EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2024

EMPLOYEE BENEFIT PLANS [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 17 – EMPLOYEE BENEFIT PLANS

The Corporation maintains two frozen qualified noncontributory defined benefit pension plans (the “Pension Plans”), and a related

complementary post-retirement benefit plan (the “Postretirement Benefit Plan”) covering medical benefits and life insurance after

retirement that it obtained in the BSPR acquisition on September 1, 2020. One defined benefit pension plan covers substantially all of

BSPR’s former employees who were active before January 1, 2007, while the other defined benefit pension plan covers personnel of

an institution previously acquired by BSPR. Benefits are based on salary and years of service. The accrual of benefits under the

Pension Plans is frozen to all participants.

The Corporation requires recognition of a plan’s overfunded and underfunded status as an asset or liability with an offsetting

adjustment to accumulated other comprehensive loss pursuant to the ASC Topic 715, “Compensation-Retirement Benefits.”

The following table presents the changes in projected benefit obligation and changes in plan assets for the years ended December

31, 2024 and 2023:

December 31, 2024

December 31, 2023

(In thousands)

Changes in projected benefit obligation:

Projected benefit obligation at the beginning of year, defined benefit pension plans

$

73,547

$

73,508

Interest cost

3,603

3,800

Actuarial (gain) loss

(1,813)

1,966

Benefits paid

(5,778)

(5,727)

Projected benefit obligation at the end of year, pension plans

$

69,559

$

73,547

Projected benefit obligation, other postretirement benefit plan

151

244

Projected benefit obligation at the end of year

$

69,710

$

73,791

Changes in plan assets:

Fair value of plan assets at the beginning of year

$

77,365

$

77,189

Actual return on plan assets - gain

1,221

5,903

Benefits paid

(5,778)

(5,727)

Fair value of pension plan assets at the end of year

(1)

$

72,808

$

77,365

Net asset, pension plans

3,249

3,818

Net benefit obligation, other postretirement benefit plan

(151)

(244)

Net asset

$

3,098

$

3,574

(1)

Other postretirement plan did not contain any assets as of December 31, 2024 and 2023.

The weighted-average discount rate used to determine the benefit obligation as of December 31, 2024 and 2023, was

5.60

% and

5.14

%, respectively. The discount rate is estimated as the single equivalent rate such that the present value of the plan’s projected

benefit obligation cash flows using the single rate equals the present value of those cash flows using the above mean actuarial yield

curve. In developing the expected long-term rate of return assumption, the Corporation evaluated input from a consultant and the

Corporation’s long-term inflation assumptions and interest rate scenarios. Projected returns are based on the same asset categories as

the plan using well-known broad indexes. Expected returns are based on historical returns with adjustments to reflect a more realistic

future return. The Corporation anticipated that the Plan’s portfolio would generate a long-term rate of return of

5.75

% and

5.51

% as of

December 31, 2024 and 2023. Adjustments are done by categories, taking into consideration current and future market conditions. The

Corporation also considered historical returns on its plan assets to review the expected rate of return. The investment policy statement

for the Pension Plans includes the following: (i) liability hedging assets to reduce funded status risk, (ii) diversified return seeking

assets to reduce equity risk, and (iii) establishes different glidepaths specific for each plan to systematically reduce risk as the funded

status improves.

The following table presents information for the plans with a projected benefit obligation and accumulated benefit obligation in

excess of plan assets for the years ended December 31, 2024 and 2023:

December 31, 2024

December 31, 2023

(In thousands)

Projected benefit obligation

$

47,305

$

49,793

Accumulated benefit obligation

47,305

49,793

Fair value of plan assets

43,651

46,801

The following table presents the components of net periodic (benefit) cost for the years ended December 31, 2024, 2023, and 2022:

Affected Line Item

in the Consolidated

Year Ended December 31,

Statements of Income

2024

2023

2022

(In thousands)

Net periodic (benefit) cost, pension plans:

Interest cost

Other expenses

$

3,603

$

3,800

$

2,614

Expected return on plan assets

Other expenses

(4,072)

(3,543)

(4,158)

Net periodic (benefit) cost, pension plans

(469)

257

(1,544)

Net periodic cost, postretirement plan

Other expenses

66

25

8

Net periodic (benefit) cost

$

(403)

$

282

$

(1,536)

The following table presents the weighted-average assumptions used to determine the net periodic (benefit) cost for the pension and

other postretirement benefit plans for the years ended December 31, 2024, 2023, and 2022:

Year Ended December 31,

2024

2023

2022

Discount rate

5.14%

5.43%

2.77%

Expected return on plan assets

5.51%

4.80%

4.43%

The following table presents the changes in pre-tax accumulated other comprehensive income of the Pension Plans and

