Issuer

Securities

84,000 shares of 8.750% Non-Cumulative Convertible Perpetual Preferred Stock, Series C.

The Preferred Stock was offered pursuant to Section 4(2) of the Securities Act only to investors that are qualified institutional buyers within the meaning of Rule 144A under the Securities Act.

Price

Ranking

Liquidation Preference

Dividends

Dividends on the Preferred Stock will be payable quarterly in arrears, when, as and if authorized and declared by our board of directors out of legally available funds at an annual rate of 8.750% on the liquidation preference of $1,000 per share.

Dividends on the Preferred Stock will be non-cumulative. If for any reason our board of directors does not authorize and declare full cash dividends on the Preferred Stock for a quarterly dividend period, we will have no obligation to pay any dividends for that period, whether or not our board of directors authorizes and declares dividends on the Preferred Stock for any subsequent dividend period.

Dividend Payment Dates

Dividend Stopper

•      no dividend will be declared and paid or set aside for payment and no distribution will be declared and made or set aside for payment on any junior securities, including our Common Stock (other than a dividend payable solely in shares of junior securities), unless the full dividends for the most recent dividend payment date on all outstanding shares of the Preferred Stock have been paid or declared and a sum sufficient for the payment of those dividends has been set aside; and

•      no shares of junior securities will be repurchased, redeemed, or otherwise acquired for consideration by us, directly or indirectly (other than (a) as a result of a reclassification of junior securities for or into other junior securities, (b) repurchases, redemptions or acquisitions in connection with any employment contract, benefit plan or similar arrangements with or for the benefit of any one or more employees, officers, directors or consultants or in connection with a dividend reinvestment or shareholder stock purchase plan providing for the purchase of junior securities by shareholders from us, (c) through the use of the proceeds of a substantially contemporaneous sale of other shares of junior securities and (d) conversions into or exchanges for other junior securities and cash solely in lieu of fractional shares of the junior securities), unless the full dividends for the most recent dividend payment date on all outstanding shares of the Preferred Stock have been paid or declared and a sum sufficient for the payment of those dividends has been set aside.

For so long as any share of Preferred Stock remains outstanding, we will not declare, pay, or set aside for payment, dividends on any parity securities for any period unless we have paid in full, or declared and set aside payment in full, in respect of all dividends for all outstanding shares of Preferred Stock. To the extent that we declare dividends for the then-current dividend period on the Preferred Stock and on any parity securities but do not make full payment of such declared dividends, we will allocate the dividend payments on a pro rata basis among the holders of the shares of Preferred Stock and the holders of any parity securities. For purposes of calculating the pro rata allocation of partial dividend payments, we will allocate those payments so that the respective amounts of payments for the then-current dividend period bear the same ratio to each other as all accrued and unpaid dividends per share on the Preferred Stock and all parity securities bear to each other.

Notwithstanding the foregoing, if there is a change in the regulatory capital guidelines applicable to us enacted in connection with or otherwise resulting from the adoption of the Federal Reserve’s notice of proposed rulemaking, approved for publication on June 7, 2012, that would implement new international capital guidelines (“Basel III”) established by the Basel Committee on Banking Supervision (as such proposed rule may be amended or revised, the “Basel III NPR”), or otherwise in connection with the implementation by applicable U.S. bank regulatory authorities of the Basel III capital accord, that would cause the Preferred Stock to fail to qualify as Tier 1 capital due to the provisions described in this “Dividend Stopper” section, then such provisions shall not be applicable if as a result thereof the Preferred Stock would then qualify as Tier 1 capital upon the closing of the acquisition of BBVA PR (as defined below) and thereafter. For the avoidance of doubt, the provisions in this “Dividend Stopper” section shall be retained and reinstated (if applicable) to the maximum extent allowable under applicable regulatory guidelines that permit the Preferred Stock to qualify as Tier 1 capital. We have agreed that for so long as the Preferred Stock is outstanding, we will not issue any shares of cumulative preferred stock.

Dividend Policy on

Common Stock

Optional Redemption by

Us if the Acquisition is not

Consummated

The Preferred Stock is not redeemable by us at any time except as follows:

If the acquisition agreement relating to our pending acquisition of BBVA PR terminates without the acquisition closing, we may, subject to regulatory approval if required under 12 CFR 225.4, at our option, redeem all (but not less than all) the shares of Preferred Stock pursuant to a notice of redemption given (i) on or prior to July 28, 2013 if the acquisition agreement terminates without the acquisition closing occurring on or prior to June 28, 2013 or (ii) on or prior to the third business day after September 30, 2013, if the last day for consummation of the acquisition has been extended in accordance with the acquisition agreement, in cash, at a redemption price equal to 101% of the liquidation preference of the shares to be redeemed and accrued and unpaid dividends for such dividend period (whether or not declared), plus a “redemption premium”. We will provide not less than 45 nor more than 60 scheduled trading days’ notice before the redemption date by mail or electronic delivery to each holder of the Preferred Stock.

