Exhibit 99.1

		News Release

First BanCorp Reports Financial Results for the Fourth Quarter and Year Ended
December 31, 2010

SAN JUAN, Puerto Rico — February 9, 2011 — First BanCorp (the “Corporation”) (NYSE: FBP), the bank holding company for FirstBank Puerto Rico (“FirstBank”), today reported a net loss of $157.7 million for the fourth quarter of 2010, compared to a net loss of $75.2 million for the third quarter of 2010 and a net loss of $53.2 million for the fourth quarter of 2009. Net loss for the year ended December 31, 2010 was $430.6 million, compared to a net loss of $275.2 million for 2009. Financial results for the fourth quarter and year ended December 31, 2010 included a $102.9 million charge to the provision for loan and lease losses associated with the transfer to held for sale of $447 million of loans as a result of the previously announced execution of an agreement providing for the strategic sale of loans in a transaction designed to accelerate the de-risking of the Corporation’s balance sheet and improve the Corporation’s risk profile by selling non-performing and adversely classified loans. Excluding the impact of this transfer of loans to held for sale, the net loss for the fourth quarter and year ended December 31, 2010 was $54.8 million, a $20.4 million reduction from the prior quarter, and $327.7 million, respectively.

Fourth Quarter Highlights

	•		Transfer of $447 million of loans, including $263 million of non-performing loans, to held for sale. In connection with the transfer, the Corporation charged off $165.1 million and recognized an additional provision for loan and lease losses of $102.9 million. On February 8, 2011, the Corporation entered into a definitive agreement to sell substantially all of these loans.
	•		Credit quality metrics:

	-		Non-performing loans held for investment decreased $267.0 million, or 18%, compared to the third quarter of 2010.
	-		Provision for loan and lease losses of $196.3 million, including the $102.9 million associated with loans transferred to held for sale. Excluding the impact of loans transferred to held for sale, the provision decreased to $93.4 million, down from $120.5 million for the third quarter of 2010.
	-		Net charge-offs of $251.8 million, including net charge-offs of $165.1 million related to loans transferred to held for sale. Excluding the impact of loans transferred to held for sale, net charge-offs were $86.8 million, or an annualized 2.96% of average loans, down 25% from $116.3 million, or an annualized 3.74%, in the third quarter of 2010.

•

Improvement in core operating metrics:

	-		Net interest margin improved by 10 basis points, primarily related to lower funding costs.
	-		Total core deposits, which exclude brokered deposits and public funds, increased 2%, or $90.6 million, compared to the previous quarter-ending balances.
	-		Non-interest expenses declined $1.2 million compared to the previous quarter.

•

Capital plan activities:

	-		Exchange agreement with the United States Department of the Treasury (“U.S. Treasury”) amended to reduce from $500 million to $350 million the size of the capital raise required to satisfy the remaining substantive condition to compel the conversion of the Series G mandatorily convertible preferred stock into shares of common stock.
	-		Tier 1, Total capital and leverage ratios were 11.00%, 12.29% and 7.94%, respectively, down from 11.96%, 13.26% and 8.34%, respectively, for the third quarter of 2010.
	-		4.38% tangible common equity and 5.40% Tier 1 common risk-based capital ratio, down from 5.21% and 6.62%, respectively, for the third quarter of 2010.
	-		A 1-for-15 reverse stock split on common stock was implemented effective January 7, 2011.

•

Balance sheet deleverage:

	-		Total assets decreased $992.1 million, or 6%, compared to September 30, 2010, as a portion of the proceeds from repayments of mortgage-backed securities and loans, as well as excess liquidity, was used to pay down maturing brokered certificates of deposit (“CDs”) and advances from FHLB not renewed.
	-		Brokered CDs decreased by $429.1 million, or 6%, from September 30, 2010.

Aurelio Alemán, President and Chief Executive Officer of First BanCorp, commented, “Our results in 2010 continued to demonstrate our commitment and focus on executing our Corporation’s strategic plan. This includes reducing non-performing and classified assets, de-leveraging and de-risking the balance sheet, improving operating metrics and advancing the capital plan. In the past twelve months we have reduced our non-performing loans, excluding loans held for sale, by 21%, or $325 million, and at year-end our total assets were approximately $15.7 billion, or $3.9 billion less than the prior year. More importantly, the bank’s core franchise continues to perform well. Core operating results reflected positive pre-tax and pre-provision income, core deposits increased $669.6 million during the year and brokered deposits decreased $1.3 billion during the same period. Despite a difficult economic scenario, we achieved approximately $3.0 billion in loan production during the year through prudent lending practices, as we renewed and extended financing to current and new customers.”

Mr. Alemán continued, “Our efforts to implement our capital plan continue. These efforts benefit from the amendment to the exchange agreement with the U.S. Treasury, which includes a reduction from $500 million to $350 million in the amount of new capital necessary to compel the conversion of our Series G preferred stock into common stock, which is the last component of our capital plan. The Corporation is working closely with the selected investment banks in order to complete a capital raise.”

“During the first quarter of 2011, we signed a definitive agreement to complete the sale of $438 million of loans, including $254 million of non-performing loans. In addition, during the fourth quarter, we completed a separate bulk sale of approximately $26 million of non-performing mortgage loans. As a result of the completion of these sales, we will have accelerated the de-risking of the balance sheet and reduced our concentration in construction and commercial mortgage loans, which have been the major cause for the Corporation’s higher loan losses over the past two years,” concluded Mr. Alemán.

The following table provides a reconciliation of earnings (loss) per common share for the quarters ended December 31, 2010, September 30, 2010 and December 31, 2009 and for the years ended December 31, 2010 and 2009:

		Quarter Ended												Year Ended
		December 31,				September 30,				December 31,				December 31,				December 31,
(In thousands, except per share information)		2010				2010				2009				2010				2009
Net loss		$	(157,732	)		$	(75,233	)		$	(53,202	)		$	(430,604	)		$	(275,187	)
Non-cumulative preferred stock dividends (Series A through E)			—				—				—				—				(23,494	)
Cumulative non-convertible preferred stock dividends (Series F)			—				(1,618	)			(5,000	)			(11,618	)			(19,167	)
Cumulative convertible preferred stock dividend (Series G)			(5,302	)			(4,183	)			—				(9,485	)			—
Preferred stock discount accretion (Series F and G) (1)			(13,133	)			(1,688	)			(1,132	)			(17,143	)			(4,227	)
Favorable impact from issuing common stock in exchange for Series A through E preferred stock, net of issuance costs (2)			—				385,387				—				385,387				—
Favorable impact from issuing Series G mandatorily convertible preferred stock in exchange for Series F preferred stock (3)			—				55,122				—				55,122				—
Net (loss) income available to common stockholders — basic		$	(176,167	)		$	357,787			$	(59,334	)		$	(28,341	)		$	(322,075	)
Convertible preferred stock dividends and accretion			—				5,626				—				—				—
Net (loss) income available to common stockholders — diluted		$	(176,167	)		$	363,413			$	(59,334	)		$	(28,341	)		$	(322,075	)
Average common shares outstanding (4)			21,303				11,432				6,168				11,310				6,167
Average potential common shares (4) (5)			—				75,119				—				—				—
Average common shares outstanding — assuming dilution (4)			21,303				86,552				6,168				11,310				6,167
Basic (loss) earnings per common share (4)		$	(8.27	)		$	31.30			$	(9.62	)		$	(2.51	)		$	(52.22	)
Diluted (loss) earnings per common share (4)		$	(8.27	) (6)		$	4.20			$	(9.62	)		$	(2.51	) (7)		$	(52.22	)

This press release should be read in conjunction with the accompanying tables (Exhibit A), which are an integral part of this press release.

