,134)		(8,140)
Loans no longer considered impaired		(14,003)		(17,731)
Paid in full or partial payments		(19,007)		(73,860)
Balance at end of period	$	908,858	$	908,858

Activity for Specific Reserve

		Quarter Ended		Six-Month Period Ended
	June 30, 2014
	(In thousands)
Specific Reserve:
Balance at beginning of period	$	85,016	$	102,601
Provision for loan losses		15,988		30,442
Net charge-offs		(32,646)		(64,685)
Balance at end of period	$	68,358	$	68,358

Contractually Required Principal and Interest Cash Flows Expected to be Collected and Fair Value at Acquisition Related to Loans Acquired

The following table presents acquired loans from Doral accounted for pursuant to ASC 310-30 as of May 30, 2014 acquisition date:
(In thousands)
Contractually- required principal and interest	$	275,842
Less: Nonaccretable difference		(86,252)
Cash flows expected to be collected		189,590
Less: Accretable yield		(86,759)
Fair value of loans acquired in 2014	$	102,831

Carrying Value of Acquired Loans

The carrying amount of PCI loans follows:
	June 30,		December 31,
	2014		2013
(In thousands)
Residential mortgage loans	$	99,997	$	-
Commercial mortgage loans		3,447		-
Credit Cards		2,176		4,791
	$	105,620	$	4,791

Accretable Yield

Changes in the accretable yield of PCI loans for the quarter and six month period ended June 30, 2014 were as follows:
	Quarter ended June 30, 2014		Quarter ended June 30, 2013		Six month period ended June 30, 2014		Six month period ended June 30, 2013
(In thousands)
Balance at beginning of period	$	-	$	406	$	-	$	2,171
Additions (accretable yield at acquisition
of loans from Doral)		86,759		-		86,759		-
Accretion recognized in earnings		(612)		-		(612)		(413)
Reclassification to non accretable		-		-		-		(1,352)
Balance at end of period	$	86,147	$	406	$	86,147	$	406

Selected Information on TDRs Includes Recorded Investment by Loan Class and Modification Type

Selected information on TDRs that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs:
		June 30, 2014
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	24,088	$	6,437	$	277,431	$	-	$	34,956	$	342,912
Commercial Mortgage Loans			30,672		12,884		74,939		-		19,124		137,619
Commercial and Industrial Loans:			7,666		4,885		33,216		3,100		54,671		103,538
Construction Loans:
Land			834		214		1,634		-		554		3,236
Construction-commercial			-		-		3,848		-		-		3,848
Construction-residential			6,155		160		3,142		-		432		9,889
Consumer Loans - Auto			-		544		8,662		-		4,904		14,110
Finance Leases			-		510		1,652		-		-		2,162
Consumer Loans - Other			642		178		8,407		130		1,562		10,919
Total Troubled Debt Restructurings (2)		$	70,057	$	25,812	$	412,931	$	3,230	$	116,203	$	628,233
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.
(2)	Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

		December 31, 2013
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	23,428	$	6,059	$	274,562	$	-	$	33,195	$	337,244
Commercial Mortgage Loans			36,543		12,985		83,993		7		20,048		153,576
Commercial and Industrial Loans			12,099		11,341		12,835		3,122		52,554		91,951
Construction Loans:
Land			878		2,012		1,760		-		675		5,325
Construction-commercial			-		-		3,924		-		-		3,924
Construction-residential			6,054		160		3,173		994		513		10,894
Consumer Loans - Auto			-		706		8,350		-		5,066		14,122
Finance Leases			-		1,286		1,072		-		-		2,358
Consumer Loans - Other			227		256		8,638		-		1,743		10,864
Total Troubled Debt Restructurings (2)		$	79,229	$	34,805	$	398,307	$	4,123	$	113,794	$	630,258
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.
(2)	Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

Corporation's TDR Activity

The following table presents the Corporation's TDR activity:
(In thousands)	Quarter Ended		Six-Month Period Ended
	June 30, 2014
Beginning balance of TDRs	$	622,320	$	630,258
New TDRs		34,810		54,745
Increases to existing TDRs - additional
disbursements		107		134
Charge-offs post modification		(18,666)		(26,648)
Foreclosures		(1,527)		(2,601)
Paid-off and partial payments		(8,811)		(27,655)
Ending balance of TDRs	$	628,233	$	628,233

Breakdown Between Accrual and Nonaccrual Status of TDRs

The following table provides a breakdown between accrual and nonaccrual status of TDRs:
(In thousands)		June 30, 2014
		Accrual		Nonaccrual (1) (2)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	256,948	$	85,964	$	342,912
Commercial Mortgage Loans			77,795		59,824		137,619
Commercial and Industrial Loans			53,249		50,289		103,538
Construction Loans:
Land			811		2,425		3,236
Construction-commercial			-		3,848		3,848
Construction-residential			3,301		6,588		9,889
Consumer Loans - Auto			8,847		5,263		14,110
Finance Leases			2,060		102		2,162
Consumer Loans - Other			8,859		2,060		10,919
Total Troubled Debt Restructurings		$	411,870	$	216,363	$	628,233
(1)	Included in non-accrual loans are $85.5 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.
(2)	Excludes non-accrual TDRs held for sale with a carrying value of $45.8 million as of June 30, 2014.

(In thousands)		December 31, 2013
		Accrual		Nonaccrual (1) (2)		Total TDRs
Non- FHA/VA Residential Mortgage loans		$	263,919	$	73,324	$	337,243
Commercial Mortgage Loans			84,419		69,156		153,575
Commercial and Industrial Loans			53,509		38,441		91,950
Construction Loans:
Land			1,000		4,325		5,325
Construction-commercial			-		3,924		3,924
Construction-residential			3,332		7,562		10,894
Consumer Loans - Auto			8,512		5,610		14,122
Finance Leases			2,275		85		2,360
Consumer Loans - Other			8,417		2,448		10,865
Total Troubled Debt Restructurings		$	425,383	$	204,875	$	630,258
(1)	Included in non-accrual loans are $95.7 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.
(2)	Excludes non-accrual TDRs held for sale with a carrying value of $45.9 million as of December 31, 2013.

Schedule Of Troubled Debt Restructurings Table [Text Block]

(Dollars in thousands)	Quarter ended June 30, 2014
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	91	$	11,017	$	10,264
Commercial Mortgage Loans	1		410		410
Commercial and Industrial Loans	7		21,114		21,114
Construction Loans:
Land	2		55		57
Construction-commercial	-		-		-
Construction-residential	-		-		-
Consumer Loans - Auto	92		1,408		1,393
Finance Leases	10		174		142
Consumer Loans - Other	313		1,457		1,430
Total Troubled Debt Restructurings	516	$	35,635	$	34,810
(Dollars in thousands)	Six-Month period ended June 30, 2014
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	138	$	18,726	$	17,975
Commercial Mortgage Loans	4		1,244		1,247
Commercial and Industrial Loans	12		29,078		28,744
Construction Loans:
Land	2		55		57
Construction-commercial	-		-		-
Construction-residential	-		-		-
Consumer Loans - Auto	209		3,013		2,998
Finance Leases	20		367		335
Consumer Loans - Other	742		3,416		3,389
Total Troubled Debt Restructurings	1,127	$	55,899	$	54,745

(Dollars in thousands)	Quarter ended June 30, 2013
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	40	$	3,335	$	3,335
Commercial Mortgage Loans	1		491		491
Commercial and Industrial Loans	1		1,165		1,165
Construction Loans:
Land	4		208		208
Consumer Loans - Auto	142		1,945		1,945
Finance Leases	19		416		416
Consumer Loans - Other	367		1,675		1,675
Total Troubled Debt Restructurings	574	$	9,235	$	9,235
(Dollars in thousands)	Six-Month period ended June 30, 2013
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	113	$	13,098	$	13,122
Commercial Mortgage Loans	1		491		491
Commercial and Industrial Loans	8		68,051		42,663
Construction Loans:
Land	4		208		208
Construction-residential	1		195		195
Consumer Loans - Auto	285		3,868		3,868
Finance Leases	38		729		729
Consumer Loans - Other	730		3,322		3,322
Total Troubled Debt Restructurings	1,180	$	89,962	$	64,598

Loan Modifications Considered Troubled Debt Restructurings Defaulted

	Quarter ended June 30,
(Dollars in thousands)	2014			2013
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	19	$	2,267	19	$	2,090
Commercial Mortgage Loans	-		-	-		-
Commercial and Industrial Loans	-		-	-		-
Construction Loans:
Land	1		46	2		66
Construction-commercial	-		-	-		-
Construction-residential	-		-	1		186
Consumer Loans - Auto	18		286	5		37
Consumer Loans - Other	53		205	35		137
Finance Leases	-		-	2		20
Total	91	$	2,804	64	$	2,536

	Six-Month Period Ended June 30,
(Dollars in thousands)	2014			2013
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	33	$	4,819	64	$	9,615
Commercial Mortgage Loans	-		-	1		46,102
Commercial and Industrial Loans	-		-	2		3,829
Construction Loans:
Land	1		46	2		66
Construction-commercial	-		-	-		-
Construction-residential	-		-	1		186
Consumer Loans - Auto	22		325	7		54
Consumer Loans - Other	98		381	40		219
Finance Leases	-		-	2		20
Total	154	$	5,571	119	$	60,091

Loan Restructuring and Effect on Allowance for Loan and Lease Losses

(In thousands)	June 30, 2014			June 30, 2013
Principal balance deemed collectible at end of period	$	62,159	$	93,451
Amount (recovery) charged off	$	(4,106)	$	25,389
(Reductions) charges to the provision for loan losses	$	(4,725)	$	2,318
Allowance for loan losses at end of period	$	942	$	3,339

Past Due Purchased Credit Impaired Table [Text Block]

The following tables present PCI loans by past due status as of June 30, 2014 and December 31, 2013:
As of June 30, 2014		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)														Current
Residential mortgage loans (1)		$	-	$	11,282	$	11,522	$	22,804	$	77,193	$	99,997
Commercial mortgage loans (1)			-		366		437		803		2,644		3,447
Credit Cards			166		62		145		373		1,803		2,176
		$	166	$	11,710	$	12,104	$	23,980	$	81,640	$	105,620
_____________
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans and commercial mortgage loans past due 30-59 days amounted to $18.2 million and $0.9 million, respectively.
As of December 31, 2013		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)														Current
Credit Cards		$	377	$	354	$	573	$	1,304	$	3,487	$	4,791

Changes In Carrying Amount Of Purchased Credit Impaired Loans Table [Text Block]

Changes in the carrying amount of loans accounted pursuant to ASC 310-30 follows:
		Quarter Ended		Six-Month Period Ended
			June 30, 2014		June 30, 2014
(In thousands)
Balance at beginning of period (1)		$	3,383	$	4,791
Additions (2)			102,831		102,831
Accretion			612		612
Collections and charge-offs			(1,207)		(2,615)
Ending balance		$	105,619	$	105,619
(1)	Relates to PCI loans acquired as part of the credit card portfolio purchased in the second quarter of 2012.
(2)	Represents the estimated fair value of the PCI loans acquired from Doral at the date of acquisition.

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SEGMENT INFORMATION (Tables)

3 Months Ended

Jun. 30, 2014

Information about the Reportable Segments

The following table presents information about the reportable segments:
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended June 30, 2014:
Interest income	$	27,444	$	54,869	$	40,825	$	13,988	$	10,879	$	10,418	$	158,423
Net (charge) credit for transfer of funds		(8,736)		4,136		(3,049)		4,584		3,065		-		-
Interest expense		-		(5,882)		-		(16,783)		(4,855)		(996)		(28,516)
Net interest income		18,708		53,123		37,776		1,789		9,089		9,422		129,907
(Provision) release for loan and lease losses		(4,089)		(19,475)		(14,179)		-		10,481		518		(26,744)
Non-interest income		2,701		10,005		1,150		344		711		1,690		16,601
Direct non-interest expenses		(10,340)		(31,510)		(14,694)		(1,514)		(7,269)		(8,664)		(73,991)
Segment income	$	6,980	$	12,143	$	10,053	$	619	$	13,012	$	2,966	$	45,773
Average earnings assets	$	2,029,859	$	2,031,391	$	3,683,746	$	2,714,179	$	883,822	$	670,692	$	12,013,689
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended June 30, 2013:
Interest income	$	27,469	$	57,984	$	42,476	$	12,584	$	9,055	$	11,102	$	160,670
Net (charge) credit for transfer of funds		(9,631)		(681)		(3,592)		11,552		2,352		-		-
Interest expense		-		(6,992)		-		(20,212)		(5,583)		(995)		(33,782)
Net interest income		17,838		50,311		38,884		3,924		5,824		10,107		126,888
(Provision) release for loan and lease losses		(68,944)		(12,142)		(6,221)		-		3,943		(4,100)		(87,464)
Non-interest income (loss)		238		9,555		1,330		(65,565)		275		1,856		(52,311)
Direct non-interest expenses		(16,570)		(30,198)		(13,993)		(1,549)		(7,532)		(15,358)		(85,200)
Segment (loss) income	$	(67,438)	$	17,526	$	20,000	$	(63,190)	$	2,510	$	(7,495)	$	(98,087)
Average earnings assets	$	2,093,238	$	2,021,367	$	3,971,083	$	2,774,670	$	746,384	$	657,946	$	12,264,688

	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Six-month period ended June 30, 2014:
Interest income	$	53,192	$	110,681	$	83,124	$	29,571	$	21,775	$	20,651	$	318,994
Net (charge) credit for transfer of funds		(17,282)		7,771		(6,048)		10,384		5,175		-		-
Interest expense		-		(12,678)		-		(33,544)		(9,652)		(1,893)		(57,767)
Net interest income		35,910		105,774		77,076		6,411		17,298		18,758		261,227
(Provision) release for loan and lease losses		(7,473)		(39,970)		(27,524)		-		16,440		(132)		(58,659)
Non-interest income		5,803		20,635		2,917		397		1,152		3,657		34,561
Direct non-interest expenses		(20,172)		(63,525)		(27,272)		(2,640)		(14,489)		(17,688)		(145,786)
Segment income	$	14,068	$	22,914	$	25,197	$	4,168	$	20,401	$	4,595	$	91,343
Average earnings assets	$	1,993,129	$	1,951,587	$	3,869,311	$	2,712,564	$	865,091	$	663,172	$	12,054,854
	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Six-month period ended June 30, 2013:
Interest income	$	55,689	$	116,243	$	85,805	$	24,044	$	17,704	$	21,410	$	320,895
Net (charge) credit for transfer of funds		(19,902)		(1,719)		(7,740)		24,515		4,846		-		-
Interest expense		-		(13,841)		-		(41,975)		(11,700)		(1,998)		(69,514)
Net interest income		35,787		100,683		78,065		6,584		10,850		19,412		251,381
(Provision) release for loan and lease losses		(77,532)		(22,323)		(92,332)		-		2,434		(8,834)		(198,587)
Non-interest income (loss)		4,588		20,297		2,789		(65,733)		887		4,028		(33,144)
Direct non-interest expenses		(28,218)		(59,866)		(31,581)		(3,955)		(14,254)		(24,494)		(162,368)
Segment (loss) income	$	(65,375)	$	38,791	$	(43,059)	$	(63,104)	$	(83)	$	(9,888)	$	(142,718)
Average earnings assets	$	2,096,464	$	1,943,173	$	4,150,227	$	2,732,539	$	713,072	$	667,587	$	12,303,062

Reconciliation of the Reportable Segment Financial Information

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
		Quarter Ended				Six-Month Period Ended
		June 30,				June 30,
		2014		2013		2014		2013
Net income (loss):
Total income (loss) for segments and other		$	45,773	$	(98,087)	$	91,343	$	(142,718)
Other non-interest (loss) income (1)			(670)		648		(7,280)		(4,890)
Other operating expenses (2)			(24,154)		(26,123)		(45,144)		(46,965)
Income (loss) before income taxes			20,949		(123,562)		38,919		(194,573)
Income tax benefit (expense)			276		979		(611)		(643)
Total consolidated net income (loss)		$	21,225	$	(122,583)	$	38,308	$	(195,216)
Average assets:
Total average earning assets for segments		$	12,013,689	$	12,264,688	$	12,054,854	$	12,303,062
Other average earning assets (1)			152		17,841		3,343		20,797
Average non-earning assets			640,718		654,304		656,179		681,489
Total consolidated average assets		$	12,654,559	$	12,936,833	$	12,714,376	$	13,005,348
(1)	The activities related to the Bank's equity interest in CPG/GS are presented as an Other non-interest income (loss) and as Other average earning assets in the table above.
(2)	Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

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LOAN PORTFOLIO - Loan Portfolio Held for Investment (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Financial Information [Line Items]
Residential mortgage loans, mainly secured by first mortgages	$ 2,795,159		$ 2,549,008
Commercial loans:
Construction loans	148,266		168,713
Commercial mortgage loans	1,813,930		1,823,608
Commercial and Industrial loans	2,647,478	[1]	2,788,250	[1]
Loans to local financial institutions collateralized by real estate mortgages	0	[2]	240,072	[2]
Commercial loans	4,609,674		5,020,643
Finance leases	240,593		245,323
Consumer loans	1,821,675		1,821,196
Loans held for investment	9,467,101		9,636,170		9,445,786
Less: allowance for loan and lease losses	(241,177)		(285,858)
Loans held for investment, net	9,225,924		9,350,312
Commercial And Industrial [Member]
Commercial loans:
Loans held for investment	$ 2,647,478		$ 3,028,322

[1] As of June 30, 2014 and December 31, 2013, includes $1.1 billion and 1.2 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.

[2] On May 30, 2014, FirstBank acquired from Doral Financial Corporation ("Doral") mortgage loans, mainly residential mortgage loans, having an unpaid principal balance of $241.7 million (estimated fair value at acquisition of $226.0 million) in full satisfaction of secured borrowings with a book value of $232.9 million owed by Doral to FirstBank. Refer to Acquired Loans, including Purchased Credit-Impaired ("PCI") loans discussion below for additional information.

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DEPOSITS - Summary of Deposit Balances (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Deposits [Line Items]
Non-interest bearing checking accounts	$ 851,038	$ 851,212
Savings accounts	2,387,743	2,334,831
Interest-bearing checking accounts	1,079,843	1,167,480
Certificates of deposit	2,215,263	2,384,378
Brokered certificates of deposit	3,096,901	3,142,023
Total deposits	$ 9,630,788	$ 9,879,924

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INVESTMENT SECURITIES - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014 minimumcreditscore	Jun. 30, 2013	Jun. 30, 2014 minimumcreditscore	Jun. 30, 2013	Dec. 31, 2013
Schedule Of Investments [Line Items]
Proceeds from sale of available-for-sale securities			$ 4,855,000	$ 0
Percentage Of Debt Securities Government And Government Sponsored Agencies	96.00%		96.00%
Minimum Credit Score	700		700
Maximum loan to value ratio	80.00%
Proceeds From Maturities Prepayments And Calls Of Available For Sale Securities			114,277,000	207,810,000
Total investment securities available for sale	1,997,408,000		1,997,408,000		1,978,282,000
Impairement on equity securities	291,000	(42,000)	291,000	(42,000)
Fair value	1,997,408,000		1,997,408,000		1,978,282,000
Amortized cost	2,018,062,000		2,018,062,000		2,049,262,000
Unrealized losses	38,698,000				78,795,000
Weighted average yield	2.56%		2.56%		2.57%
Mortgage Backed Securities Issued By Private Enterprises [Member]
Schedule Of Investments [Line Items]
Amortized cost of private label of mortgage backed security	51,200,000		51,200,000
Puerto Rico Government obligations [Member]
Schedule Of Investments [Line Items]
Total investment securities available for sale	45,000,000		45,000,000
Fair value	45,000,000		45,000,000
Amortized cost	61,100,000		61,100,000
Change in net unrealized gains	$ 3,600,000

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OTHER BORROWINGS (Tables)

3 Months Ended

Jun. 30, 2014

Components of Other Borrowings

	June 30,		December 31,
	2014		2013
	(In thousands)
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (2.98% as of June 30, 2014
and 2.99% as of December 31, 2013)	$	103,093	$	103,093
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (2.73% as of June 30, 2014
and 2.75% as of December 31, 2013)		128,866		128,866
	$	231,959	$	231,959

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Jun. 30, 2014

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The Consolidated Financial Statements (unaudited) of First BanCorp. (“the Corporation”) have been prepared in conformity with the accounting policies stated in the Corporation's Audited Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2013. Certain information and note disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from these statements pursuant to the rules and regulations of the SEC and, accordingly, these financial statements should be read in conjunction with the Audited Consolidated Financial Statements of the Corporation for the year ended December 31, 2013, which are included in the Corporation's 2013 Annual Report on Form 10-K. All adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the statement of financial position, results of operations and cash flows for the interim periods have been reflected. All significant intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for the quarter and six-month period ended June 30, 2014 are not necessarily indicative of the results to be expected for the entire year.

Adoption of new accounting requirements and recently issued but not yet effective accounting requirements

The Financial Accounting Standards Board (“FASB”) has issued the following accounting pronouncements and guidance relevant to the Corporation's operations:

In July 2013, the FASB updated the Codification to provide explicit guidelines on how to present an unrecognized tax benefit infinancial statements when a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward exists. Anunrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to adeferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a netoperating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of theapplicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of theapplicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose,the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred taxassets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset thatexist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The amendments areeffective for public entities with fiscal periods beginning after December 15, 2013. The adoption of this guidance in 2014 did not have aneffect on the Corporation's financial statements as the Corporation's NOLs and tax credit carryfowards are not available to settle anyadditional income taxes that would result from the disallowance of the Corporation's unrecognized tax benefits.

In January 2014, the FASB updated the Codification to clarify when a creditor should be considered to have received physicalpossession of residential real estate property collateralizing a consumer mortgage loan so that the loan should be derecognized and thereal estate property recognized in the financial statements. The Update clarifies that an in substance repossession or foreclosure occurs,and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgageloan, upon either: (i) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure, or (ii) theborrower conveying all interest in the residential real estate property to the creditor to satisfy the loan through completion of a deed inlieu of foreclosure or through a similar legal agreement. In addition, creditors are required to disclose on an annual and interim basis both(i) the amount of the foreclosed residential real estate property held and (ii) the recorded investment in consumer mortgage loanscollateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicablejurisdiction.

The amendments are effective for public business entities for annual periods beginning after December 15, 2014, and interimperiods within annual periods beginning after December 31, 2015. Early adoption is permitted. The guidance can be implemented usingeither a modified retrospective transition method or a prospective transition method. The Corporation is currently evaluating the impact ofthe adoption of this guidance, if any, on its financial statements.

In April 2014, the FASB issued an update to current accounting standards which will change the criteria for reporting discontinuedoperations. The amendments will also require new disclosures about discontinued operations and disposals of components of an entitythat do not qualify for discontinued operations reporting. The amendments are effective for the Corporation for new disposals (orclassifications as held for sale) of components of the Corporation, should they occur, beginning in the first quarter of fiscal year 2016.Early adoption is permitted for disposals (or classifications as held for sale) that have not been previously reported.

In May 2014, the FASB updated the Codification to create a new, principle-based revenue recognition framework. The Update is the culmination of efforts by the FASB and the International Accounting Standards Board to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance describes a 5-step process entities can apply to achieve the core principle of revenue recognition and requires disclosures sufficient to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers and the significant judgments used in determining that information. The amendments are effective for public business entities for annual periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Corporation is currently evaluating the impact that the adoption of this guidance will have on the presentation and disclosures in its financial statements.

In June 2014, the FASB updated the Codification to respond to stakeholders' concerns about current accounting and disclosures for repurchase agreements and similar transactions. This Update requires two accounting changes. First, the Update changes the accounting for repurchase-to-maturity transactions to secured borrowing accounting. Second, for repurchase financing arrangements, the Update requires separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. Additionally, the Update introduces new disclosures to (i) increase transparency about the types of collateral pledged in secured borrowing transactions and (ii) enable users to better understand transactions in which the transferor retains substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction. For public business entities, the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. All other accounting and disclosure amendments in the Update are effective for public business entities for the first interim or annual period beginning after December 15, 2014. The Corporation is currently evaluating the impact that the adoption of this guidance will have on the presentation and disclosures in its financial statements, if any.

In June 2014, the FASB updated the Codification to provide guidance for determining compensation cost under specific circumstances when an employee's compensation award is eligible to vest regardless of whether the employee is rendering service on the date the performance target is achieved. This Update becomes effective for annual and interim periods beginning after December 15, 2015 with early adoption permitted. The Company is currently evaluating the effects of this guidance on its financial statements and disclosures, if any.The Updateis effective for all business entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The Corporation is currently evaluating the impact that the adoption of this guidance will have on the presentation and disclosures in its financial statements, if any.

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SEGMENT INFORMATIO - Information about reportable segments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Segment Reporting Information [Line Items]
Interest income	$ 158,423	$ 160,670	$ 318,994	$ 320,895
Net (charge) credit for transfer of funds	0	0	0	0
Interest expense	(28,516)	(33,782)	(57,767)	(69,514)
Net interest income (loss)	129,907	126,888	261,227	251,381
(Provision) release for loan and lease losses	(26,744)	(87,464)	(58,659)	(198,587)
Non-interest income (loss)	16,601	(52,311)	34,561	(33,144)
Direct non-interest expenses	(73,991)	(85,200)	(145,786)	(162,368)
Segment (loss) income	45,773	(98,087)	91,343	(142,718)
Average earnings assets	12,013,689	12,264,688	12,054,854	12,303,062
Mortgage Banking [Member]
Segment Reporting Information [Line Items]
Interest income	27,444	27,469	53,192	55,689
Net (charge) credit for transfer of funds	(8,736)	(9,631)	(17,282)	(19,902)
Interest expense	0	0	0	0
Net interest income (loss)	18,708	17,838	35,910	35,787
(Provision) release for loan and lease losses	(4,089)	(68,944)	(7,473)	(77,532)
Non-interest income (loss)	2,701	238	5,803	4,588
Direct non-interest expenses	(10,340)	(16,570)	(20,172)	(28,218)
Segment (loss) income	6,980	(67,438)	14,068	(65,375)
Average earnings assets	2,029,859	2,093,238	1,993,129	2,096,464
Consumer Retail Banking [Member]
Segment Reporting Information [Line Items]
Interest income	54,869	57,984	110,681	116,243
Net (charge) credit for transfer of funds	4,136	(681)	7,771	(1,719)
Interest expense	(5,882)	(6,992)	(12,678)	(13,841)
Net interest income (loss)	53,123	50,311	105,774	100,683
(Provision) release for loan and lease losses	(19,475)	(12,142)	(39,970)	(22,323)
Non-interest income (loss)	10,005	9,555	20,635	20,297
Direct non-interest expenses	(31,510)	(30,198)	(63,525)	(59,866)
Segment (loss) income	12,143	17,526	22,914	38,791
Average earnings assets	2,031,391	2,021,367	1,951,587	1,943,173
Commercial And Corporate [Member]
Segment Reporting Information [Line Items]
Interest income	40,825	42,476	83,124	85,805
Net (charge) credit for transfer of funds	(3,049)	(3,592)	(6,048)	(7,740)
Interest expense	0	0	0	0
Net interest income (loss)	37,776	38,884	77,076	78,065
(Provision) release for loan and lease losses	(14,179)	(6,221)	(27,524)	(92,332)
Non-interest income (loss)	1,150	1,330	2,917	2,789
Direct non-interest expenses	(14,694)	(13,993)	(27,272)	(31,581)
Segment (loss) income	10,053	20,000	25,197	(43,059)
Average earnings assets	3,683,746	3,971,083	3,869,311	4,150,227
Treasury And Investments [Member]
Segment Reporting Information [Line Items]
Interest income	13,988	12,584	29,571	24,044
Net (charge) credit for transfer of funds	4,584	11,552	10,384	24,515
Interest expense	(16,783)	(20,212)	(33,544)	(41,975)
Net interest income (loss)	1,789	3,924	6,411	6,584
(Provision) release for loan and lease losses	0	0	0	0
Non-interest income (loss)	344	(65,565)	397	(65,733)
Direct non-interest expenses	(1,514)	(1,549)	(2,640)	(3,955)
Segment (loss) income	619	(63,190)	4,168	(63,104)
Average earnings assets	2,714,179	2,774,670	2,712,564	2,732,539
United States Operations [Member]
Segment Reporting Information [Line Items]
Interest income	10,879	9,055	21,775	17,704
Net (charge) credit for transfer of funds	3,065	2,352	5,175	4,846
Interest expense	(4,855)	(5,583)	(9,652)	(11,700)
Net interest income (loss)	9,089	5,824	17,298	10,850
(Provision) release for loan and lease losses	10,481	3,943	16,440	2,434
Non-interest income (loss)	711	275	1,152	887
Direct non-interest expenses	(7,269)	(7,532)	(14,489)	(14,254)
Segment (loss) income	13,012	2,510	20,401	(83)
Average earnings assets	883,822	746,384	865,091	713,072
Virgin Islands Operations [Member]
Segment Reporting Information [Line Items]
Interest income	10,418	11,102	20,651	21,410
Net (charge) credit for transfer of funds	0	0	0	0
Interest expense	(996)	(995)	(1,893)	(1,998)
Net interest income (loss)	9,422	10,107	18,758	19,412
(Provision) release for loan and lease losses	518	(4,100)	(132)	(8,834)
Non-interest income (loss)	1,690	1,856	3,657	4,028
Direct non-interest expenses	(8,664)	(15,358)	(17,688)	(24,494)
Segment (loss) income	2,966	(7,495)	4,595	(9,888)
Average earnings assets	$ 670,692	$ 657,946	$ 663,172	$ 667,587

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Schedule of Repurchase Agreement Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	$ 900,000	[1]	$ 900,000
Less than three years
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	600,000
Three to five years
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	$ 300,000

[1] As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

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INVESTMENT SECURITIES - Available-For-Sale Investments' Fair Value And Gross Unrealized Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	$ 40,017	$ 1,232,981
Unrealized Losses Less than 12 months	93	59,230
Fair Value 12 months or more	1,112,281	143,119
Unrealized Losses 12 months or more	51,728	33,875
Total Fair Value	1,152,298	1,376,100
Total Unrealized Losses	51,821	93,105
Equity Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	9	33
Unrealized Losses Less than 12 months	26	2
Fair Value 12 months or more	0	0
Unrealized Losses 12 months or more	0	0
Total Fair Value	9	33
Total Unrealized Losses	26	2
Debt Securities [Member] | Puerto Rico Government Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	0	23,156
Unrealized Losses Less than 12 months	0	5,977
Fair Value 12 months or more	44,096	28,174
Unrealized Losses 12 months or more	16,110	13,701
Total Fair Value	44,096	51,330
Total Unrealized Losses	16,110	19,678
Debt Securities [Member] | US States And Political Subdivisions Member [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	0	175,369
Unrealized Losses Less than 12 months	0	8,913
Fair Value 12 months or more	256,856	74,126
Unrealized Losses 12 months or more	7,389	5,863
Total Fair Value	256,856	249,495
Total Unrealized Losses	7,389	14,776
Mortgage Backed Securities [Member] | Collateralized Mortgage Obligations Member
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	0	0
Unrealized Losses Less than 12 months	0	0
Fair Value 12 months or more	9	81
Unrealized Losses 12 months or more	0	1
Total Fair Value	9	81
Total Unrealized Losses	0	1
Mortgage Backed Securities [Member] | Other-mortgage pass-through trust certificates [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	0	0
Unrealized Losses Less than 12 months	0	0
Fair Value 12 months or more	38,064	40,738
Unrealized Losses 12 months or more	13,123	14,310
Total Fair Value	38,064	40,738
Total Unrealized Losses	13,123	14,310
Mortgage Backed Securities [Member] | Federal National Mortgage Association Certificates And Obligations F N M A [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	40,008	748,215
Unrealized Losses Less than 12 months	67	33,626
Fair Value 12 months or more	577,485	0
Unrealized Losses 12 months or more	11,808	0
Total Fair Value	617,493	748,215
Total Unrealized Losses	11,875	33,626
Mortgage Backed Securities [Member] | Federal Home Loan Mortgage Corporation Certificates And Obligations F H L M C [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value Less than 12 months	0	286,208
Unrealized Losses Less than 12 months	0	10,712
Fair Value 12 months or more	195,771	0
Unrealized Losses 12 months or more	3,298	0
Total Fair Value	195,771	286,208
Total Unrealized Losses	$ 3,298	$ 10,712

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INCOME TAXES - Reconciliation of Unrecognized Tax Benefits (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Reconciliation Of Unrecognized Tax Benefits Excluding Amounts Pertaining To Examined Tax Returns Roll Forward
Balance at the beginning of the period	$ 4,310	$ 2,374
Unrecognized Tax Benefits Increases Resulting From Prior Period Tax Positions	(1,763)	0
Balance at the end of the period	$ 2,547	$ 2,374

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FAIR VALUE - Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Fair Value Inputs Level 1 [Member]		Jun. 30, 2013 Fair Value Inputs Level 1 [Member]		Jun. 30, 2014 Fair Value Inputs Level 2 [Member]		Jun. 30, 2013 Fair Value Inputs Level 2 [Member]		Jun. 30, 2014 Fair Value Inputs Level 3 [Member]		Jun. 30, 2013 Fair Value Inputs Level 3 [Member]		Jun. 30, 2014 Carrying Reported Amount Fair Value Disclosure [Member]	Dec. 31, 2013 Carrying Reported Amount Fair Value Disclosure [Member]	Jun. 30, 2014 Estimate Of Fair Value Fair Value Disclosure [Member]	Dec. 31, 2013 Estimate Of Fair Value Fair Value Disclosure [Member]	Jun. 30, 2014 Estimate Of Fair Value Fair Value Disclosure [Member] Fair Value Inputs Level 1 [Member]	Dec. 31, 2013 Estimate Of Fair Value Fair Value Disclosure [Member] Fair Value Inputs Level 1 [Member]	Jun. 30, 2014 Estimate Of Fair Value Fair Value Disclosure [Member] Fair Value Inputs Level 2 [Member]	Dec. 31, 2013 Estimate Of Fair Value Fair Value Disclosure [Member] Fair Value Inputs Level 2 [Member]	Jun. 30, 2014 Estimate Of Fair Value Fair Value Disclosure [Member] Fair Value Inputs Level 3 [Member]	Dec. 31, 2013 Estimate Of Fair Value Fair Value Disclosure [Member] Fair Value Inputs Level 3 [Member]
Assets:
Cash and due from banks and money market investments															$ 677,662	$ 655,671	$ 677,662	$ 655,671	$ 677,662	$ 655,671	$ 0	$ 0	$ 0	$ 0
Investment securities available for sale	1,997,408	1,978,282													1,997,408	1,978,282	1,997,408	1,978,282	7,506	7,532	1,948,984	1,927,458	40,918	43,292
Other equity securities															29,141	28,691	29,141	28,691	0	0	29,141	28,691	0	0
Loans held for sale			0	[1]	0	[2]	0	[1]	142,632	[2]	54,755	[1]	94,951	[2]	72,105	75,969	72,807	76,684	0	0	18,052	21,883	54,755	54,801
Loans, held for investment															9,467,101	9,636,170
Less: allowance for loan and lease losses	(241,177)	(285,858)													(241,177)	(285,858)
Loans held for investment, net of allowance			0	[3]	0	[4]	0	[3]	0	[4]	484,381	[3]	409,056	[4]	9,225,924	9,350,312	8,892,011	9,127,234	0	0	0	0	8,892,011	9,127,234
Derivatives, included in assets	115	394													115	394	115	394	0	0	115	394	0	0
Liabilities:
Deposits															9,630,788	9,879,924	9,644,647	9,898,615	0	0	9,644,647	9,898,615	0	0
Securities sold under agreements to repurchase															900,000	900,000	977,620	976,151	0	0	977,620	976,151	0	0
Advances from FHLB															320,000	300,000	319,505	297,523	0	0	319,505	297,523	0	0
Other borrowings	231,959	231,959													231,959	231,959	115,954	106,772	0	0	0	0	115,954	106,772
Derivatives, included in liabilities	$ 3,572	$ 4,023													$ 3,572	$ 4,023	$ 3,572	$ 4,023	$ 0	$ 0	$ 3,572	$ 4,023	$ 0	$ 0

[1] The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

[2] The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and, for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

[3] Mainly impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.