“Redemption premium” means an amount in cash per $1,000 liquidation preference of the shares equal to 85% of the excess, if any, of (i) the applicable conversion rate multiplied by the volume weighted average price of our Common Stock during the 40 trading day period beginning on, and including, the 42^nd scheduled trading day immediately preceding the redemption date over (ii) the initial conversion value (as defined below) per $1,000 liquidation preference of the shares.

“Initial conversion value” per $1,000 liquidation preference of the shares means $888.8889, which is equal to the product of the initial conversion rate and the closing sale price per share of our Common Stock on The New York Stock Exchange on June 27, 2012 (the “Initial Price”).

Maturity

Conversion Right

Each share of the Preferred Stock may be converted at any time, at the option of the holder, into 84.9798 shares of our Common Stock (which reflects an initial conversion price of approximately $11.77 per share of our Common Stock) plus cash in lieu of fractional shares, subject to the anti-dilution adjustments described below and subject to the limitations set forth below under “Limitation on Beneficial Ownership.”

Notwithstanding the foregoing, upon conversion, we may choose to pay or deliver, as the case may be, cash, shares of our Common Stock, or a combination thereof at our election, subject to any applicable regulatory approval. If we satisfy our conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of our Common Stock, the amount of cash and shares of Common Stock, if any, due upon conversion will be based on a daily conversion value (as described below) calculated on a proportionate basis for each trading day in a 40 consecutive trading-day period (the “observation period”) beginning on (i) subject to clauses (ii) and (iii) of this sentence, the second trading day immediately succeeding the related conversion date, (ii) if the relevant conversion date occurs on or after the date we issue a redemption notice with respect to the Preferred Stock (as described under “Optional Redemption by Us if the Acquisition is not Consummated,” below) and prior to the relevant redemption date, the 42nd scheduled trading day immediately preceding such redemption date and (iii) if the shares are being converted pursuant to our mandatory conversion right (as described under “Mandatory Conversion at Our Option,” below), the 42nd Scheduled Trading Day immediately preceding the Mandatory Conversion Date.

“Daily conversion value” means, for each of the 40 consecutive trading days during the observation period, one-40th (1/40th) of the product of (i) the then applicable conversion rate and (ii) the per share volume-weighted average price of our Common Stock on The New York Stock Exchange on such trading day.

Mandatory Conversion

at Our Option

Adjustments to Conversion Price

upon a Fundamental Change

when the Reference Price

is below the Conversion Price

If the reference price in connection with a Fundamental Change is less than the applicable conversion price (after giving effect to any adjustment described below under “Adjustment to Conversion Rate Upon a Fundamental Change”), each share of the Preferred Stock may be converted during the period beginning on the effective date of the Fundamental Change and ending on the date that is 30 days after the effective date of such Fundamental Change at an adjusted conversion price equal to the greater of (1) the reference price and (2) $5.23, which we refer to as the base price, which is 50% of the Initial Price, subject to adjustment. If the reference price is less than the base price, holders will receive on conversion of our Preferred Stock shares of our Common Stock with value that may be less than the liquidation preference of the Preferred Stock. In lieu of issuing shares of Common Stock upon conversion in such event, we may at our option, provided that we obtain any necessary regulatory approval, make a cash payment equal to the reference price for each share of Common Stock otherwise issuable upon conversion.

If the holders of our shares of Common Stock receive only cash in connection with the Fundamental Change, the reference price shall be the cash amount paid per share. Otherwise the reference price shall be the average of the closing price per share of our Common Stock on the ten trading days up to but not including the effective date of the Fundamental Change.

Adjustment to Conversion Rate

Upon a Fundamental Change

If and only to the extent a holder elects to convert its Preferred Stock in connection with a Fundamental Change, unless the conversion rate has already been adjusted as a result of the occurrence of a Specified Corporate Event, as described below under “Adjustment to Conversion Rate Upon Specified Corporate Events”, we will in certain circumstances increase the conversion rate for any conversion of the Preferred Stock that occurs during the period (the “Fundamental Change conversion period”) beginning on the effective date of the Fundamental Change (the “effective date”) and ending on the date that is 30 days after the effective date, by a number of additional shares of Common Stock (the “make-whole shares”).

The number of make whole shares will be determined by reference to the table below, based on the date on which such Fundamental Change transaction becomes effective (the “effective date”) and the price (the “share price”) paid per share for our shares of Common Stock in such Fundamental Change transaction.

The exact share prices and effective dates may not be set forth in the table above, in which case:

•      If the share price is between two stock price amounts in the table or the date is between two dates in the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower share price amounts and the two dates, as applicable, based on a 365-day year.

•      If the share price is greater than $37.50 per share, subject to adjustment, no additional shares will be added to the conversion rate.

If the share price is less than $10.46 per share, subject to adjustment, no additional shares will be added to the conversion rate.

