STOCKHOLDERS' EQUITY

3 Months Ended

Sep. 30, 2014

STOCKHOLDERS' EQUITY

NOTE 17 – STOCKHOLDERS' EQUITY

Common Stock

As of September 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 September 30, 2014 and December 31, 2013, there were 213,642,311 and 207,635,157 shares issued, respectively, and 212,977,588 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.

During the first nine months of 2014, the Corporation awarded 379,573sharesof restricted stock under the Omnibus Plan to the independent directors, subject to vesting periods ranging from one year to five years. Also in the first nine months of 2014, the Corporation granted 840,138 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 840,138 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 224,162 shares of common stock as increased compensation to certain executive officers. As of September 30, 2014 and December 31, 2013, there were 2,477,218 and 1,411,185 shares of unvested restricted stock outstanding, respectively. During the first nine months of 2014, 33,840 shares of restricted stock were forfeited and the restrictions on 119,838shares of restricted stock lapsed. Refer to Note 3 for additional details.

On September 9, 2014, the U.S. Department of Treasury announced that it would continue to wind down its investment in First BanCorp. by selling additional shares of common stock through its first pre-defined written trading plan. As of the announcement date, the U.S. Treasury held 19,680,441 shares, or approximately 9.2% of First BanCorp.'s common stock. Back in 2013, the U.S. Treasury sold 13,261,356 shares of First BanCorp.'s common stock at $6.75 per share in a registered offering.

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 September 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 nine 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 exchange resulted in a decrease in the carrying (liquidation) value of the Series A through E preferred stock of $26.9 million, 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 nine months of 2014, the Corporation withheld an aggregate of 98,544shares 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 September30, 2014 and December 31, 2013, the Corporation had 664,723 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.