[4]  Mainly impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS (Tables)

3 Months Ended

Jun. 30, 2014

Summarized income statement information

The following table shows summarized unaudited income statement information of CPG/GS for the quarters and six-month periods ended June 30, 2014 and 2013:
	Quarter Ended				Six-Month Period Ended
	June 30,		June 30,		June 30,		June 30,
	2014		2013		2014		2013
	(In thousands)				(In thousands)
Revenues, including net realized gains on sale of
investments in loans and OREO	$	2,118	$	1,040	$	2,869	$	1,719
Gross (loss) profit	$	(455)	$	(1,893)	$	(1,963)	$	(3,668)
Net (loss) income	$	(2,355)	$	(3,877)	$	(4,802)	$	2,193

Changes in Servicing Assets

The changes in servicing assets are shown below:
		Quarter ended				Six-Month period ended
		June 30,				June 30,
		2014		2013		2014		2013
		(In thousands)
Balance at beginning of period		$	22,026	$	18,717	$	21,987	$	17,524
Capitalization of servicing assets			1,017		2,094		2,069		3,814
Amortization			(790)		(796)		(1,573)		(1,586)
Adjustment to fair value			39		277		(180)		557
Other (1)			(22)		(313)		(33)		(330)
Balance at end of period		$	22,270	$	19,979	$	22,270	$	19,979
(1)	Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

Changes in Impairment Allowance

Changes in the impairment allowance related to servicing assets were as follows:
	Quarter ended				Six-Month Period Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at beginning of period	$	431	$	392	$	212	$	672
Temporary impairment charges		24		75		243		115
Recoveries		(63)		(352)		(63)		(672)
Balance at end of period	$	392	$	115	$	392	$	115

Components of Net Servicing Income

	The components of net servicing income are shown below:
		Quarter ended				Six-Month Period Ended
		June 30,				June 30,
		2014		2013		2014		2013
		(In thousands)
Servicing fees		$	1,689	$	2,096	$	3,360	$	3,613
Late charges and prepayment penalties			177		218		341		431
Adjustment for loans repurchased			(22)		(313)		(33)		(330)
Other (1)			(689)		(148)		(1,047)		(148)
Servicing income, gross			1,155		1,853		2,621		3,566
Amortization and impairment of servicing assets			(751)		(519)		(1,753)		(1,029)
Servicing income, net		$	404	$	1,334	$	868	$	2,537
(1)	Mainly consisted of compensatory fees imposed by GSEs and losses related to representations and warranties.

Key Economic Assumptions Used in Determining Fair Value at Time of Sale of Loans

The Corporation’s servicing assets are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale ranged as follows:
	Maximum		Minimum
Six-Month Period Ended June 30, 2014:
Constant prepayment rate:
Government guaranteed mortgage loans	9.6	%	9.1	%
Conventional conforming mortgage loans	9.4	%	8.9	%
Conventional non-conforming mortgage loans	13.4	%	12.7	%
Discount rate:
Government guaranteed mortgage loans	11.5	%	11.5	%
Conventional conforming mortgage loans	9.5	%	9.5	%
Conventional non-conforming mortgage loans	13.9	%	13.8	%
Six-Month Period Ended June 30, 2013:
Constant prepayment rate:
Government guaranteed mortgage loans	10.5	%	9.1	%
Conventional conforming mortgage loans	10.9	%	9.4	%
Conventional non-conforming mortgage loans	14.3	%	13.5	%
Discount rate:
Government guaranteed mortgage loans	12.0	%	12.0	%
Conventional conforming mortgage loans	10.0	%	10.0	%
Conventional non-conforming mortgage loans	14.3	%	14.3	%

Weighted-Averages of Key Economic Assumptions in Valuation Model

	(Dollars in thousands)
Carrying amount of servicing assets	$	22,270
Fair value	$	24,917
Weighted-average expected life (in years)		9.15
Constant prepayment rate (weighted-average annual rate)		9.78%
Decrease in fair value due to 10% adverse change	$	953
Decrease in fair value due to 20% adverse change	$	1,846
Discount rate (weighted-average annual rate)		10.62%
Decrease in fair value due to 10% adverse change	$	1,045
Decrease in fair value due to 20% adverse change	$	2,009

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SEGMENT INFORMATION

3 Months Ended

Jun. 30, 2014

SEGMENT INFORMATION

NOTE 21 – SEGMENT INFORMATION

Based upon the Corporation's organizational structure and the information provided to the Chief Executive Officer of the Corporation and, to a lesser extent, the Board of Directors, the operating segments are driven primarily by the Corporation's lines of business for its operations in Puerto Rico, the Corporation's principal market, and by geographic areas for its operations outside of Puerto Rico. As of June 30, 2014, the Corporation had six reportable segments: Commercial and Corporate Banking; Mortgage Banking; Consumer (Retail) Banking; Treasury and Investments; United States Operations, and Virgin Islands Operations. Management determined the reportable segments based on the internal reporting used to evaluate performance and to assess where to allocate resources. Others factors such as the Corporation's organizational chart, nature of the products, distribution channels, and the economic characteristics of the product were also considered in the determination of the reportable segments.

The Commercial and Corporate Banking segment consists of the Corporation's lending and other services for large customers represented by specialized and middle-market clients and the public sector. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, and floor plan financings, as well as other products, such as cash management and business management services. The Mortgage Banking segment consists of the origination, sale, and servicing of a variety of residential mortgage loans. The Mortgage Banking segment also acquires and sells mortgages in the secondary markets. In addition, the Mortgage Banking segment includes mortgage loans purchased from other local banks and mortgage bankers. The Consumer (Retail) Banking segment consists of the Corporation's consumer lending and deposit-taking activities conducted mainly through its branch network and loan centers. The Treasury and Investments segment is responsible for the Corporation's investment portfolio and treasury functions executed to manage and enhance liquidity. This segment lends funds to the Commercial and Corporate Banking, Mortgage Banking and Consumer (Retail) Banking segments to finance their lending activities and borrows from those segments and from the United States Operations segment. The Consumer (Retail) Banking and the United States Operations segments also lend funds to other segments. The interest rates charged or credited by Treasury and Investments, the Consumer (Retail) Banking and the United States Operations segments are allocated based on market rates. The difference between the allocated interest income or expense and the Corporation's actual net interest income from centralized management of funding costs is reported in the Treasury and Investments segment. The United States Operations segment consists of all banking activities conducted by FirstBank in the United States mainland, including commercial and retail banking services. The Virgin Islands Operations segment consists of all banking activities conducted by the Corporation in the USVI and BVI, including commercial and retail banking services and insurance activities.

The accounting policies of the segments are the same as those referred to in Note 1- “Nature of Business and Summary of Significant Accounting Policies.”

The Corporation evaluates the performance of the segments based on net interest income, the estimated provision for loan and lease losses, non-interest income and direct non-interest expenses. The segments are also evaluated based on the average volume of their interest-earning assets less the allowance for loan and lease losses.

The following table presents information about the reportable segments:
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended June 30, 2014:
Interest income	$	27,444	$	54,869	$	40,825	$	13,988	$	10,879	$	10,418	$	158,423
Net (charge) credit for transfer of funds		(8,736)		4,136		(3,049)		4,584		3,065		-		-
Interest expense		-		(5,882)		-		(16,783)		(4,855)		(996)		(28,516)
Net interest income		18,708		53,123		37,776		1,789		9,089		9,422		129,907
(Provision) release for loan and lease losses		(4,089)		(19,475)		(14,179)		-		10,481		518		(26,744)
Non-interest income		2,701		10,005		1,150		344		711		1,690		16,601
Direct non-interest expenses		(10,340)		(31,510)		(14,694)		(1,514)		(7,269)		(8,664)		(73,991)
Segment income	$	6,980	$	12,143	$	10,053	$	619	$	13,012	$	2,966	$	45,773
Average earnings assets	$	2,029,859	$	2,031,391	$	3,683,746	$	2,714,179	$	883,822	$	670,692	$	12,013,689
(In thousands)	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
For the quarter ended June 30, 2013:
Interest income	$	27,469	$	57,984	$	42,476	$	12,584	$	9,055	$	11,102	$	160,670
Net (charge) credit for transfer of funds		(9,631)		(681)		(3,592)		11,552		2,352		-		-
Interest expense		-		(6,992)		-		(20,212)		(5,583)		(995)		(33,782)
Net interest income		17,838		50,311		38,884		3,924		5,824		10,107		126,888
(Provision) release for loan and lease losses		(68,944)		(12,142)		(6,221)		-		3,943		(4,100)		(87,464)
Non-interest income (loss)		238		9,555		1,330		(65,565)		275		1,856		(52,311)
Direct non-interest expenses		(16,570)		(30,198)		(13,993)		(1,549)		(7,532)		(15,358)		(85,200)
Segment (loss) income	$	(67,438)	$	17,526	$	20,000	$	(63,190)	$	2,510	$	(7,495)	$	(98,087)
Average earnings assets	$	2,093,238	$	2,021,367	$	3,971,083	$	2,774,670	$	746,384	$	657,946	$	12,264,688

	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Six-month period ended June 30, 2014:
Interest income	$	53,192	$	110,681	$	83,124	$	29,571	$	21,775	$	20,651	$	318,994
Net (charge) credit for transfer of funds		(17,282)		7,771		(6,048)		10,384		5,175		-		-
Interest expense		-		(12,678)		-		(33,544)		(9,652)		(1,893)		(57,767)
Net interest income		35,910		105,774		77,076		6,411		17,298		18,758		261,227
(Provision) release for loan and lease losses		(7,473)		(39,970)		(27,524)		-		16,440		(132)		(58,659)
Non-interest income		5,803		20,635		2,917		397		1,152		3,657		34,561
Direct non-interest expenses		(20,172)		(63,525)		(27,272)		(2,640)		(14,489)		(17,688)		(145,786)
Segment income	$	14,068	$	22,914	$	25,197	$	4,168	$	20,401	$	4,595	$	91,343
Average earnings assets	$	1,993,129	$	1,951,587	$	3,869,311	$	2,712,564	$	865,091	$	663,172	$	12,054,854
	Mortgage Banking		Consumer (Retail) Banking		Commercial and Corporate		Treasury and Investments		United States Operations		Virgin Islands Operations		Total
Six-month period ended June 30, 2013:
Interest income	$	55,689	$	116,243	$	85,805	$	24,044	$	17,704	$	21,410	$	320,895
Net (charge) credit for transfer of funds		(19,902)		(1,719)		(7,740)		24,515		4,846		-		-
Interest expense		-		(13,841)		-		(41,975)		(11,700)		(1,998)		(69,514)
Net interest income		35,787		100,683		78,065		6,584		10,850		19,412		251,381
(Provision) release for loan and lease losses		(77,532)		(22,323)		(92,332)		-		2,434		(8,834)		(198,587)
Non-interest income (loss)		4,588		20,297		2,789		(65,733)		887		4,028		(33,144)
Direct non-interest expenses		(28,218)		(59,866)		(31,581)		(3,955)		(14,254)		(24,494)		(162,368)
Segment (loss) income	$	(65,375)	$	38,791	$	(43,059)	$	(63,104)	$	(83)	$	(9,888)	$	(142,718)
Average earnings assets	$	2,096,464	$	1,943,173	$	4,150,227	$	2,732,539	$	713,072	$	667,587	$	12,303,062

The following table presents a reconciliation of the reportable segment financial information to the consolidated totals:
		Quarter Ended				Six-Month Period Ended
		June 30,				June 30,
		2014		2013		2014		2013
Net income (loss):
Total income (loss) for segments and other		$	45,773	$	(98,087)	$	91,343	$	(142,718)
Other non-interest (loss) income (1)			(670)		648		(7,280)		(4,890)
Other operating expenses (2)			(24,154)		(26,123)		(45,144)		(46,965)
Income (loss) before income taxes			20,949		(123,562)		38,919		(194,573)
Income tax benefit (expense)			276		979		(611)		(643)
Total consolidated net income (loss)		$	21,225	$	(122,583)	$	38,308	$	(195,216)
Average assets:
Total average earning assets for segments		$	12,013,689	$	12,264,688	$	12,054,854	$	12,303,062
Other average earning assets (1)			152		17,841		3,343		20,797
Average non-earning assets			640,718		654,304		656,179		681,489
Total consolidated average assets		$	12,654,559	$	12,936,833	$	12,714,376	$	13,005,348
(1)	The activities related to the Bank's equity interest in CPG/GS are presented as an Other non-interest income (loss) and as Other average earning assets in the table above.
(2)	Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

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SUPPLEMENTAL CASH FLOW INFORMATION

3 Months Ended

Jun. 30, 2014

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 20 – SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information is as follows:

	Six-Month Period Ended June 30,
	2014		2013
	(In thousands)
Cash paid for:
Interest on borrowings	$	51,817	$	64,075
Income tax		2,524		2,141
Non-cash investing and financing activities:
Additions to other real estate owned		13,267		42,526
Additions to auto and other repossessed assets		43,091		31,236
Capitalization of servicing assets		2,069		3,814
Loan securitizations		104,236		159,140
Loans held for investment transferred to held for sale		-		181,620

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Additional Information (Detail)	Jun. 30, 2014
Maximum [Member]
Derivative Instruments Gain Loss [Line Items]
Floating rate range	1.87%
Minimum [Member]
Derivative Instruments Gain Loss [Line Items]
Floating rate range	1.67%

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EARNINGS PER COMMON SHARE - Additional Information (Detail)				3 Months Ended		6 Months Ended	3 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013 Restricted Stock [Member]	Jun. 30, 2014 Stock Option [Member]	Jun. 30, 2013 Stock Option [Member]	Jun. 30, 2013 Stock Option [Member]	Jun. 30, 2013 Warrant [Member]
Earnings Per Share Diluted [Line Items]
Antidilutive effect on earnings per share				82,575	104,499	104,499	1,285,899
Unvested shares of restricted stock	2,328,840	1,411,185	1,442,427

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DEPOSITS (Tables)

3 Months Ended

Jun. 30, 2014

Summary of Deposit Balances

The following table summarizes deposit balances:
	June 30,			December 31,
	2014		2013
	(In thousands)
Type of account:
Non-interest bearing checking accounts	$	851,038	$	851,212
Savings accounts		2,387,743		2,334,831
Interest-bearing checking accounts		1,079,843		1,167,480
Certificates of deposit		2,215,263		2,384,378
Brokered CDs		3,096,901		3,142,023
	$	9,630,788	$	9,879,924

Brokered Certificates Of Deposit Mature

Brokered CDs mature as follows:
	June 30,
	2014
	(In thousands)
Three months or less	$	547,506
Over three months to six months		475,447
Over six months to one year		757,172
One to three years		1,164,461
Three to five years		116,314
Over five years		36,001
Total	$	3,096,901

Components of Interest Expense on Deposits

The following are the components of interest expense on deposits:
	Quarter Ended				Six-Month Period Ended
	June 30,				June 30,
	2014			2013	2014			2013
	(In thousands)				(In thousands)
Interest expense on deposits	$	17,750	$	21,891	$	36,264	$	45,280
Amortization of broker placement fees		1,716		2,027		3,501		4,182
Interest expense on deposits	$	19,466	$	23,918	$	39,765	$	49,462

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REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

3 Months Ended

Jun. 30, 2014

REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

NOTE 22 – REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES

The Corporation is subject to various regulatory capital requirements imposed by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation's assets and liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation's capital amounts and classification are also subject to qualitative judgment and adjustment by the regulators with respect to minimum capital requirements, components, risk weightings and other factors.

Capital standards established by regulations require the Corporation to maintain minimum amounts and ratios for Leverage (Tier 1 capital to average total assets) and ratios of Tier 1 Capital to Risk-Weighted Assets and Total Capital to Risk-Weighted Assets as defined in the regulations. The total amount of risk-weighted assets is computed by applying risk-weighting factors to the Corporation's assets and certain off-balance sheet items, which generally vary from 0% to 100% depending on the nature of the asset.

Effective June 2, 2010, FirstBank, by and through its Board of Directors, entered into a Consent Order (the “FDIC Order”) with the FDIC and OCIF. The FDIC Order provides for various things, including (among other things) the following: (1) having and retaining qualified management; (2) increased participation in the affairs of FirstBank by its Board of Directors; (3) development and implementation by FirstBank of a capital plan to attain a leverage ratio of at least 8%, a Tier 1 risk-based capital ratio of at least 10% and a total risk-based capital ratio of at least 12%; (4) adoption and implementation of strategic, liquidity and fund management and profit and budget plans and related projects within certain timetables set forth in the FDIC Order and on an ongoing basis; (5) adoption and implementation of plans for reducing FirstBank's positions in certain classified assets and delinquent and non-accrual loans within timeframes set forth in the FDIC Order; (6) refraining from lending to delinquent or classified borrowers already obligated to FirstBank on any extensions of credit so long as such credit remains uncollected, except where FirstBank's failure to extend further credit to a particular borrower would be detrimental to the best interests of FirstBank, and any such additional credit is approved by FirstBank's Board of Directors; (7) refraining from accepting, increasing, renewing or rolling over brokered CDs without the prior written approval of the FDIC; (8) establishment of a comprehensive policy and methodology for determining the allowance for loan and lease losses and the review and revision of FirstBank's loan policies, including the non-accrual policy; and (9) adoption and implementation of adequate and effective programs of independent loan review, appraisal compliance, and an effective policy for managing FirstBank's sensitivity to interest rate risk. The foregoing summary is not complete and is qualified in all respects by reference to the actual language of the FDIC Order. Although all of FirstBank's regulatory capital ratios exceeded the minimum capital ratios for “well capitalized” levels, as well as the minimum capital ratios required by the FDIC Order, as of June 30, 2014, FirstBank cannot be treated as a “well capitalized” institution under regulatory guidance because it is operating under the FDIC Order.

Effective June 3, 2010, First BanCorp. entered into the Written Agreement with the New York FED. The Written Agreement provides, among other things, that the holding company must serve as a source of strength to FirstBank, and that, except with the consent generally of the New York FED and the Federal Reserve Board, (1) the holding company may not pay dividends to stockholders or receive dividends from FirstBank, (2) the holding company and its nonbank subsidiaries may not make payments on trust-preferred securities or subordinated debt, and (3) the holding company cannot incur, increase, or guarantee debt or repurchase any capital securities. The Written Agreement also requires that the holding company submit a capital plan that reflects sufficient capital at First BanCorp. on a consolidated basis, which must be acceptable to the New York FED, and follow certain guidelines with respect to the appointment or change in responsibilities of senior officers. The foregoing summary is not complete and is qualified in all respects by reference to the actual language of the Written Agreement.

The Corporation submitted its capital plan setting forth how it plans to improve capital positions to comply with the FDIC Order and the Written Agreement over time.

In addition to the Capital Plan, the Corporation has submitted to its regulators a liquidity and brokered CD plan, including a contingency funding plan, a non-performing asset reduction plan, a budget and profit plan, a strategic plan, and a plan for the reduction of classified and special mention assets. As of June 30, 2014, the Corporation had completed all of the items included in the Capital Plan and is continuing to work on reducing non-performing loans. Further, the Corporation has reviewed and enhanced the Corporation's loan review program, various credit policies, the Corporation's treasury and investment policy, the Corporation's asset classification and allowance for loan and lease losses and non-accrual policies, the Corporation's charge-off policy and the Corporation's appraisal program. The Regulatory Agreements also require the submission to the regulators of quarterly progress reports.

The FDIC Order imposes no other restrictions on FirstBank's products or services offered to customers, nor does it or the Written Agreement impose any type of penalties or fines upon FirstBank or the Corporation. Concurrent with the FDIC Order, the FDIC has granted FirstBank temporary waivers to enable it to continue accessing the brokered CD market through September 30, 2014. FirstBank will request approvals for future periods, although no assurance can be given that future approvals will be given.

In July 2013, U.S. banking regulators approved a revised regulatory capital framework for U.S. banking organizations (the “Basel 3 rules”) that is based on international regulatory capital requirements adopted by the Basel Committee on Banking Supervision over the past several years. The Basel 3 rules introduce new minimum capital ratios and capital conservation buffer requirements, change the composition of regulatory capital, require a number of new adjustments to and deductions from regulatory capital, and introduce a new “Standardized Approach” for the calculation of risk-weighted assets that will replace the risk-weighting requirements under the current U.S. regulatory capital rules. The new minimum regulatory capital requirements and the Standardized Approach for the calculation of risk-weighted assets will become effective for the Corporation and FirstBank on January 1, 2015. The capital conservation buffer requirements, and the regulatory capital adjustments and deductions under the Basel 3 rules will be phased-in over several years ending as of December 31, 2018.

The Basel 3 rules introduce a new and separate ratio of Common Equity Tier 1 capital (“CET1”) to risk-weighted assets. CET1, a component of total Tier 1 capital, generally consists of common stock and related surplus, retained earnings, accumulated other comprehensive income (“AOCI”), and qualifying minority interests. In addition, the Basel 3 rules also will require the Corporation to maintain an additional CET1 capital conservation buffer of 2.5%. Thus, when the Basel 3 rules are fully phased in as of January 1, 2019, the Corporation will be required to maintain: (i) a minimum CET1 to risk-weighted assets ratio of at least 4.5%, plus the 2.5% “capital conservation buffer,” resulting in a required minimum CET1 ratio of at least 7% upon full implementation, (ii) a minimum ratio of total Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum Tier 1 capital ratio of 8.5% upon full implementation, (iii) a minimum ratio of total Tier 1 plus Tier 2 capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer, resulting in a required minimum total capital ratio of 10.5% upon full implementation, and (iv) a required minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average on-balance sheet (non-risk adjusted) assets. The phase-in of the capital conversation buffer will begin on January 1, 2016 with a first year requirement of 0.625% of additional CET1, which will be progressively increased over a four-year period, increasing by that same percentage amount on each subsequent January 1 until it reaches the fully-phased in 2.5% CET1 requirement on January 1, 2019.

In addition, the Basel 3 rules require a number of new deductions from and adjustments to CET1, including deductions from CET1 for mortgage servicing rights, and deferred tax assets dependent upon future taxable income. In the case of mortgage servicing assets and deferred tax assets, among others, these items would be required to be deducted to the extent that any one such category exceeds 10% of CET1 or all such categories in the aggregate exceed 15% of CET1. Under current regulatory capital requirements, the effect of AOCI is excluded for the purposes of calculating the required regulatory capital ratios. By comparison, under the Basel 3 rules, the effects of certain AOCI items are not excluded. Certain banking organizations, however, including the Corporation and FirstBank, will be allowed to make a one-time permanent election in early 2015 to continue to exclude AOCI items.

The Corporation and FirstBank expect to make this election in order to avoid significant variations in the level of capital depending upon the impact of interest rate fluctuations on the fair value of the securities portfolio.

In addition, the Basel 3 rules will require that certain non-qualifying capital instruments, including cumulative preferred stock and Trust Preferred Securities (“TRuPs”), be excluded from Tier 1 capital. In general, banking organizations such as the Corporation and the Bank, must begin to phase out TRuPs from Tier 1 capital by January 1, 2015. The Corporation will be allowed to include 25% of the $225 million outstanding qualifying TRuPs as Tier 1 capital in 2015 and the TRuPs must be fully phased out from Tier 1 capital by January 1, 2016. However, the Corporation's TRuPs may continue to be included in Tier 2 capital until the instruments are redeemed or mature.

The Basel 3 rules also revise the “prompt corrective action” (“PCA”) regulations that apply to depository institutions, including FirstBank, pursuant to Section 38 of the Federal Deposit Insurance Act by (i) introducing a separate CET1 ratio requirement for each PCA capital category (other than critically undercapitalized), with the required CET1 ratio being 6.5% for well-capitalized status; (ii) increasing the minimum Tier 1 capital ratio requirement for each PCA capital category, with the minimum Tier 1 capital ratio for well-capitalized status being 8% (as compared to the current 6%); and (iii) eliminating the current provision that allows a bank with a composite supervisory rating of 1 to have a 3% leverage ratio and still be adequately capitalized and maintaining the minimum leverage ratio for well-capitalized status at 5%. The Basel 3 rules do not change the total risk-based capital requirement (10% for well-capitalized status) for any PCA capital category. The new PCA requirements become effective on January 1, 2015.

The Basel 3 rules separately impose a Standardized Approach for risk-weightings that expands the risk-weighting categories from the four major risk-weighting categories under the current regulatory capital rules (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets. In a number of cases, the Standardized Approach will result in higher risk weights for a variety of asset categories. Specific changes to the risk-weightings of assets under the current regulatory capital rules include, among other things: (i) applying a 150% risk weight instead of a 100% risk weight for certain high volatility commercial real estate acquisition, development and construction loans, (ii) assigning a 150% risk weight to exposures that are 90 days past due (other than qualifying residential mortgage exposures, which remain at an assigned risk-weighting of 100%), and (iii) establishing a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable, in contrast to the 0% risk-weighting under the current rules.

The Corporation's total capital, Tier I and leverage ratios as of June 30, 2014 were 18.06%, 16.80% and 12.04%, respectively. Meanwhile, the total capital, Tier I capital, and leverage ratios as of June 30, 2014 of the banking subsidiary, FirstBank Puerto Rico, were 17.70%, 16.43% and 11.79%, respectively.

The Corporation enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments may include commitments to extend credit and commitments to sell mortgage loans at fair value. As of June 30, 2014, commitments to extend credit amounted to approximately $1.1 billion, of which $685.3 million relates to credit card loans. Commercial and Financial standby letters of credit amounted to approximately $44.8 million. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause. Generally, the Corporation's mortgage banking activities do not enter into interest rate lock agreements with prospective borrowers.

As of June 30, 2014, First BanCorp and its subsidiaries were defendants in various legal proceedings arising in the ordinary course of business. Management believes that the final disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on the Corporation's financial position, results of operations or cash flows.

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FIRST BANCORP. (Holding Company Only) Financial Information

3 Months Ended

Jun. 30, 2014

FIRST BANCORP. (Holding Company Only) Financial Information

NOTE 23 – FIRST BANCORP. (HOLDING COMPANY ONLY) FINANCIAL INFORMATION

The following condensed financial information presents the financial position of the Holding Company only as of June 30, 2014 and December 31, 2013 and the results of its operations for the quarters and sixmonth periods ended June 30, 2014 and 2013.

Statements of Financial Condition
	As of June 30,			As of December 31,
	2014		2013
	(In thousands)
Assets
Cash and due from banks	$	30,862	$	31,957
Money market investments		6,111		6,111
Investment securities available for sale, at market:
Equity investments		9		33
Other investment securities		285		285
Loans held for investment, net		345		356
Investment in First Bank Puerto Rico, at equity		1,496,636		1,403,612
Investment in First Bank Insurance Agency, at equity		11,215		9,834
Investment in FBP Statutory Trust I		3,093		3,093
Investment in FBP Statutory Trust II		3,866		3,866
Other assets		4,186		4,101
Total assets	$	1,556,608	$	1,463,248
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	231,959	$	231,959
Accounts payable and other liabilities		18,648		15,431
Total liabilities		250,607		247,390
Stockholders' equity		1,306,001		1,215,858
Total liabilities and stockholders' equity	$	1,556,608	$	1,463,248

	Quarter Ended				Six-Month Period Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(In thousands)				(In thousands)
Income:
Interest income on money market investments	$	5	$	6	$	10	$	11
Other income		55		72		108		124
		60		78		118		135
Expense:
Notes payable and other borrowings		1,786		1,763		3,546		3,509
Other operating expenses		768		806		1,274		2,609
		2,554		2,569		4,820		6,118
Impairment on equity securities		-		(42)		0		(42)
Loss before income taxes and equity
in undistributed earnings (losses) of subsidiaries		(2,494)		(2,533)		(4,702)		(6,025)
Income tax provision		(2)		-		(4)		-
Equity in undistributed earnings (losses) of subsidiaries		23,721		(120,050)		43,014		(189,191)
Net income (loss)	$	21,225	$	(122,583)	$	38,308	$	(195,216)
Other Comprehensive income (loss), net of tax		27,790		(59,964)		50,329		(68,574)
Comprehensive income (loss)	$	49,015	$	(182,547)	$	88,637	$	(263,790)

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Balance at beginning of period at Dec. 31, 2012		$ 63,047	$ 20,624	$ 885,754	$ 487,166	$ 28,432
Total stockholders' equity	1,222,328	63,047	20,698	886,775	291,950	(40,142)
Common stock issued for compensation			11	0
Repurchase of common stock			(4)	(233)
Restricted stock grants			70	(70)
Restricted stock forefeited			(3)	3
Stock-based compensation				1,321
Net income (loss)	(195,216)				(195,216)
Excess of carrying amount of preferred stock exchanged over fair value of new common stock	0				0
Other comprehensive income (loss), net of tax	(68,574)					(68,574)
Common stock issued in exchange of preferred stock-Series A through E			0	0
Exchange Of Preferred Stock Series For Common Stock		0
Reversal of Issuance cost of Series A through E of preferred stock exchanged				0
Issuance Cost Of Common Stock				0
Balance at end of period at Jun. 30, 2013	1,222,328	63,047	20,698	886,775	291,950	(40,142)
Balance at beginning of period at Dec. 31, 2013	1,215,858	63,047	20,707	888,161	322,679	(78,736)
Total stockholders' equity	1,306,001	36,104	21,276	914,382	362,646	(28,407)
Common stock issued for compensation			15	(15)
Repurchase of common stock			(7)	(385)
Restricted stock grants			102	(102)
Restricted stock forefeited			0	0
Stock-based compensation				1,960
Net income (loss)	38,308				38,308
Excess of carrying amount of preferred stock exchanged over fair value of new common stock	1,659				1,659
Other comprehensive income (loss), net of tax	50,329					50,329
Common stock issued in exchange of preferred stock-Series A through E			459	23,904
Exchange Of Preferred Stock Series For Common Stock		(26,943)
Reversal of Issuance cost of Series A through E of preferred stock exchanged				921
Issuance Cost Of Common Stock				(62)
Balance at end of period at Jun. 30, 2014	$ 1,306,001	$ 36,104	$ 21,276	$ 914,382	$ 362,646	$ (28,407)

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SUBSEQUENT EVENTS

3 Months Ended

Jun. 30, 2014

SUBSEQUENT EVENTS

NOTE 24 – SUBSEQUENT EVENTS

The Corporation has performed an evaluation of events occurring subsequent to June 30, 2014; management has determined that there are no additional events occurring in this period that require disclosure in or adjustment to the accompanying financial statements.

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LOAN PORTFOLIO - Accretable Yield Related to Purchased Credit Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Accretable Yield [Line Items]
Accretable yield at acquisition	$ 0	$ 406	$ 0	$ 2,171
Additions	86,759	0	86,759	0
Reclassification to nonaccretable	0	0	0	(1,352)
Accretion recognized in earnings	612	0	612	413
Accretable yield at the end of the period	$ 86,147	$ 406	$ 86,147	$ 406

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Securities Sold Under Agreements to Repurchase (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Repurchase agreements, interest ranging from 2.45% to 3.35%(December 31, 2012- 2.45% to 3.39%)	$ 900,000	[1]	$ 900,000

[1] As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

3 Months Ended

Jun. 30, 2014

Notional Amounts of All Derivative Instruments

The following table summarizes the notional amounts of all derivative instruments:
	Notional Amounts
	As of		As of
	June 30,		December 31,
	2014		2013
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements	$	30,859	$	31,080
Written interest rate cap agreements		37,769		38,391
Purchased interest rate cap agreements		37,769		38,391
Forward Contracts:
Sale of TBA GNMA MBS pools		17,000		25,000
	$	123,397	$	132,862
Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

Summary of Fair Value of Derivative Instruments and Location in Statement of Financial Condition

The following table summarizes the fair value of derivative instruments and the location in the statement of financial condition:
	Asset Derivatives								Liability Derivatives
	Statement of		June 30,			December 31,					June 30,			December 31,
	Financial		2014			2013					2014			2013
	Condition Location		Fair Value			Fair Value			Statement of Financial Condition Location		Fair Value			Fair Value
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements		Other assets		$	99		$	162		Accounts payable and other liabilities		$	3,328		$	3,965
Written interest rate cap agreements		Other assets			-			-		Accounts payable and other liabilities			16			58
Purchased interest rate cap agreements		Other assets			16			58		Accounts payable and other liabilities			-			-
Forward Contracts:
Sales of TBA GNMA MBS pools		Other assets			-			174		Accounts payable and other liabilities			228			-
			$	115		$	394				$	3,572		$	4,023

Effect of Derivative Instruments on Statement of Income (Loss)

The following table summarizes the effect of derivative instruments on the statement of income (loss):
		Gain (or Loss)				Gain (or Loss)
	Location of Gain or (loss)	Quarter Ended				Six-Month Period Ended
	Recognized in Income on	June 30,				June 30,
(In thousands)	Derivatives	2014		2013		2014		2013
		(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements used to hedge fixed-rate loans	Interest income - Loans	$	261	$	709	$	574	$	1,099
Written and purchased interest rate cap agreements	Interest income - Loans		-		(1)		-		9
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage banking activities		(237)		971		(402)		866
Total gain on derivatives		$	24	$	1,679	$	172	$	1,974

Summary of Interest Rate Swaps

		As of		As of
		June 30,		December 31,
		2014		2013
			(Dollars in thousands)
Pay fixed/receive floating :
Notional amount		$	30,859	$	31,080
Weighted-average receive rate at period end			1.84%		1.85%
Weighted-average pay rate at period end			6.77%		6.77%
Floating rates range from 167 to 187 basis points over 3-month LIBOR
	As of June 30, 2014, the Corporation has not entered into any derivative instrument containing credit-risk related contingent features.