Adjustment Upon Specified

Corporate Events if Shareholder

Approval is not Obtained

In connection with a Specified Corporate Event as described in “Specified Corporate Events”:

•      we will permanently increase the conversion rate for the Preferred Stock by a number of additional shares (the “additional shares”) as described below, regardless of whether any holder converts its Preferred Shares in connection therewith; and

•      the dividend rate per annum will increase by 3.0% during each quarter in which the closing price of our Common Stock is below the Initial Price, subject to adjustment, for 20 trading days within the period of 30 consecutive trading days ending 15 trading days prior to the quarterly record date for the quarter.

The number of additional shares will be determined by reference to the table provided above under “Adjustment to Conversion Rate Upon a Fundamental Change”, based on the date on which the corporate event becomes effective (the “effective date”) and the average of the closing sale prices of our Common Stock over the ten trading day period ending on the trading day immediately preceding the effective date (the “share price”). If the share price is less than the Initial Price, subject to adjustment, however, it will be deemed to be such amount, and upon conversion a holder shall be entitled to receive additional shares as if the share price were this amount. This adjustment to the conversion rate as a result of the occurrence of a Specified Corporate Event will be made only once, regardless of the occurrence of any subsequent Specified Corporate Events, if any.

A “Specified Corporate Event” will be deemed to occur if any of the following occurs:

1.      The acquisition, directly or indirectly, by any person or group (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the aggregate voting power of our voting stock; or

2.      Our Common Stock ceases to be listed on any of the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective successors).

Notwithstanding the foregoing, on and after the date on which we receive shareholder approval to allow us to issue shares of our Common Stock in excess of the share cap (as defined under “Fundamental Change,” above), the occurrence of either of the events described in clauses 1 and 2 above shall no longer constitute a Specified Corporate Event and shall instead constitute a Fundamental Change, as described under “Fundamental Changes,” above.

The conversion rate may be adjusted in the event of, among other things:

•    increases in cash dividends on our Common Stock;

•    dividends or distributions in Common Stock or other property;

•    certain issuances of stock purchase rights;

•    certain self tender offers; or

•    subdivisions, splits and combinations of the Common Stock.

Shares of Common Stock

Outstanding

No Registration Rights;

Additional Dividends

If, at any time during the six-month period beginning on, and including, the date which is six months after the issuance of the Preferred Stock, we fail to timely file any document or report that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, as applicable (after giving effect to all applicable grace periods thereunder and other than reports on Form 8-K), or the Preferred Stock is not otherwise freely tradable by holders other than our affiliates (as a result of restrictions pursuant to U.S. securities law or the terms of the Preferred Stock), the dividend rate per annum on the Preferred Stock will increase by a rate of 0.25% per annum for each day during such period for which our failure to file has occurred and is continuing or the Preferred Stock is not so freely tradable. If a failure to file has occurred and is continuing or the Preferred Stock remains not freely tradable by holders other than our affiliates for a period of 90 calendar days, the dividend rate per annum on the Preferred Stock will increase by an additional 0.25% per annum for each day during such six-month period from such 90^th day for which our failure to file has occurred and is continuing or the Preferred Stock is not so freely tradable.

Further, if, and for so long as, the restrictive legend on the Preferred Stock has not been removed or the Preferred Stock is not otherwise freely tradable by holders other than our affiliates (without restrictions pursuant to U.S. securities law or the terms of the Preferred Stock) as of the 365th day after the date of original issuance of the Preferred Stock , the dividend rate per annum on the Preferred Stock will increase by a rate of 0.50% per annum for each day during such period until such restrictive legend is removed and the Preferred Stock is freely tradable as described above.

Subject to the increase in the dividend rate described in “Adjustment Upon Specified Corporate Events,” above, in no event will the dividend rate per annum on the Preferred Stock increase by more than 0.50% per annum as compared to the initial dividend rate as described in “Dividends”.

There can be no assurances that we will be able to remove the restrictive legend from the Preferred Stock or from any shares of Common Stock issued upon conversion of the Preferred Stock.

No Listing

Cash and Cash Equivalents

Liabilities:

Deposits

Borrowings:

Short-term borrowings

Securities sold under agreements to repurchase

Advances from FHLB

Subordinated capital notes

Total borrowings

Derivative liabilities

Accrued expenses and other liabilities

Total liabilities

Stockholders’ equity:

Preferred stock, $1 par value; 10,000,000 shares authorized, $25 liquidation value:

1,405,000 shares of Series A authorized; 1,340,000 shares of Series A issued and outstanding.

1,380,000 shares of Series B authorized, issued and outstanding

Preferred stock offered hereby, $1 par value, $1,000 liquidation value

Common stock, $1 par value; 100,000,000 shares authorized; 47,841,251 shares issued; 40,689,650 shares outstanding

Additional paid-in capital

Legal surplus

Retained earnings

Treasury stock, at cost, 7,151,601 shares

Accumulated other comprehensive income, net of tax of $1,464

Total stockholders’ equity

Total liabilities and stockholders’ equity

Regulatory capital ratios of the Bank:^*

Total Capital to Risk-Weighted Assets

Tier 1 Capital to Risk-Weighted Assets

Tier 1 Capital to Total Assets