Earnings Highlights

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2010				2010				2010				2010				2009
Earnings (in thousands)
Net loss		$	(157,732	)		$	(75,233	)		$	(90,640	)		$	(106,999	)		$	(53,202	)
Net (loss) income available to common stockholders — basic		$	(176,167	)		$	357,787			$	(96,810	)		$	(113,151	)		$	(59,334	)
Net (loss) income available to common stockholders — diluted		$	(176,167	)		$	363,413			$	(96,810	)		$	(113,151	)		$	(59,334	)
Adjusted Pre-Tax, Pre-Provision Income (1)		$	38,951			$	43,410			$	35,739			$	40,063			$	62,909
Common share data (2)
(Loss) earnings per common share basic		$	(8.27	)		$	31.30			$	(15.70	)		$	(18.34	)		$	(9.62	)
(Loss) earnings per common share diluted		$	(8.27	)		$	4.20			$	(15.70	)		$	(18.34	)		$	(9.62	)
Financial ratios
Return on average assets			-3.86	%			-1.73	%			-1.94	%			-2.25	%			-1.08	%
Return on average common equity			-78.61	%			-50.80	%			-70.31	%			-68.06	%			-30.54	%
Tier 1 capital			11.00	%			11.96	%			12.05	%			11.98	%			12.16	%
Total capital			12.29	%			13.26	%			13.35	%			13.26	%			13.44	%
Leverage			7.94	%			8.34	%			8.14	%			8.37	%			8.91	%
Tangible common equity (3)			4.38	%			5.21	%			2.57	%			2.74	%			3.20	%
Tier 1 common equity to risk-weight assets (3)			5.40	%			6.62	%			2.86	%			3.36	%			4.10	%
Net interest margin (4)			2.88	%			2.83	%			2.66	%			2.73	%			3.03	%
Efficiency			69.54	%			66.69	%			62.18	%			56.33	%			50.43	%
Common shares outstanding (2)			21,303,669				21,303,669				6,169,455				6,169,455				6,169,455
Average common shares outstanding (2)
Basic			21,302,672				11,432,204				6,168,083				6,168,083				6,167,608
Diluted			21,302,672				86,551,688				6,168,083				6,168,083				6,167,608

Operating results for the quarter ended December 31, 2010 reflect the impact of the $102.9 million charge to the provision for loan and lease losses associated with the transfer of loans to held for sale, which also required a charge-off of $165.1 million. Excluding this impact, the net loss for the fourth quarter of 2010 was $54.8 million, or ($3.44) per share, compared to a net loss of $75.2 million for the third quarter of 2010 mainly due to lower credit-related expenses. Lower charges to specific reserves and the deleveraging of the loan portfolio contributed to a decrease in the provision for loan and lease losses. The lower credit-related expenses also resulted from lower losses on the other real estate owned portfolio (REO).

Loan Sale Transaction

On December 7, 2010, the Corporation announced that it had signed a non-binding letter of intent to pursue the possibility of a sale of a loan portfolio with an unpaid principal balance of approximately $701.9 million (book value of $602.8 million), to a new joint venture. The amount of the loan pool to be sold was subsequently reduced for loan payments and exclusions from the pool. During the fourth quarter of 2010, the Corporation transferred loans with an unpaid principal balance of $527 million and a book value of $447 million ($335 million of construction loans, $83 million of commercial mortgage loans and $29 million of commercial and industrial loans) to held for sale. The recorded investment in the loans was written down to a value of $281.6 million, which resulted in 2010 fourth quarter charge-offs of $165.1 million (a $127.0 million charge to construction loans, a $29.5 million charge to commercial mortgage loans and a $8.6 million charge to commercial and industrial loans). Further, the provision for loan and lease losses was increased by $102.9 million.

On February 8, 2011, the Corporation entered into a definitive agreement to sell substantially all of the loans transferred to held for sale, or loans with an unpaid principal balance of $516.7 million (book value of $438.5 million), at a purchase price of $275.9 million (53.4% of the unpaid principal balance as of December 31, 2010) to a joint venture, majority owned by PRLP Ventures LLC, an investing company to be created by Goldman, Sachs &

Co. and Caribbean Property Group, upon closing of the transaction. The purchase price of $275.9 million is being funded with an initial cash contribution by PRLP Ventures LLC of $90 million to be received by FirstBank, an acquisition loan of approximately $138 million to be provided by FirstBank, and a $48 million or 35% equity interest in the joint venture to be retained by FirstBank. The size of the loan pool sold is approximately $185 million lower than the amount originally stated in the letter of intent. The loan portfolio sold was composed of 74% construction loans, 19% commercial real estate loans and 7% commercial loans. Approximately 94% of the loans are adversely classified loans and 58% are non-performing.

The Corporation’s primary goal in agreeing to the loan sale transaction is to accelerate the de-risking of the balance sheet and improve the Corporation’s risk profile. The Corporation has been operating under a Consent Order imposed by banking regulators since June of 2010, which, among other things, requires the Corporation to improve its risk profile, by reducing the level of classified assets and delinquent loans. The Corporation entered into this transaction to reduce the level of classified and non-performing assets and reduce its concentration in construction loans.

Impact of Loan Sale Transaction

(In thousands, except per share information)

										Excluding
		As				Loan Sale				Loan Sale
2010 Fourth Quarter		Reported				Transaction Impact				Transaction Impact
Total loans held for investment — December 31, 2010		$	11,655,436			$	(446,675	)		$	12,102,111
Construction loans			700,579				(334,220	)			1,034,799
Commercial mortgage			1,670,161				(83,211	)			1,753,372
Commercial and Industrial			4,151,764				(29,244	)			4,181,008
Total net charge-offs (1)		$	251,848			$	165,057			$	86,791
Total net charge-offs to average loans			8.27	%							2.96	%
Construction loans			158,311				126,950				31,361
Construction loans net charge-offs to average loans			57.61	%							16.40	%
Commercial mortgage			32,829				29,506				3,323
Commercial mortgage loans net charge-offs to average loans			7.56	%							0.80	%
Commercial and Industrial			28,752				8,601				20,151
Commercial and Industrial loans net charge-offs to average loans			2.73	%							1.93	%
Loans held for sale — December 31, 2010		$	300,766			$	281,618			$	19,148	(2)
Construction loans			207,270				207,270				—
Commercial mortgage			53,705				53,705				—
Commercial and Industrial			20,643				20,643				—
Provision for loans and lease losses		$	196,347			$	102,938			$	93,409
Net loss		$	(157,732	)		$	(102,938	)		$	(54,794	)
Net loss per common share		$	(8.27	)		$	(4.83	)		$	(3.44	)
Non-performing loans — December 31, 2010		$	1,398,310			$	(103,883)	(3)		$	1,502,193

Adjusted Pre-Tax, Pre-Provision Income Trends

One metric that Management believes is useful in analyzing performance is the level of earnings adjusted to exclude tax expense, the expense for the provision for loan and lease loss and certain significant items. (See Adjusted Pre-Tax, Pre-Provision Income in Basis of Presentation for a full discussion.)