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FIRST BANCORP. (Holding Company Only) Financial Information (Tables)

3 Months Ended

Jun. 30, 2014

Statements of Financial Condition

Statements of Financial Condition
	As of June 30,			As of December 31,
	2014		2013
	(In thousands)
Assets
Cash and due from banks	$	30,862	$	31,957
Money market investments		6,111		6,111
Investment securities available for sale, at market:
Equity investments		9		33
Other investment securities		285		285
Loans held for investment, net		345		356
Investment in First Bank Puerto Rico, at equity		1,496,636		1,403,612
Investment in First Bank Insurance Agency, at equity		11,215		9,834
Investment in FBP Statutory Trust I		3,093		3,093
Investment in FBP Statutory Trust II		3,866		3,866
Other assets		4,186		4,101
Total assets	$	1,556,608	$	1,463,248
Liabilities and Stockholders' Equity
Liabilities:
Other borrowings	$	231,959	$	231,959
Accounts payable and other liabilities		18,648		15,431
Total liabilities		250,607		247,390
Stockholders' equity		1,306,001		1,215,858
Total liabilities and stockholders' equity	$	1,556,608	$	1,463,248

Statements of Income (Loss)

	Quarter Ended				Six-Month Period Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(In thousands)				(In thousands)
Income:
Interest income on money market investments	$	5	$	6	$	10	$	11
Other income		55		72		108		124
		60		78		118		135
Expense:
Notes payable and other borrowings		1,786		1,763		3,546		3,509
Other operating expenses		768		806		1,274		2,609
		2,554		2,569		4,820		6,118
Impairment on equity securities		-		(42)		0		(42)
Loss before income taxes and equity
in undistributed earnings (losses) of subsidiaries		(2,494)		(2,533)		(4,702)		(6,025)
Income tax provision		(2)		-		(4)		-
Equity in undistributed earnings (losses) of subsidiaries		23,721		(120,050)		43,014		(189,191)
Net income (loss)	$	21,225	$	(122,583)	$	38,308	$	(195,216)
Other Comprehensive income (loss), net of tax		27,790		(59,964)		50,329		(68,574)
Comprehensive income (loss)	$	49,015	$	(182,547)	$	88,637	$	(263,790)

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LOAN PORTFOLIO - Corporation's Aging of Loans Held for Investment Portfolio (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 30, 2014 numberofpayments	Dec. 31, 2013
Accounts Notes And Loans Receivable [Line Items]
Loans considered to be defaulted if borrower has failed to make payment for a period or more than the period	0 years 2 months 29 days	0 years 2 months 29 days
Period during which credit card loans continue to accrue finance charges and fees	0 years 5 months 27 days	0 years 5 months 27 days
Defaulted loans collateralizing Ginnie Mae (GNMA) securities	$ 19.8	$ 11.5
Minimum Number of Payments in Arrears to Consider Commercial Mortgage and Construction Loan as Past Due	2
Residential mortgage loans insured by FHA or guaranteed by the VA	40.3	37.0
Period of residential mortgage loan that are no longer accruing interest	1 year 6 months 0 days	1 year 6 months 0 days
Fha Va And Other Government Guaranteed Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	16.5	23.9
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	160.1	166.7
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	72.1	18.4
Residential Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	2.5	2.5
Land Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days past due Mortgages	$ 0.8	$ 0.9

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Consolidated Statements of Financial Condition (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
ASSETS
Cash and due from banks	$ 660,709		$ 454,302
Money market investments:
Time deposits with other financial institutions	300		300
Other short-term investments	16,653		201,069
Total money market investments	16,953		201,369
Investment securities available for sale, at fair value:
Securities pledged that can be repledged	1,038,071		1,042,482
Other investment securities	959,337		935,800
Total investment securities available for sale	1,997,408		1,978,282
Other equity securities	29,141		28,691
Investment in unconsolidated entities	0		7,279
Loans, net of allowance for loan and lease losses of $301,047 (2012 - $435,414)	9,225,924		9,350,312
Loans held for sale, at lower of cost or market	72,105		75,969
Total loans, net	9,298,029		9,426,281
Premises and equipment, net	170,056		166,946
Other real estate owned	121,842		160,193
Accrued interest receivable on loans and investments	52,092		54,012
Other assets	177,021		179,570
Total assets	12,523,251		12,656,925
LIABILITIES
Non-interest-bearing deposits	851,038		851,212
Interest-bearing deposits	8,779,750		9,028,712
Total deposits	9,630,788		9,879,924
Securities sold under agreements to repurchase	900,000	[1]	900,000
Advances from the Federal Home Loan Bank (FHLB)	320,000		300,000
Other borrowings	231,959		231,959
Accounts payable and other liabilities	134,503		129,184
Total liabilities	11,217,250		11,441,067
Preferred stock, authorized 50,000,000 shares:
Non-cumulative Perpetual Monthly Income Preferred Stock: issued - 22,004,000 shares, outstanding 2,521,872 shares, aggregate liquidation value of $63,047	36,104		63,047
Common stock, $0.10 par value, authorized, 2,000,000,000 shares; issued, 207,514,167 shares (2012 - 206,730,318 shares issued)	21,340		20,764
Less: Treasury stock (at par value)	(64)		(57)
Common stock outstanding, 206,982,105 shares outstanding (2012 - 206,235,465 shares	21,276		20,707
Additional paid-in capital	914,382		888,161
Retained earnings	362,646		322,679
Accumulated other comprehensive (loss) income, net of tax expense of $8,171 (2012 - $7,749)	(28,407)		(78,736)
Total stockholders' equity	1,306,001		1,215,858
Total liabilities and stockholders' equity	$ 12,523,251		$ 12,656,925

[1] As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Tables)

3 Months Ended

Jun. 30, 2014

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase (repurchase agreements) consist of the following:
		June 30,		December 31,
		2014 (1)		2013
		(Dollars in thousands)
Repurchase agreements, interest rates ranging from 2.45% to 3.31%
(December 31, 2013 - 2.45% to 3.32%)		$	900,000	$	900,000
(1)	As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

Schedule of Repurchase Agreement Maturity

Repurchase agreements mature as follows:
		June 30, 2014
		(In thousands)
	Over one year to three years	$	600,000
	Three to five years		300,000
	Total	$	900,000

Repurchase Agreements Grouped by Counterparty

Repurchase agreements as of June 30, 2014, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	Citigroup Global Markets	$	300,000	28
	JP Morgan Chase		200,000	32
	Dean Witter / Morgan Stanley		100,000	40
	Credit Suisse First Boston		300,000	42
		$	900,000

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Notional Amounts of All Derivative Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivative [Line Items]
Notional amount of derivatives	$ 123,397	$ 132,862
Interest Rate Swap [Member]
Derivative [Line Items]
Notional amount of derivatives	30,859	31,080
Nondesignated [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Notional amount of derivatives	30,859	31,080
Nondesignated [Member] | Interest Rate Cap [Member] | Purchase
Derivative [Line Items]
Notional amount of derivatives	37,769	38,391
Nondesignated [Member] | Interest Rate Cap [Member] | Written
Derivative [Line Items]
Notional amount of derivatives	37,769	38,391
Nondesignated [Member] | Forward Contracts [Member]
Derivative [Line Items]
Notional amount of derivatives	$ 17,000	$ 25,000

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FAIR VALUE - Qualitative Information Regarding Fair Value Measurements for Level 3 Financial Instruments (Detail)	3 Months Ended
	Jun. 30, 2014
Loans [Member]
Fair Value Option Quantitative Disclosures [Line Items]
Method	Income, Market, Comparable Sales, Discounted Cash Flows
Valuation technique	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Other Real Estate Owned [Member]
Fair Value Option Quantitative Disclosures [Line Items]
Method	Income, Market, Comparable Sales, Discounted Cash Flows
Valuation technique	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Mortgage Servicing Rights [Member]
Fair Value Option Quantitative Disclosures [Line Items]
Method	Discounted Cash Flow
Valuation technique	Weighted average prepayment rate 9.78%; weighted average discount rate 10.62%

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DEPOSITS - Components of Interest Expense on Deposits (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Deposits [Line Items]
Interest expense on deposits	$ 17,750	$ 21,891	$ 36,264	$ 45,280
Amortization of broker placement fees	1,716	2,027	3,501	4,182
Interest expense on deposits	$ 19,466	$ 23,918	$ 39,765	$ 49,462

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net income (loss)	$ 21,225	$ (122,583)	$ 38,308	$ (195,216)
Available-for-sale debt securities on which an other-than-temporary impairment has been recognized:
Subsequent unrealized gain on debt securities on which an other-than-temporary impairment has been recognized	274	592	1,187	1,435
Reclassification adjustment for other-than-temporary impairment on debt securities included in net income	0	0	0	117
All other unrealized gains and losses on available-for-sale securities:
All other unrealized holding gains arising during the period	27,806	(60,176)	49,430	(69,746)
Reclassification adjustment for other-than-temporary impairment on equity securities	0	42	0	42
Other Comprehensive Income Loss Reclassification Adjustment From AOCIF or Writedown Of Securities Before Tax			0	42
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax	(291)	0	(291)	0
Income tax expense related to items of other comprehensive income	1	(422)	3	(422)
Other comprehensive income (loss) for the period, net of tax	27,790	(59,964)	50,329	(68,574)
Total comprehensive income (loss)	$ 49,015	$ (182,547)	$ 88,637	$ (263,790)

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LOANS HELD FOR SALE - Portfolio of Loans Held for Sale (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts Notes And Loans Receivable [Line Items]
Commercial Mortgage loans	$ 6,953	$ 6,999
Total	72,105	75,969
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
Residential mortgage loans	17,350	21,168
Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Construction loans	$ 47,802	$ 47,802

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SEGMENT INFORMATION - Additional Information (Detail)	3 Months Ended
	Jun. 30, 2014 numberofreportableunits
Number of reportable segments	6

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SEGMENT INFORMATION - Reconciliation of Reportable Segment Financial Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Net Income (Loss):
Total income for segments and other	$ 45,773		$ (98,087)		$ 91,343		$ (142,718)
Other non-interest income (loss)	(670)	[1]	648	[1]	(7,280)	[1]	(4,890)	[1]
Other operating expenses	(24,154)	[2]	(26,123)	[2]	(45,144)	[2]	(46,965)	[2]
Income (loss) before income taxes	20,949		(123,562)		38,919		(194,573)
Income tax expense	276		979		(611)		(643)
Total consolidated net income (loss)	21,225		(122,583)		38,308		(195,216)
Average assets:
Total average earning assets for segments	12,013,689		12,264,688		12,054,854		12,303,062
Other average earning assets	152	[1]	17,841	[1]	3,343	[1]	20,797	[1]
Average non-earning assets	640,718		654,304		656,179		681,489
Total consolidated average assets	$ 12,654,559		$ 12,936,833		$ 12,714,376		$ 13,005,348

[1] The activities related to the Bank's equity interest in CPG/GS are presented as an Other non-interest income (loss) and as Other average earning assets in the table above.

[2] Expenses pertaining to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment are not included in the reported financial results of the operating segments. The unallocated corporate expenses include certain general and administrative expenses and related depreciation and amortization expenses.

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STOCK-BASED COMPENSATION - Restricted Stock Activity Under Omnibus Plan (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of non-vested shares of restricted stock, beginning of period	1,411,185
Granted shares of restricted stock	1,020,978
Vested	(101,323)
Forefeited	(2,000)
Number of non-vested shares of restricted stock, end of period	2,328,840
Weighted-Average Grant Date Fair Value, beginning of period	$ 3.04
Weighted-Average Grant Date Fair Value of Stocks	$ 3.52
Weighted-Averages Grant Date Dair Value, Forefeitures	$ 6.03
Weighted-Averages Grant Date Fair Value, Vested	$ 4.39
Weighted-Average Grant Date Fair Value, end of period	$ 3.20

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Interest Rate Swaps (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Pay fixed/receive floating :
Notional amount	$ 123,397	$ 132,862
Weighted-average receive rate at period end	1.84%	1.85%
Weighted-average pay rate at period end	6.77%	6.77%
Interest Rate Swap [Member]
Pay fixed/receive floating :
Notional amount	$ 30,859	$ 31,080

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Jun. 30, 2014

Activity of Stock Options

The activity of stock options granted under the 1997 stock option plan for the six-month period ended June 30, 2014 is set forth below:
				Weighted-Average
				Remaining		Aggregate
	Number of		Weighted-Average	Contractual Term		Intrinsic Value
	Options	Exercise Price		(Years)	(In thousands)
Beginning of period outstanding and
exercisable	101,435	$	206.95
Options expired	(12,795)		321.75
Options cancelled	(6,065)		226.15
End of period outstanding and exercisable	82,575	$	187.75	1.9	$	-

Restricted Stock Activity Under Omnibus Plan

The following table summarizes the restricted stock activity in 2014 under the Omnibus Plan for both executive officers covered by the TARP requirements and other employees as well as for independent directors:
	Six-Month Period Ended
	June 30, 2014
	Number of shares		Weighted-Average
	of restricted		Grant Date
	stock		Fair Value
Non-vested shares at beginning of year	1,411,185	$	3.04
Granted	1,020,978		3.52
Forfeited	(2,000)		6.03
Vested	(101,323)		4.39
Non-vested shares at June 30, 2014	2,328,840	$	3.20

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FAIR VALUE - Assets and Liabilities Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Investment securities available-for-sale:
Discount rate used for calculation of mortgage servicing rights value	14.50%	14.50%
Fair value input prepayment rate	32.00%	29.00%
Securities available for sale
Discount rate used for calculation of mortgage servicing rights value	14.50%	14.50%
Fair value input prepayment rate	32.00%	29.00%
Private Label Mbs [Member]
Investment securities available-for-sale:
Fair Value	$ 38,184
Discount rate used for calculation of mortgage servicing rights value	14.50%
Securities available for sale
Fair Value	38,184
Discount rate used for calculation of mortgage servicing rights value	14.50%
US States And Political Subdivisions Member [Member]
Investment securities available-for-sale:
Fair Value	2,734
Unobservable input prepayment rate	5.57%
Securities available for sale
Fair Value	$ 2,734
Unobservable input prepayment rate	5.57%
Discounted Cash Flow [Member] | Private Label Mbs [Member]
Investment securities available-for-sale:
Valuation technique	Discounted cash flow
Securities available for sale
Valuation technique	Discounted cash flow
Discounted Cash Flow [Member] | US States And Political Subdivisions Member [Member]
Investment securities available-for-sale:
Valuation technique	Discounted cash flow
Securities available for sale
Valuation technique	Discounted cash flow
Minimum [Member]
Investment securities available-for-sale:
Fair value input prepayment rate	18.15%	15.86%
Securities available for sale
Fair value input prepayment rate	18.15%	15.86%
Minimum [Member] | Private Label Mbs [Member]
Investment securities available-for-sale:
Unobservable input prepayment rate	18.15%
Fair value projected Cumulative Loss Rate	0.90%
Securities available for sale
Unobservable input prepayment rate	18.15%
Fair value projected Cumulative Loss Rate	0.90%
Maximum [Member]
Investment securities available-for-sale:
Fair value input prepayment rate	100.00%	100.00%
Securities available for sale
Fair value input prepayment rate	100.00%	100.00%
Maximum [Member] | Private Label Mbs [Member]
Investment securities available-for-sale:
Unobservable input prepayment rate	100.00%
Fair value projected Cumulative Loss Rate	80.00%
Securities available for sale
Unobservable input prepayment rate	100.00%
Fair value projected Cumulative Loss Rate	80.00%

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INVESTMENT SECURITIES - Significant Assumptions in Valuation of Private Label MBS (Detail)	3 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule Of Investments [Line Items]
Fair Value Inputs Discount Rate	14.50%	14.50%
Fair Value Inputs Prepayment Rate	32.00%	29.00%
Weighted Average, Projected Cumulative Loss Rate	8.50%	6.80%
Minimum [Member]
Schedule Of Investments [Line Items]
Fair Value Inputs Prepayment Rate	18.15%	15.86%
Weighted Average, Projected Cumulative Loss Rate	0.90%	0.58%
Maximum [Member]
Schedule Of Investments [Line Items]
Fair Value Inputs Prepayment Rate	100.00%	100.00%
Weighted Average, Projected Cumulative Loss Rate	80.00%	38.16%

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

3 Months Ended

Jun. 30, 2014

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

NOTE14 – SECURITIES SOLD UNDER AGREEMENTSTO REPURCHASE

Securities sold under agreements to repurchase (repurchase agreements) consist of the following:
		June 30,		December 31,
		2014 (1)		2013
		(Dollars in thousands)
Repurchase agreements, interest rates ranging from 2.45% to 3.31%
(December 31, 2013 - 2.45% to 3.32%)		$	900,000	$	900,000
(1)	As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

Repurchase agreements mature as follows:
		June 30, 2014
		(In thousands)
	Over one year to three years	$	600,000
	Three to five years		300,000
	Total	$	900,000

As of June 30, 2014 and December 31, 2013, the securities underlying such agreements were delivered to the dealers with which the repurchase agreements were transacted.

Repurchase agreements as of June 30, 2014, grouped by counterparty, were as follows:
	(Dollars in thousands)			Weighted-Average
	Counterparty	Amount		Maturity (In Months)
	Citigroup Global Markets	$	300,000	28
	JP Morgan Chase		200,000	32
	Dean Witter / Morgan Stanley		100,000	40
	Credit Suisse First Boston		300,000	42
		$	900,000

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INVESTMENT SECURITIES (Tables)

3 Months Ended

Jun. 30, 2014

Investment Securities Available for Sale

		June 30, 2014
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI								Fair value		Weighted average yield%
								Gross Unrealized
								gains			losses
		(Dollars in thousands)
U.S. Treasury securities:
	Due within one year	$	7,494	$	-	$	3		$	-		$	7,497	0.11
Obligations of U.S.
government-sponsored
agencies:
After 1 to 5 years			50,000		-		-			521			49,479	1.05
After 5 to 10 years			214,245		-		-			6,868			207,377	1.31
Puerto Rico government
obligations:
After 1 to 5 years			39,807		-		-			10,807			29,000	4.49
After 5 to 10 years			885		-		1			-			886	5.20
After 10 years			20,399		-		-			5,303			15,096	5.82
United States and Puerto Rico
government obligations			332,830		-		4			23,499			309,335	1.91
Mortgage-backed securities:
FHLMC certificates:
After 10 years			335,489		-		1,354			3,298			333,545	2.20
GNMA certificates:
After 1 to 5 years			59		-		2			-			61	3.39
After 5 to 10 years			1,620		-		91			-			1,711	3.30
After 10 years			394,842		-		21,917			-			416,759	3.83
			396,521		-		22,010			-			418,531	3.83
FNMA certificates:
After 1 to 5 years			5,114		-		237			-			5,351	3.46
After 5 to 10 years			7,627		-		485			-			8,112	3.81
After 10 years			889,130		-		7,077			11,875			884,332	2.38
			901,871		-		7,799			11,875			897,795	2.40
Collateralized mortgage
obligations issued or
guaranteed by the FHLMC:
After 1 to 5 years			9		-		-			0			9	3.01
Other mortgage pass-through
trust certificates:
Over 5 to 10 years			120		-		0			-			120	7.27
After 10 years			51,187		13,123		-			-			38,064	2.21
			51,307		13,123		0			-			38,184	2.21
Total mortgage-backed
securities			1,685,197		13,123		31,163			15,173			1,688,064	2.69
Equity securities (without
contractual maturity) (1)			35		-		-			26			9	-
Total investment securities
available for sale		$	2,018,062	$	13,123	$	31,167		$	38,698		$	1,997,408	2.56
(1)	Represents common shares of another financial institution in Puerto Rico.

		December 31, 2013
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI								Fair value		Weighted average yield%
								Gross Unrealized
								gains			losses
U.S. Treasury securities:
	Due within one year	$	7,498	$	-	$	1		$	-		$	7,499	0.12
Obligations of U.S.
government-sponsored
agencies:
	After 1 to 5 years		50,000		-		-			1,408			48,592	1.05
	After 5 to 10 years		214,271		-		-			13,368			200,903	1.31
Puerto Rico government
obligations:
	Due within one year		10,000		-		-			210			9,790	3.50
	After 5 to 10 years		40,699		-		-			12,962			27,737	4.51
	After 10 years		20,309		-		-			6,506			13,803	5.82
United States and Puerto Rico
government obligations			342,777		-		1			34,454			308,324	1.96
Mortgage-backed securities:
FHLMC certificates:
	After 10 years		332,766		-		133			10,712			322,187	2.16
GNMA certificates:
	After 1 to 5 years		86		-		4			-			90	3.48
	After 5 to 10 years		800		-		37			-			837	2.47
	After 10 years		425,589		-		18,492			-			444,081	3.82
			426,475		-		18,533			-			445,008	3.82
FNMA certificates:
	After 1 to 5 years		1,389		-		84			-			1,473	4.82
	After 5 to 10 years		7,765		-		389			-			8,154	4.09
	After 10 years		882,798		-		2,984			33,626			852,156	2.36
			891,952		-		3,457			33,626			861,783	2.38
Collateralized mortgage
	obligations issued or
	guaranteed by the FHLMC:
	After 1 to 5 years		82		-		-			1			81	3.01
Other mortgage pass-through
trust certificates:
	Over 5 to 10 years		127		-		1			-			128	7.27
	After 10 years		55,048		14,310		-			-			40,738	2.24
			55,175		14,310		1			-			40,866	2.24
Total mortgage-backed
	securities		1,706,450		14,310		22,124			44,339			1,669,925	2.69
Equity securities (without
	contractual maturity) (1)		35		-		-			2			33	-
Total investment securities
	available for sale	$	2,049,262	$	14,310	$	22,125		$	78,795		$	1,978,282	2.57
(1)	Represents common shares of another financial institution in Puerto Rico.

Available-for-Sale Investments' Fair Value and Gross Unrealized Losses

	As of June 30, 2014
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico government obligations	$	-	$	-	$	44,096	$	16,110	$	44,096	$	16,110
U.S. government agencies obligations		-		-		256,856		7,389		256,856		7,389
Mortgage-backed securities:
FNMA		40,008		67		577,485		11,808		617,493		11,875
FHLMC		-		-		195,771		3,298		195,771		3,298
Collateralized mortgage obligations
issued or guaranteed by FHLMC		-		-		9		-		9		-
Other mortgage pass-through trust
certificates		-		-		38,064		13,123		38,064		13,123
Equity securities		9		26		-		-		9		26
	$	40,017	$	93	$	1,112,281	$	51,728	$	1,152,298	$	51,821
	As of December 31, 2013
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico government obligations	$	23,156	$	5,977	$	28,174	$	13,701	$	51,330	$	19,678
U.S. government agencies obligations		175,369		8,913		74,126		5,863		249,495		14,776
Mortgage-backed securities:
FNMA		748,215		33,626		-		-		748,215		33,626
FHLMC		286,208		10,712		-		-		286,208		10,712
Collateralized mortgage obligations
issued or guaranteed by FHLMC		-		-		81		1		81		1
Other mortgage pass-through trust
certificates		-		-		40,738		14,310		40,738		14,310
Equity securities		33		2		-		-		33		2
	$	1,232,981	$	59,230	$	143,119	$	33,875	$	1,376,100	$	93,105

OTTI Losses on Available-for-Sale Debt Securities

	Private Label MBS				Private Label MBS
	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
(In thousands)
Total other-than-temporary impairment losses	$	-	$	-	$	-	$	-
Portion of other-than-temporary impairment losses recognized in OCI		-		-		-		(117)
Net impairment losses recognized in earnings	$	-	$	-	$	-	$	(117)

Roll-Forward of Credit Losses on Debt Securities Held by Corporation

The following table summarizes the roll-forward of credit losses on debt securities held by the Corporation for which a portion of an OTTI is recognized in OCI:
	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
(In thousands)
Credit losses at the beginning of the period	$	5,389	$	5,389	$	5,389	$	5,272
Additions:
Credit losses on debt securities for which an OTTI was
previously recognized		-		-		-		117
Ending balance of credit losses on debt securities held for
which a portion of an OTTI was recognized in OCI	$	5,389	$	5,389	$	5,389	$	5,389

Significant Assumptions in Valuation of Private Label MBS

	June 30, 2014		December 31, 2013
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	14.5%	14.5%	14.5%	14.5%
Prepayment rate	32%	18.15%-100.00%	29%	15.86%-100.00%
Projected Cumulative Loss Rate	8.5%	0.90%-80.00%	6.8%	0.58%-38.16%
No OTTI losses on equity securities held in the available-for-sale investment portfolio were recognized in the first half of 2014. The Corporation recorded OTTI losses of $42,000 on equity securities held in the available-for-sale investment portfolio in the second quarter and first half of 2013.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Effect of Derivative Instruments on Statement of Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Economic undesignated hedges:
Total gain (loss) on derivatives	$ 24	$ 1,679	$ 172	$ 1,974
Interest Income Loans [Member] | Interest Rate Swap [Member]
Economic undesignated hedges:
Total gain (loss) on derivatives	261	709	574	1,099
Interest Income Loans [Member] | Interest Rate Cap [Member]
Economic undesignated hedges:
Total gain (loss) on derivatives	0	(1)	0	9
Mortgage Banking Activities [Member] | Forward Contracts [Member]
Economic undesignated hedges:
Total gain (loss) on derivatives	$ (237)	$ 971	$ (402)	$ 866

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OTHER BORROWINGS - Components of Other Borrowings (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034	$ 231,959	$ 231,959
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Seventy Five [Member]
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034	103,093	103,093
Junior Subordinated Debentures Bearing Interest At Floating Rate Of Two Point Fifty Percent [Member]
Debt Instrument [Line Items]
Junior subordinated debentures due in 2034	$ 128,866	$ 128,866

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OTHER BORROWINGS

3 Months Ended

Jun. 30, 2014

OTHER BORROWINGS

NOTE 16 – OTHER BORROWINGS

Other borrowings consist of:

	June 30,		December 31,
	2014		2013
	(In thousands)
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.75%
over 3-month LIBOR (2.98% as of June 30, 2014
and 2.99% as of December 31, 2013)	$	103,093	$	103,093
Junior subordinated debentures due in 2034,
interest-bearing at a floating rate of 2.50%
over 3-month LIBOR (2.73% as of June 30, 2014
and 2.75% as of December 31, 2013)		128,866		128,866
	$	231,959	$	231,959

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LOAN PORTFOLIO - Loan Portfolio Held for Investment (Parenthetical) (Detail) (USD $)	3 Months Ended			3 Months Ended
	Mar. 31, 2013	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013 Net increase Commercial Mortgage [Member]	Jun. 30, 2013 Net decrease Commercial And Industrial [Member]	Jun. 30, 2013 Net decrease Construction Loans [Member]
Financial Information [Line Items]
Classified And Non Performing Loans Sold	$ 211,400,000
Reclassification Of Loans				269,000,000	246,800,000	22,200,000
Commercian Loans Collaterized By Real Estate		$ 1,100,000,000	$ 1,200,000,000

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Components of Net Servicing Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Servicing fees	$ 1,689		$ 2,096		$ 3,360		$ 3,613
Late charges and prepayment penalties	177		218		341		431
Other	(689)	[1]	(148)	[1]	(1,047)	[1]	(148)	[1]
Adjustment to servicing assets for loans repurchased	(22)	[2]	(313)	[2]	(33)	[2]	(330)	[2]
Servicing income, gross	1,155		1,853		2,621		3,566
Amortization and impairment of servicing assets	(751)		(519)		(1,753)		(1,029)
Servicing income, net	$ 404		$ 1,334		$ 868		$ 2,537

[1] Mainly consisted of compensatory fees imposed by GSEs and losses related to representations and warranties.

[2] Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

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CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income (loss)	$ 38,308	$ (195,216)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	10,574	11,933
Amortization and impairment of intangible assets	2,488	3,039
Provision for loan and lease losses	58,659	198,587
Deferred income tax (benefit) expense	(1,352)	(2,154)
Stock-based compensation	1,960	1,321
Gain on sales of investments, net	(291)	0
Other-than-temporary impairments on debt securities	0	117
Other-than-temporary impairements on equity securities	0	42
Equity in losses of unconsolidated entities	7,280	4,890
Impairement of collateral pledged to Lehman	0	66,574
Derivative instruments and financial liabilities measured at fair value, gain	(173)	(1,974)
Loss (gain) on sale of premises and equipment and other assets	(32)	0
Net gain on sale of loans held for investment	(3,868)	(4,870)
Net amortization of premiums, discounts and deferred loan fees and costs	(1,564)	(2,078)
Originations and purchases of loans held for sale	(141,099)	(306,579)
Sales and repayments of loans held for sale	157,964	263,072
Loans held for sale valuation adjustment	0	6,103
Amortization of broker placement fees	3,501	4,182
Net amortization of premium and discounts on investment securities	869	6,713
(Decrease) increase in accrued income tax payable	5,013	(1,623)
(Increase) decrease in accrued interest receivable	1,920	(2,965)
Decrease in accrued interest payable	2,449	1,257
Decrease (increase) in other assets	12,480	20,702
Increase (decrease) in other liabilities	(4,940)	16,116
Net cash provided by operating activities	150,146	87,189
Cash flows from investing activities:
Principal collected on loans	1,619,024	1,363,136
Loans originated and purchased	(1,582,527)	(1,545,408)
Proceeds from sale of loans held for investment	16,558	296,610
Proceeds from sale of repossessed assets	35,344	60,568
Proceeds from sale of available-for-sale securities	4,855	0
Purchases of securities available for sale	(88,493)	(541,910)
Proceeds from principal repayments and maturities of securities available for sale	114,277	207,810
Additions to premises and equipment	(13,689)	(4,999)
Proceeds from sale of premises and equipment and other assets	37	0
(Increase) decrease in other equity securities	(450)	6,436
Net cash provided by investing activities	104,936	(157,757)
Cash flows from financing activities:
Net decrease in deposits	(252,637)	108,917
Net FHLB advances paid	20,000	(150,000)
Payments Of Stock Issuance Costs	62	0
Repurchase of outstanding common stock	392	233
Net cash provided (used in) financing activities	(233,091)	(41,316)
Net increase in cash and cash equivalents	21,991	(111,884)
Cash and cash equivalents at beginning of period	655,671	946,851
Cash and cash equivalents at end of period	677,662	834,967
Cash and cash equivalents include:
Cash and due from banks	660,709	618,593
Money market instruments	16,953	216,374
Cash and Cash Equivalents, at Carrying Value, Total	$ 677,662	$ 834,967

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Consolidated Statements of Financial Condition (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended		3 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Accumulated Other Comprehensive Income (Loss) [Member]	Dec. 31, 2013 Accumulated Other Comprehensive Income (Loss) [Member]
Allowance for loan and lease losses	$ 241,177	$ 241,177	$ 285,858
Preferred stock, shares authorized	50,000,000	50,000,000	50,000,000
Preferred stock, shares issued	22,004,000	22,004,000	22,004,000
Preferred stock, shares outstanding	1,444,146	1,444,146	2,521,872
Preferred stock, liquidation value	36,104	36,104	63,047
Common stock, par value	$ 0.10	$ 0.10	$ 0.10
Common stock, shares authorized	2,000,000,000	2,000,000,000	2,000,000,000
Common stock, shares issued	213,399,037	213,399,037	207,635,157
Common stock, shares outstanding	212,760,158	212,760,158	207,068,978
Income tax expense	$ (276)	$ 611		$ 7,752	$ 7,755

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

3 Months Ended

Jun. 30, 2014

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 9–DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

One of the market risks facing the Corporation is interest rate risk, which includes the risk that changes in interest rates will result in changes in the value of the Corporation's assets or liabilities and the risk that net interest income from its loan and investment portfolios will be adversely affected by changes in interest rates. The overall objective of the Corporation's interest rate risk management activities is to reduce the variability of earnings caused by changes in interest rates.

The Corporation designates a derivative as a fair value hedge, a cash flow hedge or an economic undesignated hedge when it enters into the derivative contract. As of June 30, 2014 and December 31, 2013, all derivatives held by the Corporation were considered economic undesignated hedges. These undesignated hedges are recorded at fair value with the resulting gain or loss recognized in current earnings.

The following summarizes the principal derivative activities used by the Corporation in managing interest rate risk:

Interest rate cap agreements - Interest rate cap agreements provide the right to receive cash if a reference interest rate rises above a contractual rate. The value increases as the reference interest rate rises. The Corporation enters into interest rate cap agreements for protection from rising interest rates.

Interest rate swaps - Interest rate swap agreements generally involve the exchange of fixed and floating-rate interest payment obligations without the exchange of the underlying notional principal amount. As of June 30, 2014 and December 31, 2013, most of the interest rate swaps outstanding are used for protection against rising interest rates. Similar to unrealized gains and losses arising from changes in fair value, net interest settlements on interest rate swaps are recorded as an adjustment to interest income or interest expense depending on whether an asset or liability is being economically hedged.

Forward Contracts- Forward contracts are sales of to-be-announced (“TBA”) mortgage-backed securities that will settle over the standard delivery date and do not qualify as “regular way” security trades. Regular-way security trades are contracts that have no net settlement provision and no market mechanism to facilitate net settlement and provide for delivery of a security within the time generally established by regulations or conventions in the marketplace or exchange in which the transaction is being executed. The forward sales are considered derivative instruments that need to be marked to market. These securities are used to economically hedge the FHA/VA residential mortgage loan securitizations of the mortgage-banking operations. Unrealized gains (losses) are recognized as part of mortgage banking activities in the Consolidated Statements of Income (Loss).

To satisfy the needs of its customers, the Corporation may enter into nonhedging transactions. On these transactions, generally, the Corporation participates as a buyer in one of the agreements and as a seller in the other agreement under the same terms and conditions.

In addition, the Corporation enters into certain contracts with embedded derivatives that do not require separate accounting as these are clearly and closely related to the economic characteristics of the host contract. When the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, it is bifurcated, carried at fair value, and designated as a trading or non-hedging derivative instrument.

The following table summarizes the notional amounts of all derivative instruments:
	Notional Amounts
	As of		As of
	June 30,		December 31,
	2014		2013
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements	$	30,859	$	31,080
Written interest rate cap agreements		37,769		38,391
Purchased interest rate cap agreements		37,769		38,391
Forward Contracts:
Sale of TBA GNMA MBS pools		17,000		25,000
	$	123,397	$	132,862
Notional amounts are presented on a gross basis with no netting of offsetting exposure positions.

The following table summarizes the fair value of derivative instruments and the location in the statement of financial condition:
	Asset Derivatives								Liability Derivatives
	Statement of		June 30,			December 31,					June 30,			December 31,
	Financial		2014			2013					2014			2013
	Condition Location		Fair Value			Fair Value			Statement of Financial Condition Location		Fair Value			Fair Value
	(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements		Other assets		$	99		$	162		Accounts payable and other liabilities		$	3,328		$	3,965
Written interest rate cap agreements		Other assets			-			-		Accounts payable and other liabilities			16			58
Purchased interest rate cap agreements		Other assets			16			58		Accounts payable and other liabilities			-			-
Forward Contracts:
Sales of TBA GNMA MBS pools		Other assets			-			174		Accounts payable and other liabilities			228			-
			$	115		$	394				$	3,572		$	4,023

The following table summarizes the effect of derivative instruments on the statement of income (loss):
		Gain (or Loss)				Gain (or Loss)
	Location of Gain or (loss)	Quarter Ended				Six-Month Period Ended
	Recognized in Income on	June 30,				June 30,
(In thousands)	Derivatives	2014		2013		2014		2013
		(In thousands)
Undesignated economic hedges:
Interest rate contracts:
Interest rate swap agreements used to hedge fixed-rate loans	Interest income - Loans	$	261	$	709	$	574	$	1,099
Written and purchased interest rate cap agreements	Interest income - Loans		-		(1)		-		9
Forward contracts:
Sales of TBA GNMA MBS pools	Mortgage banking activities		(237)		971		(402)		866
Total gain on derivatives		$	24	$	1,679	$	172	$	1,974

Derivative instruments, such as interest rate swaps, are subject to market risk. As is the case with investment securities, the market value of derivative instruments is largely a function of the financial market's expectations regarding the future direction of interest rates. Accordingly, current market values are not necessarily indicative of the future impact of derivative instruments on earnings. This will depend, for the most part, on the shape of the yield curve, the level of interest rates, as well as the expectations for rates in the future.

A summary of interest rate swaps follows:

		As of		As of
		June 30,		December 31,
		2014		2013
			(Dollars in thousands)
Pay fixed/receive floating :
Notional amount		$	30,859	$	31,080
Weighted-average receive rate at period end			1.84%		1.85%
Weighted-average pay rate at period end			6.77%		6.77%
Floating rates range from 167 to 187 basis points over 3-month LIBOR
	As of June 30, 2014, the Corporation has not entered into any derivative instrument containing credit-risk related contingent features.

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GOODWILL AND OTHER INTANGIBLES - Gross Amount and Accumulated Amortization of Other Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified		3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2014 Core Deposits [Member]	Dec. 31, 2013 Core Deposits [Member]	Jun. 30, 2014 Purchased Credit Card Relationship Intangible [Member]	Dec. 31, 2013 Purchased Credit Card Relationship Intangible [Member]
Finite Lived Intangible Assets [Line Items]
Gross amount	$ 24,500	$ 45,844	$ 45,844	$ 24,465	$ 24,465
Accumulated amortization		(39,644)	(38,863)	(6,385)	(4,678)
Net carrying amount		$ 6,200	$ 6,981	$ 18,080	$ 19,787
Remaining amortization period		8 years 10 months 24 days	9 years 9 months 18 days	7 years 6 months 0 days	8 years 0 months 0 days

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ALLOWANCE FOR LOAN AND LEASE LOSSES - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2014	Mar. 31, 2013	Jun. 30, 2013 Net Increase [Member] Commercial Mortgage [Member]	Jun. 30, 2013 Net Decrease [Member] Commercial And Industrial [Member]	Jun. 30, 2013 Net Decrease [Member] Construction Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Reserve for unfunded loan commitments	$ 0.2
Adversely classified assets sold		217.7
Charge-offs		98.5
Charge-off related to credit losses		39.9
Changes In Allowance For Loan Losses	(4.8)
Reclassification Of Loans			$ 269.0	$ 246.8	$ 22.2

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LOAN PORTFOLIO - Loan Restructuring and Effect on Allowance for Loan and Lease Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013	Jun. 30, 2014		Jun. 30, 2013	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 628,233	[1]		$ 628,233	[1]		$ 622,320	$ 630,258	[2]
Charges to the provision for loan losses	26,744		87,464	58,659		198,587
Allowance for loan losses at the end of the period	241,177			241,177				285,858
Loans Split [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	62,159		93,451	62,159		93,451
Amount charged-off	(4,106)		25,389
Charges to the provision for loan losses	(4,725)		2,318
Allowance for loan losses at the end of the period	942		3,339	942		3,339
Accrual [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 411,870			$ 411,870				$ 425,383

[1]  Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

[2]  Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014
Federal Home Loan Bank Advances Branch Of F H L B Bank [Line Items]
Credit facility based on collateral pledged	$ 396.8

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FAIR VALUE - Change in unrealized losses included in earnings (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014		Jun. 30, 2013
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Included in earnings			$ 0	[1]	$ (117)	[1]
Available for Sale Securities
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Included in earnings	$ 0	$ 0	$ 0		$ 117

[1] Amounts mostly related to private label mortgage-backed securities.

