FIRST BANCORP /CP/ – 10-Q – MANAGEMENT REPORT ON FINANCIAL POSITION AND RESULTS OF OPERATIONS (“MD&A”)

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The following MD&A relates to the accompanying unaudited consolidated financial
statements of First BanCorp. (the "Corporation," "we," "us," "our," or "First
BanCorp.") and should be read in conjunction with such financial statements and
the notes thereto and our Annual Report on Form 10-K for the year ended December
31, 2021 (the "2021 Annual Report on Form 10-K"). This section also presents
certain financial measures that are not based on generally accepted accounting
principles in the United States ("GAAP"). See "Basis of Presentation" below for
information about why non-GAAP financial measures are presented and the
reconciliation of non-GAAP financial measures to the most comparable GAAP
financial measures for which the reconciliation is not presented earlier.

ABSTRACT

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

RECENT DEVELOPMENTS

Share buyback program

On April 27, 2022, the Corporation announced that its Board of Directors
approved a stock repurchase program, under which the Corporation may repurchase
up to $350 million of its outstanding common stock, expected to be executed
through the next four quarters, which commenced in the second quarter of 2022.
Repurchases under the program may be executed through open market purchases,
accelerated share repurchases, and/or privately negotiated transactions or
plans, including under plans complying with Rule 10b5-1 under the Exchange Act.
The Corporation's stock repurchase program is subject to various factors,
including the Corporation's capital position, liquidity, financial performance
and alternative uses of capital, stock trading price, and general market
conditions. The stock repurchase program may be modified, extended, suspended,
or terminated at any time at the Corporation's discretion. As of August 3, 2022,
the Corporation has repurchased approximately 10.71 million shares of common
stock for a total purchase price of $150 million under the $350 million stock
repurchased program.

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LIBOR Transition

In March 2021, the United Kingdom's Financial Conduct Authority (the "FCA")
confirmed that publication of the overnight and one-month, three-month,
six-month and twelve-month U.S. Dollar LIBOR settings will cease or become no
longer representative of the market the rates seek to measure (i.e.,
non-representative) immediately after June 30, 2023, and all other U.S. Dollar
LIBOR settings, including the one week and two-month U.S. Dollar LIBOR settings,
became non-representative after December 31, 2021. See " Executive Summary -
Recent Developments - LIBOR Transition" in the MD&A of the Corporation's 2021
Annual Report on Form 10-K for additional information.

On March 15, 2022, President Biden signed the Adjustable Interest Rate Act (the
"LIBOR Act") into law. The LIBOR Act provides a nationwide framework for
transitioning legacy contracts that either lack or contain insufficient
contractual provisions addressing the permanent cessation of LIBOR to a
benchmark interest rate. Under the LIBOR Act, references to the most common
tenors of LIBOR (overnight, one-month, three-month, six-month, and twelve-month
tenors) in these contracts will be replaced as a matter of law, without the need
to be amended, to a replacement benchmark interest rate that will be identified
in regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve"). The Federal Reserve must promulgate these regulations by
September 11, 2022, the date that is 180 days after the statute's enactment. Any
Federal Reserve-identified replacement benchmark interest rate will be based on
the SOFR and will include an appropriate "tenor spread adjustment" to reflect
historical spreads between LIBOR and SOFR. The statute also provides a "safe
harbor," under which a party that has discretion to select a replacement for
LIBOR may choose to adopt the replacement benchmark identified by the Federal
Reserve. The LIBOR Act preempts state and local laws (including any territory or
possession) that limit the manner interest is calculated with respect to the
replacement benchmark interest rate.

As of June 30, 2022, the Corporation's LIBOR exposure consisted of the
following: (i) $2.0 billion of variable rate commercial and construction loans
(including unused commitments), (ii) $49.3 million of U.S. agencies debt
securities and private label MBS held as part of the available-for-sale debt
securities portfolio, (iii) $132.6 million of Puerto Rico municipalities bonds
held as part of the held-to-maturity debt securities portfolio, and (iv) $183.8
million of junior subordinated debentures (other borrowings). Of the
Corporation's total LIBOR exposure as of June 30, 2022, approximately $369.0
million does not contain fallback language and is mostly comprised by $132.6
million of Puerto Rico municipalities held as part of the held-to-maturity debt
securities portfolio and $183.8 million of other borrowings. The Corporation
expects to follow the provisions of the LIBOR Act for the transition of any
residual exposure after June 30, 2023.