The following table shows adjusted pre-tax, pre-provision income of $39.0 million in the 2010 fourth quarter, down from $43.4 million in the prior quarter.

Pre-Tax, Pre-Provision Income

(Dollars in thousands)

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2010				2010				2010				2010				2009
Loss before income taxes		$	(158,016	)		$	(76,196	)		$	(86,817	)		$	(100,138	)		$	(49,891	)
Add: Provision for loan and lease losses			196,347				120,482				146,793				170,965				137,187
Less: Net loss (gain) on sale and OTTI of investment securities			620				(48,281	)			(24,237	)			(30,764	)			(24,387	)
Add: Loss on early extinguishment of repurchase agreements			—				47,405				—				—				—
Adjusted Pre-tax, pre-provision income (1)		$	38,951			$	43,410			$	35,739			$	40,063			$	62,909
Change from most recent prior quarter — amount		$	(4,459	)		$	7,671			$	(4,324	)		$	(22,846	)		$	629
Change from most recent prior quarter — percent			-10.3	%			21.5	%			-10.8	%			-36.3	%			1.0	%

As discussed in the sections that follow, the decrease in pre-tax, pre-provision income from the 2010 third quarter primarily reflected a decrease of $3.2 million in net interest income and lower gains on sales of residential mortgage loans in the secondary market, partially offset by lower non-interest expenses.

Net Interest Income

Net interest income, excluding fair value adjustments on derivatives and financial liabilities measured at fair value (“valuations”), amounted to $112.0 million for the fourth quarter of 2010, a decrease of $3.2 million compared to $115.2 million for the third quarter of 2010. Net interest income excluding valuations and net interest income on a tax-equivalent basis are non-GAAP measures. (See Basis of Presentation below for additional information.) The following table reconciles net interest income in accordance with GAAP to net interest income, excluding valuations, and net interest income on a tax-equivalent basis and net interest spread and net interest margin on a GAAP basis to these items excluding valuations and on a tax-equivalent basis.

		Quarter Ended
		December 31, 2010				September 30, 2010				June 30, 2010				March 31, 2010				December 31, 2009
Net Interest Income (in thousands)
Interest Income — GAAP		$	192,806			$	204,028			$	214,864			$	220,988			$	243,449
Unrealized (gain) loss on derivative instruments			(903	)			938				487				744				(2,764	)
Interest income excluding valuations			191,903				204,966				215,351				221,732				240,685
Tax-equivalent adjustment			4,494				6,778				7,222				9,912				12,311
Interest income on a tax-equivalent basis excluding valuations			196,397				211,744				222,573				231,644				252,996
Interest Expense — GAAP			80,758				90,326				95,802				104,125				106,152
Unrealized (loss) gain on derivative instruments and liabilities measured at fair value			(813	)			(526	)			3,896				(989	)			(247	)
Interest expense excluding valuations			79,945				89,800				99,698				103,136				105,905
Net interest income — GAAP		$	112,048			$	113,702			$	119,062			$	116,863			$	137,297
Net interest income excluding valuations		$	111,958			$	115,166			$	115,653			$	118,596			$	134,780
Net interest income on a tax-equivalent basis excluding valuations		$	116,452			$	121,944			$	122,875			$	128,508			$	147,091
Average Balances (in thousands)
Loans and leases		$	12,185,511			$	12,443,055			$	13,025,808			$	13,569,467			$	13,777,928
Total securities and other short-term investments			3,863,532				4,640,055				5,485,934				5,526,589				5,505,527
Average Interest-Earning Assets		$	16,049,043			$	17,083,110			$	18,511,742			$	19,096,056			$	19,283,455
Average Interest-Bearing Liabilities		$	14,036,776			$	15,002,168			$	16,378,022			$	16,910,781			$	17,112,556
Average Yield/Rate
Average yield on interest-earning assets — GAAP			4.77	%			4.74	%			4.66	%			4.69	%			5.01	%
Average rate on interest-bearing liabilities — GAAP			2.28	%			2.39	%			2.35	%			2.50	%			2.46	%
Net interest spread — GAAP			2.49	%			2.35	%			2.31	%			2.19	%			2.55	%
Net interest margin — GAAP			2.77	%			2.64	%			2.58	%			2.48	%			2.82	%
Average yield on interest-earning assets excluding valuations			4.74	%			4.76	%			4.66	%			4.71	%			4.95	%
Average rate on interest-bearing liabilities excluding valuations			2.26	%			2.37	%			2.44	%			2.47	%			2.46	%
Net interest spread excluding valuations			2.48	%			2.39	%			2.22	%			2.24	%			2.49	%
Net interest margin excluding valuations			2.77	%			2.67	%			2.51	%			2.52	%			2.77	%
Average yield on interest-earning assets on a tax-equivalent basis and excluding valuations			4.86	%			4.92	%			4.82	%			4.92	%			5.21	%
Average rate on interest-bearing liabilities excluding valuations			2.26	%			2.37	%			2.44	%			2.47	%			2.46	%
Net interest spread on a tax-equivalent basis and excluding valuations			2.60	%			2.55	%			2.38	%			2.45	%			2.75	%
Net interest margin on a tax-equivalent basis and excluding valuations			2.88	%			2.83	%			2.66	%			2.73	%			3.03	%

The decrease in net interest income, excluding valuations of $3.2 million for the fourth quarter of 2010, compared to the third quarter, is largely due to the decrease in volume of interest-earning assets. The reduction in average earning assets reflected a combination of activities including:

	•		$776.5 million, or 17% decrease, in average investment securities and other short term investments, including the full effect of the $1.2 billion sale of mortgage-backed securities (“MBS”) completed in the middle of the third quarter, and
	•		$257.5 million, or 2% decrease, in average total loans and leases, mainly resulting from a combination of charge-offs and sales of loans.

While the sale of MBS in the previous quarter, coupled with the cancellation of the related repurchase agreements, contributed in part to a higher net interest margin due to the reduction in securities carried at a negative spread, the $173 million of securities sold over the $1.0 billion in repurchase agreements cancelled offset the benefit in net interest income. Net interest income was also negatively impacted by the accelerated MBS premium amortization

due to a higher level of prepayments under a low interest rate scenario, and by lower loan yields for the commercial and residential mortgage loan portfolios. Lower loan yields reflected a combination of factors, including a lower volume of commercial mortgage loans returning to accrual status during the fourth quarter, the full effect of a bulk sale of $83 million of performing residential mortgage loans with an average rate of 6.05% completed in the previous quarter, lower rates on originations of new residential mortgage loans and lower interest income recorded on a cash basis for residential mortgage loans in non-accrual status.