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Summary of Advances from FHLB (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Short Term Debt [Line Items]
Fixed-rate advances from FHLB, with a weighted-average interest rate of 1.69% (December 31, 2012 - 2.26%)	$ 320,000	$ 300,000

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 31, 2014
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	fbp
Entity Registrant Name	FIRST BANCORP /PR/
Entity Central Index Key	0001057706
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		212,764,795

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STOCKHOLDERS' EQUITY - Additional Information (Detail) (USD $)	6 Months Ended		6 Months Ended	3 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Restricted Stock [Member]	Jun. 30, 2014 First Fifty Percentage Restricted Stock Nonvest Awards [Member]	Jun. 30, 2013 First Fifty Percentage Restricted Stock Nonvest Awards [Member]	Jun. 30, 2014 First Fifty Percentage Restricted Stock Nonvest Awards [Member] Omnibus Plan [Member]	Jun. 30, 2014 Other Fifty Percentage Restricted Stock Nonvest Awards [Member]	Jun. 30, 2013 Other Fifty Percentage Restricted Stock Nonvest Awards [Member]	Jun. 30, 2014 Other Fifty Percentage Restricted Stock Nonvest Awards [Member] Omnibus Plan [Member]	Jun. 30, 2014 FirstBank [Member]	Jun. 30, 2014 Series A Preferred Stock [Member]	Jun. 30, 2014 Series B Preferred Stock [Member]	Jun. 30, 2014 Series C Preferred Stock [Member]	Jun. 30, 2014 Series D Preferred Stock [Member]	Jun. 30, 2014 Series E Preferred Stock [Member]
Class Of Stock [Line Items]
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares issued	213,399,037	207,635,157
Common stock, shares outstanding	212,760,158	207,068,978
Granted shares of restricted stock	1,020,978
Restricted stock lapse, maximum				2 years 0 months 0 days	2 years 0 months 0 days		3 years 0 months 0 days	3 years 0 months 0 days
Percentage of restricted stock lapse					50.00%	50.00%		50.00%	50.00%
Corporation has authorized shares of preferred stock	50,000,000	50,000,000
Preferred stock, par value	$ 1
Preferred stock dividend rate percentage											7.125%	8.35%	7.40%	7.25%	7.00%
Stock repurchase plan treasury stock	638,879	566,179
Legal surplus reserve rate										10.00%
Original amount contributed in percentage										20.00%
Repurchased of common stock			23,555
Liquidation value per share	$ 25

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OFFSETTING OF ASSETS AND LIABILITIES

3 Months Ended

Jun. 30, 2014

Text Block [Abstract]

OFFSETTING OF ASSETS AND LIABILITIES

NOTE 10–OFFSETTING OF ASSETS AND LIABILITIES

The Corporation enters into master agreements with counterparties that may allow for netting of exposures in the event of default, primarily related to derivatives and repurchase agreements. In an event of default, each party has a right of set-off against the other party for the amounts owed in the related agreement and any other amount or obligation owed in respect of any other agreement or transaction between them. The following table presents information about the offsetting of financial assets and liabilities as well as derivative assets and liabilities:

Offsetting of Financial Assets and Derivative Assets
(In thousands)
As of June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position
									Financial Instruments		Cash Collateral
													Net Amount
Description
Derivatives	$	16	$	-	$	16	$	(16)	$	-	$	-
As of December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position
									Financial Instruments		Cash Collateral
													Net Amount
Description
Derivatives	$	58	$	-	$	58	$	(58)	$	-	$	-

Offsetting of Financial Liabilities and Derivative Liabilities
(In thousands)
As of June 30, 2014
										Gross Amounts Not Offset in the Statement of Financial Position
							Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position
													Financial Instruments			Cash Collateral
																			Net Amount
Description
Derivatives		$	3,328		$	-		$	3,328		$	(3,328)		$	-		$	-
Repurchase agreements			600,000			-			600,000			(600,000)			-			-
Total		$	603,328		$	-		$	603,328		$	(603,328)		$	-		$	-
As of December 31, 2013
										Gross Amounts Not Offset in the Statement of Financial Position
							Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position
													Financial Instruments			Cash Collateral
																			Net Amount
Description
Derivatives
		$	3,965		$	-		$	3,965		$	(3,965)		$	-		$	-
Repurchase agreements			600,000			-			600,000			(600,000)			-			-
Total		$	603,965		$	-		$	603,965		$	(603,965)		$	-		$	-

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LOAN PORTFOLIO - Contractually Required Principal and Interest Cash Flows Expected to be Collected and Fair Value at Acquisition Related to Loans Acquired (Detail) (USD $)	0 Months Ended
	May 30, 2012	Jun. 30, 2014	May 30, 2014
Financing Receivable Impaired [Line Items]
Contractually outstanding principal and interest at acquisition			$ 275,842,000
Less: Nonaccretable difference		(86,252,000)
Cash flows expected to be collected at acquisition		189,590,000
Less: Accretable yield		(86,759,000)
Fair value of loans acquired		102,831,000
Payment To Acquire Credit Card Portfolio	$ 406,000,000

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LOAN PORTFOLIO - Loan Modifications Considered Troubled Debt Restructurings Defaulted (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014 numberofcontracts	Jun. 30, 2013 numberofcontracts	Jun. 30, 2014 numberofcontracts	Jun. 30, 2013 numberofcontracts
Financing Receivable Modifications [Line Items]
Number of Contracts	91	64	154	119
Recorded Investment	$ 2,804	$ 2,536	$ 5,571	$ 60,091
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	19	19	33	64
Recorded Investment	2,267	2,090	4,819	9,615
Commercial Mortgage Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	0	0	0	1
Recorded Investment	0	0	0	46,102
Commercial And Industrial Loan [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	0	0	0	2
Recorded Investment	0	0	0	3,829
Construction Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts
Recorded Investment
Consumer Auto Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	18	5	22	7
Recorded Investment	286	37	325	54
Other Consumer Loans [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	53	35	98	40
Recorded Investment	205	137	381	219
Finance Leases [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	0	2	0	2
Recorded Investment	0	20	0	20
Commercial Construction [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	0	0	0	0
Recorded Investment	0	0	0	0
Residential Construction [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	0	1	0	1
Recorded Investment	0	186	0	186
Land Construction [Member]
Financing Receivable Modifications [Line Items]
Number of Contracts	1	2	1	2
Recorded Investment	$ 46	$ 66	$ 46	$ 66

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CONSOLIDATED STATEMENTS OF INCOME (LOSS) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Interest income:
Loans	$ 144,241	$ 147,986	$ 289,084	$ 296,629
Investment securities	13,728	12,185	28,956	23,228
Money market investments	454	499	954	1,038
Total interest income	158,423	160,670	318,994	320,895
Interest expense:
Deposits	19,466	23,918	39,765	49,462
Securities sold under agreements to repurchase	6,430	6,470	12,798	12,887
Advances from FHLB	833	1,631	1,657	3,656
Notes payable and other borrowings	1,787	1,763	3,547	3,509
Total interest expense	28,516	33,782	57,767	69,514
Net interest income (loss)	129,907	126,888	261,227	251,381
Provision for loan and lease losses	26,744	87,464	58,659	198,587
Net interest income after provision for loan and lease losses	103,163	39,424	202,568	52,794
Non-interest income:
Service charges on deposit accounts	3,290	3,098	6,493	6,478
Mortgage banking activities	3,036	4,823	6,404	9,403
Net (loss) gain on sale of investments (includes $42 accumulated other comprehensive income reclassification for other-than-temporary impairment on equity securities for the quarter and six-month period ended June 30, 2013)	291	(42)	291	(42)
Other-than-temporary impairment losses on investment securities:
Total other-than-temporary impairment losses	0	0	0	0
Portion of loss previously recognized in other comprehensive income	0	0	0	(117)
Net impairment losses on investment securities	0	0	0	(117)
Equity in losses of unconsolidated entities	(670)	648	(7,280)	(4,890)
Impairement of collateral pledged to Lehman	0	(66,574)	0	(66,574)
Insurance income	1,467	1,508	4,038	3,528
Other non-interest income	8,517	4,876	17,335	14,180
Total non-interest income	15,931	(51,663)	27,281	(38,034)
Non-interest expenses:
Employees' compensation and benefits	35,023	33,116	67,965	66,670
Occupancy and equipment	14,509	14,946	28,855	30,016
Business promotion	4,142	3,831	8,115	7,188
Professional fees	11,371	13,735	21,411	24,867
Taxes, other than income taxes	4,477	6,239	9,024	9,228
Insurance and supervisory fees	10,784	12,699	21,774	25,505
Net loss on real estate owned (REO) and REO operations	6,778	14,829	12,615	22,139
Credit and debit processing fees	3,882	2,281	7,706	5,358
Communications	1,894	1,885	3,773	3,699
Other non-interest expenses	5,285	7,762	9,692	14,663
Total non-interest expenses	98,145	111,323	190,930	209,333
Income (loss) before income taxes	20,949	(123,562)	38,919	(194,573)
Income tax expense	276	979	(611)	(643)
Net income (loss)	21,225	(122,583)	38,308	(195,216)
Net income (loss) attributable to common stockholders - basic	$ 22,505	$ (122,583)	$ 39,967	$ (195,216)
Net income (loss) per common share:
Basic	$ 0.11	$ (0.60)	$ 0.19	$ (0.95)
Diluted	$ 0.11	$ (0.60)	$ 0.19	$ (0.95)
Dividends declared per common share	$ 0	$ 0	$ 0	$ 0

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INVESTMENT SECURITIES

3 Months Ended

Jun. 30, 2014

INVESTMENT SECURITIES

NOTE 4 – INVESTMENT SECURITIES

Investment Securities Available for Sale

The amortized cost, non-credit loss component of other-than-temporary impairment (“OTTI”)recorded in other comprehensive income (“OCI”), gross unrealized gains and losses recorded in OCI, approximate fair value, weightedaverage yield and contractual maturities of investment securities available for sale as of June 30, 2014 and December 31, 2013 were as follows:

		June 30, 2014
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI								Fair value		Weighted average yield%
								Gross Unrealized
								gains			losses
		(Dollars in thousands)
U.S. Treasury securities:
	Due within one year	$	7,494	$	-	$	3		$	-		$	7,497	0.11
Obligations of U.S.
government-sponsored
agencies:
After 1 to 5 years			50,000		-		-			521			49,479	1.05
After 5 to 10 years			214,245		-		-			6,868			207,377	1.31
Puerto Rico government
obligations:
After 1 to 5 years			39,807		-		-			10,807			29,000	4.49
After 5 to 10 years			885		-		1			-			886	5.20
After 10 years			20,399		-		-			5,303			15,096	5.82
United States and Puerto Rico
government obligations			332,830		-		4			23,499			309,335	1.91
Mortgage-backed securities:
FHLMC certificates:
After 10 years			335,489		-		1,354			3,298			333,545	2.20
GNMA certificates:
After 1 to 5 years			59		-		2			-			61	3.39
After 5 to 10 years			1,620		-		91			-			1,711	3.30
After 10 years			394,842		-		21,917			-			416,759	3.83
			396,521		-		22,010			-			418,531	3.83
FNMA certificates:
After 1 to 5 years			5,114		-		237			-			5,351	3.46
After 5 to 10 years			7,627		-		485			-			8,112	3.81
After 10 years			889,130		-		7,077			11,875			884,332	2.38
			901,871		-		7,799			11,875			897,795	2.40
Collateralized mortgage
obligations issued or
guaranteed by the FHLMC:
After 1 to 5 years			9		-		-			0			9	3.01
Other mortgage pass-through
trust certificates:
Over 5 to 10 years			120		-		0			-			120	7.27
After 10 years			51,187		13,123		-			-			38,064	2.21
			51,307		13,123		0			-			38,184	2.21
Total mortgage-backed
securities			1,685,197		13,123		31,163			15,173			1,688,064	2.69
Equity securities (without
contractual maturity) (1)			35		-		-			26			9	-
Total investment securities
available for sale		$	2,018,062	$	13,123	$	31,167		$	38,698		$	1,997,408	2.56
(1)	Represents common shares of another financial institution in Puerto Rico.

		December 31, 2013
		Amortized cost		Noncredit Loss Component of OTTI Recorded in OCI								Fair value		Weighted average yield%
								Gross Unrealized
								gains			losses
U.S. Treasury securities:
	Due within one year	$	7,498	$	-	$	1		$	-		$	7,499	0.12
Obligations of U.S.
government-sponsored
agencies:
	After 1 to 5 years		50,000		-		-			1,408			48,592	1.05
	After 5 to 10 years		214,271		-		-			13,368			200,903	1.31
Puerto Rico government
obligations:
	Due within one year		10,000		-		-			210			9,790	3.50
	After 5 to 10 years		40,699		-		-			12,962			27,737	4.51
	After 10 years		20,309		-		-			6,506			13,803	5.82
United States and Puerto Rico
government obligations			342,777		-		1			34,454			308,324	1.96
Mortgage-backed securities:
FHLMC certificates:
	After 10 years		332,766		-		133			10,712			322,187	2.16
GNMA certificates:
	After 1 to 5 years		86		-		4			-			90	3.48
	After 5 to 10 years		800		-		37			-			837	2.47
	After 10 years		425,589		-		18,492			-			444,081	3.82
			426,475		-		18,533			-			445,008	3.82
FNMA certificates:
	After 1 to 5 years		1,389		-		84			-			1,473	4.82
	After 5 to 10 years		7,765		-		389			-			8,154	4.09
	After 10 years		882,798		-		2,984			33,626			852,156	2.36
			891,952		-		3,457			33,626			861,783	2.38
Collateralized mortgage
	obligations issued or
	guaranteed by the FHLMC:
	After 1 to 5 years		82		-		-			1			81	3.01
Other mortgage pass-through
trust certificates:
	Over 5 to 10 years		127		-		1			-			128	7.27
	After 10 years		55,048		14,310		-			-			40,738	2.24
			55,175		14,310		1			-			40,866	2.24
Total mortgage-backed
	securities		1,706,450		14,310		22,124			44,339			1,669,925	2.69
Equity securities (without
	contractual maturity) (1)		35		-		-			2			33	-
Total investment securities
	available for sale	$	2,049,262	$	14,310	$	22,125		$	78,795		$	1,978,282	2.57
(1)	Represents common shares of another financial institution in Puerto Rico.

Maturities of mortgage-backed securities are based on contractual terms assuming no prepayments. Expected maturities of investments might differ from contractual maturities because they may be subject to prepayments and/or call options. The weighted average yield on investment securities available for sale is based on amortized cost and, therefore, does not give effect to changes in fair value. The net unrealized gain or loss on securities available for sale and the noncredit loss component of OTTI are presented as part of OCI.

The following tables show the Corporation's available-for-sale investments' fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of June 30, 2014 and December 31, 2013. The tables also include debt securities for which an OTTI was recognized and only the amount related to a credit loss was recognized in earnings. Unrealized losses for which OTTI had been recognized have been reduced by any subsequent recoveries in fair value.

	As of June 30, 2014
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico government obligations	$	-	$	-	$	44,096	$	16,110	$	44,096	$	16,110
U.S. government agencies obligations		-		-		256,856		7,389		256,856		7,389
Mortgage-backed securities:
FNMA		40,008		67		577,485		11,808		617,493		11,875
FHLMC		-		-		195,771		3,298		195,771		3,298
Collateralized mortgage obligations
issued or guaranteed by FHLMC		-		-		9		-		9		-
Other mortgage pass-through trust
certificates		-		-		38,064		13,123		38,064		13,123
Equity securities		9		26		-		-		9		26
	$	40,017	$	93	$	1,112,281	$	51,728	$	1,152,298	$	51,821
	As of December 31, 2013
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
		(In thousands)
Debt securities:
Puerto Rico government obligations	$	23,156	$	5,977	$	28,174	$	13,701	$	51,330	$	19,678
U.S. government agencies obligations		175,369		8,913		74,126		5,863		249,495		14,776
Mortgage-backed securities:
FNMA		748,215		33,626		-		-		748,215		33,626
FHLMC		286,208		10,712		-		-		286,208		10,712
Collateralized mortgage obligations
issued or guaranteed by FHLMC		-		-		81		1		81		1
Other mortgage pass-through trust
certificates		-		-		40,738		14,310		40,738		14,310
Equity securities		33		2		-		-		33		2
	$	1,232,981	$	59,230	$	143,119	$	33,875	$	1,376,100	$	93,105

Assessment for OTTI

On a quarterly basis, the Corporation performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered an OTTI. A debt security is considered impaired if the fair value is less than its amortized cost basis at the reporting date. The accounting literature requires the Corporation to assess whether the unrealized loss is otherthantemporary.

OTTI losses must be recognized in earnings if an investor has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. However, even if an investor does not expect to sell a debt security, it must evaluate expected cash flows to be received and determine if a credit loss has occurred.

An unrealized loss is generally deemed to be other-than-temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. The credit loss component of an OTTI, if any, is recorded as a component of net impairment losses on investment securities in the accompanying consolidated statements of income (loss), while the remaining portion of the impairment loss is recognized in OCI, provided the Corporation does not intend to sell the underlying debt security and it is “more likely than not” that the Corporation will not have to sell the debt security prior to recovery.

Debt securities issued by U.S. government agencies, government-sponsored entities and theTreasury accounted for approximately 96% of the total available-for-sale portfolio as of June 30, 2014 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government. The Corporation's OTTI assessment was concentrated mainly on private label mortgage-backed securities (“MBS”) with an amortized cost of $51.2million for which credit losses are evaluated on a quarterly basis. The Corporation considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

• The length of time and the extent to which the fair value has been less than the amortized cost basis;
• Changes in the near term prospects of the underlying collateral of a security, such as changes in default rates, loss severity given default, and significant changes in prepayment assumptions;
• The level of cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities; and
• Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the overall financial condition of the issuer, credit ratings, recent legislation and government actions affecting the issuer's industry and actions taken by the issuer to deal with the present economic climate.

The Corporation recorded OTTI losses on available-for-sale debt securities as follows:

	Private Label MBS				Private Label MBS
	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
(In thousands)
Total other-than-temporary impairment losses	$	-	$	-	$	-	$	-
Portion of other-than-temporary impairment losses recognized in OCI		-		-		-		(117)
Net impairment losses recognized in earnings	$	-	$	-	$	-	$	(117)

The following table summarizes the roll-forward of credit losses on debt securities held by the Corporation for which a portion of an OTTI is recognized in OCI:
	Quarter ended June 30,				Six-Month Period Ended June 30,
	2014		2013		2014		2013
(In thousands)
Credit losses at the beginning of the period	$	5,389	$	5,389	$	5,389	$	5,272
Additions:
Credit losses on debt securities for which an OTTI was
previously recognized		-		-		-		117
Ending balance of credit losses on debt securities held for
which a portion of an OTTI was recognized in OCI	$	5,389	$	5,389	$	5,389	$	5,389

During the first half of 2013, the $117thousand credit-related impairment loss is related to private label MBS, which are collateralized by fixed-rate mortgages on single-family residential properties in the United States. The interest rate on these private-label MBS is variable, tied to 3-month LIBOR and limited to the weighted-average coupon of the underlying collateral. The underlying mortgages are fixed-rate single-family loans with original high FICO scores (over 700) and moderate original loan-to-value ratios (under 80%), as well as moderate delinquency levels.

Based on the expected cash flows derived from the model, and since the Corporation does not have the intention to sell the securities and has sufficient capital and liquidity to hold these securities until a recovery of the fair value occurs, only the credit loss component was reflected in earnings. Significant assumptions in the valuation of the private label MBS were as follows:

	June 30, 2014		December 31, 2013
	Weighted		Weighted
	Average	Range	Average	Range
Discount rate	14.5%	14.5%	14.5%	14.5%
Prepayment rate	32%	18.15%-100.00%	29%	15.86%-100.00%
Projected Cumulative Loss Rate	8.5%	0.90%-80.00%	6.8%	0.58%-38.16%
No OTTI losses on equity securities held in the available-for-sale investment portfolio were recognized in the first half of 2014. The Corporation recorded OTTI losses of $42,000 on equity securities held in the available-for-sale investment portfolio in the second quarter and first half of 2013.

Total proceeds from the sale of securities available for sale during the second quarter and first half of 2014 amounted to $4.9 million, including a $0.3 million gain on the sale of a Puerto Rico government agency bond.

As of June 30, 2014, the Corporation held approximately$61.1million of Puerto Rico governmentand agencies bond obligations, mainly bonds of the Government Development Bank (“GDB”) and the Puerto Rico Building Authority, as part of its available-for-sale investment securities portfolio,which were reflected at their aggregate fair value of $45.0 million. During the first half of 2014, the fair value of these obligation increased by $3.6million. In February 2014, Standard & Poor's (“S&P”), Moody's Investor Service (“Moodys”) and Fitch Ratings (“Fitch”) downgraded the Commonwealth of Puerto Rico general obligation bonds and other obligations of Puerto Rico instrumentalities to non-investment grade category. In July 2014, the Puerto Rico debt was downgraded further into speculative grade by these credit agencies after the enactment of The Puerto Rico Public Corporations Debt Enforcement and Recovery Act that provides a legislative framework for certain public corporations that are experiencing severe financial stress to address their financial obstacles through an orderly statutory process that allows them to handle their debts. The issuers of Puerto Rico government and agencies bonds held by the Corporation have not defaulted, and the contractual payments on these securities have been made as scheduled. The Corporation has the ability and intent to hold these securities until a recovery of the fair value occurs, and it is not more likely than not that the Corporation will be required to sell the securities prior to such recovery. It is uncertain how the financial markets may react to any potential further rating downgrade of Puerto Rico's debt. However, further deterioration in the fiscal situation could further adversely affect the value of Puerto Rico's government obligations. The Corporation will continue to closely monitor Puerto Rico's political and economic status and evaluate the portfolio for any declines in value that could be considered other-than temporary.

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STOCK-BASED COMPENSATION

3 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2014

STOCK-BASED COMPENSATION

NOTE 3 – STOCK-BASED COMPENSATION

Between 1997 and January 2007, the Corporation had the 1997 stock option plan that authorized the granting of up to 579,740 options on shares of the Corporation's common stock to eligible employees. The options granted under the plan could not exceed 20% of the number of common shares outstanding.

On January 21, 2007, the 1997 stock option plan expired; all outstanding awards granted under this plan continue in full force and effect, subject to their original terms. No awards for shares could be granted under the 1997 stock option plan as of its expiration.

The activity of stock options granted under the 1997 stock option plan for the six-month period ended June 30, 2014 is set forth below:
				Weighted-Average
				Remaining		Aggregate
	Number of		Weighted-Average	Contractual Term		Intrinsic Value
	Options	Exercise Price		(Years)	(In thousands)
Beginning of period outstanding and
exercisable	101,435	$	206.95
Options expired	(12,795)		321.75
Options cancelled	(6,065)		226.15
End of period outstanding and exercisable	82,575	$	187.75	1.9	$	-

On April 29, 2008, the Corporation's stockholders approved the First BanCorp. 2008 Omnibus Incentive Plan, as amended (the “Omnibus Plan”). The Omnibus Plan provides for equity-based compensation incentives (the “awards”) through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other stock-based awards. The Omnibus Plan authorizes the issuance of up to 8,169,807 shares of common stock, subject to adjustments for stock splits, reorganizations and other similar events. The Corporation's Board of Directors, upon receiving the relevant recommendation of the Compensation Committee, has the power and authority to determine those eligible to receive awards and to establish the terms and conditions of any awards, subject to various limits and vesting restrictions that apply to individual and aggregate awards.

Under the Omnibus Plan, during the second quarter of 2014, 210,840shares of restricted stock were awarded to the Corporation's independent directors subject to a one-year vesting period. In addition, during the first quarter of 2014, the Corporation issued 810,138shares of restricted stock that will vest based on the employees' continued service with the Corporation. Fifty percent (50%) of those shares vest in two years from the grant date and the remaining 50% vests in three years from the grant date. Included in those 810,138 shares of restricted stock are 653,138shares granted to certain senior officers consistent with the requirements of the Troubled Asset Relief Program (“TARP”) Interim Final Rule, which permit TARP recipients to grant “long-term restricted stock” without violating the prohibition on paying or accruing a bonus payment if it satisfies the following requirements: (i) the value of the grant may not exceed one-third of the amount of the employee's annual compensation, (ii) no portion of the grant may vest before two years after the grant date, and (iii) the grant must be subject to a further restriction on transfer or payment as described below. Specifically, the stock that has otherwise vested may not become transferable at any time earlier than as permitted under the schedule set forth by TARP, which is based on the repayment in 25% increments of the aggregate financial assistance received from the U.S. Department of Treasury (the “Treasury”). Hence, notwithstanding the vesting period mentioned above, the employees covered by TARP are restricted from transferring the shares.

The fair value of the shares of restricted stock granted in 2014 was based on the market price of the Corporation's outstanding common stock on the date of the grant. For the 653,138 shares of restricted stock granted under the TARP requirements, the market price was discounted due to postvesting restrictions. For purposes of computing the discount, the Corporation estimated an appreciation of 16% in the value of the common stock using the Capital Asset Pricing Model as a basis of what would be a market participant's expected return on the Corporation's stock and assumed that the Treasury would hold its outstanding common stock of the Corporation fortwo years, resulting in a fair value of $2.63 for restricted shares granted under the TARP requirements. Also, the Corporation uses empirical data to estimate employee termination; separate groups of employees that have similar historical exercise behavior were considered separately for valuation purposes.

The following table summarizes the restricted stock activity in 2014 under the Omnibus Plan for both executive officers covered by the TARP requirements and other employees as well as for independent directors:
	Six-Month Period Ended
	June 30, 2014
	Number of shares		Weighted-Average
	of restricted		Grant Date
	stock		Fair Value
Non-vested shares at beginning of year	1,411,185	$	3.04
Granted	1,020,978		3.52
Forfeited	(2,000)		6.03
Vested	(101,323)		4.39
Non-vested shares at June 30, 2014	2,328,840	$	3.20

For the quarter and six-month period ended June 30, 2014, the Corporation recognized $0.8 million and $1.2 million, respectively, of stock-based compensation expense related to restricted stock awards, compared to $0.4 million and $0.6 million for the same periods in 2013. As of June 30, 2014, there was $4.4 million of total unrecognized compensation cost related to nonvested shares of restricted stock. The weighted average period over which the Corporation expects to recognize such cost is 1.7 years.

During the second quarter of 2013, the Corporation issued 701,405 shares of restricted stock that will vest based on the employees' continued service with the Corporation. Fifty percent (50%) of those shares vest in two years from the grant date and the remaining 50% vest in three years from the grant date. Included in those 701,405 shares of restricted stock are 582,905 shares granted to certain senior officers consistent with the requirements of TARP. The employees covered by TARP are restricted from transferring the shares, subject to certain conditions as explained above.

The fair value of the shares of restricted stock granted in the second quarter of 2013 was based on the market price of the Corporation's outstanding common stock on the date of the grant of $6.03. For the 582,905 shares of restricted stock granted under the TARP requirements, the market price was discounted due to postvesting restrictions. For purposes of computing the discount, the Corporation assumed appreciation of 13% in the value of the common stock and a holding period by the Treasury of its outstanding common stock of the Corporation of two years, resulting in a fair value of $3.02 for restricted shares granted under the TARP requirements.

Stock-based compensation accounting guidance requires the Corporation to develop an estimate of the number of share-based awards that will be forfeited due to employee or director turnover. Quarterly changes in the estimated forfeiture rate may have a significant effect on share-based compensation, as the effect of adjusting the rate for all expense amortization is recognized in the period in which the forfeiture estimate is changed. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease in the expense recognized in the financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase in the expense recognized in the financial statements. When unvested options or shares of restricted stock are forfeited, any compensation expense previously recognized on the forfeited awards is reversed in the period of the forfeiture. Approximately $5 thousand of compensation expense was reversed during the first six months of 2014 related to forfeited awards.

Also, under the Omnibus Plan, effective April 1, 2013, the Corporation's Board of Directors determined to increase the salary amounts paid to certain executive officers primarily by paying the increased salary amounts in the form of shares of the Corporation's common stock, instead of cash. During the first six months of 2014, the Corporation issued 147,781 shares of common stock with a weighted average market value of $5.24 as salary stock compensation. This resulted in a compensation expense of $0.8 million recorded in the first six-months of 2014. For the first half of 2014, the Corporation withheld 49,145 shares from the common stock paid to certain senior officers as additional compensation and 23,555 shares of restricted stock that vested during the first quarter of 2014, to cover employees' payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid any fractional share of salary stock that the officer was entitled to in cash. In the consolidated financial statements, the Corporation treats shares withheld for tax purposes as common stock repurchases.

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

3 Months Ended

Jun. 30, 2014

ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB)

NOTE15 – ADVANCESFROM THE FEDERAL HOME LOAN BANK (FHLB)

The following is a summary of the advances from the FHLB:
		June 30,		December 31,
		2014		2013
		(Dollars in thousands)
	Fixed-rate advances from FHLB, with a weighted-
	average interest rate of 1.07%	$	320,000	$	300,000

Advances from FHLB mature as follows:
		June 30,
		2014
		(In thousands)
	One to thirty days	$	20,000
	Over one year to three years		100,000
	Over three years		200,000
	Total	$	320,000

As of June 30, 2014, the Corporation had additional capacity of approximately $396.8million on this credit facility based on collateral pledged at the FHLB, including a haircut reflecting the perceived risk associated with holding the collateral.

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GOODWILL AND OTHER INTANGIBLES

3 Months Ended

Jun. 30, 2014

GOODWILL AND OTHER INTANGIBLES

NOTE 11 – GOODWILL AND OTHER INTANGIBLES

Goodwill as of June 30, 2014 and December 31, 2013 amounted to $28.1 million, recognized as part of “Other Assets” in the consolidated statement of financial condition. The Corporation conducted its annual evaluation of goodwill and intangibles during the fourth quarter of 2013.

The Corporation bypassed the qualitative assessment in 2013 and proceeded directly to perform the first step of the two-step goodwill impairment test. The Step 1 evaluation of goodwill allocated to the Florida reporting unit under both valuation approaches (market and discounted cash flow analysis) indicated that the fair value of the unit was above the carrying amount of its equity book value as of the valuation date (October 1);therefore, the completion of Step 2 was not required. Based on the analysis under both the market and discounted cash flow analysis, the estimated fair value of the equity of the reporting unit exceeded the carrying amount of the entity, including goodwill at the evaluation date. There have been no events related to the Florida reporting unit that could indicate potential goodwill impairment since the date of the last evaluation; therefore, no goodwill impairment evaluation was performed during the first six months of 2014. Goodwill and other indefinite life intangibles are reviewed at least annually for impairment.

In connection with the acquisition of the FirstBank-branded credit card loan portfolio in the second quarter of 2012, the Corporation recognized a purchased credit card relationship intangible of $24.5 million, which is being amortized over 7.5 years on an accelerated basis based on the estimated attrition rate of the purchased credit card accounts, which reflects the pattern in which the economic benefits of the intangible asset are consumed. These benefits are consumed as the revenue stream generated by the cardholder relationship is realized.

The following table shows the gross amount and accumulated amortization of the Corporation’s intangible assets recognized as part of Other Assets in the consolidated statement of financial condition:
	As of		As of
	June 30,		December 31,
	2014		2013
(Dollars in thousands)
Core deposit intangible:
Gross amount	$	45,844	$	45,844
Accumulated amortization		(39,644)		(38,863)
Net carrying amount	$	6,200	$	6,981
Remaining amortization period		8.9 years		9.8 years
Purchased credit card relationship intangible:
Gross amount	$	24,465	$	24,465
Accumulated amortization		(6,385)		(4,678)
Net carrying amount	$	18,080	$	19,787
Remaining amortization period		7.5 years		8.0 years

For the quarter and six-month period ended June 30, 2014, the amortization expense of core deposit intangibles amounted to $0.4 million and $0.8 million,respectively (2013- $0.6million and $1.2million). For the quarter and six-month period ended June 30, 2014, the amortization expense of the purchased credit card relationship intangible amounted to $0.9 million and $1.7million, respectively (2013 - $0.9million and $1.9million).

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LOAN PORTFOLIO -Changes in Carrying Amount Of Purchased Credit Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013	Jun. 30, 2014		Jun. 30, 2013
Financing Receivable Impaired [Line Items]
Beggining balance: purchased credit-impaired loans				$ 4,791
Accretion	(612)		0	(612)		(413)
Ending balance: purchased credit-impaired loans	105,620			105,620
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities [Member]
Financing Receivable Impaired [Line Items]
Beggining balance: purchased credit-impaired loans	3,383	[1]		4,791	[1]
Purchased Credit Impaired Loans Aquired	102,831	[2]		102,831	[2]
Accretion	612			612
Sop Collections And Charge Offs	(1,207)			(2,615)
Ending balance: purchased credit-impaired loans	$ 105,619			$ 105,619

[1] Relates to PCI loans acquired as part of the credit card portfolio purchased in the second quarter of 2012.

[2] Represents the estimated fair value of the PCI loans acquired from Doral at the date of acquisition.

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ALLOWANCE FOR LOAN AND LEASE LOSSES

3 Months Ended

Jun. 30, 2014

ALLOWANCE FOR LOAN AND LEASE LOSSES

NOTE 7 – ALLOWANCE FOR LOAN AND LEASE LOSSES

The changes in the allowance for loan and lease losses were as follows:
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended June 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	30,508	$	66,512	$	79,590	$	27,411	$	62,757	$	266,778
Charge-offs		(4,987)		(13,423)		(19,452)		(2,661)		(18,531)		(59,054)
Recoveries		300		4,297		416		55		1,641		6,709
Provision (release)		3,934		(8,808)		16,336		(3,513)		18,795		26,744
Ending balance	$	29,755	$	48,578	$	76,890	$	21,292	$	64,662	$	241,177
Ending balance: specific reserve for impaired loans	$	16,464	$	16,317	$	22,745	$	8,962	$	3,870	$	68,358
Ending balance: purchased credit-impaired loans	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance	$	13,291	$	32,261	$	54,145	$	12,330	$	60,792	$	172,819
Loans held for investment:
Ending balance	$	2,795,159	$	1,813,930	$	2,647,478	$	148,266	$	2,062,268	$	9,467,101
Ending balance: impaired loans	$	414,448	$	238,997	$	179,764	$	46,721	$	28,928	$	908,858
Ending balance: purchased credit-impaired loans	$	99,997	$	3,447	$	-	$	-	$	2,176	$	105,620
Ending balance: loans with general allowance	$	2,280,714	$	1,571,486	$	2,467,714	$	101,545	$	2,031,164	$	8,452,623
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Six-Month period ended June 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	33,110	$	73,138	$	85,295	$	35,814	$	58,501	$	285,858
Charge-offs		(11,409)		(19,233)		(41,911)		(3,631)		(36,577)		(112,761)
Recoveries		369		4,332		1,079		672		2,969		9,421
Provision (release)		7,685		(9,659)		32,427		(11,563)		39,769		58,659
Ending balance	$	29,755	$	48,578	$	76,890	$	21,292	$	64,662	$	241,177
Ending balance: specific reserve for impaired loans	$	16,464	$	16,317	$	22,745	$	8,962	$	3,870	$	68,358
Ending balance: purchased credit-impaired loans	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance	$	13,291	$	32,261	$	54,145	$	12,330	$	60,792	$	172,819
Loans held for investment:
Ending balance	$	2,795,159	$	1,813,930	$	2,647,478	$	148,266	$	2,062,268	$	9,467,101
Ending balance: impaired loans	$	414,448	$	238,997	$	179,764	$	46,721	$	28,928	$	908,858
Ending balance: purchased credit-impaired loans	$	99,997	$	3,447	$	-	$	-	$	2,176	$	105,620
Ending balance: loans with general allowance	$	2,280,714	$	1,571,486	$	2,467,714	$	101,545	$	2,031,164	$	8,452,623

(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended June 30, 2013
Allowance for loan and lease losses:
Beginning balance		$	64,722	$	78,053	$	97,363	$	45,033	$	57,360	$	342,531
Charge-offs			(5,956)		(3,271)		(6,488)		(2,387)		(16,350)		(34,452)
Charge-offs related to bulk sale			(97,941)		-		-		(31)		-		(97,972)
Recoveries			479		18		968		50		1,961		3,476
Provision (release)			74,277		2,522		5,274		(6,686)		12,077		87,464
Reclassification (1)			-		10,691		(9,440)		(1,251)		-		-
Ending balance		$	35,581	$	88,013	$	87,677	$	34,728	$	55,048	$	301,047
Ending balance: specific reserve for impaired loans		$	20,406	$	33,219	$	36,503	$	21,884	$	2,941	$	114,953
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance		$	15,175	$	54,794	$	51,174	$	12,844	$	52,107	$	186,094
Loans held for investment:
Ending balance		$	2,511,206	$	1,916,509	$	2,775,791	$	194,912	$	2,047,368	$	9,445,786
Ending balance: impaired loans		$	384,062	$	212,983	$	206,932	$	76,483	$	27,785	$	908,245
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	8,285	$	8,285
Ending balance: loans with general allowance		$	2,127,144	$	1,703,526	$	2,568,859	$	118,429	$	2,011,298	$	8,529,256
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Six-Month period ended June 30, 2013
Allowance for loan and lease losses:
Beginning balance		$	68,354	$	97,692	$	146,900	$	61,600	$	60,868	$	435,414
Charge-offs			(16,653)		(19,270)		(47,430)		(28,246)		(31,114)		(142,713)
Charge-offs related to bulk sale			(98,972)		(40,057)		(44,678)		(12,784)		-		(196,491)
Recoveries			627		38		1,759		147		3,679		6,250
Provision			82,225		38,919		40,566		15,262		21,615		198,587
Reclassification (1)			-		10,691		(9,440)		(1,251)		-		-
Ending balance		$	35,581	$	88,013	$	87,677	$	34,728	$	55,048	$	301,047
Ending balance: specific reserve for impaired loans		$	20,406	$	33,219	$	36,503	$	21,884	$	2,941	$	114,953
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance		$	15,175	$	54,794	$	51,174	$	12,844	$	52,107	$	186,094
Loans held for investment:
Ending balance		$	2,511,206	$	1,916,509	$	2,775,791	$	194,912	$	2,047,368	$	9,445,786
Ending balance: impaired loans		$	384,062	$	212,983	$	206,932	$	76,483	$	27,785	$	908,245
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	8,285	$	8,285
Ending balance: loans with general allowance		$	2,127,144	$	1,703,526	$	2,568,859	$	118,429	$	2,011,298	$	8,529,256
(1)	During the second quarter of 2013, after a comprehensive review of substantially all of the loans in our commercial portfolios, the classification of certain loans was revised to more accurately depict the nature of the underlying loans. This reclassification resulted in a net increase of $269.0 million in commercial mortgage loans, since the principal source of repayment for such loans is derived primarily from the operation of the underlying real estate, with a corresponding decrease of $246.8 million in commercial and industrial loans and $22.2 million decrease in construction loans. The Corporation evaluated the impact of this reclassification on the provision for loan losses and determined that the effect of this adjustment was not material to any previously reported results.

During the second quarter of 2014, the Corporation made certain enhancements to the general allowance estimation process for commercial loans which mainly consisted of the following:

Utilization of longer historical loss periods to better reflect the level of incurred losses in portfolio.Historical charge-off rates are calculated by the Corporation on a quarterly basis by tracking cumulative charge-offs experienced over a two year loss period on loans according to their internal risk rating (referred to as “base rate” for the quarter). Prior to the second quarter enhancements, the Corporation would use the base rate of the current quarter or the average of the last 4 quarters, if greater. During the second quarter of 2014, the Corporation eliminated the use of the “greater of” approach and adopted the utilization of the base rate average of the last 8 quarters. This change captures a longer historical period that would help mitigate period to period volatility in the loss rates.

Enhancements of the environmental factors adjustment. Prior to the second quarter enhancements, these adjustments were applied in the form of basis points additions to the loss ratio based on changes in credit and economic indicators observed in the most recent periods. During the second quarter of 2014, the resulting factor derived from a set of risk-based ratings and weights assigned to credit and economic indicators activity over a reasonable period is now applied to a developed expected range of historical losses, in order to adjust the base loss rates. These enhancements result in a framework that can be applied more consistently, by having a more granular analysis that better captures trends in economic conditions and the impact in the Corporation's portfolio.