Postretirement Benefit Plan for the years ended December 31, 2024, 2023, and 2022:

Year Ended December 31,

2024

2023

2022

(In thousands)

Accumulated other comprehensive income at beginning of year, pension plans

$

2,369

$

1,974

$

5,457

Net (loss) gain

(1,038)

395

(3,483)

Accumulated other comprehensive income at end of year, pension plans

1,331

2,369

1,974

Accumulated other comprehensive loss at end of year, postretirement plan

(77)

(155)

(61)

Accumulated other comprehensive income at end of year

$

1,254

$

2,214

$

1,913

The following are the pre-tax amounts recognized in accumulated other comprehensive income for the years ended December 31,

2024, 2023, and 2022:

Year Ended December 31,

2024

2023

2022

(In thousands)

Net actuarial (loss) gain, pension plans

$

(1,038)

$

395

$

(3,483)

Net actuarial gain (loss), other postretirement benefit plan

22

(111)

(35)

Amortization of net loss

56

17

3

Net amount recognized

$

(960)

$

301

$

(3,515)

The Pension Plans asset allocations by asset category are as follows as of the indicated dates:

December 31, 2024

December 31, 2023

Asset category

Investment in funds

96%

97%

Other

4%

3%

100%

100%

As of December 31, 2024 and 2023, substantially all of the plan assets of $

72.8

 million and $

77.4

 million, respectively, were

invested in common collective trusts, which primarily consist of equity securities, MBS, corporate bonds and U.S. Treasuries. 

Determination of Fair Value

The following is a description of the valuation inputs and techniques used to measure the fair value of pension plan assets: 

Investment in Funds -

Investment in common collective trusts have been measured at fair value using the net asset value per unit as

a practical expedient and, accordingly, have not been classified in the fair value hierarchy. Fair value is based on the calculated net

asset value of shares held by the Plan as reported by the sponsor of the funds.

Interest-Bearing Deposits -

Interest-bearing deposits consist of money market accounts with short-term maturities and, therefore,

the carrying value approximates fair value.

The Corporation does not expect to contribute to the Pension Plans during 2025.

The Corporation’s investment policy with respect to the Corporation’s Pension Plans is to optimize, without undue risk, the total

return on investment of the Plan assets after inflation, within a framework of prudent and reasonable portfolio risk. The investment

portfolio is diversified in multiple asset classes to reduce portfolio risk, and assets may be shifted between asset classes to reduce

volatility when warranted by projections of the economic and/or financial market environment, consistent with Employee Retirement

Income Security Act of 1974, as amended (ERISA). As circumstances and market conditions change, the Corporation’s target asset

allocations may be amended to reflect the most appropriate distribution given the new environment, consistent with the investment

objectives. 

Expected future benefit payments for the plans during the next ten years are as follows:

Amount

(In thousands)

2025

$

6,223

2026

6,203

2027

6,077

2028

5,848

2029

5,796

2030 through 2034

27,141

$

57,288

Defined Contribution Plan

In addition, FirstBank provides contributory retirement plans pursuant to Section 1081.01 of the Puerto Rico Internal Revenue

Code of 2011, as amended (the “PR Tax Code”) for Puerto Rico employees and Section 401(k) of the U.S. Internal Revenue Code for

USVI and U.S. employees (the “Plans”). Eligible employees may participate in the Plans after completion of

three months

 of service

for purposes of making elective deferral contributions and

one year

 of service with at least

1,000

 hours of service for purposes of

sharing in the Bank’s matching, qualified matching, and qualified non-elective contributions. The Bank contributes a matching

contribution of

fifty

 cents for every dollar up to the first

6

% of the participants’ eligible compensation that a participant contributes to

the Plan on a pre-tax basis.

The matching contribution of fifty cents for every dollar of the employee’s contribution is comprised of:

(i) twenty-five cents for every dollar of the employee’s contribution up to 6% of the employee’s eligible compensation to be paid to

the Plan as of each bi-weekly payroll; and (ii) an additional twenty-five cents for every dollar of the employee’s contribution up to 6%

of the employee’s eligible compensation to be deposited as a lump sum subsequent to the Plan Year.

 Puerto Rico employees were

permitted to contribute up to $

15,000

 for each of the years ended December 31, 2024, 2023 and 2022 (USVI and U.S. employees -

$

23,000

 for 2024, $

22,500

 for 2023 and $

20,500

 for 2022). Additional contributions to the Plans may be voluntarily made by the

Bank as determined by its Board of Directors.

No

 additional discretionary contributions were made for the years ended December 31,

2024, 2023, and 2022. The Bank had total plan expenses of $

4.1

 million for the year ended December 31, 2024 (2023 - $

3.4

 million;

2022 - $

3.5

 million).