The average volume of all major loan categories, in particular the average volume of construction and residential mortgage loans, decreased from the third quarter of 2010. The decrease in average construction loans of $141.3 million was primarily related to the charge-off activity, the full effect of approximately $31 million of non-performing construction loans sold in the latter part of the third quarter and improvements in absorption rates on residential construction projects in Puerto Rico. Average residential mortgage loans decreased $57.4 million, or 2%, reflecting sales of both performing and non-performing loans, pay-downs and charge-off activity. The average balance of commercial loans decreased by $15.2 million, mainly due to pay-downs and charge-offs, while the average balance of consumer loans (including finance leases) decreased by $43.7 million, resulting from pay-downs and charge-offs that exceeded new loan originations.

Partially offsetting the decline in the average volume of earning assets was an increase of 10 basis points in the net interest margin, resulting primarily from a reduction in funding costs, an increase in the ratio of loans to total interest earning assets and, to a lesser extent, the investment of some excess liquidity in intermediate-term securities. The overall average cost of funding decreased by 11 basis points, as the Corporation benefited from the roll-off and repayments of higher cost funds, including maturing brokered CDs and advances from the Federal Home Loan Bank (FHLB), as well as from the full impact of the repurchase agreements cancelled prior to maturity in the previous quarter. The average balance of brokered CDs decreased to $6.4 billion in the fourth quarter of 2010 from $6.9 billion in the third quarter, a decrease of $500.1 million. The decrease of 11 basis points in the average cost of funding more than offset the 2 basis point decrease in the average yield of interest-earning assets.

Provision for Loan and Lease Losses

The provision for loan and lease losses for the fourth quarter of 2010 increased by $75.9 million to $196.3 million, compared to a provision of $120.5 million in the third quarter of 2010. The 2010 fourth quarter included a provision of $102.9 million associated with loans transferred to held for sale. (See the Credit Quality section below for a full discussion.)

Non-Interest Income

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(In thousands)		2010				2010				2010				2010				2009
Other service charges on loans		$	2,019			$	1,963			$	1,486			$	1,756			$	1,982
Service charges on deposit accounts			3,125				3,325				3,501				3,468				3,357
Mortgage banking activities			2,501				6,474				2,140				2,500				2,426
(Loss) gain on sale of investments and impairments			(620	)			48,281				24,237				30,764				24,387
Broker-dealer income			121				501				1,347				207				61
Other operating income			6,640				6,127				6,814				6,631				6,594
Loss on early extinguishment of repurchase agreements			—				(47,405	)			—				—				—
Non-interest income		$	13,786			$	19,266			$	39,525			$	45,326			$	38,807

Non-interest income decreased $5.5 million, or 28%, from the 2010 third quarter primarily due to:

	-		A $4.0 million, or 61%, decrease in mortgage banking income as the prior quarter included a $4.7 million gain (including the recognition of servicing rights) on the bulk sale of $83 million of residential mortgage loans.
	-		A $0.6 million other-than-temporary impairment charge related to the credit loss portion of private label MBS.
	-		A $0.4 million decrease in broker-dealer commissions.

The aforementioned decreases were partially offset by a $0.4 million increase in interchange fee revenue, other ATM fee income and cash management services.

Non-Interest Expenses

		Quarter Ended
		December, 31				September, 30				June 30,				March 31,				December 31,
(In thousands)		2010				2010				2010				2010				2009
Employees’ compensation and benefits		$	28,591			$	29,849			$	30,958			$	31,728			$	29,617
Occupancy and equipment			15,537				14,655				14,451				14,851				14,822
Deposit insurance premium			13,568				14,702				15,369				16,653				13,923
Other taxes, insurance and supervisory fees			5,069				5,401				5,054				5,686				5,127
Professional fees			5,863				4,533				5,604				5,287				4,883
Business promotion			3,561				3,226				3,340				2,205				4,327
Net loss on REO operations			7,471				8,193				10,816				3,693				4,847
Other			7,843				8,123				13,019				11,259				11,262
Total		$	87,503			$	88,682			$	98,611			$	91,362			$	88,808

Non-interest expenses decreased $1.2 million to $87.5 million in the fourth quarter of 2010, compared to the third quarter of 2010, primarily reflecting the following:

	•		A $1.3 million decrease in employee compensation and benefit expenses, reflecting further reductions in headcount which decreased by approximately 87, or 3%, over the last two quarters, and further reductions in bonuses and incentive-based compensation.
	•		A $1.1 million decrease in the federal deposit insurance premium, mainly related to a lower average volume of brokered CDs.
	•		A $0.7 million decrease in losses on real estate owned (REO) operations, mainly due to lower write-downs to the value of repossessed residential and commercial properties.

•

A $0.7 million decrease in other expenses associated with the settlement of a lawsuit in the previous quarter and a decrease in sundry losses provision.

The decrease was partially offset by:

	•		A $1.3 million increase in professional service fees mainly related to higher legal expenses.
	•		A $0.9 million increase in occupancy and equipment costs, primarily reflecting higher depreciation expenses associated with the new service center building, as well as higher maintenance costs that offset reductions in rental expense.
	•		A $0.3 million increase in business promotion expenses, reflecting increases in branding and product advertising activities.

The Corporation intends to continue improving its operating efficiency by further reducing controllable expenses, rationalizing its business operations and enhancing its technological infrastructure through targeted investments.

Income Taxes

For the fourth quarter ended December 31, 2010, the Corporation recognized an income tax benefit of $0.3 million, compared to an income tax benefit of $1.0 million for the third quarter of 2010. The income tax benefit recorded in the fourth quarter was mainly related to the operations of profitable subsidiaries. The higher benefit recorded in the third quarter was mainly related to the operations of FirstBank Overseas, which had a pre-tax loss of $30.5 million during the third quarter, driven by its share of the loss on the early extinguishment of repurchase agreements. This entity was profitable for the year ended December 31, 2010.

As of December 31, 2010, the deferred tax asset, net of a valuation allowance of $350.1 million, amounted to $103.0 million compared to $101.2 million as of September 30, 2010. The increase in the net deferred tax asset was mainly related to a decrease in deferred tax liabilities associated with lower unrealized gains on available for sale securities. The valuation allowance increased by approximately $59.6 million during the quarter, as the Corporation continued to reserve deferred tax assets created in connection with the operations of its banking subsidiary FirstBank.