In addition, the calculation of loss rates for asset classifications with limited or zero loss history was improved to consider these loans' migration experience.

The Corporation maintained a parallel computation of the general reserve for commercial loans. The enhancements to the general allowance estimation process resulted in a net decrease to the allowance for loan losses of $4.8 million as of the implementation date of May 31, 2014.

The bulk sale of approximately $217.7 million of adversely classified assets in the first quarter of 2013, mainly commercial loans, resulted in charge-offs of approximately $98.5 million. In determining the historical loss rate for the computation of the general reserve for commercial loans, the Corporation includes the portion of these charge-offs that was related to the acceleration of previously reserved credit losses amounting to approximately $39.9 million.  The Corporation considered that the portion not deemed to be credit-related losses was not indicative of the ultimate losses that may have occurred had the assets been resolved on an individual basis, over time and not in a steeply discounted bulk sale.  A transaction, such as this one, entered into to expedite the reduction of non-performing and adversely classified assets, can result in charge-offs that are not reflective of true credit-related charge-off history since there is a component related to the discounted value realized on a bulk sale basis. Accordingly, the Corporation concluded that it is reasonable to exclude the component related to the discounted value from its historical charge-off analysis used in estimating its allowance for loan losses.

As of June 30, 2014, the Corporation maintained a $0.2 million reserve for unfunded loan commitments mainly related to outstanding construction and commercial and industrial loan commitments. The reserve for unfunded loan commitments is an estimate of the losses inherent in off-balance sheet loan commitments to borrowers that are experiencing financial difficulties at the balance sheet date. It is calculated by multiplying an estimated loss factor by an estimated probability of funding, and then by the period-end amounts for unfunded commitments. The reserve for unfunded loan commitments is included as part of accounts payable and other liabilities in the consolidated statement of financial condition.

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INVESTMENT SECURITIES - Investment Securities Available for Sale (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Jun. 30, 2014		Dec. 31, 2013
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	$ 2,018,062		$ 2,049,262
Non credit loss component of OTTI recorded in OCI	13,123		14,310
Unrealized gain on available-for-sale securities	31,167		22,125
Gross unrealized losses	38,698		78,795
Fair value	1,997,408		1,978,282
Weighted average yield	2.56%		2.57%
Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	61,100
Fair value	45,000
United States And Puerto Rico Government Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	332,830		342,777
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	4		1
Gross unrealized losses	23,499		34,454
Fair value	309,335		308,324
Weighted average yield	1.91%		1.96%
Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	1,685,197		1,706,450
Non credit loss component of OTTI recorded in OCI	13,123		14,310
Unrealized gain on available-for-sale securities	31,163		22,124
Gross unrealized losses	15,173		44,339
Fair value	1,688,064		1,669,925
Weighted average yield	2.69%		2.69%
Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	396,521		426,475
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	22,010		18,533
Gross unrealized losses	0		0
Fair value	418,531		445,008
Weighted average yield	3.83%		3.82%
Federal National Mortgage Association Certificates And Obligations F N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	901,871		891,952
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	7,799		3,457
Gross unrealized losses	11,875		33,626
Fair value	897,795		861,783
Weighted average yield	2.40%		2.38%
Mortgage Backed Securities Issued By Private Enterprises [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	51,307		55,175
Non credit loss component of OTTI recorded in OCI	13,123		14,310
Unrealized gain on available-for-sale securities	0		1
Gross unrealized losses	0		0
Fair value	38,184		40,866
Weighted average yield	2.21%		2.24%
Due Within One Year [Member] | U S Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	7,494		7,498
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	3		1
Gross unrealized losses	0		0
Fair value	7,497		7,499
Weighted average yield	0.11%		0.12%
Due Within One Year [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost			10,000
Non credit loss component of OTTI recorded in OCI			0
Unrealized gain on available-for-sale securities			0
Gross unrealized losses			210
Fair value			9,790
Weighted average yield			3.50%
After One To Five Years [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	50,000		50,000
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	0		0
Gross unrealized losses	521		1,408
Fair value	49,479		48,592
Weighted average yield	1.05%		1.05%
After One To Five Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	39,807		0
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	0		0
Gross unrealized losses	10,807		0
Fair value	29,000		0
Weighted average yield	4.49%		0.00%
After One To Five Years [Member] | Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	59		86
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	2		4
Gross unrealized losses	0		0
Fair value	61		90
Weighted average yield	3.39%		3.48%
After One To Five Years [Member] | Federal National Mortgage Association Certificates And Obligations F N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	5,114		1,389
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	237		84
Gross unrealized losses	0		0
Fair value	5,351		1,473
Weighted average yield	3.46%		4.82%
After One To Five Years [Member] | Collateralized Mortgage Obligations Issued And Guaranteed By Fhlmc Fnma And Gnma [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	9		82
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	0		0
Gross unrealized losses	0		1
Fair value	9		81
Weighted average yield	3.01%		3.01%
After Five To Ten Years [Member] | US Government Sponsored Enterprises Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	214,245		214,271
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	0		0
Gross unrealized losses	6,868		13,368
Fair value	207,377		200,903
Weighted average yield	1.31%		1.31%
After Five To Ten Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	885		40,699
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	1		0
Gross unrealized losses	0		12,962
Fair value	886		27,737
Weighted average yield	5.20%		4.51%
After Five To Ten Years [Member] | Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	1,620		800
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	91		37
Gross unrealized losses	0		0
Fair value	1,711		837
Weighted average yield	3.30%		2.47%
After Five To Ten Years [Member] | Federal National Mortgage Association Certificates And Obligations F N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	7,627		7,765
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	485		389
Gross unrealized losses	0		0
Fair value	8,112		8,154
Weighted average yield	3.81%		4.09%
After Five To Ten Years [Member] | Mortgage Backed Securities Issued By Private Enterprises [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	120		127
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	0		1
Gross unrealized losses	0		0
Fair value	120		128
Weighted average yield	7.27%		7.27%
After Ten Years [Member] | Puerto Rico Government obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	20,399		20,309
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	0		0
Gross unrealized losses	5,303		6,506
Fair value	15,096		13,803
Weighted average yield	5.82%		5.82%
After Ten Years [Member] | Federal Home Loan Mortgage Corporation Certificates And Obligations F H L M C [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	335,489		332,766
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	1,354		133
Gross unrealized losses	3,298		10,712
Fair value	333,545		322,187
Weighted average yield	2.20%		2.16%
After Ten Years [Member] | Government National Mortgage Association Certificates And Obligations G N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	394,842		425,589
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	21,917		18,492
Gross unrealized losses	0		0
Fair value	416,759		444,081
Weighted average yield	3.83%		3.82%
After Ten Years [Member] | Federal National Mortgage Association Certificates And Obligations F N M A [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	889,130		882,798
Non credit loss component of OTTI recorded in OCI	0		0
Unrealized gain on available-for-sale securities	7,077		2,984
Gross unrealized losses	11,875		33,626
Fair value	884,332		852,156
Weighted average yield	2.38%		2.36%
After Ten Years [Member] | Mortgage Backed Securities Issued By Private Enterprises [Member] | Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	51,187		55,048
Non credit loss component of OTTI recorded in OCI	13,123		14,310
Unrealized gain on available-for-sale securities	0		0
Gross unrealized losses	0		0
Fair value	38,064		40,738
Weighted average yield	2.21%		2.24%
Equity Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized cost	35	[1]	35	[1]
Non credit loss component of OTTI recorded in OCI	0	[1]	0	[1]
Unrealized gain on available-for-sale securities	0	[1]	0	[1]
Gross unrealized losses	26	[1]	2	[1]
Fair value	$ 9	[1]	$ 33	[1]
Weighted average yield	0.00%		0.00%

[1]  Represents common shares of another financial institution in Puerto Rico.

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Weighted-Averages of Key Economic Assumptions in Valuation Model (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Carrying amount of servicing assets	$ 22,270	$ 22,026	$ 21,987	$ 19,979	$ 18,717	$ 17,524
Fair value	24,917
Weighted-average expected life	9 years 1 month 24 days
Constant prepayment rate	9.78%
Decrease in fair value due to 10% adverse change	953
Decrease in fair value due to 20% adverse change	1,846
Discount rate	10.62%
Decrease in fair value due to 10% adverse change	1,045
Decrease in fair value due to 20% adverse change	$ 2,009

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OTHER EQUITY SECURITIES

3 Months Ended

Jun. 30, 2014

OTHER EQUITY SECURITIES

NOTE 5 – OTHER EQUITY SECURITIES

Institutions that are members of the FHLB system are required to maintain a minimum investment in FHLB stock. Such minimum investment is calculated as a percentage of aggregate outstanding mortgages, and an additional investment is required that is calculated as a percentage of total FHLB advances, letters of credit, and the collateralized portion of interest-rate swaps outstanding. The stock is capital stock issued at $100 par value. Both stock and cash dividends may be received on FHLB stock.

As of June 30, 2014 and December 31, 2013, the Corporation had investments in FHLB stock with a book value of $28.9million and $28.4 million, respectively. The net realizable value is a reasonable proxy for the fair value of these instruments. Dividend income from FHLB stock for the quarter and six-month period ended June 30, 2014 was $0.3 million and $0.6 million, respectively, compared to $0.3 million and $0.7 million for the comparable periods in 2013.

The shares of FHLB stock owned by the Corporation are issued by the FHLB of New York. The FHLB of New York is part of the Federal Home Loan Bank System, a national wholesale banking network of 12 regional, stockholder-owned congressionally chartered banks. The Federal Home Loan Banks are all privately capitalized and operated by their member stockholders. The system is supervised by the Federal Housing Finance Agency, which ensures that the Home Loan Banks operate in a financially safe and sound manner, remain adequately capitalized and able to raise funds in the capital markets, and carry out their housing finance mission.

The Corporation has other equity securities that do not have a readily available fair value. The carrying value of such securities as of June 30, 2014 and December 31, 2013 was $0.3 million.

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LOAN PORTFOLIO

3 Months Ended

Jun. 30, 2014

LOAN PORTFOLIO

NOTE 6 – LOANS HELD FOR INVESTMENT

The following table provides information about the loan portfolio held for investment:

		June 30,		December 31,
		2014		2013
(In thousands)
Residential mortgage loans, mainly secured by first mortgages		$	2,795,159	$	2,549,008
Commercial loans:
Construction loans			148,266		168,713
Commercial mortgage loans			1,813,930		1,823,608
Commercial and Industrial loans (1)			2,647,478		2,788,250
Loans to a local financial institution collateralized by
real estate mortgages (2)			-		240,072
Commercial loans			4,609,674		5,020,643
Finance leases			240,593		245,323
Consumer loans			1,821,675		1,821,196
Loans held for investment			9,467,101		9,636,170
Allowance for loan and lease losses			(241,177)		(285,858)
Loans held for investment, net		$	9,225,924	$	9,350,312
(1)	As of June 30, 2014 and December 31, 2013, includes $1.1 billion and 1.2 billion, respectively, of commercial loans that are secured by real estate but are not dependent upon the real estate for repayment.
(2)	On May 30, 2014, FirstBank acquired from Doral Financial Corporation ("Doral") mortgage loans, mainly residential mortgage loans, having an unpaid principal balance of $241.7 million (estimated fair value at acquisition of $226.0 million) in full satisfaction of secured borrowings with a book value of $232.9 million owed by Doral to FirstBank. Refer to Acquired Loans, including Purchased Credit-Impaired ("PCI") loans discussion below for additional information.

Loans held for investment on which accrual of interest income had been discontinued were as follows:
(In thousands)		June 30,		December 31,
		2014		2013
Non-performing loans:
Residential mortgage		$	175,404	$	161,441
Commercial mortgage			166,218		120,107
Commercial and Industrial			143,669		114,833
Construction:
Land			20,838		27,834
Construction-commercial			3,849		3,924
Construction-residential			14,143		27,108
Consumer:
Auto loans			22,005		21,316
Finance leases			3,414		3,082
Other consumer loans			15,091		15,904
Total non-performing loans held for investment (1) (2)		$	564,631	$	495,549
_______________
(1)	As of June 30, 2014 and December 31, 2013, excludes $54.8 million of non-performing loans held for sale.
(2)	Amount excludes PCI loans with a carrying value of approximately $105.6 million and $4.8 million as of June 30, 2014 and December 31, 2013, respectively, primarily mortgage loans acquired from Doral in the second quarter of 2014, as further discussed below. These loans are not considered non-performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

The Corporation’s aging of the loans held for investment portfolio is as follows:
										Purchased Credit-Impaired Loans				Total loans held for investment		90 days past due and still accruing (2)
		30-59 Days Past Due		60-89 Days Past Due			90 days or more Past Due (1)	Total Past Due
As of June 30, 2014
(In thousands)																		Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	10,357	$	79,082	$	89,439	$	-	$	72,554	$	161,993	$	79,082
Other residential mortgage loans (4)			-		95,029		189,752		284,781		99,997		2,248,388		2,633,166		14,348
Commercial:
Commercial and Industrial loans			12,240		3,015		162,557		177,812		-		2,469,666		2,647,478		18,888
Commercial mortgage loans (4)			-		5,362		179,861		185,223		3,447		1,625,260		1,813,930		13,643
Construction:
Land (4)			-		258		23,212		23,470		-		39,879		63,349		2,374
Construction-commercial			-		-		3,849		3,849		-		14,980		18,829		-
Construction-residential (4)			-		-		14,143		14,143		-		51,945		66,088		-
Consumer:
Auto loans			82,018		20,391		22,005		124,414		-		997,700		1,122,114		-
Finance leases			9,664		3,376		3,414		16,454		-		224,139		240,593		-
Other consumer loans			7,139		8,770		18,713		34,622		2,176		662,763		699,561		3,622
Total loans held for investment		$	111,061	$	146,558	$	696,588	$	954,207	$	105,620	$	8,407,274	$	9,467,101	$	131,957
_____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.
(3)	As of June 30, 2014, includes $19.8 million of defaulted loans collateralizing Government National Mortgage Association ("GNMA") securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $16.5 million, $160.1 million, $72.1 million, $0.8 million, and $2.5 million, respectively.

As of December 31, 2013		30-59 Days Past Due		60-89 Days Past Due		90 days or more Past Due(1)								Total loans held for investment		90 days past due and still accruing (2)
(In thousands)											Total Past Due		Purchased Credit- Impaired Loans					Current
Residential mortgage:
FHA/VA and other government-guaranteed loans (2) (3) (4)		$	-	$	12,180	$	78,645	$	90,825	$	-	$	104,401	$	195,226	$	78,645
Other residential mortgage loans (4)			-		88,898		172,286		261,184		-		2,092,598		2,353,782		10,845
Commercial:
Commercial and Industrial loans			21,029		5,454		134,233		160,716		-		2,867,606		3,028,322		19,400
Commercial mortgage loans (4)			-		5,428		126,674		132,102		-		1,691,506		1,823,608		6,567
Construction:
Land (4)			-		358		27,871		28,229		-		52,145		80,374		37
Construction-commercial			-		-		3,924		3,924		-		12,907		16,831		-
Construction-residential (4)			-		-		27,108		27,108		-		44,400		71,508		-
Consumer:
Auto loans			79,279		17,944		21,316		118,539		-		993,781		1,112,320		-
Finance leases			10,275		3,536		3,082		16,893		-		228,430		245,323		-
Other consumer loans			11,710		8,691		20,492		40,893		4,791		663,192		708,876		4,588
Total loans held for investment		$	122,293	$	142,489	$	615,631	$	880,413	$	4,791	$	8,750,966	$	9,636,170	$	120,082
____________
(1)	Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.
(2)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.
(3)	As of December 31, 2013, includes $11.5 million of defaulted loans collateralizing GNMA securities for which the Corporation has an unconditional option (but not an obligation) to repurchase the defaulted loans.
(4)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $23.9 million, $166.7 million, $18.4 million, $0.9 million and $2.5 million, respectively.

The Corporation’s credit quality indicators by loan type as of June 30, 2014 and December 31, 2013 are summarized below:
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
June 30, 2014
(In thousands)
Commercial mortgage		$	295,588	$	3,133	$	-	$	298,721	$	1,813,930
Construction:
Land			21,134		936		-		22,070		63,349
Construction-commercial			12,490		3,149		-		15,639		18,829
Construction-residential			13,343		741		60		14,144		66,088
Commercial and Industrial			252,595		2,768		475		255,838		2,647,478
		Commercial Credit Exposure-Credit Risk Profile Based on Creditworthiness category:
		Substandard		Doubtful		Loss		Total Adversely Classified (1)		Total Portfolio
December 31, 2013
(In thousands)
Commercial mortgage		$	317,365	$	9,160	$	234	$	326,759	$	1,823,608
Construction
Land			31,777		3,308		52		35,137		80,373
Construction-commercial			16,022		-		-		16,022		16,831
Construction-residential			27,829		2,209		241		30,279		71,509
Commercial and Industrial			205,807		7,998		973		214,778		3,028,322
_________
(1)	Excludes $54.8 million ($7.8 million land, $39.1 million construction-commercial, $0.9 million construction-residential and $ 7.0 million commercial mortgage) as of June 30, 2014 and December 31, 2013, of non-performing loans held for sale.

The Corporation considers a loan as adversely classified if its risk rating is Substandard, Doubtful or Loss. These categories are defined as follows:

Substandard- A Substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful- Doubtful classifications have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. A Doubtful classification may be appropriate in cases where significant risk exposures are perceived, but Loss cannot be determined because of specific reasonable pending factors which may strengthen the credit in the near term.

Loss- Assets classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future.There is little or no prospect for near term improvement and no realistic strengthening action of significance pending.

June 30, 2014		Consumer Credit Exposure-Credit Risk Profile based on payment activity
		Residential Real-Estate				Consumer
		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	161,993	$	2,357,765	$	1,100,109	$	237,179	$	682,294
Purchased Credit-Impaired (2)			-		99,997		-		-		2,176
Non-performing			-		175,404		22,005		3,414		15,091
Total		$	161,993	$	2,633,166	$	1,122,114	$	240,593	$	699,561
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.
December 31, 2013		Consumer Credit Exposure-Credit Risk Profile based on payment activity
			Residential Real-Estate			Consumer
		FHA/VA/ Guaranteed(1)		Other residential loans		Auto		Finance Leases		Other Consumer
(In thousands)
Performing		$	195,226	$	2,192,341	$	1,091,004	$	242,241	$	688,181
Purchased Credit-Impaired (2)			-		-		-		-		4,791
Non-performing			-		161,441		21,316		3,082		15,904
Total		$	195,226	$	2,353,782	$	1,112,320	$	245,323	$	708,876
(1)	It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.
(2)	PCI loans are excluded from non-performing statistics due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

The following tables present information about impaired loans, excluding purchased credit-impaired loans, which are reported separately, as discussed below:

Impaired Loans
(In thousands)
									Quarter ended				Six-month Period Ended
										June 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment		Interest Income Recognized Accrual Basis		Interest Income Recognized Cash Basis		Interest Income Recognized Accrual Basis		Interest Income Recognized Cash Basis
As of June 30, 2014
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		263,024		286,904		-		265,285		2,788		355		5,357		749
Commercial:
Commercial mortgage loans		84,909		90,834		-		85,642		423		484		884		640
Commercial and Industrial Loans		39,507		55,335		-		40,027		6		264		14		264
Construction:
Land		1,821		2,500		-		1,844		6		3		12		3
Construction-commercial		-		-		-		-		-		-		-		-
Construction-residential		4,848		4,946		-		4,917		42		2		83		4
Consumer:
Auto loans		-		-		-		-		-		-		-		-
Finance leases		-		-		-		-		-		-		-		-
Other consumer loans		4,882		5,699		-		4,962		75		18		154		32
	$	398,991	$	446,218	$	-	$	402,677	$	3,340	$	1,126	$	6,504	$	1,692
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		151,424		172,951		16,464		153,650		1,393		660		2,728		1,040
Commercial:
Commercial mortgage loans		154,088		176,208		16,317		160,076		471		162		937		599
Commercial and Industrial Loans		140,257		171,068		22,745		150,374		611		333		1,177		390
Construction:
Land		13,548		22,265		3,855		13,690		13		10		27		14
Construction-commercial		15,639		15,639		3,950		15,881		-		87		-		259
Construction-residential		10,865		11,062		1,157		12,548		-		-		-		-
Consumer:
Auto loans		14,110		14,110		1,980		14,887		258		-		498		-
Finance leases		2,162		2,162		91		2,348		58		-		110		-
Other consumer loans		7,774		8,616		1,799		8,042		589		15		1,113		26
	$	509,867	$	594,081	$	68,358	$	531,496	$	3,393	$	1,267	$	6,590	$	2,328
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Other residential mortgage loans		414,448		459,855		16,464		418,935		4,181		1,015		8,085		1,789
Commercial:
Commercial mortgage loans		238,997		267,042		16,317		245,718		894		646		1,821		1,239
Commercial and Industrial Loans		179,764		226,403		22,745		190,401		617		597		1,191		654
Construction:
Land		15,369		24,765		3,855		15,534		19		13		39		17
Construction-commercial		15,639		15,639		3,950		15,881		-		87		-		259
Construction-residential		15,713		16,008		1,157		17,465		42		2		83		4
Consumer:
Auto loans		14,110		14,110		1,980		14,887		258		-		498		-
Finance leases		2,162		2,162		91		2,348		58		-		110		-
Other consumer loans		12,656		14,315		1,799		13,004		664		33		1,267		58
	$	908,858	$	1,040,299	$	68,358	$	934,173	$	6,733	$	2,393	$	13,094	$	4,020

(In thousands)
	Recorded Investments		Unpaid Principal Balance		Related Specific Allowance		Year-To-Date Average Recorded Investment
As of December 31, 2013
With no related allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		220,428		237,709		-		222,617
Commercial:
Commercial mortgage loans		69,484		73,723		-		71,367
Commercial and Industrial Loans		32,418		56,831		-		37,946
Construction:
Land		359		366		-		360
Construction-commercial		-		-		-		-
Construction-residential		14,761		19,313		-		17,334
Consumer:
Auto loans		-		-		-		-
Finance leases		-		-		-		-
Other consumer loans		4,035		4,450		-		3,325
	$	341,485	$	392,392	$	-	$	352,949
With an allowance recorded:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		190,566		212,028		18,125		193,372
Commercial:
Commercial mortgage loans		149,888		163,656		32,189		153,992
Commercial and Industrial Loans		154,686		170,191		26,686		162,786
Construction:
Land		27,711		40,348		10,455		28,906
Construction-commercial		16,022		16,238		8,873		16,157
Construction-residential		13,864		13,973		2,816		13,640
Consumer:
Auto loans		14,121		14,122		1,829		12,937
Finance leases		2,359		2,359		73		2,219
Other consumer loans		8,410		8,919		1,555		8,919
	$	577,627	$	641,834	$	102,601	$	592,928
Total:
FHA/VA-Guaranteed loans	$	-	$	-	$	-	$	-
Other residential mortgage loans		410,994		449,737		18,125		415,989
Commercial:
Commercial mortgage loans		219,372		237,379		32,189		225,359
Commercial and Industrial Loans		187,104		227,022		26,686		200,732
Construction:
Land		28,070		40,714		10,455		29,266
Construction-commercial		16,022		16,238		8,873		16,157
Construction-residential		28,625		33,286		2,816		30,974
Consumer:
Auto loans		14,121		14,122		1,829		12,937
Finance leases		2,359		2,359		73		2,219
Other consumer loans		12,445		13,369		1,555		12,244
	$	919,112	$	1,034,226	$	102,601	$	945,877
Interest income of approximately $7.9 million ($6.4 million on an accrual basis and $1.5 million on a cash basis) and $15.3 million ($12.0 million on an accrual basis and $3.3 million on a cash basis) was recognized on impaired loans for the second quarter and six-month period ended June 30, 2013, respectively.

The following tables show the activity for impaired loans and the related specific reserve for the quarter and six-month
period ended June 30, 2014:
	Quarter Ended		Six-Month Period Ended
	June 30, 2014
		(In thousands)
Impaired Loans:
Balance at beginning of period	$	879,388	$	919,112
Loans determined impaired during the period		98,966		153,243
Net charge-offs		(32,646)		(64,685)
Increases to impaired loans- additional disbursements		294		919
Foreclosures		(4,134)		(8,140)
Loans no longer considered impaired		(14,003)		(17,731)
Paid in full or partial payments		(19,007)		(73,860)
Balance at end of period	$	908,858	$	908,858

		Quarter Ended		Six-Month Period Ended
	June 30, 2014
	(In thousands)
Specific Reserve:
Balance at beginning of period	$	85,016	$	102,601
Provision for loan losses		15,988		30,442
Net charge-offs		(32,646)		(64,685)
Balance at end of period	$	68,358	$	68,358

Acquired loans, including PCI Loans

On May 30, 2014, FirstBank purchased from Doral all of its rights, title and interests in first and second mortgage loans having an unpaid principal balance of approximately $241.7 million for an aggregate price of approximately $232.9 million. Doral had pledged the mortgage loans to FirstBank as collateral for secured borrowings pursuant to a series of credit agreements between the parties entered into in 2006. As consideration for the purchase of the mortgage loans, FirstBank credited approximately $232.9 million as full satisfaction of the outstanding balance of the Doral secured borrowings plus interest owed to FirstBank. The estimated fair value of the mortgage loans at acquisition was $226.0 million. This transaction resulted in a loss of $6.9 million derived from the difference between the fair value of the mortgage loans acquired, $226.0 million, and the book value of the secured borrowings of $232.9 million. Approximately $5.5 million of the loss was part of the general allowance for loan losses established for commercial loans in prior periods; thus, an additional charge of $1.4 million to the provision was recorded in the second quarter of 2014. In addition, the Corporation recorded $0.6 million of professional service fees in the second quarter of 2014 specifically related to this transaction.

Acquired loans are recorded at fair value at the date of acquisition. The Corporation concluded that loans with a contractual unpaid principal balance of $119.2 million and an estimated fair value at acquisition of $102.8 million were acquired with evidence of credit quality deterioration and, as purchased credit impaired loans, have been accounted for under ASC 310-30, while loans with a contractual unpaid principal balance of $122.5 million and an estimated fair value at acquisition of $123.2 million are non-credit impaired purchased loans that have been accounted for under ASC 310-20.

Subsequent to the day-one fair value, acquired loans accounted for under ASC 310-20 are accounted for consistently with other originated loans, potentially becoming non-accrual or impaired, as well as being classified under the Corporation's standard practices and procedures. In addition, these loans are considered in the determination of the allowance for loan losses.

Under ASC 310-30, the acquired loans were aggregated into pools based on similarcharacteristics (i.e. delinquency status, loan terms). Each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.The loans which are accounted for under ASC 310-30 by the Corporation are not considered non-performing and will continue tohave an accretable yield as long as there is a reasonable expectation about the timing and amount of cash flows expected to be collected. TheCorporation measures additional losses for this portfolio when it is probable the Corporation will be unable to collect all cash flows expected atacquisition plus additional cash flows expected to be collected arising from changes in estimates after acquisition.

On May 30, 2012, the Corporation reentered the credit card business with the acquisition of an approximate $406 million portfolio of FirstBank-branded credit card loans from FIA Card Services (“FIA”). These loans were recorded on the Consolidated Statement of Financial Condition at estimated fair value on the acquisition date of $368.9 million. The Corporation concluded that loans with a contractual outstanding unpaid principal and interest balance at acquisition of $34.6 million and an estimated fair value of $15.7 million were PCI loans.

The carrying amount of PCI loans follows:
	June 30,		December 31,
	2014		2013
(In thousands)
Residential mortgage loans	$	99,997	$	-
Commercial mortgage loans		3,447		-
Credit Cards		2,176		4,791
	$	105,620	$	4,791

The following tables present PCI loans by past due status as of June 30, 2014 and December 31, 2013:
As of June 30, 2014		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)														Current
Residential mortgage loans (1)		$	-	$	11,282	$	11,522	$	22,804	$	77,193	$	99,997
Commercial mortgage loans (1)			-		366		437		803		2,644		3,447
Credit Cards			166		62		145		373		1,803		2,176
		$	166	$	11,710	$	12,104	$	23,980	$	81,640	$	105,620
_____________
(1)	According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans and commercial mortgage loans past due 30-59 days amounted to $18.2 million and $0.9 million, respectively.
As of December 31, 2013		30-59 Days		60-89 Days		90 days or more		Total Past Due				Total PCI loans
(In thousands)														Current
Credit Cards		$	377	$	354	$	573	$	1,304	$	3,487	$	4,791

Initial Fair Value and Accretable Yield of PCI Loans

At acquisition, the Corporation estimated the cash flows the Corporation expected to collect on PCI loans. Under the accounting guidance for PCI loans, the difference between the contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference. This difference is neither accreted into income nor recorded on the Corporation's Consolidated Statement of Financial Condition. The excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loans, using the effective-yield method

The following table presents acquired loans from Doral accounted for pursuant to ASC 310-30 as of May 30, 2014 acquisition date:
(In thousands)
Contractually- required principal and interest	$	275,842
Less: Nonaccretable difference		(86,252)
Cash flows expected to be collected		189,590
Less: Accretable yield		(86,759)
Fair value of loans acquired in 2014	$	102,831

The cash flows expected to be collected consider the estimated remaining life of the underlying loans and include the effects of estimated prepayments.

Changes in accretable yield of acquired loans

Subsequent to acquisition, the Corporation is required to periodically evaluate its estimate of cash flows expected to be collected. These evaluations, performed quarterly, require the continued use of key assumptions and estimates, similar to the initial estimate of fair value. Subsequent changes in the estimated cash flows expected to be collected may result in changes in the accretable yield and nonaccretable difference or reclassifications from nonaccretable yield to accretable. Increases in the cash flows expected to be collected will generally result in an increase in interest income over the remaining life of the loan or pool of loans. Decreases in expected cash flows due to further credit deterioration will generally result in an impairment charge recognized in the Corporation's provision for loan and lease losses, resulting in an increase to the allowance for loan losses. During the first half of 2014, the Corporation did not record charges to the provision for loan losses related to PCI loans, most of which were acquired on May 30, 2014.

.

Changes in the accretable yield of PCI loans for the quarter and six month period ended June 30, 2014 were as follows:
	Quarter ended June 30, 2014		Quarter ended June 30, 2013		Six month period ended June 30, 2014		Six month period ended June 30, 2013
(In thousands)
Balance at beginning of period	$	-	$	406	$	-	$	2,171
Additions (accretable yield at acquisition
of loans from Doral)		86,759		-		86,759		-
Accretion recognized in earnings		(612)		-		(612)		(413)
Reclassification to non accretable		-		-		-		(1,352)
Balance at end of period	$	86,147	$	406	$	86,147	$	406

Changes in the carrying amount of loans accounted pursuant to ASC 310-30 follows:
		Quarter Ended		Six-Month Period Ended
			June 30, 2014		June 30, 2014
(In thousands)
Balance at beginning of period (1)		$	3,383	$	4,791
Additions (2)			102,831		102,831
Accretion			612		612
Collections and charge-offs			(1,207)		(2,615)
Ending balance		$	105,619	$	105,619
(1)	Relates to PCI loans acquired as part of the credit card portfolio purchased in the second quarter of 2012.
(2)	Represents the estimated fair value of the PCI loans acquired from Doral at the date of acquisition.

The outstanding principal balance of PCI loans, including amounts charged off by the Corporation, amounted to $139.3 million as of June 30, 2014 (December 2013- $22.7 million).

Purchases and Sales of Loans

In addition to loans acquired from Doral, during 2014, the Corporation purchased $80.5million of residential mortgage loans consistent with a strategic program established by the Corporation in 2005 to purchase ongoing residential mortgage loan production from mortgage bankers in Puerto Rico. Generally, the loans purchased from mortgage bankers were conforming residential mortgage loans. Purchases of conforming residential mortgage loans provide the Corporation the flexibility to retain or sell the loans, including through securitization transactions, depending upon the Corporation's interest rate risk management strategies. When the Corporation sells such loans, it generally keeps the servicing of the loans.

In the ordinary course of business, the Corporation sells residential mortgage loans (originated or purchased) to the GNMA and government-sponsored entities (“GSEs”). GNMA and GSEs, such as Fannie Mae (“FNMA”) and Freddie Mac (“FHLMC”), generally securitize the transferred loans into mortgage-backed securities for sale into the secondary market. The Corporation sold approximately $65.1million of performing residential mortgage loans to FNMA and FHLMC during the first half of 2014. Also, the Corporation securitized $104.2million of FHA/VA mortgage loans into GNMA mortgage-backed securities during the first half of 2014. The Corporation's continuing involvement in these loan sales consists primarily of servicing the loans. In addition, the Corporation agreed to repurchase loans when it breaches any of the representations and warranties included in the sale agreement. These representations and warranties are consistent with the GSEs' selling and servicing guidelines (i.e., ensuring that the mortgage was properly underwritten according to established guidelines).

For loans sold to GNMA, the Corporation holds an option to repurchase individual delinquent loans issued on or after January 1, 2003 when the borrower fails to make any payment for three consecutive months. This option gives the Corporation the ability, but not the obligation, to repurchase the delinquent loans at par without prior authorization from GNMA.

Under ASC Topic 860 Transfer and Servicing, once the Corporation has the unilateral ability to repurchase the delinquent loan, it is considered to have regained effective control over the loan and is required to recognize the loan and a corresponding repurchase liability on the balance sheet regardless of the Corporation's intent to repurchase the loan.

During the first half of 2014, the Corporation repurchased pursuant to its repurchase option with GNMA $2.7million of loans previously sold to GNMA. The principal balance of these loans is fully guaranteed and the risk of loss related to repurchases is generally limited to the difference between the delinquent interest payment advanced to GNMA computed at the loan's interest rate and the interest payments reimbursed by FHA, which are computed at a pre-determined debenture rate. Repurchases of GNMA loans allow the Corporation, among other things, to maintain acceptable delinquency rates on outstanding GNMA pools and remain as a seller and servicer in good standing with GNMA. The Corporation generally remediates any breach of representations and warranties related to the underwriting of such loans according to established GNMA guidelines without incurring losses. The Corporation does not maintain a liability for estimated losses as a result of breaches in representations and warranties.

Loan sales to FNMA and FHLMC are without recourse in relation to the future performance of the loans. The Corporation repurchased at par loans previously sold to FNMA and FHLMC in the amount of $1.3million during the first half of 2014. The Corporation's risk of loss with respect to these loans is also minimal as these repurchased loans are generally performing loans with documentation deficiencies. A $0.7 million loss was recorded in the first half of 2014 related to breaches in representations and warranties and a $0.3 million charge was recorded related to compensatory fees imposed by GSEs. Historically, losses experienced related to breaches in representation and warranties have been immaterial.

As a consequence, as of June 30, 2014, the Corporation does not maintain a liability for estimated losses on loans expected to be repurchased as a result of breaches in loan and servicer representations and warranties.

Bulk Sales of Assets and Transfer of Loans to Held For Sale

On June 21, 2013, the Corporation announced that it had completed a sale of non-performing residential mortgage loans with a book value of $203.8 million and OREO properties with a book value of $19.2 million in a cash transaction. The sales price of this bulk sale was $128.3 million. Approximately $30.1 million of reserves had already been allocated to the loans. This transaction resulted in total charge-offs of $98.0 million and an incremental loss of $69.8 million, reflected in the provision for loan and lease losses for the second quarter and first half of 2013. In addition, the Corporation recorded $3.1 million of professional service fees specifically related to this bulk sale of non-performing residential assets. This transaction resulted in a total pre-tax loss of $72.9 million.

On March 28, 2013, the Corporation completed the sale of adversely classified loans with a book value of $211.4 million ($100.1million of commercial and industrial loans, $68.8million of commercial mortgage loans, $41.3million of construction loans, and $1.2million of residential mortgage loans), and $6.3 million of OREO properties in a cash transaction. Included in the bulk sale was $185.0 million of non-performing assets. The sales price of this bulk sale was $120.2 million. Approximately $39.9 million of reserves had already been allocated to the loans. This transaction resulted in total charge-offs of $98.5 million and an incremental loss of $58.9 million, reflected in the provision for loan and lease losses for the first half of 2013. In addition, the Corporation recorded $3.9 million of professional fees specifically related to this bulk sale of assets. This transaction resulted in a total pre-tax loss of $62.8 million.

In addition, during the first quarter of 2013, the Corporation transferred to held for sale non-performing loans with an aggregate book value of $181.6 million. These transfers resulted in charge-offs of $36.0 million and an incremental loss of $5.2 million reflected in the provision for loan and lease losses for the first half of 2013.

During the second quarter of 2013, the Corporation completed the sale of a $40.8 million non-performing commercial mortgage loan that was among the loans transferred to held for sale in the first quarter of 2013 without incurring additional losses.

In a separate transaction during 2013, the Corporation foreclosed on the collateral underlying $39.2 million related to one of the loans written-off and transferred to held for sale in the first quarter of 2013.Furthermore, in the third quarter of 2013, approximately $6.4 million of construction loan held for sale participations were paid-off.

The Corporation's primary goal with respect to these sales has been to accelerate the disposition of non-performing assets, which is the main priority of the Corporation's Strategic Plan. The opportunistic sale of distressed assets is a pivotal and tactical step in the Corporation's efforts to reduce balance sheet risk, improve earnings in the future through reductions of credit-related-costs and enhance credit quality consistent with regulators' expectations of adequate levels of adversely classified assets for financial institutions.