CREDIT QUALITY

		December 31,				September 30,				June 30,				March 31,				December 31,
(Dollars in thousands)		2010				2010				2010				2010				2009
Non-performing loans held for investment:
Residential mortgage		$	392,134			$	427,574			$	448,079			$	446,676			$	441,642
Commercial mortgage			217,165				173,350				200,033				230,468				196,535
Commercial and Industrial			317,243				293,323				233,201				228,113				241,316
Construction			263,056				558,148				621,387				685,415				634,329
Consumer and Finance leases			49,391				53,608				47,965				48,672				50,041
Total non-performing loans held for investment			1,238,989				1,506,003				1,550,665				1,639,344				1,563,863
REO			84,897				82,706				72,358				73,444				69,304
Other repossessed property			14,023				15,824				13,383				12,464				12,898
Investment securities (1)			64,543				64,543				64,543				64,543				64,543
Total non-performing assets, excluding loans held for sale		$	1,402,452			$	1,669,076			$	1,700,949			$	1,789,795			$	1,710,608
Non-performing loans held for sale			159,321				—				—				—				—
Total non-performing assets, including loans held for sale		$	1,561,773			$	1,669,076			$	1,700,949			$	1,789,795			$	1,710,608
Past due loans 90 days and still accruing		$	144,114			$	139,795			$	187,659			$	189,647			$	165,936
Non-performing loans held for investment to total loans held for investment			10.63	%			12.36	%			12.40	%			12.35	%			11.23	%
Non-performing assets, excluding loans held for sale, to total assets, excluding non-performing loans transferred to held for sale			9.03	%			10.01	%			9.39	%			9.49	%			8.71	%
Non-performing assets to total assets			9.96	%			10.01	%			9.39	%			9.49	%			8.71	%

Credit quality performance continued to show signs of stabilization, though net charge-offs were adversely impacted by charge-offs associated with loans transferred to held for sale. Net charge-offs increased $135.6 million, or 117%, from the prior quarter, including $165.1 million of charge-offs related to loans transferred to held for sale. Excluding the charge-offs related to the loans transferred to held for sale, total net charge-offs were $86.8 million, representing a $29.5 million decline from the prior quarter to the lowest level since the fourth quarter of 2009. The current quarter saw a decline in non-performing assets, and the allowance for loan and lease losses as a percent of period-end non-performing loans held for investment increased to 45% from 40%.

Non-Performing Loans and Non-Performing Assets

Total non-performing loans, including non-performing loans held for sale of $159.3 million, were $1.40 billion, down from $1.51 billion at September 30, 2010 primarily reflecting charge-offs of $103.9 million associated with loans transferred to held for sale. Total non-performing loans held for investment, which exclude non-performing loans held for sale, were $1.24 billion at December 31, 2010, which represented 10.63% of total loans receivable. This was down $267.0 million, or 18%, from $1.51 billion, or 12.36% of total loans receivable, at September 30, 2010. The decrease in non-performing loans held for investment from the third quarter of 2010 primarily reflected the transfer of $263 million of non-performing loans into held for sale. Also contributing to the decrease were declines in residential, construction and consumer non-performing loans partially offset by increases in commercial mortgage and commercial and industrial (“C&I”) non-performing loans.

Non-performing residential mortgage loans decreased by $35.4 million, or 8%, as compared to the balance at September 30, 2010. The decrease was primarily related to the bulk sale of $25.8 million of non-performing residential mortgage loans in the fourth quarter of 2010, and declines related to loan modifications combined with charge-offs. Most of the decrease was in Puerto Rico where non-performing residential mortgage loans decreased by $35.7 million, or 10%, compared to the third quarter of 2010. Approximately $281.8 million, or 72% of total non-performing residential mortgage loans, have been written down to their net realizable value. Non-performing residential mortgage loans in the Virgin Islands decreased $0.3 million and increased $0.6 million in Florida from September 30, 2010.

Total non-performing construction loans, including non-performing construction loans held for sale of $140.1 million, were $403.2 million, down from $558.1 million as of September 30, 2010. The decrease of $154.9 million includes a charge-off of $89.5 million associated with the transfer of $230 million of non-performing construction

loans to held for sale. Non-performing construction loans held for investment decreased $295.1 million, or 53%, from the end of the third quarter, of which $230 million was related to loans transferred to held for sale. Other decreases were a function of charge-off activity, problem credit resolutions (including restructured loans), and paydowns. Non-performing construction loans held for investment in Puerto Rico decreased $266.1 million, including the $230 million decrease associated with the loans transferred to held for sale. The remaining decrease was mainly related to paydowns on residential housing projects and charge-offs of $16.5 million. The Corporation experienced increases in absorption rates for its residential housing projects in Puerto Rico, reflecting a combination of factors, including low interest rates, incentives by home developers, reduced unit prices and the impact of the Puerto Rico Government housing stimulus package enacted in September 2010. As previously reported, from September 1, 2010 to June 30, 2011, the Government of Puerto Rico is providing tax and transaction fees incentives to both purchasers and sellers (whether a Puerto Rico resident or not) of new and existing residential property, as well as commercial property, with a sales price of no more than $3 million. Among its significant provisions, the housing stimulus package provides various types of income and property tax exemptions as well as reduced closing costs. Also key to the improvement in non-performing construction loans was the significantly lower level of inflows. The level of inflow, or migration, is an important indication of the future trend of the portfolio.

Non-performing construction loans in our operations in the United States decreased by $25.2 million, primarily driven by a loan of $19.7 million that has been formally restructured so as to be reasonably assured of principal and interest repayment and of performance according to its modified terms. The Corporation restructured the loan by splitting it into two separate notes. The first note for $17 million was placed in accruing status as the borrower has exhibited a period of sustained performance, and the second note for $2.7 million was charged-off. Non-performing construction loans in the Virgin Islands decreased by $3.8 million driven by charge-offs.

During the fourth quarter of 2010, $31.8 million of commercial construction projects were converted to commercial mortgage or commercial loans, of which $12.3 million is related to Puerto Rico and $19.5 million to Florida.

Non-performing commercial mortgage loans held for investment increased by $43.8 million, or 25%, from the end of the third quarter of 2010. Total non-performing commercial mortgage loans held for investment in Puerto Rico increased by $54.1 million, primarily driven by one relationship amounting to $85.7 million placed in non-accruing status due to the borrower’s financial condition, even though most of the loans in the relationship are under 90 days delinquent. Partially offsetting the increase in Puerto Rico was $33 million of non-performing commercial mortgage loans transferred to held for sale. Non-performing commercial mortgage loans in the United States decreased $9.9 million, driven by sales of $8.5 million of non-performing loans as a direct result of the ongoing efforts of our Special Asset Group. In the Virgin Islands, non-performing commercial mortgage loans decreased by $0.4 million from the third quarter of 2010.

C&I non-performing loans held for investment increased by $23.9 million, or 8%, on a sequential quarter basis. The increase was related primarily to two relationships in Puerto Rico of individual amounts exceeding $10 million each, with an aggregate carrying value of $45.9 million, of which $33.8 million (net of a charge-off of $6.6 million) is related to one relationship. This was partially offset by a $27.4 million non-performing loan paid-off during the quarter. In the United States and the Virgin Islands, C&I non-performing loans increased by $0.8 million and $0.2 million, respectively.