Loan Portfolio Concentration

The Corporation's primary lending area is Puerto Rico. The Corporation's banking subsidiary, First Bank, also lends in the USVI and BVI markets and in the United States (principally in the state of Florida). Of the total gross loans held for investment of $9.5 billion as of June 30, 2014, approximately 83% have credit risk concentration in Puerto Rico, 10% in the United States, and 7% in the USVI and BVI.

As of June 30, 2014, the Corporation had $385.3million in credit facilities granted to the Puerto Rico government, its municipalities and public corporations, of which $340.7 million was outstanding, compared to $397.8 million outstanding as of December 31, 2013, and $80.2 million granted to the government of the Virgin Islands, compared to $60.6 million as of December 31, 2013. Approximately $205.7 million of the outstanding credit facilities consists of loans to municipalities in Puerto Rico. Municipal debt exposure is secured by ad valorem taxation without limitation as to rate or amount on all taxable property within the boundaries of each municipality. The good faith, credit, and unlimited taxing power of the applicable municipality have been pledged to the repayment of all outstanding bonds and notes. Approximately $46.4 million consists of loans to units of the central government, and approximately $88.6 million consists of loans to public corporations that receive revenues from the rates they charge for services or products, such as electric power services, including a $75.0 million credit extended to the Puerto Rico Electric Power Authority for fuel purchases that have priority over senior bonds and other debt. Main public corporations have varying degrees of independence from the central government and many receive appropriations or other payments from the Puerto Rico's government general fund. Debt issued by the central government can either carry the full faith, credit and taxing power of the Commonwealth of Puerto Rico or represent an obligation that is subject to annual budget appropriations. Furthermore, the Corporation had $200.2 million outstanding as of June 30, 2014 in financing to the hotel industry in Puerto Rico guaranteed by the Puerto Rico Tourism Development Fund (“TDF”). The TDF is a subsidiary of the GDB that works with private-sector financial institutions to structure financings for new hospitality projects.

As disclosed in Note 4, S&P, Moody's and Fitch downgraded the credit rating of the Commonwealth of Puerto Rico's debt and certain public corporations to non-investment grade categories. The Corporation cannot predict at this time the impact that the current fiscal situation of the Commonwealth of Puerto Rico and the various legislative and other measures adopted and to be adopted by the Puerto Rico government in response to such fiscal situation will have on the Puerto Rico economy and on the Corporation's financial condition and results of operations.

Troubled Debt Restructurings

The Corporation provides homeownership preservation assistance to its customers through a loss mitigation program in Puerto Rico that is similar to the U.S. government's Home Affordable Modification Program guidelines. Depending upon the nature of borrowers' financial condition, restructurings or loan modifications through this program as well as other restructurings of individual commercial, commercial mortgage, construction, and residential mortgage loans in the U.S. mainland fit the definition of a troubled debt restructuring (a “TDR”). A restructuring of a debt constitutes a TDR if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider. Modifications involve changes in one or more of the loan terms that bring a defaulted loan current and provide sustainable affordability. Changes may include the refinancing of any past-due amounts, including interest and escrow, the extension of the maturity of the loan and modifications of the loan rate. As of June 30, 2014, the Corporation's total TDR loans held for investment of $628.2 million consisted of $342.9 million of residential mortgage loans, $103.5 million of commercial and industrial loans, $137.6 million of commercial mortgage loans, $17.0 million of construction loans, and $27.2 million of consumer loans. Outstanding unfunded commitments on TDR loans amounted to $0.4million as of June 30, 2014.

The Corporation's loss mitigation programs for residential mortgage and consumer loans can provide for one or a combination of the following: movement of interest past due to the end of the loan, extension of the loan term, deferral of principal payments for a significant period of time, and reduction of interest rates either permanently (offered up to 2010) or for a period of up to two years (step-up rates). Additionally, in certain cases, the restructuring may provide for the forgiveness of contractually due principal or interest. Uncollected interest is added to the end of the loan term at the time of the restructuring and not recognized as income until collected or when the loan is paid off. These programs are available only to those borrowers who have defaulted, or are likely to default, permanently on their loan and would lose their homes in a foreclosure action absent some lender concession. Nevertheless, if the Corporation is not reasonably assured that the borrower will comply with its contractual commitment, properties are foreclosed.

Prior to permanently modifying a loan, the Corporation may enter into trial modifications with certain borrowers. Trial modifications generally represent a six-month period during which the borrower makes monthly payments under the anticipated modified payment terms prior to a formal modification. Upon successful completion of a trial modification, the Corporation and the borrower enter into a permanent modification. TDR loans that are participating in or that have been offered a binding trial modification are classified as TDRs when the trial offer is made and continue to be classified as TDRs regardless of whether the borrower enters into a permanent modification. As of June 30, 2014, we classified an additional $8.2 million of residential mortgage loans as TDRs that were participating in or had been offered a trial modification.

For the commercial real estate, commercial and industrial, and construction portfolios, at the time of a restructuring, the Corporation determines, on a loan-by-loan basis, whether a concession was granted for economic or legal reasons related to the borrower's financial difficulty. Concessions granted for commercial loans could include: reductions in interest rates to rates that are considered below market; extension of repayment schedules and maturity dates beyond original contractual terms; waivers of borrower covenants; forgiveness of principal or interest; or other contract changes that would be considered a concession. The Corporation mitigates loan defaults for its commercial loan portfolios through its collections function. The function's objective is to minimize both early stage delinquencies and losses upon default of commercial loans. In the case of the commercial and industrial, commercial mortgage and construction loan portfolios, the Corporation's Special Asset Group (“SAG”) focuses on strategies for the accelerated reduction of non-performing assets through note sales, short sales, loss mitigation programs, and sales of OREO. In addition to the management of the resolution process for problem loans, the SAG oversees collection efforts for all loans to prevent migration to the non-performing and/or adversely classified status. The SAG utilizes relationship officers, collection specialists, and attorneys. In the case of residential construction projects, the workout function monitors project specifics, such as project management and marketing, as deemed necessary. The SAG utilizes its collections infrastructure of workout collection officers, credit work-out specialists, in-house legal counsel, and third-party consultants. In the case of residential construction projects and large commercial loans, the function also utilizes third-party specialized consultants to monitor the residential and commercial construction projects in terms of construction, marketing and sales, and assists with the restructuring of large commercial loans. In addition, the Corporation extends, renews, and restructures loans with satisfactory credit profiles. Many commercial loan facilities are structured as lines of credit, which are mainly one year in term and therefore are required to be renewed annually. Other facilities may be restructured or extended from time to time based upon changes in the borrower's business needs, use of funds, timing of completion of projects, and other factors. If the borrower is not deemed to have financial difficulties, extensions, renewals, and restructurings are done in the normal course of business and not considered concessions, and the loans continue to be recorded as performing.

Selected information on TDRs that includes the recorded investment by loan class and modification type is summarized in the following tables. This information reflects all TDRs:
		June 30, 2014
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	24,088	$	6,437	$	277,431	$	-	$	34,956	$	342,912
Commercial Mortgage Loans			30,672		12,884		74,939		-		19,124		137,619
Commercial and Industrial Loans:			7,666		4,885		33,216		3,100		54,671		103,538
Construction Loans:
Land			834		214		1,634		-		554		3,236
Construction-commercial			-		-		3,848		-		-		3,848
Construction-residential			6,155		160		3,142		-		432		9,889
Consumer Loans - Auto			-		544		8,662		-		4,904		14,110
Finance Leases			-		510		1,652		-		-		2,162
Consumer Loans - Other			642		178		8,407		130		1,562		10,919
Total Troubled Debt Restructurings (2)		$	70,057	$	25,812	$	412,931	$	3,230	$	116,203	$	628,233
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.
(2)	Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

		December 31, 2013
(In thousands)		Interest rate below market		Maturity or term extension		Combination of reduction in interest rate and extension of maturity		Forgiveness of principal and/or interest		Other (1)		Total
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans		$	23,428	$	6,059	$	274,562	$	-	$	33,195	$	337,244
Commercial Mortgage Loans			36,543		12,985		83,993		7		20,048		153,576
Commercial and Industrial Loans			12,099		11,341		12,835		3,122		52,554		91,951
Construction Loans:
Land			878		2,012		1,760		-		675		5,325
Construction-commercial			-		-		3,924		-		-		3,924
Construction-residential			6,054		160		3,173		994		513		10,894
Consumer Loans - Auto			-		706		8,350		-		5,066		14,122
Finance Leases			-		1,286		1,072		-		-		2,358
Consumer Loans - Other			227		256		8,638		-		1,743		10,864
Total Troubled Debt Restructurings (2)		$	79,229	$	34,805	$	398,307	$	4,123	$	113,794	$	630,258
(1)	Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.
(2)	Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

The following table presents the Corporation's TDR activity:
(In thousands)	Quarter Ended		Six-Month Period Ended
	June 30, 2014
Beginning balance of TDRs	$	622,320	$	630,258
New TDRs		34,810		54,745
Increases to existing TDRs - additional
disbursements		107		134
Charge-offs post modification		(18,666)		(26,648)
Foreclosures		(1,527)		(2,601)
Paid-off and partial payments		(8,811)		(27,655)
Ending balance of TDRs	$	628,233	$	628,233

TDRs are classified as either accrual or nonaccrual loans. A loan on nonaccrual and restructured as a TDR will remain on nonaccrual status until the borrower has proven the ability to perform under the modified structure, generally for a minimum of six months, and there is evidence that such payments can and are likely to continue as agreed. Performance prior to the restructuring, or significant events that coincide with the restructuring, are included in assessing whether the borrower can meet the new terms and may result in the loans being returned to accrual at the time of the restructuring or after a shorter performance period. If the borrower's ability to meet the revised payment schedule is uncertain, the loan remains classified as a nonaccrual loan. Loan modifications increase the Corporation's interest income by returning a non-performing loan to performing status, if applicable,increase cash flows by providing for payments to be made by the borrower, and avoid increases in foreclosure and OREO costs. TheCorporation continues to consider a modified loan as an impairedloan for purposes of estimating the allowance for loan and lease losses.A TDR loan that specifies an interest rate that at the time of the restructuring is greater than or equal to the rate the Corporation is willing to accept for a new loan with comparable risk may not be reported as a TDR or an impaired loan in the calendar years subsequent to the restructuring if it is in compliance with its modified terms. The Corporation did not remove loans from the TDR classification during the first half of 2014.

The following table provides a breakdown between accrual and nonaccrual status of TDRs:
(In thousands)		June 30, 2014
		Accrual		Nonaccrual (1) (2)		Total TDRs
Non-FHA/VA Residential Mortgage loans		$	256,948	$	85,964	$	342,912
Commercial Mortgage Loans			77,795		59,824		137,619
Commercial and Industrial Loans			53,249		50,289		103,538
Construction Loans:
Land			811		2,425		3,236
Construction-commercial			-		3,848		3,848
Construction-residential			3,301		6,588		9,889
Consumer Loans - Auto			8,847		5,263		14,110
Finance Leases			2,060		102		2,162
Consumer Loans - Other			8,859		2,060		10,919
Total Troubled Debt Restructurings		$	411,870	$	216,363	$	628,233
(1)	Included in non-accrual loans are $85.5 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.
(2)	Excludes non-accrual TDRs held for sale with a carrying value of $45.8 million as of June 30, 2014.

(In thousands)		December 31, 2013
		Accrual		Nonaccrual (1) (2)		Total TDRs
Non- FHA/VA Residential Mortgage loans		$	263,919	$	73,324	$	337,243
Commercial Mortgage Loans			84,419		69,156		153,575
Commercial and Industrial Loans			53,509		38,441		91,950
Construction Loans:
Land			1,000		4,325		5,325
Construction-commercial			-		3,924		3,924
Construction-residential			3,332		7,562		10,894
Consumer Loans - Auto			8,512		5,610		14,122
Finance Leases			2,275		85		2,360
Consumer Loans - Other			8,417		2,448		10,865
Total Troubled Debt Restructurings		$	425,383	$	204,875	$	630,258
(1)	Included in non-accrual loans are $95.7 million in loans that are performing under the terms of the restructuring agreement but are reported in non-accrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status and there is no doubt about full collectability.
(2)	Excludes non-accrual TDRs held for sale with a carrying value of $45.9 million as of December 31, 2013.

TDRs exclude restructured mortgage loans that are government guaranteed (i.e., FHA/VA loans) in an amount totaling $76.9 million. The Corporation excludes government guaranteed loans from TDRs given that, in the event that the borrower defaults on the loan, the principal and interest (debenture rate) are guaranteed by the U.S. government; therefore, the risk of loss on these types of loans is very low. The Corporation does not consider loans with government guarantees to be impaired loans for the purpose of calculating the allowance for loan and lease losses.

Loan modifications that are considered TDRscompleted during the quarter and six-month period ended June 30, 2014 and 2013 were as follows:

(Dollars in thousands)	Quarter ended June 30, 2014
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	91	$	11,017	$	10,264
Commercial Mortgage Loans	1		410		410
Commercial and Industrial Loans	7		21,114		21,114
Construction Loans:
Land	2		55		57
Construction-commercial	-		-		-
Construction-residential	-		-		-
Consumer Loans - Auto	92		1,408		1,393
Finance Leases	10		174		142
Consumer Loans - Other	313		1,457		1,430
Total Troubled Debt Restructurings	516	$	35,635	$	34,810
(Dollars in thousands)	Six-Month period ended June 30, 2014
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	138	$	18,726	$	17,975
Commercial Mortgage Loans	4		1,244		1,247
Commercial and Industrial Loans	12		29,078		28,744
Construction Loans:
Land	2		55		57
Construction-commercial	-		-		-
Construction-residential	-		-		-
Consumer Loans - Auto	209		3,013		2,998
Finance Leases	20		367		335
Consumer Loans - Other	742		3,416		3,389
Total Troubled Debt Restructurings	1,127	$	55,899	$	54,745

(Dollars in thousands)	Quarter ended June 30, 2013
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	40	$	3,335	$	3,335
Commercial Mortgage Loans	1		491		491
Commercial and Industrial Loans	1		1,165		1,165
Construction Loans:
Land	4		208		208
Consumer Loans - Auto	142		1,945		1,945
Finance Leases	19		416		416
Consumer Loans - Other	367		1,675		1,675
Total Troubled Debt Restructurings	574	$	9,235	$	9,235
(Dollars in thousands)	Six-Month period ended June 30, 2013
	Number of contracts	Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Non-FHA/VA Residential Mortgage loans	113	$	13,098	$	13,122
Commercial Mortgage Loans	1		491		491
Commercial and Industrial Loans	8		68,051		42,663
Construction Loans:
Land	4		208		208
Construction-residential	1		195		195
Consumer Loans - Auto	285		3,868		3,868
Finance Leases	38		729		729
Consumer Loans - Other	730		3,322		3,322
Total Troubled Debt Restructurings	1,180	$	89,962	$	64,598

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-performing loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. The Corporation considers a loan to have defaulted if the borrower has failed to make payments of either principal, interest, or both for a period of 90 days or more.

Loan modifications considered TDRs that defaulted during the quarters and six-month periods ended June 30, 2014 and June 30, 2013 and had become TDRs during the 12-months preceding the default date were as follows:

	Quarter ended June 30,
(Dollars in thousands)	2014			2013
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	19	$	2,267	19	$	2,090
Commercial Mortgage Loans	-		-	-		-
Commercial and Industrial Loans	-		-	-		-
Construction Loans:
Land	1		46	2		66
Construction-commercial	-		-	-		-
Construction-residential	-		-	1		186
Consumer Loans - Auto	18		286	5		37
Consumer Loans - Other	53		205	35		137
Finance Leases	-		-	2		20
Total	91	$	2,804	64	$	2,536

	Six-Month Period Ended June 30,
(Dollars in thousands)	2014			2013
	Number of contracts	Recorded Investment		Number of contracts	Recorded Investment
Non-FHA/VA Residential Mortgage loans	33	$	4,819	64	$	9,615
Commercial Mortgage Loans	-		-	1		46,102
Commercial and Industrial Loans	-		-	2		3,829
Construction Loans:
Land	1		46	2		66
Construction-commercial	-		-	-		-
Construction-residential	-		-	1		186
Consumer Loans - Auto	22		325	7		54
Consumer Loans - Other	98		381	40		219
Finance Leases	-		-	2		20
Total	154	$	5,571	119	$	60,091

For certain TDRs, the Corporation splits the loans into two new notes, A and B notes. The A note is restructured to comply with the Corporation's lending standards at current market rates, and is tailored to suit the customer's ability to make timely interest and principal payments. The B note includes the granting of the concession to the borrower and varies by situation. The B note is charged off but the obligation is not forgiven to the borrower, and any payments collected are accounted for as recoveries. At the time of restructuring, the A note is identified and classified as a TDR. If the loan performs for at least six months according to the modified terms, the A note may be returned to accrual status. The borrower's payment performance prior to the restructuring is included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of the restructuring. In the periods following the calendar year in which a loan is restructured, the A note may no longer be reported as a TDR if it is on accrual, is in compliance with its modified terms, and yields a market rate (as determined and documented at the time of the restructuring).

The recorded investment in loans held for investment restructured using the A/B note restructure workout strategy was approximately $62.2 million at June 30, 2014. The following table provides additional information about the volume of this type of loan restructuring and the effect on the allowance for loan and lease losses in the first half of 2014 and 2013:

(In thousands)	June 30, 2014			June 30, 2013
Principal balance deemed collectible at end of period	$	62,159	$	93,451
Amount (recovery) charged off	$	(4,106)	$	25,389
(Reductions) charges to the provision for loan losses	$	(4,725)	$	2,318
Allowance for loan losses at end of period	$	942	$	3,339

Of the loans comprising the $62.2 million that have been deemed collectible, approximately $60.5 million were placed in accrual status as the borrowers have exhibited a period of sustained performance. These loans continue to be individually evaluated for impairment purposes.

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SUPPLEMENTAL CASH FLOW INFORMATION - Supplemental Cash Flow Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Cash paid for:
Interest on borrowings			$ 51,817	$ 64,075
Income tax			2,524	2,141
Non-cash investing and financing activities:
Additions to other real estate owned			13,267	42,526
Additions to auto repossesions			43,091	31,236
Loan securitizations			104,236	159,140
Capitalization of servicing assets	1,017	2,094	2,069	3,814
Loans held for investment transferred to held for sale			$ 0	$ 181,620

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LOANS HELD FOR SALE

3 Months Ended

Jun. 30, 2014

LOANS HELD FOR SALE

NOTE 8–LOANS HELD FOR SALE

The Corporation's loans held-for-sale portfolio was composed of:

	June 30, 2014		December 31, 2013
	(In thousands)
Residential mortgage loans	$	17,350	$	21,168
Construction loans		47,802		47,802
Commercial mortgage loans		6,953		6,999
Total	$	72,105	$	75,969

Non-performing loans held for sale totaled $54.8million ($7.0 million commercial mortgage and $47.8million construction loans) as of June 30, 2014 and December 31, 2013.

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INVESTMENT SECURITIES - Roll-Forward of Credit Losses on Debt Securities Held by Corporation (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Other Than Temporary Impairment Credit Losses Recognized In Earnings [Line Items]
Beginning balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	$ 5,389	$ 5,389	$ 5,389	$ 5,272
Additions:
Credit losses on debt securities for which an OTTI was previously recognized	0	0	0	117
Ending balance of credit losses on debt securities held for which a portion of an OTTI was recognized in OCI	$ 5,389	$ 5,389	$ 5,389	$ 5,389

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (FHLB) - Summary of Advances from FHLB (Parenthetical) (Detail)	Jun. 30, 2014	Dec. 31, 2013
Short Term Debt [Line Items]
Weighted-average interest rate	1.07%	1.07%

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LOAN PORTFOLIO - Selected Information on TDRs Includes Recorded Investment by Loan Class and Modification Type (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Mar. 31, 2014	Dec. 31, 2013
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 628,233	[1]	$ 622,320	$ 630,258	[2]
Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	70,057	[1]		79,229	[2]
Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	25,812	[1]		34,805	[2]
Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	412,931	[1]		398,307	[2]
Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,230	[1]		4,123	[2]
Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	116,203	[1],[3]		113,794	[2],[3]
Non Fha Va Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	342,912			337,244
Non Fha Va Residential Mortgage Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	24,088			23,428
Non Fha Va Residential Mortgage Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,437			6,059
Non Fha Va Residential Mortgage Loans [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	277,431			274,562
Non Fha Va Residential Mortgage Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Non Fha Va Residential Mortgage Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	34,956	[3]		33,195	[3]
Commercial Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	137,619			153,576
Commercial Mortgage Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	30,672			36,543
Commercial Mortgage Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	12,884			12,985
Commercial Mortgage Loans [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	74,939			83,993
Commercial Mortgage Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			7
Commercial Mortgage Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	19,124	[3]		20,048	[3]
Commercial And Industrial Loan [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	103,538			91,951
Commercial And Industrial Loan [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	7,666			12,099
Commercial And Industrial Loan [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	4,885			11,341
Commercial And Industrial Loan [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	33,216			12,835
Commercial And Industrial Loan [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,100			3,122
Commercial And Industrial Loan [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	54,671	[3]		52,554	[3]
Consumer Auto Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	14,110			14,122
Consumer Auto Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Consumer Auto Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	544			706
Consumer Auto Loans [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	8,662			8,350
Consumer Auto Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Consumer Auto Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	4,904	[3]		5,066	[3]
Finance Leases [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	2,162			2,358
Finance Leases [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Finance Leases [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	510			1,286
Finance Leases [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,652			1,072
Finance Leases [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Finance Leases [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[3]		0	[3]
Other Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	10,919			10,864
Other Consumer Loans [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	642			227
Other Consumer Loans [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	178			256
Other Consumer Loans [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	8,407			8,638
Other Consumer Loans [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	130			0
Other Consumer Loans [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,562	[3]		1,743	[3]
Commercial Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,848			3,924
Commercial Construction [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Commercial Construction [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Commercial Construction [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,848			3,924
Commercial Construction [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Commercial Construction [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0	[3]		0	[3]
Residential Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	9,889			10,894
Residential Construction [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	6,155			6,054
Residential Construction [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	160			160
Residential Construction [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,142			3,173
Residential Construction [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			994
Residential Construction [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	432	[3]		513	[3]
Land Construction [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	3,236			5,325
Land Construction [Member] | Interest Rate Below Market [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	834			878
Land Construction [Member] | Maturity of Term Extension [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	214			2,012
Land Construction [Member] | Combination of reduction in interest rate and extension of maturity [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	1,634			1,760
Land Construction [Member] | Forgiveness of principal and/or interest [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	0			0
Land Construction [Member] | Other [Member]
Financing Receivable Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 554	[3]		$ 675	[3]

[1]  Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

[2]  Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

[3]  Other concessions granted by the Corporation include deferral of principal and/or interest payments for a period longer than what would be considered insignificant, payment plans under judicial stipulation or a combination of the concessions listed in the table.

XML

OTHER EQUITY SECURITIES - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Schedule Of Other Assets [Line Items]
Capital stock par value	$ 100		$ 100
Book value of investment in FHLB stock	$ 28.9		$ 28.9		$ 28.4
Dividend income from FHLB stock	0.3	0.3	0.6	0.7
Carrying value of other equity security	$ 0.3		$ 0.3		$ 0.3

XML

GOODWILL AND OTHER INTANGIBLES - Additional Information (Detail) (USD $)	6 Months Ended				3 Months Ended		6 Months Ended		12 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2012	Jun. 30, 2014 Purchased Credit Card Relationship Intangible [Member]	Jun. 30, 2013 Purchased Credit Card Relationship Intangible [Member]	Jun. 30, 2014 Purchased Credit Card Relationship Intangible [Member]	Jun. 30, 2013 Purchased Credit Card Relationship Intangible [Member]	Dec. 31, 2013 Purchased Credit Card Relationship Intangible [Member]	Jun. 30, 2014 Core Deposits [Member]	Jun. 30, 2013 Core Deposits [Member]	Jun. 30, 2014 Core Deposits [Member]	Jun. 30, 2013 Core Deposits [Member]	Dec. 31, 2013 Core Deposits [Member]
Finite Lived Intangible Assets [Line Items]
Goodwill	$ 28,100,000		$ 28,100,000
Purchase credit card relationship intangible amount				24,500,000	24,465,000		24,465,000		24,465,000	45,844,000		45,844,000		45,844,000
Amortization period of purchased credit card relationship intangible					7 years 6 months 0 days				8 years 0 months 0 days	8 years 10 months 24 days				9 years 9 months 18 days
Amortization expense	$ 2,488,000	$ 3,039,000			$ 900,000	$ 900,000	$ 1,700,000	$ 1,900,000		$ 400,000	$ 600,000	$ 800,000	$ 1,200,000

XML

INVESTMENT SECURITIES - OTTI Losses on Available-for-Sale Debt Securities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Schedule Of Available For Sale Securities [Line Items]
Total other-than-temporary impairment losses	$ 0	$ 0	$ 0	$ 0
Net impairment losses recognized in earnings	0	0	0	117
Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Total other-than-temporary impairment losses	0	0	0	0
Portion of loss previously recognized in other comprehensive income	0	0	0	(117)
Net impairment losses recognized in earnings	$ 0	$ 0	$ 0	$ (117)

XML

ALLOWANCE FOR LOAN AND LEASE LOSSES - Changes in Allowance for Loan and Lease Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013		Jun. 30, 2014	Jun. 30, 2013		Mar. 31, 2014	Dec. 31, 2013
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	$ 266,778	$ 342,531		$ 285,858	$ 435,414
Charge-offs	(59,054)	(34,452)		(112,761)	(142,713)
Charge-off related to bulk sale		97,972			196,491
Recoveries	6,709	3,476		9,421	6,250
Provision For Loan Lease And Other Losses	26,744	(87,464)		58,659	(198,587)
Reclassification		0	[1]		0	[1]
Ending balance	241,177	301,047		241,177	301,047
Balance at end of period	68,358	114,953		68,358	114,953		85,016	102,601
Ending balance: general allowance	172,819	186,094		172,819	186,094
Ending balance	9,467,101	9,445,786		9,467,101	9,445,786			9,636,170
Ending balance: impaired loans	908,858	908,245		908,858	908,245		879,388	919,112
Ending balance: purchased credit-impaired loans	105,620			105,620				4,791
Ending balance: loans with general allowance	8,452,623	8,529,256		8,452,623	8,529,256
Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: purchased credit-impaired loans	0	0		0	0
Ending balance: purchased credit-impaired loans	105,620	8,285		105,620	8,285
Residential Mortgage [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	30,508	64,722		33,110	68,354
Charge-offs	(4,987)	(5,956)		(11,409)	(16,653)
Charge-off related to bulk sale		97,941			98,972
Recoveries	300	479		369	627
Provision For Loan Lease And Other Losses	3,934	(74,277)		7,685	(82,225)
Reclassification		0	[1]		0	[1]
Ending balance	29,755	35,581		29,755	35,581
Balance at end of period	16,464	20,406		16,464	20,406
Ending balance: general allowance	13,291	15,175		13,291	15,175
Ending balance	2,795,159	2,511,206		2,795,159	2,511,206
Ending balance: impaired loans	414,448	384,062		414,448	384,062
Ending balance: loans with general allowance	2,280,714	2,127,144		2,280,714	2,127,144
Residential Mortgage [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: purchased credit-impaired loans	0	0		0	0
Ending balance: purchased credit-impaired loans	99,997	0		99,997	0
Commercial Mortgage [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	66,512	78,053		73,138	97,692
Charge-offs	(13,423)	(3,271)		(19,233)	(19,270)
Charge-off related to bulk sale		0			40,057
Recoveries	4,297	18		4,332	38
Provision For Loan Lease And Other Losses	(8,808)	(2,522)		(9,659)	(38,919)
Reclassification		10,691	[1]		10,691	[1]
Ending balance	48,578	88,013		48,578	88,013
Balance at end of period	16,317	33,219		16,317	33,219
Ending balance: general allowance	32,261	54,794		32,261	54,794
Ending balance	1,813,930	1,916,509		1,813,930	1,916,509
Ending balance: impaired loans	238,997	212,983		238,997	212,983
Ending balance: loans with general allowance	1,571,486	1,703,526		1,571,486	1,703,526
Commercial Mortgage [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: purchased credit-impaired loans	0	0		0	0
Ending balance: purchased credit-impaired loans	3,447	0		3,447	0
Commercial And Industrial Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	79,590	97,363		85,295	146,900
Charge-offs	(19,452)	(6,488)		(41,911)	(47,430)
Charge-off related to bulk sale		0			44,678
Recoveries	416	968		1,079	1,759
Provision For Loan Lease And Other Losses	16,336	(5,274)		32,427	(40,566)
Reclassification		(9,440)	[1]		(9,440)	[1]
Ending balance	76,890	87,677		76,890	87,677
Balance at end of period	22,745	36,503		22,745	36,503
Ending balance: general allowance	54,145	51,174		54,145	51,174
Ending balance	2,647,478	2,775,791		2,647,478	2,775,791
Ending balance: impaired loans	179,764	206,932		179,764	206,932
Ending balance: loans with general allowance	2,467,714	2,568,859		2,467,714	2,568,859
Commercial And Industrial Loans [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: purchased credit-impaired loans	0	0		0	0
Ending balance: purchased credit-impaired loans	0	0		0	0
Construction Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	27,411	45,033		35,814	61,600
Charge-offs	(2,661)	(2,387)		(3,631)	(28,246)
Charge-off related to bulk sale		31			12,784
Recoveries	55	50		672	147
Provision For Loan Lease And Other Losses	(3,513)	6,686		(11,563)	(15,262)
Reclassification		(1,251)	[1]		(1,251)	[1]
Ending balance	21,292	34,728		21,292	34,728
Balance at end of period	8,962	21,884		8,962	21,884
Ending balance: general allowance	12,330	12,844		12,330	12,844
Ending balance	148,266	194,912		148,266	194,912
Ending balance: impaired loans	46,721	76,483		46,721	76,483
Ending balance: loans with general allowance	101,545	118,429		101,545	118,429
Construction Loans [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: purchased credit-impaired loans	0	0		0	0
Ending balance: purchased credit-impaired loans	0	0		0	0
Consumer Loan [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	62,757	57,360		58,501	60,868
Charge-offs	(18,531)	(16,350)		(36,577)	(31,114)
Charge-off related to bulk sale		0			0
Recoveries	1,641	1,961		2,969	3,679
Provision For Loan Lease And Other Losses	18,795	(12,077)		39,769	(21,615)
Reclassification		0	[1]		0	[1]
Ending balance	64,662	55,048		64,662	55,048
Balance at end of period	3,870	2,941		3,870	2,941
Ending balance: general allowance	60,792	52,107		60,792	52,107
Ending balance	2,062,268	2,047,368		2,062,268	2,047,368
Ending balance: impaired loans	28,928	27,785		28,928	27,785
Ending balance: loans with general allowance	2,031,164	2,011,298		2,031,164	2,011,298
Consumer Loan [Member] | Purchased Credit Impaired [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Ending balance: purchased credit-impaired loans	0	0		0	0
Ending balance: purchased credit-impaired loans	$ 2,176	$ 8,285		$ 2,176	$ 8,285

[1] During the second quarter of 2013, after a comprehensive review of substantially all of the loans in our commercial portfolios, the classification of certain loans was revised to more accurately depict the nature of the underlying loans. This reclassification resulted in a net increase of $269.0 million in commercial mortgage loans, since the principal source of repayment for such loans is derived primarily from the operation of the underlying real estate, with a corresponding decrease of $246.8 million in commercial and industrial loans and $22.2 million decrease in construction loans. The Corporation evaluated the impact of this reclassification on the provision for loan losses and determined that the effect of this adjustment was not material to any previously reported results.

XML

FAIR VALUE - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Securities available for sale
Investment securities available for sale	$ 1,997,408	$ 1,978,282
Derivatives, included in assets:
Derivatives, included in assets	115	394
Derivatives, included in liabilities:
Derivatives, included in liabilities	3,572	4,023
Forward Contracts [Member]
Derivatives, included in assets:
Derivatives, included in assets	0	174
Derivatives, included in liabilities:
Derivatives, included in liabilities	228	0
Equity Securities [Member]
Securities available for sale
Investment securities available for sale	9	33
U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale	7,497	7,499
Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale	207,377	200,903
Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale	1,699,358	1,677,651
US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale	44,982	51,330
Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale	38,184	40,866
Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	16	58
Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities	16	58
Interest Rate Swap [Member]
Derivatives, included in assets:
Derivatives, included in assets	99	162
Derivatives, included in liabilities:
Derivatives, included in liabilities	3,328	3,965
Fair Value Inputs Level 1 [Member] | Forward Contracts [Member]
Derivatives, included in assets:
Derivatives, included in assets	0	0
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 1 [Member] | Equity Securities [Member]
Securities available for sale
Investment securities available for sale	9	33
Fair Value Inputs Level 1 [Member] | U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale	7,497	7,499
Fair Value Inputs Level 1 [Member] | Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 1 [Member] | Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 1 [Member] | US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 1 [Member] | Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 1 [Member] | Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	0	0
Fair Value Inputs Level 1 [Member] | Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 1 [Member] | Interest Rate Swap [Member]
Derivatives, included in assets:
Derivatives, included in assets	0	0
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 2 [Member] | Forward Contracts [Member]
Derivatives, included in assets:
Derivatives, included in assets	0	174
Derivatives, included in liabilities:
Derivatives, included in liabilities	228	0
Fair Value Inputs Level 2 [Member] | Equity Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 2 [Member] | U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 2 [Member] | Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale	207,377	200,903
Fair Value Inputs Level 2 [Member] | Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale	1,699,358	1,677,651
Fair Value Inputs Level 2 [Member] | US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale	42,248	48,904
Fair Value Inputs Level 2 [Member] | Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 2 [Member] | Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	16	58
Fair Value Inputs Level 2 [Member] | Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities	16	58
Fair Value Inputs Level 2 [Member] | Interest Rate Swap [Member]
Derivatives, included in assets:
Derivatives, included in assets	99	162
Derivatives, included in liabilities:
Derivatives, included in liabilities	3,328	3,965
Fair Value Inputs Level 3 [Member] | Forward Contracts [Member]
Derivatives, included in assets:
Derivatives, included in assets	0	0
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 3 [Member] | Equity Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | U S Treasury Securities [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | Us Government Agencies Debt Securities Noncallable [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | Us Government Agencies Debt Securities Callable [Member]
Securities available for sale
Investment securities available for sale	0	0
Fair Value Inputs Level 3 [Member] | US States And Political Subdivisions Member [Member]
Securities available for sale
Investment securities available for sale	2,734	2,426
Fair Value Inputs Level 3 [Member] | Private Label Mbs [Member]
Securities available for sale
Investment securities available for sale	38,184	40,866
Fair Value Inputs Level 3 [Member] | Interest Rate Cap [Member] | Purchase
Derivatives, included in assets:
Derivatives, included in assets	0	0
Fair Value Inputs Level 3 [Member] | Interest Rate Cap [Member] | Written
Derivatives, included in liabilities:
Derivatives, included in liabilities	0	0
Fair Value Inputs Level 3 [Member] | Interest Rate Swap [Member]
Derivatives, included in assets:
Derivatives, included in assets	0	0
Derivatives, included in liabilities:
Derivatives, included in liabilities	$ 0	$ 0

XML

EARNINGS PER COMMON SHARE (Tables)

3 Months Ended

Jun. 30, 2014

Schedule of Earning Per Share [Table Text Block]

The calculations of earnings (losses) per common share for the quarters and six month periods ended June 30, 2014 and 2013 are as follows:
	Quarter Ended				Six-Month Period Ended
	June 30,		June 30,		June 30,		June 30,
	2014		2013		2014		2013
		(In thousands, except per share information)
Net income (loss)	$	21,225	$	(122,583)	$	38,308	$	(195,216)
Favorable impact from issuing common stock in exchange
for Series A through E preferred stock		1,280		-		1,659		-
Net income (loss) attributable to common stockholders	$	22,505	$	(122,583)	$	39,967	$	(195,216)
Weighted-Average Shares:
Basic weighted-average common shares outstanding		208,202		205,490		206,974		205,477
Average potential common shares		1,942		-		1,543		-
Diluted weighted-average number of common shares
outstanding		210,144		205,490		208,517		205,477
Earnings (loss) per common share:
Basic	$	0.11	$	(0.60)	$	0.19	$	(0.95)
Diluted	$	0.11	$	(0.60)	$	0.19	$	(0.95)

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FIRST BANCORP. (Holding Company Only) Financial Information - Statements of Loss (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income:
Interest income on investment securities	$ 13,728	$ 12,185	$ 28,956	$ 23,228
Expense:
Impairement on equity securities	291	(42)	291	(42)
Loss before income taxes and equity in undistributed earnings (losses) of subsidiaries	20,949	(123,562)	38,919	(194,573)
Income tax expense	276	979	(611)	(643)
Net income (loss)	21,225	(122,583)	38,308	(195,216)
Other comprehensive income (loss), net of tax	27,790	(59,964)	50,329	(68,574)
Comprehensive (loss) income	49,015	(182,547)	88,637	(263,790)
Holding Company [Member]
Income:
Interest Income Other	5	6	10	11
Other income	55	72	108	124
Total interest income	60	78	118	135
Expense:
Notes payable and other borrowings	1,786	1,763	3,546	3,509
Other operating expenses	768	806	1,274	2,609
Total operating expenses	2,554	2,569	4,820	6,118
Impairement on equity securities	0	(42)	0	(42)
Loss before income taxes and equity in undistributed earnings (losses) of subsidiaries	(2,494)	(2,533)	(4,702)	(6,025)
Income tax expense	(2)	0	(4)	0
Equity in undistributed earnings (losses) of subsidiaries	23,721	(120,050)	43,014	(189,191)
Net income (loss)	21,225	(122,583)	38,308	(195,216)
Other comprehensive income (loss), net of tax	27,790	(59,964)	50,329	(68,574)
Comprehensive (loss) income	$ 49,015	$ (182,547)	$ 88,637	$ (263,790)

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

3 Months Ended

Jun. 30, 2014

Supplemental Cash Flow Information

	Six-Month Period Ended June 30,
	2014		2013
	(In thousands)
Cash paid for:
Interest on borrowings	$	51,817	$	64,075
Income tax		2,524		2,141
Non-cash investing and financing activities:
Additions to other real estate owned		13,267		42,526
Additions to auto and other repossessed assets		43,091		31,236
Capitalization of servicing assets		2,069		3,814
Loan securitizations		104,236		159,140
Loans held for investment transferred to held for sale		-		181,620

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DEPOSITS

3 Months Ended

Jun. 30, 2014

DEPOSITS

NOTE13– DEPOSITS

The following table summarizes deposit balances:
	June 30,			December 31,
	2014		2013
	(In thousands)
Type of account:
Non-interest bearing checking accounts	$	851,038	$	851,212
Savings accounts		2,387,743		2,334,831
Interest-bearing checking accounts		1,079,843		1,167,480
Certificates of deposit		2,215,263		2,384,378
Brokered CDs		3,096,901		3,142,023
	$	9,630,788	$	9,879,924

Brokered CDs mature as follows:
	June 30,
	2014
	(In thousands)
Three months or less	$	547,506
Over three months to six months		475,447
Over six months to one year		757,172
One to three years		1,164,461
Three to five years		116,314
Over five years		36,001
Total	$	3,096,901

The following are the components of interest expense on deposits:
	Quarter Ended				Six-Month Period Ended
	June 30,				June 30,
	2014			2013	2014			2013
	(In thousands)				(In thousands)
Interest expense on deposits	$	17,750	$	21,891	$	36,264	$	45,280
Amortization of broker placement fees		1,716		2,027		3,501		4,182
Interest expense on deposits	$	19,466	$	23,918	$	39,765	$	49,462

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Securities Sold Under Agreements to Repurchase (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Securities sold under agreements to repurchase	$ 900,000	[1]	$ 900,000
Maximum [Member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate	3.31%		3.32%
Minimum [Member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate	2.45%		2.45%
Weighted Average [Member] | Callable Repurchase Agreements [Member]
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Line Items]
Assets sold under agreements to repurchase interest rate	2.84%

[1] As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

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INCOME TAXES

3 Months Ended

Jun. 30, 2014

INCOME TAXES

NOTE 18 - INCOME TAXES

Income tax expense includes Puerto Rico and Virgin Islands income taxes as well as applicable U.S. federal and state taxes. The Corporation is subject to Puerto Rico income tax on its income from all sources. As a Puerto Rico corporation, First BanCorp. is treated as a foreign corporation for U.S. income tax purposes and is generally subject to United States income tax only on its income from sources within the United States or income effectively connected with the conduct of a trade or business within the United States. Any such tax paid is also creditable against the Corporation's Puerto Rico tax liability, subject to certain conditions and limitations.