The levels of non-performing consumer loans, including finance leases, remained stable, showing a $4.2 million decrease during the third quarter, mainly related to boat and auto financing.

At December 31, 2010, approximately $247.2 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 $65.4 million of restructured loans maintained in nonaccrual status until the restructured loans meet the criteria of sustained payment performance under the revised terms for reinstatement to accrual status. Collections are being recorded on a cash basis through earnings, or on a cost-recovery basis, as conditions warrant.

During the fourth quarter and year ended December 31, 2010, interest income of approximately $2.0 million and $6.2 million, respectively, related to non-performing loans with a carrying value of $721.1 million as of December

31, 2010, mainly non-performing construction and commercial loans, was applied against the related principal balances under the cost-recovery method.

As of December 31, 2010, approximately $438.3 million, or 35%, of total non-performing loans held for investment have been charged-off to their net realizable value. (See Allowance for Loan and Lease Losses discussion below for additional information.)

The REO portfolio, which is part of non-performing assets, increased by $2.2 million, mainly in Puerto Rico, reflecting increases in both commercial and residential properties, partially offset by sales of REO properties in Florida. Consistent with the Corporation’s assessment of the value of properties and current and future market conditions, management is executing strategies to accelerate the sale of the real estate acquired in satisfaction of debt. During the fourth quarter of 2010, the Corporation sold approximately $18.7 million of REO properties ($14.3 million in Florida, $4.2 million in Puerto Rico and $0.3 million in the Virgin Islands), compared to $14.4 million in the previous quarter.

The over 90-day delinquent, but still accruing, loans held for investment, excluding loans guaranteed by the U.S. Government, increased to $62.8 million, or 0.54% of total loans held for investment, at December 31, 2010, from $60.8 million, or 0.50% of total loans held for investment, at the end of the third quarter.

First BanCorp Reports Financial Results for the Quarter and Year Ended December 31, 2010 — Page 14 of 36

Allowance for Loan and Lease Losses

The following table sets forth an analysis of the allowance for loan and lease losses during the periods indicated:

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(Dollars in thousands)		2010				2010				2010				2010				2009
Allowance for loan and lease losses, beginning of period		$	608,526			$	604,304			$	575,303			$	528,120			$	471,484
Provision (recovery) for loan and lease losses:
Residential mortgage			13,875				19,961				31,307				28,739				8,206
Commercial mortgage			35,120	(1)			11,546				22,759				37,560				24,906
Commercial and Industrial			(334	) (2)			27,280				41,525				(7,685	)			25,503
Construction			133,230	(3)			48,451				40,398				99,300				64,196
Consumer and finance leases			14,456				13,244				10,804				13,051				14,376
Total provision for loan and lease losses			196,347				120,482				146,793				170,965				137,187
Loans net charge-offs:
Residential mortgage			(18,644	)			(13,109	)			(17,619	)			(13,346	)			(7,488	)
Commercial mortgage			(32,829	) (4)			(11,455	)			(17,839	)			(19,297	)			(5,221	)
Commercial and Industrial			(28,752	) (5)			(19,926	)			(26,019	)			(23,776	)			(7,739	)
Construction			(158,311	) (6)			(58,423	)			(43,204	)			(53,215	)			(44,906	)
Consumer and finance leases			(13,312	)			(13,347	)			(13,111	)			(14,148	)			(15,197	)
Net charge-offs			(251,848	)			(116,260	)			(117,792	)			(123,782	)			(80,551	)
Allowance for loan and lease losses, end of period		$	553,025			$	608,526			$	604,304			$	575,303			$	528,120
Allowance for loan and lease losses to period end total loans receivable			4.74	%			5.00	%			4.83	%			4.33	%			3.79	%
Net charge-offs (annualized) to average loans outstanding during the period			8.27	%			3.74	%			3.62	%			3.65	%			2.34	%
Net charge-offs (annualized), excluding charge-offs related to loans transferred to held for sale, to average loans outstanding during the period			2.96	%			3.74	%			3.62	%			3.65	%			2.34	%
Provision for loan and lease losses to net charge-offs during the period			0.78	x			1.04	x			1.25	x			1.38	x			1.70	x
Provision for loan and lease losses to net charge-offs during the period, excluding impact of loans transferred to held for sale			1.08	x			1.04	x			1.25	x			1.38	x			1.70	x

Provision for Loan and Lease Losses

The provision for loan and lease losses of $196.3 million, including $102.9 million associated with loans transferred to held for sale, increased by $75.9 million, or 63%, compared to the provision recorded for the third quarter of 2010. Excluding the impact of loans transferred to held for sale, the provision decreased by $27.1 million to $93.4 million for the fourth quarter of 2010. The decrease in the provision was principally related to the C&I loan portfolio in Puerto Rico, primarily reflecting a decrease in specific reserves on impaired loans driven by non-performing loans paydowns and charge-offs that did not require additional provisioning. The provision for the residential mortgage loan portfolio also showed a decrease due to stabilization in the delinquency trend and improved vintage performance during the fourth quarter of 2010. The decreases in the provision for the C&I and the residential mortgage loan portfolios were partially offset by an increase in the provision for the commercial mortgage loan portfolio in all of the Corporation’s geographic segments.

The Corporation recorded a $175.5 million provision for loan and lease losses in the fourth quarter of 2010 in Puerto Rico, including the $102.9 million provision relating to the transfer of loans to held for sale, compared to a provision of $112.6 million for the third quarter of 2010. Excluding the provision relating to the loans transferred to held for sale, the provision in Puerto Rico decreased by $40.0 million to $72.6 million for the fourth quarter of 2010. The decrease was mainly related to a $38.2 million decrease in the provision for C&I loans due to decreases in specific reserves on impaired loans. These decreases were partially offset by an increase of $5.2 million in the provision for commercial mortgage loans in Puerto Rico as reserve factors for criticized loans were increased mainly due to trends in charge-offs.

First BanCorp Reports Financial Results for the Quarter and Year Ended December 31, 2010 — Page 15 of 36

With respect to the United States loan portfolio, the Corporation recorded a $10.5 million provision for the fourth quarter of 2010, compared to $4.1 million for the third quarter of 2010, an increase of $6.4 million. The change was mainly related to a $9.5 million increase in the provision for construction loans due to higher charges to specific reserves, and a $5.2 million increase in the provision for commercial mortgage loans, mainly due to higher reserves for criticized assets due to negative trends in charge-offs. These increases were partially offset by a $7.8 million decrease in the provision for residential mortgage loans, largely due to stabilization in the delinquency trend and improved vintage performance during the fourth quarter of 2010. The Virgin Islands recorded an increase of $6.5 million in the provision for loan losses, reflecting increases in all major portfolios mainly due also to negative trends in charge-offs.