Under the Puerto Rico Internal Revenue Code of 2011, as amended (the “2011 PR Code”), the Corporation and its subsidiaries are treated as separate taxable entities and are not entitled to file consolidated tax returns and, thus, the Corporation is not able to utilize losses from one subsidiary to offset gains in another subsidiary. Accordingly, in order to obtain a tax benefit from a NOL, a particular subsidiary must be able to demonstrate sufficient taxable income within the applicable carry forward period. The 2011 PR Code provides a dividend received deduction of 100% on dividends received from “controlled” subsidiaries subject to taxation in Puerto Rico and 85% on dividends received from other taxable domestic corporations.

On June 30, 2013, the Puerto Rico Government approved Act No. 40 (“Act 40”), known as the “Tax Burden Adjustment and Redistribution Act”, which amended the 2011 PR Code, and Act No. 46 (“Act 46”), which bring changes to the sales and use tax regime. The main provisions of Act 40 that impact financial institutions are:

• A new national gross receipts tax that in the case of financial institutions is 1% of gross income that is not deductible for purposes of computing net taxable income and is not part of the alternative minimum tax (“AMT”). This provision was retroactive to January 1, 2013. The national gross receipts tax expense for the quarter and six-month period ended June 30, 2014 amounted to $1.4 million and $2.8 million, respectively, compared to $3.2 million recorded for the second quarter of 2013 ($1.6 million of such charge corresponded to the first quarter of 2013 and was recorded in the second quarter of 2013 upon enactment of Act 40, which was retroactive to January 1, 2013). This expense is included as part of “Taxes, other than income taxes” in the consolidated statement of income (loss). Subject to certain limitations, a financial institution will be able to claim a credit of 0.5% of its gross income against its regular income tax or the AMT. A benefit related to this credit of $0.7 million and $1.4 million was recorded as a reduction to the provision for income taxes in the second quarter and first half of 2014, respectively, compared to the benefit of $1.6 million recorded in the second quarter of 2013.

• A decrease in the deduction available to corporations for the computation of the additional surtax from $750,000 to $25,000 and a change in the surtax rate to rates that range from 5% to 19%, resulting in an increase in the maximum statutory tax rate from 30% to 39%. This provision was also retroactive to January 1, 2013.
• A higher AMT rate (30% of the alternative minimum net income, as compared to 20% previously) and various parallel computations required to be made before determining whether an AMT liability exists.

• The NOL carryover period increased from 10 years to 12 years for losses incurred in taxable years that commenced after December 31, 2004 and ended before January 1, 2013. The carryover period for NOLs incurred during taxable years commencing after December 31, 2012 is 10 years. The NOL deduction is now limited to 90% of taxable income for regular income tax purposes and 80% for AMT purposes.

Significant changes to the sales and use tax regime include adjustments to the Business to Business exclusion. The business to business exclusion applicable to services rendered from one registered business to another registered business remains in effect, except for certain services that will be taxable, including, among others, service charges imposed by financial institutions on other businesses (commercial clients), collection services, repairs and maintenance services of real and personal property, and computer programming services, including modifications to previously designed systems. The sales and use tax provisions were effective beginning on July 1, 2013.

On October 14, 2013, the Governor of Puerto Rico signed into law Act No. 117 (“Act 117”) providing additional changes and transitional provisions in connection with Act 40.  In relation to the national gross receipts tax, Act 117 clarifies, among other things, that gross income subject to the special tax does not include the following:

• Dividends received from a 100% controlled domestic subsidiary. During the first half of 2014, no dividends subject to this exception were received by any of the Corporation's entities.
• Income attributable to a trade or business outside of Puerto Rico.

The Corporation has maintained an effective tax rate lower than the maximum statutory rate mainly by investing in government obligations and mortgage-backed securities exempt from U.S. and Puerto Rico income taxes and by doing business through an International Banking Entity (“IBE”) of the Bank and through the Bank's subsidiary, FirstBank Overseas Corporation, whose interest income and gain on sales is exempt from Puerto Rico and U.S. income taxation. The IBE and FirsBank Overseas Corporation were created under the International Banking Entity Act of Puerto Rico, which provides for total Puerto Rico tax exemption on net income derived by IBEs operating in Puerto Rico on the specific activities identifiedin the IBE Act. An IBE that operates as a unit of a bank pays income taxes at normal rates to the extent that the IBE's net income exceeds 20% of the bank's total net taxable income.

For the quarter and six-month period endedJune 30, 2014, the Corporation recorded an income tax benefit of $0.3million and an income tax expense of $0.6 million compared to an income tax benefit of $1.0 million and an income tax expense of $0.6 million for the same periods in 2013. The variance in the second quarter of 2014 compared to the same period in 2013 mainly reflects the impact of the amendments to the 2011 PR Code during the second quarter of 2013 when the Corporation recognized a $1.6 million benefit related to the national gross receipts tax credit ($0.8 million of such benefit corresponded to the first quarter of 2013 and was recorded in the second quarter of 2013 upon enactment of Act 40 which was retroactive to January 1, 2013) compared to the $0.7 million benefit related to the national gross receipts tax credit recorded in 2014. In addition, the variance reflects a net benefit in the 2013 second quarter of $0.5 million related to the increase in the deferred tax asset of profitable subsidiaries due to changes in statutory tax rates.Further, there was an increase of $1.0 million in the AMT expense recorded in the second quarter of 2014. These variances were partially offset by a $1.8 million reduction to the liability for certain tax positions related to prior year's tax positions, as further discussed below. The income tax in the interim financial statements is calculated based on the income of the individual subsidiaries and the currently valid tax rates as a best possible estimate. As of June 30, 2014, the deferred tax asset, net of a valuation allowance of $510.8 million, amounted to $8.7 million compared to $7.6 million as of December 31, 2013. The decrease in the valuation allowance to $510.8 million from $522.7 million as of December 31, 2013 was mainly due to the reversal of temporary differences primarily attributable to the reduction in the allowance for loan and lease losses during the first half of 2014.

Accounting for income taxes requires that companies assess whether a valuation allowance should be recorded against their deferred tax asset based on an assessment of the amount of the deferred tax asset that is “more likely than not” to be realized. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized.

In making such assessment, significant weight is given to evidence that can be objectively verified, including both positive and negative evidence. Consideration must be given to all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of the reversal of temporary differences and carry forwards, taxable income in carry back years and tax planning strategies. In estimating taxes, management assesses the relative merits and risks of the appropriate tax treatment of transactions taking into account statutory, judicial and regulatory guidance.

In assessing the weight of positive and negative evidence, a significant negative factor that resulted in the maintenance of the valuation allowance was that the Corporation's banking subsidiary, FirstBank Puerto Rico, was in a three-year historical cumulative loss position as of June 30, 2014, mainly due to significant charges to the provision for loan and lease losses in prior years as a result of the economic downturn and the bulk sales of assets completed in 2013. As of June 30, 2014, the Corporation had a gross deferred tax asset of $520.6 million, including $373.3 million associated with NOLs. The Bank incurred all of the NOLs on or after 2009.As mentioned before, the Corporation maintained a valuation allowance of $510.8 million as of June 30, 2014 against the deferred tax asset. As of June 30, 2014, management concluded that $8.7 million of the deferred tax asset will be realized as it relates to profitable subsidiaries and to amounts that can be realized through future reversals of existing taxable temporary differences. To the extent the realization of a portion, or all, of the tax asset becomes “more likely than not” based on changes in circumstances (such as, improved earnings, changes in tax laws or other relevant changes), a reversal of that portion of the deferred tax asset valuation allowance will then be recorded.

The authoritative accounting guidance prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken on income tax returns. Under this guidance, income tax benefits are recognized and measured based upon a two-step analysis: 1) a tax position must be more likely than not to be sustained based solely on its technical merits in order to be recognized, and 2) the benefit is measured as the largest dollar amount of that position that is more likely than not to be sustained upon settlement. The difference between the benefit recognized under this analysis and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit (“UTB”).

	The following table reconciles the balance of UTBs:
		Six-Month Period Ended June 30, 2014		Six-Month Period Ended June 30, 2013
(In thousands)
Balance beginning of the year		$	4,310	$	2,374
Decrease related to positions taken during prior years			(1,763)		-
Balance at end of period		$	2,547	$	2,374

As of June 30, 2014, the Corporation had UTBs of approximately$2.5 million, all of which would, if recognized, affect the Corporation's effective tax rate. The Corporation classifies all interest and penalties, if any, related to tax uncertainties as income tax expense. As of June 30, 2014, the Corporation's accrued interest that relates to tax uncertainties amounted to $2.4million and there was no need to accrue for the payment of penalties. The years 2007 through 2009 were examined by the United States Internal Revenue Service (“IRS”) and disputed issues were taken to administrative appeals during 2011. Based on feasible settlement with the IRS Appeals office in June 2014, the Corporation released a portion of its reserve for uncertain tax positions, resulting in a tax benefit of approximately $1.8 million. Based on such agreement management believes that the amounts of unrecognized tax benefits willdecrease within the next twelve months by approximately $2.5 million. Such change will not have an impact on the effective tax rate.

The Corporation's liability for income taxes includes its liability for UTBs, and interest that relates to tax years still subject to review by taxing authorities. The UTBs are recorded as a liability instead of a reduction to the deferred tax asset as the Corporation's NOLs and tax credit carryfowards are not available to settle any income tax that would result from the disallowance of the Corporation's UTBs. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the 2011 PR Code is 4 years; the statute of limitations for Virgin Islands and U.S. income tax purposes are each three years after a tax return is due or filed, whichever is later. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Corporation's liability for income taxes. Any such adjustment could be material to results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. For Puerto Rico, Virgin Islands and U.S income tax purposes, all tax years subsequent to 2009 remain open to examination. Tax year 2010 is currently under examination by the Puerto Rico Department of Treasury.

Recent Developments. On July 1, 2014, the Puerto Rico Government approved Act No. 77 (“Act 77”), Act for Adjustments to Tax System, which amended the 2011 PR Code. Some of the main provisions that impact corporations follow:

• Long Term Capital Gain Tax Rate is increased from 15% to 20% and Long Term Capital Treatment was amended to apply only to assets held for a period of 1 year or more (previously 6 month or more) for transactions completed after June 30, 2014.
• New Capital Loss carryover limitation, of up to 90% of Capital Gains and the carryover period of NOL's attributable to capital losses incurred during taxable years commencing after December 31, 2013 was increased from 5 years to 7 years.
• The credit for AMT paid in previous years will be limited to 25% of the excess of the regular income tax over the tentative minimum tax.
• The national gross receipts tax rate for financial institutions was not affected by Act 77 and remains at 1% and financial institutions continue to claim 0.5% of their gross income as a credit against regular income tax or the AMT. However, tax credits purchased or generated by the institution are not allowed as a credit against the national gross receipts tax obligation.

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LOANS HELD FOR SALE - Additional Information (Details) (USD $)	3 Months Ended
	Sep. 30, 2013	Mar. 31, 2013	Jun. 30, 2014	Dec. 31, 2013
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale			$ 72,105,000	$ 75,969,000
Commercial Mortgage loans			6,953,000	6,999,000
Non-performing loan sold previously reclassified to Loans Held For Sale		211,400,000
Repayment of construction loans held for sale	6,400,000
Non Accrual [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale			54,800,000	54,800,000
Commercial Mortgage loans			7,000,000	7,000,000
Construction loans			$ 47,800,000	$ 47,800,000

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INCOME TAXES (Tables)

3 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Schedule of unrecognized tax benefits

	The following table reconciles the balance of UTBs:
		Six-Month Period Ended June 30, 2014		Six-Month Period Ended June 30, 2013
(In thousands)
Balance beginning of the year		$	4,310	$	2,374
Decrease related to positions taken during prior years			(1,763)		-
Balance at end of period		$	2,547	$	2,374

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Income Statement Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Variable Interest Entity [Line Items]
Net income (loss)	$ 21,225	$ (122,583)	$ 38,308	$ (195,216)
Cpg Gs [Member]
Variable Interest Entity [Line Items]
Revenues	2,118	1,040	2,869	1,719
Gross profit	(455)	(1,893)	(1,963)	(3,668)
Net income (loss)	$ (2,355)	$ (3,877)	$ (4,802)	$ 2,193

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OFFSETTING OF ASSETS AND LIABILITIES (Tables)

3 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Offsetting of assets and liabilties

Offsetting of Financial Assets and Derivative Assets
(In thousands)
As of June 30, 2014
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position
									Financial Instruments		Cash Collateral
													Net Amount
Description
Derivatives	$	16	$	-	$	16	$	(16)	$	-	$	-
As of December 31, 2013
							Gross Amounts Not Offset in the Statement of Financial Position
					Net Amounts of Assets Presented in the Statement of Financial Position
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position
									Financial Instruments		Cash Collateral
													Net Amount
Description
Derivatives	$	58	$	-	$	58	$	(58)	$	-	$	-

Offsetting of Financial Liabilities and Derivative Liabilities
(In thousands)
As of June 30, 2014
										Gross Amounts Not Offset in the Statement of Financial Position
							Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position
													Financial Instruments			Cash Collateral
																			Net Amount
Description
Derivatives		$	3,328		$	-		$	3,328		$	(3,328)		$	-		$	-
Repurchase agreements			600,000			-			600,000			(600,000)			-			-
Total		$	603,328		$	-		$	603,328		$	(603,328)		$	-		$	-
As of December 31, 2013
										Gross Amounts Not Offset in the Statement of Financial Position
							Net Amounts of Liabilities Presented in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Financial Position
													Financial Instruments			Cash Collateral
																			Net Amount
Description
Derivatives
		$	3,965		$	-		$	3,965		$	(3,965)		$	-		$	-
Repurchase agreements			600,000			-			600,000			(600,000)			-			-
Total		$	603,965		$	-		$	603,965		$	(603,965)		$	-		$	-

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Changes in Impairment Allowance (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Valuation Allowance For Impairment Of Recognized Servicing Assets [Line Items]
Balance at beginning of period	$ 431	$ 392	$ 212	$ 672
Temporary impairment charges	24	75	243	115
OTTI of servicing assets	0	0	0	0
Recoveries	(63)	(352)	(63)	(672)
Balance at end of period	$ 392	$ 115	$ 392	$ 115

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CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Statement [Abstract]
Net (loss) gain on sale of investments, (includes $42 accumulated other comprehensive income reclassification for other-than-temporary impairment on equity securities for the quarter and six month period ended June 30, 2013)	$ (291)	$ 42	$ (291)	$ 42

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LOAN PORTFOLIO - Breakdown Between Accrual and Nonaccrual Status of TDRs (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Mar. 31, 2014	Dec. 31, 2013
Financing Receivable Modifications [Line Items]
Total TDR loans	$ 628,233	[1]	$ 622,320	$ 630,258	[2]
Performing Financing Receivable [Member] | Non Accrual [Member]
Financing Receivable Modifications [Line Items]
Total TDR loans	$ 85,500			$ 95,700

[1]  Excludes TDRs held for sale amounting to $45.8 million as of June 30, 2014

[2]  Excludes TDRs held for sale amounting to $45.9 million as of December 31, 2013.

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EARNINGS PER COMMON SHARE

3 Months Ended

Jun. 30, 2014

EARNINGS PER COMMON SHARE

NOTE 2 – EARNINGS PER COMMON SHARE

The calculations of earnings (losses) per common share for the quarters and six month periods ended June 30, 2014 and 2013 are as follows:
	Quarter Ended				Six-Month Period Ended
	June 30,		June 30,		June 30,		June 30,
	2014		2013		2014		2013
		(In thousands, except per share information)
Net income (loss)	$	21,225	$	(122,583)	$	38,308	$	(195,216)
Favorable impact from issuing common stock in exchange
for Series A through E preferred stock		1,280		-		1,659		-
Net income (loss) attributable to common stockholders	$	22,505	$	(122,583)	$	39,967	$	(195,216)
Weighted-Average Shares:
Basic weighted-average common shares outstanding		208,202		205,490		206,974		205,477
Average potential common shares		1,942		-		1,543		-
Diluted weighted-average number of common shares
outstanding		210,144		205,490		208,517		205,477
Earnings (loss) per common share:
Basic	$	0.11	$	(0.60)	$	0.19	$	(0.95)
Diluted	$	0.11	$	(0.60)	$	0.19	$	(0.95)

Earnings (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares issued and outstanding. Net income (loss) attributable to common stockholders represents net income (loss) adjusted for any preferred stock dividends, including any dividends declared, and any cumulative dividends related to the current dividend period that have not been declared as of the end of the period. For the second quarter and first half of 2014, net income attributable to common stockholders also includes the one-time effect of the issuance of common stock in exchange for Series A through E preferred stock. This transaction is discussed in Note 17 to the unaudited consolidated financial statements. Basic weighted average common shares outstanding excludes unvested shares of restricted stock.

Potential common shares consist of common stock issuable under the assumed exercise of stock options, unvested shares of restricted stock, and outstanding warrants using the treasury stock method. This method assumes that the potential common shares are issued and the proceeds from the exercise, in addition to the amount of compensation cost attributable to future services, are used to purchase common stock at the exercise date. The difference between the number of potential shares issued and the shares purchased is added as incremental shares to the actual number of shares outstanding to compute diluted earnings per share. Stock options, unvested shares of restricted stock, and outstanding warrants that result in lower potential shares issued than shares purchased under the treasury stock method are not included in the computation of dilutive earnings per share since their inclusion would have an antidilutive effect on earnings per share. Stock options not included in the computation of outstanding shares because they were antidilutive amounted to 82,575and 104,499for the quarters and six-month periods ended June 30, 2014 and 2013, respectively. Warrants outstanding to purchase 1,285,899 shares of common stock and 1,442,427 unvested sharesofrestricted stock were excluded from the computation of diluted earnings per share for the quarter and six-month period ended June 30, 2013 because the Corporation reported a net loss attributable to common stockholders for the periods and their inclusion would have an antidilutive effect.

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STOCK-BASED COMPENSATION - Activity of Stock Options (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options, Beginning of year		101,435
Number of Options, expired		(12,795)
Number of Options, cancelled		(6,065)
Number of options, End of period outstanding and exercisable	82,575	82,575
Weighted-Average Exercise Price, beginning of year		$ 206.95
Weighted-Average Exercise Price, Options expired		$ 321.75
Weighted-Average Exercise Price, Options cancelled		$ 226.15
Weighted-Average Exercise Price, End of period outstanding and exercisable	$ 187.75	$ 187.75
Weighted- Average Remaining Contractual Term (Years),End of period outstanding and exercisable	1 year 10 months 24 days
Aggregate Intrinsic Value, End of period outstanding and exercisable	$ 0	$ 0

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LOAN PORTFOLIO- Corporation's Aging of Purchased Credit Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	$ 111,061		$ 122,293
60-89 Days, Past Due	146,558		142,489
90 days or more, Past Due	696,588	[1]	615,631	[2]
Total Past Due	954,207		880,413
Financing Receivable, Current	8,407,274		8,750,966
Loans held for investment	9,467,101		9,636,170		9,445,786
90 days past due and still accruing	131,957	[3]	120,082	[4]
Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	166
60-89 Days, Past Due	11,710
90 days or more, Past Due	12,104
Total Past Due	23,980
Financing Receivable, Current	81,640
Loans held for investment	105,620
Residential Mortgage [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	0	[5]	0	[6]
60-89 Days, Past Due	95,029	[5]	88,898	[6]
90 days or more, Past Due	189,752	[1],[5]	172,286	[2],[6]
Total Past Due	284,781	[5]	261,184	[6]
Financing Receivable, Current	2,248,388	[5]	2,092,598	[6]
Loans held for investment	2,633,166	[5]	2,353,782	[6]
90 days past due and still accruing	14,348	[3],[5]	10,845	[4],[6]
Residential Mortgage [Member] | Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	18,200	[7]
60-89 Days, Past Due	11,282	[7]
90 days or more, Past Due	11,522	[7]
Total Past Due	22,804	[7]
Financing Receivable, Current	77,193	[7]
Loans held for investment	99,997	[7]
Commercial Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	0	[5]	0	[6]
60-89 Days, Past Due	5,362	[5]	5,428	[6]
90 days or more, Past Due	179,861	[1],[5]	126,674	[2],[6]
Total Past Due	185,223	[5]	132,102	[6]
Financing Receivable, Current	1,625,260	[5]	1,691,506	[6]
Loans held for investment	1,813,930	[5]	1,823,608	[6]
90 days past due and still accruing	13,643	[3],[5]	6,567	[4],[6]
Commercial Mortgage Loans [Member] | Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	900	[7]
60-89 Days, Past Due	366	[7]
90 days or more, Past Due	437	[7]
Total Past Due	803	[7]
Financing Receivable, Current	2,644	[7]
Loans held for investment	3,447	[7]
Consumer Credit Card Financing Receivable [Member] | Purchased Credit Impaired Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
30-59 Days Past Due	166		377
60-89 Days, Past Due	62		354
90 days or more, Past Due	145		573
Total Past Due	373		1,304
Financing Receivable, Current	1,803		3,487
Loans held for investment	$ 2,176		$ 4,791

[1] Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e., FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges fees until charged-off at 180 days.

[2] Includes non-performing loans and accruing loans that are contractually delinquent 90 days or more (i.e. FHA/VA guaranteed loans and credit cards). Credit card loans continue to accrue finance charges and fees until charged-off at 180 days.

[3] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.

[4] It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past-due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.

[5] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $16.5 million, $160.1 million, $72.1 million, $0.8 million, and $2.5 million, respectively.

[6] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage, commercial mortgage, and construction loans are considered past due when the borrower is in arrears two or more monthly payments. FHA/VA government guaranteed loans, other residential mortgage loans, commercial mortgage loans, land loans and construction-residential loans past due 30-59 days amounted to $23.9 million, $166.7 million, $18.4 million, $0.9 million and $2.5 million, respectively.

[7] According to the Corporation's delinquency policy and consistent with the instructions for the preparation of the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) required by the Federal Reserve Board, residential mortgage and commercial mortgage loans are considered past due when the borrower is in arrears two or more monthly payments. PCI residential mortgage loans and commercial mortgage loans past due 30-59 days amounted to $18.2 million and $0.9 million, respectively.

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS - Changes in Servicing Assets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Servicing Assets At Amortized Value [Line Items]
Balance at beginning of period	$ 22,026		$ 18,717		$ 21,987		$ 17,524
Capitalization of servicing assets	1,017		2,094		2,069		3,814
Amortization	(790)		(796)		(1,573)		(1,586)
Adjustment to servicing assets for loans repurchased	(22)	[1]	(313)	[1]	(33)	[1]	(330)	[1]
Adjustment to fair value	39		277		(180)		557
Balance at end of period	$ 22,270		$ 19,979		$ 22,270		$ 19,979

[1] Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

XML

LOAN PORTFOLIO - Loans Held for Investment on Which Accrual of Interest Income had been Discontinued (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Non-performing loans:
Total non-performing loans held for investment	$ 564,631	[1],[2]	$ 495,549	[1],[2]
Residential Mortgage [Member]
Non-performing loans:
Total non-performing loans held for investment	175,404		161,441
Commercial Mortgage [Member]
Non-performing loans:
Total non-performing loans held for investment	166,218		120,107
Commercial And Industrial [Member]
Non-performing loans:
Total non-performing loans held for investment	143,669		114,833
Consumer Auto Loans [Member]
Non-performing loans:
Total non-performing loans held for investment	22,005		21,316
Finance Leases [Member]
Non-performing loans:
Total non-performing loans held for investment	3,414		3,082
Consumer Retail Banking [Member]
Non-performing loans:
Total non-performing loans held for investment	15,091		15,904
Residential Construction [Member]
Non-performing loans:
Total non-performing loans held for investment	14,143		27,108
Commercial Construction [Member]
Non-performing loans:
Total non-performing loans held for investment	3,849		3,924
Land Construction [Member]
Non-performing loans:
Total non-performing loans held for investment	$ 20,838		$ 27,834

[1] As of June 30, 2014 and December 31, 2013, excludes $54.8 million of non-performing loans held for sale.

[2] Amount excludes PCI loans with a carrying value of approximately $105.6 million and $4.8 million as of June 30, 2014 and December 31, 2013, respectively, primarily mortgage loans acquired from Doral in the second quarter of 2014, as further discussed below. These loans are not considered non-performing due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

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FAIR VALUE

3 Months Ended

Jun. 30, 2014

FAIR VALUE

NOTE 19 – FAIR VALUE

Fair Value Measurement

The FASB authoritative guidance for fair value measurement defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This guidance also establishes a fair value hierarchy for classifying financial instruments. The hierarchy is based on whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. Three levels of inputs may be used to measure fair value:

Level 1	Valuations of Level 1 assets and liabilities are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 1 assets and liabilities include equity securities that trade in an active exchange market, as well as certain U.S. Treasury and other U.S. government and agency securities and corporate debt securities that are traded by dealers or brokers in active markets.
Level 2	Valuations of Level 2 assets and liabilities are based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include (i) mortgage-backed securities for which the fair value is estimated based on the value of identical or comparable assets, (ii) debt securities with quoted prices that are traded less frequently than exchange-traded instruments, and (iii) derivative contracts and financial liabilities (e.g., medium-term notes elected to be measured at fair value) whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.
Level 3	Valuations of Level 3 assets and liabilities are based on unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models for which the determination of fair value required significant management judgments estimation.

For 2014, there were no transfers into or out of Level 1, Level 2 or Level 3 measurement of the fair value hierarchy.

Financial Instruments Recorded at Fair Value on a Recurring Basis

Investment securities available for sale

The fair value of investment securities was the market value based on quoted market prices (as is the case with equity securities, U.S. Treasury notes, and non-callable U.S. Agency debt securities), when available (Level 1), or market prices for identical or comparable assets (as is the case with MBS and callable U.S. agency debt) that are based on observable market parameters, including benchmark yields, reported trades, quotes from brokers or dealers, issuer spreads, bids, offers and reference data including market research operations (Level 2). Observable prices in the market already consider the risk of nonperformance. If listed prices or quotes are not available, fair value is based upon models that use unobservable inputs due to the limited market activity of the instrument, as is the case with certain private label mortgage-backed securities held by the Corporation (Level 3).

Private label MBS are collateralized by fixed-rate mortgages on single-family residential properties in the United States; the interest rate on the securities is variable, tied to three-month LIBOR and limited to the weighted-average coupon of the underlying collateral. The market valuation represents the estimated net cash flows over the projected life of the pool of underlying assets applying a discount rate that reflects market observed floating spreads over LIBOR, with a widening spread based on a nonrated security. The market valuation is derived from a model that utilizes relevant assumptions such as prepayment rate, default rate, and loss severity on a loan level basis. The Corporation modeled the cash flow from the fixed-rate mortgage collateral using a static cash flow analysis according to collateral attributes of the underlying mortgage pool (i.e. loan term, current balance, note rate, rate adjustment type, rate adjustment frequency, rate caps, and others) in combination with prepayment forecasts obtained from a commercially available prepayment model (ADCO). The variable cash flow of the security is modeled using the 3-month LIBOR forward curve. Loss assumptions were driven by the combination of default and loss severity estimates, taking into account loan credit characteristics (loan-to-value, state, origination date, property type, occupancy loan purpose, documentation type, debt-to-income ratio, and other) to provide an estimate of default and loss severity.

Refer to the table below for further information regarding qualitative information for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

Derivative instruments

The fair value of most of the Corporation's derivative instruments is based on observable market parameters and takes into consideration the credit risk component of paying counterparties when appropriate, except when collateral is pledged. That is, on interest rate swaps, the credit risk of both counterparties is included in the valuation; and, on options and caps, only the seller's credit risk is considered. The derivative instruments, namely swaps and caps, were valued based on a discounted cash flow approach using the related LIBOR and swap rate for each cash flow. Derivatives include interest rate swaps used for protection against rising interest rates. For these interest rate swaps, a credit component was not considered in the valuation since the Corporation has fully collateralized with investment securities any marked-to-market loss with the counterparty and, if there were market gains, the counterparty had to deliver additional collateral to the Corporation.

Although most of the derivative instruments are fully collateralized, a credit spread is considered for those that are not secured in full. The cumulative mark-to-market effect of credit risk in the valuation of derivative instruments for the quarter and six-month period endedJune 30, 2014 was immaterial.

The information about the estimated fair value of financial instruments required by GAAP is presented hereunder. The fair value amounts presented do not necessarily represent management's estimate of the underlying value of the Corporation.

Assets and liabilities measured at fair value on a recurring basis, are summarized below:
	As of June 30, 2014								As of December 31, 2013
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value		Level 1		Level 2		Level 3		Assets/Liabilities at Fair Value
Assets:
Securities available for sale :
Equity securities	$	9	$	-	$	-	$	9	$	33	$	-	$	-	$	33
U.S. Treasury Securities		7,497		-		-		7,497		7,499		-		-		7,499
Noncallable U.S. agency debt		-		207,377		-		207,377		-		200,903		-		200,903
Callable U.S. agency debt and MBS		-		1,699,358		-		1,699,358		-		1,677,651		-		1,677,651
Puerto Rico government obligations		-		42,248		2,734		44,982		-		48,904		2,426		51,330
Private label MBS		-		-		38,184		38,184		-		-		40,866		40,866
Derivatives, included in assets:
Interest rate swap agreements		-		99		-		99		-		162		-		162
Purchased interest rate cap agreements		-		16		-		16		-		58		-		58
Forward contracts		-		-		-		-		-		174		-		174
Liabilities:
Derivatives, included in liabilities:
Interest rate swap agreements		-		3,328		-		3,328		-		3,965		-		3,965
Written interest rate cap agreement		-		16		-		16		-		58		-		58
Forward contracts		-		228		-		228		-		-		-		-

The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the quarters and six-month period ended June 30, 2014 and 2013:

		Total Fair Value Measurements
		Quarter ended June 30,
		2014		2013
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	47,510	$	52,047
Total gains or losses (realized/unrealized):
Included in other comprehensive income			729		29
Sales			(4,855)		0
Principal repayments and amortization			(2,466)		(3,416)
Ending balance		$	40,918	$	48,660
(1)	Amounts mostly related to private label mortgage-backed securities.

		Total Fair Value Measurements
		Six-Month Period Ended June 30,
		2014		2013
Level 3 Instruments Only		Securities		Securities
(In thousands)		Available For Sale(1)		Available For Sale(1)
Beginning balance		$	43,292	$	54,617
Total gains or losses (realized/unrealized):
Included in earnings			-		(117)
Included in other comprehensive income			1,693		860
Purchases			5,123		-
Sales			(4,855)		-
Principal repayments and amortization			(4,335)		(6,700)
Ending balance		$	40,918	$	48,660
(1)	Amounts mostly related to private label mortgage-backed securities.

The table below presents qualitative information for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at June 30, 2014:
	June 30, 2014
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
Investment securities available-for-sale:
Private label MBS	$	38,184	Discounted cash flow	Discount rate	14.5%
				Prepayment rate	18.15% -100% (Weighted Average 32%)
				Projected cumulative loss rate	0.90% -80.00% (Weighted Average 8.5%)
Puerto Rico Government Obligations		2,734	Discounted cash flow	Prepayment speed	5.57%

Information about Sensitivity to Changes in Significant Unobservable Inputs

Private label MBS: The significant unobservable inputs in the valuation include probability of default, the loss severity assumption and the prepayment rates. Shifts in those inputs would result in different fair value measurements. Increases in the probability of default, loss severity assumptions, and prepayment rates in isolation would generally result in an adverse effect in the fair value of the instruments. Meaningful and possible shifts of each input were modeled to assess the effect on the fair value estimation.

Puerto Rico Government Obligations: The significant unobservable input used in the fair value measurement is the assumed prepayment rate. A significant increase (decrease) in the assumed rate would lead to a higher (lower) fair value estimate. Loss severity and probability of default are not included as significant unobservable variables because the obligations are guaranteed by the Puerto Rico Housing Finance Authority (“PRHFA”). The PRHFA credit risk is modeled by discounting the cash flows using a curve appropriate to the PRHFA credit rating.

The tables below summarize changes in unrealized gains and losses recorded in earnings for the quarters and six-month periods ended June 30, 2014 and 2013 for Level 3 assets and liabilities that are still held at the end of each period:
	Changes in Unrealized Losses		Changes in Unrealized Losses
	Quarter ended June 30, 2014		Quarter ended June 30, 2013
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	-	$	0

		Changes in Unrealized Losses		Changes in Unrealized Losses
		Six-Month Period Ended June 30, 2014		Six-Month Period Ended June 30, 2013
Level 3 Instruments Only	Securities		Securities
(In thousands)	Available For Sale		Available For Sale
Changes in unrealized losses relating to assets still held at reporting date:
Net impairment losses on available-for-sale investment securities (credit component)	$	0	$	(117)

Additionally, fair value is used on a nonrecurring basis to evaluate certain assets in accordance with GAAP. Adjustments to fair value usually result from the application of lower-of-cost or market accounting (e.g., loans held for sale carried at the lower-of-cost or fair value and repossessed assets) or write downs of individual assets (e.g., goodwill, loans).