The economic environment remains challenging. The Corporation has continued to increase general reserve factors for most of its portfolios. The allowance for loan and lease losses amounted to $553.0 million, or 4.74% of total loans receivable, as of December 31, 2010, down from $608.5 million, or 5.00% of total loans receivable as of September 30, 2010. The allowance to non-performing loans held for investment ratio as of December 31, 2010 was 44.64%, compared to 40.41% as of September 30, 2010. The reduction in the total allowance to total loans held for investment level was a result of the transfer of $447 million ($282 million net of charge-offs) of construction, commercial mortgage and commercial loans to held for sale which will improve the credit quality of the overall portfolio since most of them were non-performing or classified loans with specific reserves based on impairment analysis.

The following table sets forth information concerning the ratio of the allowance to non-performing loans held for investment as of December 31, 2010 and September 30, 2010 by loan category:

		Residential				Commercial								Construction				Consumer and
(Dollars in thousands)		Mortgage Loans				Mortgage Loans				C&I Loans				Loans				Finance Leases				Total
As of December 31, 2010
Non-performing loans held for investment charged-off to realizable value		$	281,807			$	20,239			$	101,151			$	32,139			$	2,916			$	438,252
Other non-performing loans held for investment			110,327				196,926				216,092				230,917				46,475				800,737
Total non-performing loans held for investment		$	392,134			$	217,165			$	317,243			$	263,056			$	49,391			$	1,238,989
Allowance to non-performing loans held for investment			15.90	%			48.62	%			48.11	%			57.77	%			162.96	%			44.64	%
Allowance to non-performing loans held for investment, excluding non-performing loans charged-off to realizable value			56.50	%			53.62	%			70.64	%			65.81	%			173.18	%			69.06	%
As of September 30, 2010
Non-performing loans held for investment charged-off to realizable value		$	307,398			$	34,028			$	101,473			$	129,814			$	—			$	572,713
Other non-performing loans held for investment			120,176				139,322				191,850				428,334				53,608				933,290
Total non-performing loans held for investment		$	427,574			$	173,350			$	293,323			$	558,148			$	53,608			$	1,506,003
Allowance to non-performing loans held for investment			15.69	%			56.41	%			61.15	%			33.13	%			148.00	%			40.41	%
Allowance to non-performing loans held for investment, excluding non-performing loans charged-off to realizable value			55.83	%			70.18	%			93.50	%			43.17	%			148.00	%			65.20	%

First BanCorp Reports Financial Results for the Quarter and Year Ended December 31, 2010 — Page 16 of 36

The following table sets forth information concerning the composition of the Corporation’s allowance for loan and lease losses as of December 31, 2010 and September 30, 2010, respectively, by loan category and by whether the allowance and related provisions were calculated individually for impairment purposes or through a general valuation allowance.

		Residential				Commercial								Construction				Consumer and
(Dollars in thousands)		Mortgage Loans				Mortgage Loans				C&I Loans				Loans				Finance Leases				Total
As of December 31, 2010
Impaired loans without specific reserves:
Principal balance of loans, net of charge-offs		$	251,900			$	28,252			$	54,631			$	24,919			$	2,916			$	362,618
Impaired loans with specific reserves:
Principal balance of loans, net of charge-offs			304,754				148,139				325,374				237,908				3,386				1,019,561
Allowance for loan and lease losses			43,482				26,831				65,030				57,833				251				193,427
Allowance for loan and lease losses to principal balance			14.27	%			18.11	%			19.99	%			24.31	%			7.41	%			18.97	%
Loans with general allowance:
Principal balance of loans			2,860,763				1,493,770				3,771,759				437,752				1,709,213				10,273,257
Allowance for loan and lease losses			18,848				78,765				87,611				94,139				80,235				359,598
Allowance for loan and lease losses to principal balance			0.66	%			5.27	%			2.32	%			21.51	%			4.69	%			3.50	%
Total loans held for investment:
Principal balance of loans		$	3,417,417			$	1,670,161			$	4,151,764			$	700,579			$	1,715,515			$	11,655,436
Allowance for loan and lease losses			62,330				105,596				152,641				151,972				80,486				553,025
Allowance for loan and lease losses to principal balance			1.82	%			6.32	%			3.68	%			21.69	%			4.69	%			4.74	%
As of September 30, 2010
Impaired loans without specific reserves:
Principal balance of loans, net of charge-offs		$	234,012			$	38,181			$	93,025			$	121,517			$	—			$	486,735
Impaired loans with specific reserves:
Principal balance of loans, net of charge-offs			294,943				160,335				392,120				546,937				—				1,394,335
Allowance for loan and lease losses			30,629				35,946				88,555				116,295				—				271,425
Allowance for loan and lease losses to principal balance			10.38	%			22.42	%			22.58	%			21.26	%			0.00	%			19.47	%
Loans with general allowance:
Principal balance of loans			2,919,380				1,543,946				3,635,626				446,193				1,753,811				10,298,956
Allowance for loan and lease losses			36,469				61,836				90,826				68,629				79,341				337,101
Allowance for loan and lease losses to principal balance			1.25	%			4.01	%			2.50	%			15.38	%			4.52	%			3.27	%
Total loans held for investment:
Principal balance of loans		$	3,448,335			$	1,742,462			$	4,120,771			$	1,114,647			$	1,753,811			$	12,180,026
Allowance for loan and lease losses			67,098				97,782				179,381				184,924				79,341				608,526
Allowance for loan and lease losses to principal balance			1.95	%			5.61	%			4.35	%			16.59	%			4.52	%			5.00	%

Net Charge-Offs

Total net charge-offs for the fourth quarter of 2010 were $251.8 million, or 8.27% of average loans on an annualized basis. This was up $135.6 million, or 117%, from $116.3 million, or an annualized 3.74%, in the third quarter of 2010. The increase from the prior quarter included $165.1 million associated with loans transferred to held for sale. Excluding the charge-offs related to loans transferred to held for sale, net charge offs in the fourth quarter were $86.8 million, or an annualized 2.96% of average loans, down $29.5 million, or 25%, from the third quarter of 2010. Lower net charge-offs were reflected primarily in the United States portfolio with a $34.6 million decrease, mainly related to the construction loan portfolio. The Puerto Rico portfolio reflected a slight decrease of $0.9 million and the Virgin Islands portfolio increased by $6.1 million.

Construction loan net charge-offs in the fourth quarter were $158.3 million, or an annualized 57.61%, up from $58.4 million, or an annualized 18.84% of related loans, in the third quarter of 2010. The increase from the prior quarter included $127.0 million associated with construction loans transferred to held for sale in Puerto Rico. Excluding the charge-offs related to construction loans transferred to held for sale, net charge offs in the fourth quarter were $31.4 million, or an annualized 16.40%, down $27.1 million, or 46%, from the third quarter of 2010 on this same basis.

First BanCorp Reports Financial Results for the Quarter and Year Ended December 31, 2010 — Page 17 of 36

Approximately 53%, or $16.5 million, of the construction loan net charge-offs in the fourth quarter of 2010, excluding charge-offs related to the loans transferred to held for sale, was related to the Puerto Rico portfolio, including an individual charge-off of $9.6 million associated with a high-rise residential project. In Florida, construction loan net charge-offs were $8.8 million, a decrease of $31.2 million when compared to third quarter levels, of which approximately $5.2 million was related to a land loan for residential development fully charged-off during the fourth quarter. In addition, there was an individual charge-off of $2.7 million related to the above mentioned commercial construction loan which the Corporation restructured by splitting it into two separate notes. The construction portfolio in Florida has been reduced to $78.5 million, as of December 31, 2010, from $107.3 million, as of September 30, 2010. Construction loan net charge-offs in the Virgin Islands were $6.1 million for the fourth quarter of 2010, all related to a residential project that was placed in non-accruing status in the previous quarter and was adequately reserved.

Commercial mortgage loan net charge-offs in the fourth quarter of 2010 were $32.8 million, or an annualized 7.56% of related average loans, up from $11.5 million, or an annualized 2.88% of related loans, in the third quarter of 2010. The increase from the prior quarter included $29.5 million associated with commercial mortgage loans transferred to held for sale in Puerto Rico. Excluding the charge-offs related to commercial mortgage loans transferred to held for sale, net charge offs in the fourth quarter were $3.3 million, or an annualized 0.80%, down $8.1 million, or 71%, from the third quarter of 2010 on this same basis. There was a reduced level of larger dollar charge-offs. Approximately 91%, or $3.0 million, of commercial mortgage loans net charge-offs in the fourth quarter, excluding charge-offs related to loans transferred to held for sale, were in Puerto Rico spread throughout several industries. Commercial mortgage loan net charge-offs in Florida of $0.3 million were driven by loans sold during the quarter.

C&I loans net charge-offs in the fourth quarter of 2010 were $28.8 million, or an annualized 2.73% of related average loans, up from $19.9 million, or an annualized 1.82% of related loans, in the third quarter of 2010. The increase from the prior quarter included $8.6 million associated with C&I loans transferred to held for sale in Puerto Rico. Excluding the charge-offs related to C&I loans transferred to held for sale, net charge offs in the fourth quarter were $20.2 million, or an annualized 1.93%, up $0.2 million, or 1%, from the third quarter of 2010 on this same basis. Approximately 97%, or $19.4 million, of net charge-offs in the fourth quarter, excluding charge-offs related to loans transferred to held for sale, were in Puerto Rico, including a charge-off of $6.6 million on the aforementioned $33.8 million relationship placed in non-accruing status during the fourth quarter of 2010. Also, there were aggregate charge-offs of $8.8 million in two other relationships. No significant C&I loans charge-offs were recorded in the United States or Virgin Islands portfolios.

Residential mortgage loans net charge-offs were $18.6 million, or an annualized 2.20% of related average loans. This represents an increase of $5.5 million from $13.1 million, or an annualized 1.52% of related average balances in the third quarter of 2010. Net charge-offs for the fourth quarter of 2010 include $7.8 million associated with the aforementioned $25.8 million bulk sale of non-performing residential mortgage loans. Although there continues to be valuation pressure, the Corporation experienced reductions in non-performing loans as a result of continued focus on loss mitigation activity. Approximately $8.3 million in charge-offs for the fourth quarter ($6.0 million in Puerto Rico and $2.3 million in Florida) resulted from valuations for impairment purposes of residential mortgage loan portfolios considered homogeneous given high delinquency and loan-to-value levels, compared to $10.5 million recorded in the third quarter.

The total amount of the residential mortgage loan portfolio that has been charged-off to its net realizable value as of December 31, 2010 amounted to $281.8 million. This represents approximately 72% of the total non-performing residential mortgage loan portfolio outstanding as of December 31, 2010. Net charge-offs of residential mortgage loans also include $1.5 million related to loans foreclosed during the fourth quarter, up from $1.1 million recorded for loans foreclosed in the third quarter of 2010. Loss rates in the Corporation’s Puerto Rico operations continue to be lower than loss rates experienced in the Florida market.

Net charge-offs on consumer loan and finance leases in the fourth quarter of 2010 were $13.3 million, essentially unchanged compared to net charge-offs for the third quarter of 2010. Performance of this portfolio on both absolute and relative terms continued to be consistent with management’s views regarding the underlying quality of the portfolio.

First BanCorp Reports Financial Results for the Quarter and Year Ended December 31, 2010 — Page 18 of 36

The following table presents annualized net charge-offs to average loans held-in-portfolio:

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2010				2010				2010				2010				2009
Residential mortgage			2.20	% (1)			1.52	%			1.99	%			1.50	%			0.84	%
Commercial mortgage			7.56	% (2)			2.88	%			4.56	%			4.85	%			1.35	%
Commercial and Industrial			2.73	% (3)			1.82	%			2.25	%			1.88	%			0.60	%
Construction			57.61	% (4)			18.84	%			11.96	%			14.35	%			11.34	%
Consumer and finance leases			3.07	%			3.00	%			2.86	%			3.01	%			3.16	%
Total loans			8.27	% (5)			3.74	%			3.62	%			3.65	%			2.34	%

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

First BanCorp Reports Financial Results for the Quarter and Year Ended December 31, 2010 — Page 19 of 36

The following table presents annualized net charge-offs to average loans by geographic segment:

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2010				2010				2010				2010				2009
PUERTO RICO:
Residential mortgage			2.39	% (1)			1.61	%			2.09	%			1.11	%			0.62	%
Commercial mortgage			10.64	% (2)			2.49	%			0.34	%			0.71	%			0.80	%
Commercial and Industrial			2.79	% (3)			1.92	%			2.48	%			1.92	%			0.63	%
Construction			70.85	% (4)			8.30	%			8.56	%			13.45	%			0.76	%
Consumer and finance leases			3.10	%			2.97	%			2.94	%			2.95	%			3.05	%
Total loans			9.02	% (5)			2.61	%			2.81	%			2.80	%			1.03	%
VIRGIN ISLANDS:
Residential mortgage			0.10	%			0.13	%			0.00	%			0.47	%			0.00	%
Commercial mortgage			0.00	%			0.00	%			0.00	%			0.00	%			0.00	%
Commercial and Industrial			0.00	%			-0.01	% (6)			-1.41	% (6)			-0.02	% (6)			0.06	%
Construction			12.66	%			0.00	%			0.01	%			0.15	%			0.00	%
Consumer and finance leases			1.97	%			1.56	%			0.46	%			3.82	%			3.44	%
Total loans			2.78	%			0.18	%			-0.32	%			0.55	%			0.33	%
FLORIDA:
Residential mortgage			3.45	%			2.59	%			3.67	%			5.70	%			3.42	%
Commercial mortgage			0.28	%			4.20	%			13.84	%			13.23	%			2.58	%
Commercial and Industrial			9.48	%			0.02	%			1.16	%			10.78	%			0.53	%
Construction			36.13	%			101.18	% (7)			32.75	%			27.23	%			44.34	%
Consumer and finance leases			3.91	%			8.37	%			4.86	%			3.96	%			7.39	%
Total loans			5.53	%			18.34	%			14.59	%			13.90	%			14.92	%