As of June 30, 2014, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of June 30, 2014						(Losses) Gain recorded for the Quarter Ended June 30, 2014		(Losses) Gain recorded for the Six-Month Period Ended June 30, 2014
		Level 1		Level 2		Level 3
			(In thousands)
Loans receivable (1)		$	-	$	-	$	484,381	$	(3,742)	$	(34,193)
OREO (2)			-		-		121,842		(4,481)		(8,958)
Mortgage servicing rights (3)			-		-		22,270		39		(180)
Loans Held For Sale (4)			-		-		54,755		0		0
(1)	Mainly impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates, net operating income of income producing properties) which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to mortgage servicing rights were mainly due to assumptions associated with mortgage prepayment rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment rate 9.78%, Discount Rate 10.62%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

As of June 30, 2013, impairment or valuation adjustments were recorded for assets recognized at fair value on a non-recurring basis as shown in the following table:
		Carrying value as of June 30, 2013						(Losses) Gain recorded for the Quarter Ended June 30, 2013		(Losses) Gain recorded for the Six-Month Period Ended June 30, 2013
		Level 1		Level 2		Level 3
		(In thousands)
Loans receivable (1)		$	-	$	-	$	409,056	$	(3,534)	$	(14,192)
Other Real Estate Owned (2)			-		-		139,257		(9,181)		(12,106)
Mortgage servicing rights (3)			-		-		19,979		277		557
Loans Held For Sale (4)			-		142,632		94,951		(6,103)		(11,325)
(1)	Mainly impaired commercial and construction loans. The impairment was generally measured based on the fair value of the collateral. The fair value was derived from external appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the collateral (e.g. absorption rates), which are not market observable.
(2)	The fair value was derived from appraisals that take into consideration prices in observed transactions involving similar assets in similar locations but adjusted for specific characteristics and assumptions of the properties (e.g. absorption rates, net operating income of income producing properties) which are not market observable. Losses were related to market valuation adjustments after the transfer of the loans to the OREO portfolio.
(3)	Fair value adjustments to the mortgage servicing rights were mainly due to assumptions associated with mortgage prepayments rates. The Corporation carries its mortgage servicing rights at the lower of cost or market, measured at fair value on a non-recurring basis. Assumptions for the value of mortgage servicing rights include: Prepayment Rate 9.40%, Discount Rate 11.06%.
(4)	The value of these loans was derived from external appraisals, adjusted for specific characteristics of the loans, and, for loans with signed sale agreements, the value was determined based on the sales price on such agreements.

Qualitative information regarding the fair value measurements for Level 3 financial instruments are as follows:
	June 30, 2014
	Method	Inputs
Loans	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
OREO	Income, Market, Comparable Sales, Discounted Cash Flows	External appraised values; probability weighting of broker price opinions; management assumptions regarding market trends or other relevant factors
Mortgage servicing rights	Discounted Cash Flow	Weighted average prepayment rate 9.78%; weighted average discount rate 10.62%

The following is a description of the valuation methodologies used for instruments that are not measured and reported at fair value on a recurring basis or reported at fair value on a non-recurring basis. The estimated fair value was calculated using certain facts and assumptions, which vary depending on the specific financial instrument.

Cash and due from banks and money market investments

The carrying amounts of cash and due from banks and money market investments are reasonable estimates of their fair value. Money market investments include held-to-maturity securities, which have a contractual maturity of three months or less. The fair value of these securities is based on quoted market prices in active markets that incorporate the risk of nonperformance.

Other equity securities

Equity or other securities that do not have a readily available fair value are stated at their net realizable value, which management believes is a reasonable proxy for their fair value. This category is principally composed of stock that is owned by the Corporation to comply with FHLB regulatory requirements. The realizable value of the FHLB stock equals its cost as this stock can be freely redeemed at par.

Loans receivable, including loans held for sale

The fair value of loans held for investment and for mortgage loans held for sale was estimated using discounted cash flow analyses, based on interest rates currently being offered for loans with similar terms and credit quality and with adjustments that the Corporation's management believes a market participant would consider in determining fair value. Loans were classified by type, such as commercial, residential mortgage, and automobile. These asset categories were further segmented into fixed- and adjustable-rate categories. Valuations are carried out based on categories and not on a loan-by-loan basis. The fair values of performing fixed-rate and adjustable-rate loans were calculated by discounting expected cash flows through the estimated maturity date. This fair value is not currently an indication of an exit price as that type of assumption could result in a different fair value estimate. The fair value of credit card loans was estimated using a discounted cash flow method and excludes any value related to a customer account relationship. Other loans with no stated maturity, like credit lines, were valued at book value. Prepayment assumptions were considered for non-residential loans. For residential mortgage loans, prepayment estimates were based on a prepayments model that combined both a historical calibration and current market prepayment expectations. Discount rates were based on the Treasury and LIBOR/Swap Yield Curves at the date of the analysis, and included appropriate adjustments for expected credit losses and liquidity. For impaired collateral dependent loans, the impairment was primarily measured based on the fair value of the collateral, which is derived from appraisals that take into consideration prices in observable transactions involving similar assets in similar locations.The market valuation of the loans acquired from Doral was derived from a model that utilizes relevant assumptions such as prepayment rate, default rate, and loss severity on a loan level basis. The cash flows were modeledusing a static cash flow analysis discounted by yieldsobserved in the secondary market and in combination with prepayment forecasts. Loss assumptions were driven by the combination of default and loss severity estimates, taking into account loan credit characteristics (loan-to-value, Puerto Rico market, loan type, delinquency status, loan terms, and other), with higher default rates applied to loans acquired with evidence of credit deterioration.

Deposits

The estimated fair value of demand deposits and savings accounts, which are deposits with no defined maturities, equals the amount payable on demand at the reporting date. The fair values of retail fixed-rate time deposits, with stated maturities, are based on the present value of the future cash flows expected to be paid on the deposits. The cash flows were based on contractual maturities; no early repayments were assumed. Discount rates were based on the LIBOR yield curve.

The estimated fair value of total deposits excludes the fair value of core deposit intangibles, which represent the value of the customer relationship measured by the value of demand deposits and savings deposits that bear a low or zero rate of interest and do not fluctuate in response to changes in interest rates.The fair value of brokered CDs, which are included within deposits, is determined using discounted cash flow analyses over the full term of the CDs.

The fair value of the CDs is computed using the outstanding principal amount. The discount rates used were based on brokered CD market rates as of June 30, 2014. The fair value does not incorporate the risk of nonperformance, since interests in brokered CDs are generally sold by brokers in amounts of less than $250,000 and, therefore, insured by the FDIC.

Securities sold under agreements to repurchase

Some repurchase agreements reprice at least quarterly, and their outstanding balances are estimated to be their fair value. Where longer commitments are involved, fair value is estimated using exit price indications of the cost of unwinding the transactions as of the end of the reporting period. The brokers who are the counterparties provide these indications. Securities sold under agreements to repurchase are fully collateralized by investment securities.

Advances from FHLB

The fair value of advances from FHLB with fixed maturities is determined using discounted cash flow analyses over the full term of the borrowings, using indications of the fair value of similar transactions. The cash flows assume no early repayment of the borrowings. Discount rates are based on the LIBOR yield curve. Advances from FHLB are fully collateralized by mortgage loans and, to a lesser extent, investment securities.

Other borrowings

Other borrowings consist of junior subordinated debentures. Projected cash flows from the debentures were discounted using the Bloomberg BB Finance curve plus a credit spread. This credit spread was estimated using the difference in yield curves between Swap rates and a yield curve that considers the industry and credit rating of the Corporation as issuer of the note at a tenor comparable to the time to maturity of the debentures.

The following table presents the estimated fair value and carrying value of financial instruments as of June 30, 2014 and December 31, 2013:
	Total Carrying Amount in Statement of Financial Condition June 30, 2014		Fair Value Estimate June 30, 2014		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	677,662	$	677,662	$	677,662	$	-	$	-
Investment securities available
for sale		1,997,408		1,997,408		7,506		1,948,984		40,918
Other equity securities		29,141		29,141		-		29,141		-
Loans held for sale		72,105		72,807		-		18,052		54,755
Loans, held for investment		9,467,101
Less: allowance for loan and lease losses		(241,177)
Loans held for investment, net of allowance	$	9,225,924		8,892,011		-		-		8,892,011
Derivatives, included in assets		115		115		-		115		-
Liabilities:
Deposits		9,630,788		9,644,647		-		9,644,647		-
Securities sold under agreements to repurchase		900,000		977,620		-		977,620		-
Advances from FHLB		320,000		319,505		-		319,505		-
Other borrowings		231,959		115,954		-		-		115,954
Derivatives, included in liabilities		3,572		3,572		-		3,572		-

	Total Carrying Amount in Statement of Financial Condition December 31, 2013		Fair Value Estimate December 31, 2013		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Cash and due from banks and money
market investments	$	655,671	$	655,671	$	655,671	$	-	$	-
Investment securities available
for sale		1,978,282		1,978,282		7,532		1,927,458		43,292
Other equity securities		28,691		28,691		-		28,691		-
Loans held for sale		75,969		76,684		-		21,883		54,801
Loans, held for investment		9,636,170
Less: allowance for loan and lease losses		(285,858)
Loans held for investment, net of allowance	$	9,350,312		9,127,234		-		-		9,127,234
Derivatives, included in assets		394		394		-		394		-
Liabilities:
Deposits		9,879,924		9,898,615		-		9,898,615		-
Securities sold under agreements to repurchase		900,000		976,151		-		976,151		-
Advances from FHLB		300,000		297,523		-		297,523		-
Other borrowings		231,959		106,772		-		-		106,772
Derivatives, included in liabilities		4,023		4,023		-		4,023		-

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Schedule of Repurchase Agreement Maturity (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	$ 900,000	[1]	$ 900,000
Callable Repurchase Agreements [Member]
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	800,000
Variable Rate [Member]
Repurchase Agreement [Line Items]
Securities Sold Under Agreements To Repurchase	$ 700,000

[1] As of June 30, 2014, includes $800 million with an average rate of 2.84% that lenders have the right to call before their contractual maturities at various dates beginning on July 9, 2014. Subsequent to June 30, 2014, no lender has exercised its call option on repurchase agreements. Also includes $700 million that is currently tied to variable rates.

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FAIR VALUE - Fair Value of Assets and Liabilities Measured on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 47,510	[1]	$ 52,047	[1]	$ 43,292	[1]	$ 54,617	[1]
Total gains or (losses) (realized/unrealized):
Included in earnings					0	[1]	(117)	[1]
Included in other comprehensive income	729	[1]	29	[1]	1,693	[1]	860	[1]
Sales	4,855	[1]	0	[1]	(4,855)	[1]	0	[1]
Purchases					5,123	[1]	0	[1]
Principal Repayments	2,466	[1]	3,416	[1]	(4,335)	[1]	(6,700)	[1]
Ending balance	40,918	[1]	48,660	[1]	40,918	[1]	48,660	[1]
Available for Sale Securities
Total gains or (losses) (realized/unrealized):
Included in earnings	$ 0		$ 0		$ 0		$ 117

[1] Amounts mostly related to private label mortgage-backed securities.

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STOCKHOLDERS' EQUITY - Exchange offer with respect to Series A through E preferred stock (Detail) (USD $) In Thousands, except Share data, unless otherwise specified			6 Months Ended		3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Exchange of preferred stock-Series A through E	Dec. 31, 2013 Exchange of preferred stock-Series A through E	Jun. 30, 2014 Series A Preferred Stock [Member]	Jun. 30, 2014 Series A Preferred Stock [Member] Exchange of preferred stock-Series A through E	Dec. 31, 2013 Series A Preferred Stock [Member] Exchange of preferred stock-Series A through E	Jun. 30, 2014 Series B Preferred Stock [Member]	Jun. 30, 2014 Series B Preferred Stock [Member] Exchange of preferred stock-Series A through E	Dec. 31, 2013 Series B Preferred Stock [Member] Exchange of preferred stock-Series A through E	Jun. 30, 2014 Series C Preferred Stock [Member]	Jun. 30, 2014 Series C Preferred Stock [Member] Exchange of preferred stock-Series A through E	Dec. 31, 2013 Series C Preferred Stock [Member] Exchange of preferred stock-Series A through E	Jun. 30, 2014 Series D Preferred Stock [Member]	Jun. 30, 2014 Series D Preferred Stock [Member] Exchange of preferred stock-Series A through E	Dec. 31, 2013 Series D Preferred Stock [Member] Exchange of preferred stock-Series A through E	Jun. 30, 2014 Series E Preferred Stock [Member]	Jun. 30, 2014 Series E Preferred Stock [Member] Exchange of preferred stock-Series A through E	Dec. 31, 2013 Series E Preferred Stock [Member] Exchange of preferred stock-Series A through E
Class Of Stock [Line Items]
Liquidation value per share	$ 25					$ 25			$ 25			$ 25			$ 25			$ 25
Preferred stock, shares outstanding	1,444,146	2,521,872		2,521,872			450,195			475,987			460,611			510,592			624,487
Shares Of Preferred Stock Exchanged			1,077,726			252,809			179,841			210,759			225,070			209,247
Preferred Stock Shares Outstanding Aftter Exchange			1,444,146			197,386			296,146			249,852			285,522			415,240
Preferred Stock Value	$ 36,104	$ 63,047	$ 36,104			$ 4,935			$ 7,404			$ 6,246			$ 7,138			$ 10,381
Conversion Of Stock Shares Issued1			4,597,121			1,081,652			769,379			890,830			961,724			893,536
Preferred stock dividend rate percentage					7.125%			8.35%			7.40%			7.25%			7.00%

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LOAN PORTFOLIO - Credit Risk Payment Activity (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	$ 9,467,101		$ 9,636,170		$ 9,445,786
Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	1,122,114		1,112,320
Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	240,593		245,323
Residential Real Estate [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	161,993	[1]	195,226	[2]
Residential Real Estate [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	2,633,166		2,353,782
Residential Real Estate [Member] | Performing Financing Receivable [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	161,993	[1]	195,226	[2]
Residential Real Estate [Member] | Performing Financing Receivable [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	2,357,765		2,192,341
Residential Real Estate [Member] | Purchased Credit Impaired [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[1],[3]	0	[2],[3]
Residential Real Estate [Member] | Purchased Credit Impaired [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	99,997	[3]	0	[3]
Residential Real Estate [Member] | Nonperforming Financing Receivable [Member] | Fhava Guaranteed Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[1]	0	[2]
Residential Real Estate [Member] | Nonperforming Financing Receivable [Member] | Other Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	175,404		161,441
Consumer [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	1,122,114		1,112,320
Consumer [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	240,593		245,323
Consumer [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	699,561		708,876
Consumer [Member] | Performing Financing Receivable [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	1,100,109		1,091,004
Consumer [Member] | Performing Financing Receivable [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	237,179		242,241
Consumer [Member] | Performing Financing Receivable [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	682,294		688,181
Consumer [Member] | Purchased Credit Impaired [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[3]	0	[3]
Consumer [Member] | Purchased Credit Impaired [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	0	[3]	0	[3]
Consumer [Member] | Purchased Credit Impaired [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	2,176	[3]	4,791	[3]
Consumer [Member] | Nonperforming Financing Receivable [Member] | Auto loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	22,005		21,316
Consumer [Member] | Nonperforming Financing Receivable [Member] | Finance Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	3,414		3,082
Consumer [Member] | Nonperforming Financing Receivable [Member] | Other Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Loans And Leases Receivable Gross Carrying Amount	$ 15,091		$ 15,904

[1]  It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $40.3 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of June 30, 2014.

[2]  It is the Corporation's policy to report delinquent residential mortgage loans insured by the FHA or guaranteed by the VA as past due loans 90 days and still accruing as opposed to non-performing loans since the principal repayment is insured. These balances include $37.0 million of residential mortgage loans insured by the FHA or guaranteed by the VA that are over 18 months delinquent, and are no longer accruing interest as of December 31, 2013.

[3]  PCI loans are excluded from non-performing statistics due to the application of the accretion method, in which these loans will accrete interest income over the remaining life of the loans using estimated cash flow analysis.

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ALLOWANCE FOR LOAN AND LEASE LOSSES (Tables)

3 Months Ended

Jun. 30, 2014

Changes in Allowance for Loan and Lease Losses

The changes in the allowance for loan and lease losses were as follows:
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended June 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	30,508	$	66,512	$	79,590	$	27,411	$	62,757	$	266,778
Charge-offs		(4,987)		(13,423)		(19,452)		(2,661)		(18,531)		(59,054)
Recoveries		300		4,297		416		55		1,641		6,709
Provision (release)		3,934		(8,808)		16,336		(3,513)		18,795		26,744
Ending balance	$	29,755	$	48,578	$	76,890	$	21,292	$	64,662	$	241,177
Ending balance: specific reserve for impaired loans	$	16,464	$	16,317	$	22,745	$	8,962	$	3,870	$	68,358
Ending balance: purchased credit-impaired loans	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance	$	13,291	$	32,261	$	54,145	$	12,330	$	60,792	$	172,819
Loans held for investment:
Ending balance	$	2,795,159	$	1,813,930	$	2,647,478	$	148,266	$	2,062,268	$	9,467,101
Ending balance: impaired loans	$	414,448	$	238,997	$	179,764	$	46,721	$	28,928	$	908,858
Ending balance: purchased credit-impaired loans	$	99,997	$	3,447	$	-	$	-	$	2,176	$	105,620
Ending balance: loans with general allowance	$	2,280,714	$	1,571,486	$	2,467,714	$	101,545	$	2,031,164	$	8,452,623
(In thousands)	Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Six-Month period ended June 30, 2014
Allowance for loan and lease losses:
Beginning balance	$	33,110	$	73,138	$	85,295	$	35,814	$	58,501	$	285,858
Charge-offs		(11,409)		(19,233)		(41,911)		(3,631)		(36,577)		(112,761)
Recoveries		369		4,332		1,079		672		2,969		9,421
Provision (release)		7,685		(9,659)		32,427		(11,563)		39,769		58,659
Ending balance	$	29,755	$	48,578	$	76,890	$	21,292	$	64,662	$	241,177
Ending balance: specific reserve for impaired loans	$	16,464	$	16,317	$	22,745	$	8,962	$	3,870	$	68,358
Ending balance: purchased credit-impaired loans	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance	$	13,291	$	32,261	$	54,145	$	12,330	$	60,792	$	172,819
Loans held for investment:
Ending balance	$	2,795,159	$	1,813,930	$	2,647,478	$	148,266	$	2,062,268	$	9,467,101
Ending balance: impaired loans	$	414,448	$	238,997	$	179,764	$	46,721	$	28,928	$	908,858
Ending balance: purchased credit-impaired loans	$	99,997	$	3,447	$	-	$	-	$	2,176	$	105,620
Ending balance: loans with general allowance	$	2,280,714	$	1,571,486	$	2,467,714	$	101,545	$	2,031,164	$	8,452,623

(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Quarter ended June 30, 2013
Allowance for loan and lease losses:
Beginning balance		$	64,722	$	78,053	$	97,363	$	45,033	$	57,360	$	342,531
Charge-offs			(5,956)		(3,271)		(6,488)		(2,387)		(16,350)		(34,452)
Charge-offs related to bulk sale			(97,941)		-		-		(31)		-		(97,972)
Recoveries			479		18		968		50		1,961		3,476
Provision (release)			74,277		2,522		5,274		(6,686)		12,077		87,464
Reclassification (1)			-		10,691		(9,440)		(1,251)		-		-
Ending balance		$	35,581	$	88,013	$	87,677	$	34,728	$	55,048	$	301,047
Ending balance: specific reserve for impaired loans		$	20,406	$	33,219	$	36,503	$	21,884	$	2,941	$	114,953
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance		$	15,175	$	54,794	$	51,174	$	12,844	$	52,107	$	186,094
Loans held for investment:
Ending balance		$	2,511,206	$	1,916,509	$	2,775,791	$	194,912	$	2,047,368	$	9,445,786
Ending balance: impaired loans		$	384,062	$	212,983	$	206,932	$	76,483	$	27,785	$	908,245
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	8,285	$	8,285
Ending balance: loans with general allowance		$	2,127,144	$	1,703,526	$	2,568,859	$	118,429	$	2,011,298	$	8,529,256
(In thousands)		Residential Mortgage Loans		Commercial Mortgage Loans		Commercial & Industrial Loans		Construction Loans		Consumer Loans		Total
Six-Month period ended June 30, 2013
Allowance for loan and lease losses:
Beginning balance		$	68,354	$	97,692	$	146,900	$	61,600	$	60,868	$	435,414
Charge-offs			(16,653)		(19,270)		(47,430)		(28,246)		(31,114)		(142,713)
Charge-offs related to bulk sale			(98,972)		(40,057)		(44,678)		(12,784)		-		(196,491)
Recoveries			627		38		1,759		147		3,679		6,250
Provision			82,225		38,919		40,566		15,262		21,615		198,587
Reclassification (1)			-		10,691		(9,440)		(1,251)		-		-
Ending balance		$	35,581	$	88,013	$	87,677	$	34,728	$	55,048	$	301,047
Ending balance: specific reserve for impaired loans		$	20,406	$	33,219	$	36,503	$	21,884	$	2,941	$	114,953
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	-	$	-
Ending balance: general allowance		$	15,175	$	54,794	$	51,174	$	12,844	$	52,107	$	186,094
Loans held for investment:
Ending balance		$	2,511,206	$	1,916,509	$	2,775,791	$	194,912	$	2,047,368	$	9,445,786
Ending balance: impaired loans		$	384,062	$	212,983	$	206,932	$	76,483	$	27,785	$	908,245
Ending balance: purchased credit-impaired loans		$	-	$	-	$	-	$	-	$	8,285	$	8,285
Ending balance: loans with general allowance		$	2,127,144	$	1,703,526	$	2,568,859	$	118,429	$	2,011,298	$	8,529,256
(1)	During the second quarter of 2013, after a comprehensive review of substantially all of the loans in our commercial portfolios, the classification of certain loans was revised to more accurately depict the nature of the underlying loans. This reclassification resulted in a net increase of $269.0 million in commercial mortgage loans, since the principal source of repayment for such loans is derived primarily from the operation of the underlying real estate, with a corresponding decrease of $246.8 million in commercial and industrial loans and $22.2 million decrease in construction loans. The Corporation evaluated the impact of this reclassification on the provision for loan losses and determined that the effect of this adjustment was not material to any previously reported results.

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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

3 Months Ended

Jun. 30, 2014

NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

NOTE 12 – NON CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS

The Corporation transfers residential mortgage loans in sale or securitization transactions in which it has continuing involvement, including servicing responsibilities and guarantee arrangements. All such transfers have been accounted for as sales as required by applicable accounting guidance.

When evaluating transfers and other transactions with Variable Interest Entities (“VIEs”) for consolidation, the Corporation first determines if the counterparty is an entity for which a variable interest exists. If no scope exception is applicable and a variable interest exists, the Corporation then evaluates if it is the primary beneficiary of the VIE and whether the entity should be consolidated or not.

Below is a summary of transfers of financial assets to VIEs for which the Corporation has retained some level of continuing involvement:

Ginnie Mae

The Corporation typically transfers first lien residential mortgage loans in conjunction with GNMA securitization transactions in which the loans are exchanged for cash or securities that are readily redeemed for cash proceeds and servicing rights. The securities issued through these transactions are guaranteed by the issuer and, as such, under seller/servicer agreements, the Corporation is required to service the loans in accordance with the issuers' servicing guidelines and standards. As of June 30, 2014, the Corporation serviced loans securitized through GNMA with a principal balance of $1.1billion.

Trust Preferred Securities

In 2004, FBP Statutory Trust I, a financing subsidiary of the Corporation, sold to institutional investors $100 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.1 million of FBP Statutory Trust I variable rate common securities, were used by FBP Statutory Trust I to purchase $103.1 million aggregate principal amount of the Corporation's Junior Subordinated Deferrable Debentures. Also in 2004, FBP Statutory Trust II, a statutory trust that is wholly owned by the Corporation, sold to institutional investors $125 million of its variable rate trust-preferred securities. The proceeds of the issuance, together with the proceeds of the purchase by the Corporation of $3.9 million of FBP Statutory Trust II variable rate common securities, were used by FBP Statutory Trust II to purchase $128.9 million aggregate principal amount of the Corporation's Junior Subordinated Deferrable Debentures. The debentures are presented in the Corporation's consolidated statement of financial condition as Other Borrowings, net of related issuance costs. The variable rate trust-preferred securities are fully and unconditionally guaranteed by the Corporation. The $100 million Junior Subordinated Deferrable Debentures issued by the Corporation in April 2004 and the $125 million issued in September 2004 mature on June 17, 2034 and September 20, 2034, respectively; however, under certain circumstances, the maturity of Junior Subordinated Deferrable Debentures may be shortened (such shortening would result in a mandatory redemption of the variable rate trust-preferred securities). The trust-preferred securities, subject to certain limitations, qualify as Tier I regulatory capital under current applicable rules and regulations. The Collins Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act eliminates certain trust-preferred securities from Tier 1 Capital. Bank Holding Companies, such as the Corporation, must fully phase out these instruments fromTier I capital by January 1, 2016 (25% allowed in 2015 and 0% in 2016); however, these instruments may remain in Tier 2 capital until the instruments are redeemed or mature.

Grantor Trusts

During 2004 and 2005, a third party to the Corporation, from now on identified as the seller, established a series of statutory trusts to effect the securitization of mortgage loans and the sale of trust certificates. The seller initially provided the servicing for a fee, which is senior to the obligations to pay trust certificate holders.

The seller then entered into a sales agreement through which it sold and issued the trust certificates in favor of the Corporation's banking subsidiary. Currently, the Bank is the sole owner of the trust certificates; the servicing of the underlying residential mortgages that generate the principal and interest cash flows is performed by another third party, which receives a servicing fee. The securities are variable rate securities indexed to 90-day LIBOR plus a spread. The principal payments from the underlying loans are remitted to a paying agent (servicer) who then remits interest to the Bank; interest income is shared to a certain extent with the FDIC, which has an interest only strip (“IO”) tied to the cash flows of the underlying loans and is entitled to receive the excess of the interest income less a servicing fee over the variable rate income that the Bank earns on the securities. This IO is limited to the weighted average coupon of the securities. The FDIC became the owner of the IO upon the intervention of the seller, a failed financial institution. No recourse agreement exists and the risk from losses on non accruing loans and repossessed collateral is absorbed by the Bank as the sole holder of the certificates. As of June 30, 2014, the amortized balance and carrying value of Grantor Trusts amounted to $51.2million and $38.1 million, respectively, with a weighted average yield of 2.21%.

Investment in unconsolidated entity

On February 16, 2011, FirstBank sold an asset portfolio consisting of performing and non-performing construction, commercial mortgage and commercial and industrial loans with an aggregate book value of $269.3 million to CPG/GS, an entity organized under the laws of the Commonwealth of Puerto Rico and majority owned by PRLP Ventures LLC ("PRLP"), a company created by Goldman, Sachs & Co. and Caribbean Property Group. In connection with the sale, the Corporation received $88.5 million in cash and a 35% interest in CPG/GS, and made a loan in the amount of $136.1 million representing seller financing provided by FirstBank. The loan had a seven-year maturity and bears variable interest at 30-day LIBOR plus 300 basis points and is secured by a pledge of all of the acquiring entity's assets as well as the PRLP's 65% ownership interest in CPG/GS. As of June 30, 2014, the carrying amount of the loan was $39.2 million,which was included in the Corporation's Commercial and Industrial loans held for investment portfolio.FirstBank's equity interest in CPG/GS is accounted for under the equity method and included as part of Investment in unconsolidated entity in the Consolidated Statements of Financial Condition. When applying the equity method, the Bank follows the Hypothetical Liquidation Book Value method (“HLBV”) to determine its share of CPG/GS's earnings or loss. Under HLBV, the Bank determines its share of CPG/GS's earnings or loss by determining the difference between its “claim on CPG/GS's book value” at the end of the period as compared to the beginning of the period. This claim is calculated as the amount the Bank would receive if CPG/GS were to liquidate all of its assets at recorded amounts determined in accordance with GAAP and distribute the resulting cash to the investors, PRLP and FirstBank, according to their respective priorities as provided in the contractual agreement. The Bank reports its share of CPG/GS's operating results on a one-quarter lag basis. In addition, as a result of using HLBV, the difference between the Bank's investment in CPG/GS and its claim on the book value of CPG/GS at the date of the investment, known as the basis difference, is amortized over the estimated life of the investment, or five years. CPG/GS records its loans receivable under the fair value option. Equity in loss of unconsolidated entity for the six month period ended June 30, 2014 of $7.3 million includes $1.8million related to the amortization of the basis differential, compared to equity in loss of unconsolidated entity of $4.9 million for the first six months of 2013. The loss recorded in 2014 reduced to zero the carrying amount of the Bank's investment in CPG/GS. No negative investment needs to be reported as the Bank has no legal obligation or commitment to provide further financial support to this entity; thus, no further losses will be recorded on this investment. Any potential increase in the carrying value of the investment in CPG/GS, under the HLBV method, would depend upon how better off the Bank is at the end of the period than it was at the beginning of the period after the waterfall calculation performed to determine the amount of gain allocated to the investors.

FirstBank also provided an $80 million advance facility to CPG/GS to fund unfunded commitments and costs to complete projects under construction, which was fully disbursed in 2011, and a $20 million working capital line of credit to fund certain expenses of CPG/GS. During 2013, the working capital line of credit was renewed and reduced to $7 million for a period of two years expiring September 2015.

During 2012, CPG/GS repaid the outstanding balance of the advance facility to fund unfunded commitments, and the funds became available to redraw under a one-time revolver agreement. These loans bear variable interest at 30-day LIBOR plus 300 basis points. As of June 30, 2014, the carrying value of the revolver agreement and working capital line was $34.1million and $0, respectively, which was included in the Corporation's commercial and industrial loans held for investment portfolio.

Cash proceeds received by CPG/GS are first used to cover operating expenses and debt service payments, including the note receivable, the advance facility, and the working capital line, described above, which must be substantially repaid before proceeds can be used for other purposes, including the return of capital to both PRLP and FirstBank. FirstBank will not receive any return on its equity interest until PRLP receives an aggregate amount equivalent to its initial investment and a priority return of at least 12%, resulting in FirstBank's interest in CPG/GS being subordinate to PRLP's interest. CPG/GS will then begin to make payments pro rata to PRLP and FirstBank, 35% and 65%, respectively, until FirstBank has achieved a 12% return on its invested capital and the aggregate amount of distributions is equal to FirstBank's capital contributions to CPG/GS.

The Bank has determined that CPG/GS is a VIEin which the Bank is not the primary beneficiary. In determining the primary beneficiary of CPG/GS, the Bank considered applicable guidance that requires the Bank to qualitatively assess the determination of the primary beneficiary (or consolidator) of CPG/GS based on whether it has both the power to direct the activities of CPG/GS that most significantly impact the entity's economic performance and the obligation to absorb losses of CPG/GS that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

The Bank determined that it does not have the power to direct the activities that most significantly impact the economic performance of CPG/GS as it does not have the right to manage the loan portfolio, impact foreclosure proceedings, or manage the construction and sale of the property; therefore, the Bank concluded that it is not the primary beneficiary of CPG/GS. As a creditor to CPG/GS, the Bank has certain rights related to CPG/GS; however, these are intended to be protective in nature and do not provide the Bank with the ability to manage the operations of CPG/GS. Since CPG/GS is not a consolidated subsidiary of the Bank and the transaction met the criteria for sale accounting under authoritative guidance, the Bank accounted for this transaction as a true sale, recognizing the cash received, the notes receivable, and the interest in CPG/GS and derecognizing the loan portfolio sold.

The following table shows summarized unaudited income statement information of CPG/GS for the quarters and six-month periods ended June 30, 2014 and 2013:
	Quarter Ended				Six-Month Period Ended
	June 30,		June 30,		June 30,		June 30,
	2014		2013		2014		2013
	(In thousands)				(In thousands)
Revenues, including net realized gains on sale of
investments in loans and OREO	$	2,118	$	1,040	$	2,869	$	1,719
Gross (loss) profit	$	(455)	$	(1,893)	$	(1,963)	$	(3,668)
Net (loss) income	$	(2,355)	$	(3,877)	$	(4,802)	$	2,193

Servicing Assets

The Corporation is actively involved in the securitization of pools of FHA-insured and VA-guaranteed mortgages for issuance of GNMA mortgage-backed securities. Also, certain conventional conforming loans are sold to FNMA or FHLMC with servicing retained. The Corporation recognizes as separate assets the rights to service loans for others, whether those servicing assets are originated or purchased.

The changes in servicing assets are shown below:
		Quarter ended				Six-Month period ended
		June 30,				June 30,
		2014		2013		2014		2013
		(In thousands)
Balance at beginning of period		$	22,026	$	18,717	$	21,987	$	17,524
Capitalization of servicing assets			1,017		2,094		2,069		3,814
Amortization			(790)		(796)		(1,573)		(1,586)
Adjustment to fair value			39		277		(180)		557
Other (1)			(22)		(313)		(33)		(330)
Balance at end of period		$	22,270	$	19,979	$	22,270	$	19,979
(1)	Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

Impairment charges are recognized through a valuation allowance for each individual stratum of servicing assets. The valuation allowance is adjusted to reflect the amount, if any, by which the cost basis of the servicing asset for a given stratum of loans being serviced exceeds its fair value. Any fair value in excess of the cost basis of the servicing asset for a given stratum is not recognized.

Changes in the impairment allowance related to servicing assets were as follows:
	Quarter ended				Six-Month Period Ended
	June 30,				June 30,
	2014		2013		2014		2013
	(In thousands)
Balance at beginning of period	$	431	$	392	$	212	$	672
Temporary impairment charges		24		75		243		115
Recoveries		(63)		(352)		(63)		(672)
Balance at end of period	$	392	$	115	$	392	$	115

	The components of net servicing income are shown below:
		Quarter ended				Six-Month Period Ended
		June 30,				June 30,
		2014		2013		2014		2013
		(In thousands)
Servicing fees		$	1,689	$	2,096	$	3,360	$	3,613
Late charges and prepayment penalties			177		218		341		431
Adjustment for loans repurchased			(22)		(313)		(33)		(330)
Other (1)			(689)		(148)		(1,047)		(148)
Servicing income, gross			1,155		1,853		2,621		3,566
Amortization and impairment of servicing assets			(751)		(519)		(1,753)		(1,029)
Servicing income, net		$	404	$	1,334	$	868	$	2,537
(1)	Mainly consisted of compensatory fees imposed by GSEs and losses related to representations and warranties.

The Corporation’s servicing assets are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale ranged as follows:
	Maximum		Minimum
Six-Month Period Ended June 30, 2014:
Constant prepayment rate:
Government guaranteed mortgage loans	9.6	%	9.1	%
Conventional conforming mortgage loans	9.4	%	8.9	%
Conventional non-conforming mortgage loans	13.4	%	12.7	%
Discount rate:
Government guaranteed mortgage loans	11.5	%	11.5	%
Conventional conforming mortgage loans	9.5	%	9.5	%
Conventional non-conforming mortgage loans	13.9	%	13.8	%
Six-Month Period Ended June 30, 2013:
Constant prepayment rate:
Government guaranteed mortgage loans	10.5	%	9.1	%
Conventional conforming mortgage loans	10.9	%	9.4	%
Conventional non-conforming mortgage loans	14.3	%	13.5	%
Discount rate:
Government guaranteed mortgage loans	12.0	%	12.0	%
Conventional conforming mortgage loans	10.0	%	10.0	%
Conventional non-conforming mortgage loans	14.3	%	14.3	%

As of June 30, 2014, fair values of the Corporation's servicing assets were based on a valuation model that incorporates market driven assumptionsregarding discount rates and mortgage prepayment rates, adjusted by the particular characteristics of the Corporation's servicing portfolio. The weighted-averages of the key economic assumptions used by the Corporation in its valuation model and the sensitivity of the current aggregate fair value to immediate 10% and 20% adverse changes in those assumptions for mortgage loans as of June 30, 2014 were as follows:

	(Dollars in thousands)
Carrying amount of servicing assets	$	22,270
Fair value	$	24,917
Weighted-average expected life (in years)		9.15
Constant prepayment rate (weighted-average annual rate)		9.78%
Decrease in fair value due to 10% adverse change	$	953
Decrease in fair value due to 20% adverse change	$	1,846
Discount rate (weighted-average annual rate)		10.62%
Decrease in fair value due to 10% adverse change	$	1,045
Decrease in fair value due to 20% adverse change	$	2,009

These sensitivities are hypothetical and should be used with caution. As the figures indicate, changes in fair value based on a 10% variation in assumptions generally cannot be extrapolated because the relationship between the change in assumption and the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the servicing asset is calculated without changing any other assumption; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the sensitivities.

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OFFESTTING OF ASSETS AND LIABILITIES - Offsetting of financial assets and liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Offsetting [Abstract]
Gross amount recognized of derivative asset	$ 16	$ 58
Gross amount of derivatives assets offset	0	0
Net asset amount of assets presented in the Statement of Financial Condition	16	58
Obligation to return Financial instrument, derivatives assets	(16)	(58)
Obligation to return Cash Collateral, derivative assets	0	0
Net derivative asset amount not offset	0	0
Gross amount recognized of derivative liabilities	3,328	3,965
Gross amount of derivative liabilities offset	0	0
Net derivative liability amount offset presented	3,328	3,965
Right to claim Financial instrument, derivatives liabilities	(3,328)	(3,965)
Right to claim Cash Collateral, derivatives liabilities	0	0
Net derivatives liability amount not offset	0	0
Gross amount recognized of repurchase agreements	600,000	600,000
Gross amount of repurchase agreements offset	0	0
Net repurchase agreements amount offset presented	600,000	600,000
Right to claim Financial instrument, repurchase agreements	(600,000)	(600,000)
Right to claim Cash Collateral, repurchase agreements	0	0
Net repurchase agreements amount not offset	0	0
Gross amount recognized of liabilities	603,328	603,965
Gross amount of liabilties offset	0	0
Net liabilities amount offset presented	603,328	603,965
Right to claim Financial instrument, liabilities	(603,328)	(603,965)
Right to claim Cash Collateral, liabilties	0	0
Net liability amount not offset	$ 0	$ 0