The Corporation continues to execute its LIBOR transition workplan. Effective
December 31, 2021, the Corporation discontinued originations that use U.S.
Dollar LIBOR as a reference rate. In addition, the Corporation continues working
with the update of systems, processes, documentation, and models, with
additional updates expected through 2023.

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Critical accounting policies and practices

The accounting principles of the Corporation and the methods of applying these
principles conform to GAAP. In preparing the consolidated financial statements,
management is required to make estimates, assumptions, and judgments that affect
the amounts recorded for assets, liabilities and contingent liabilities as of
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. The Corporation's significant accounting
policies are described in Note 1 - Nature of Business and Summary of Significant
Accounting Policies to the consolidated financial statements included in the
2021 Annual Report on Form 10-K.

Not all significant accounting policies require management to make difficult,
subjective or complex judgments. The Corporation's critical accounting estimates
that are particularly susceptible to significant changes include, but are not
limited to, the following: (i) the allowance for credit losses ("ACL"); (ii)
valuation of financial instruments; (iii) acquired loans; and (iv) income taxes.
For more information, see "Critical Accounting Policies and Practices" in the
MD&A of the 2021 Annual Report on Form 10-K and "Risk Management - Credit Risk
Management" below for information on the ACL estimation methodology. Actual
results could differ from estimates and assumptions if different outcomes or
conditions prevail.


Overview of operating results

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

The Corporation had net income of $74.7 million, or $0.38 per diluted common
share, for the quarter ended June 30, 2022, compared to $70.6 million, or $0.33
per diluted common share, for the same period in 2021. Other relevant selected
financial indicators for the periods presented is included below:

                                                   Quarter Ended                                Six-Month Period Ended
                                      June 30, 2022             June 30, 2021             June 30, 2022          June 30, 2021

Key performance indicator:

    Return on Average Assets (1)
    (2)                                    1.52     %                 1.40    %                 1.59    %             1.35    %
    Return on Average Total
    Equity (1) (3)                         17.82                     12.60                     17.18                  11.71
    Efficiency Ratio (1) (4)               47.69                     60.64                     48.25                  62.45

(1) These financial ratios are used by management to monitor the Company’s financial performance and determine whether it is using its

assets effectively.
(2) Indicates the profitability of the Company in relation to its total assets and is calculated by dividing the net profit over a

annualized by its average total assets.
(3) Measures the Company’s performance based on its average shareholders’ equity and is calculated by dividing net profit by

on an annualized basis by its average total equity.
(4) Measures how much the Company has incurred to generate a dollar of revenue and is calculated by dividing the

expenses by total income.

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Key drivers of the Company’s GAAP financial results for the quarter
ended June 30, 2022compared to the same period in 2021, include the following:

?Net interest income for the quarter ended June 30, 2022 was $196.2 million,
compared to $184.8 million for the second quarter of 2021. The increase was
mainly driven by a lower U.S. agencies MBS premium amortization expense,
positive impact of upward repricing of variable-rate commercial loans and
interest-bearing cash balances maintained at the FED, and growth in the consumer
loans and finance leases portfolio, partially offset by lower interest income on
SBA PPP loans. In addition, net interest income includes a decline in the
average cost of deposits and a decrease in long-term debt.

The net interest margin increased by 19 basis points to 4.00% for the second
quarter of 2022, compared to 3.81% for the second quarter of 2021. The increase
was primarily attributable to lower U.S. agencies MBS premium amortization
expense, the upward repricing of variable-rate commercial loans and
interest-bearing cash balances maintained at the FED, and a lower cost of
funding driven by lower rates paid on interest bearing non-brokered deposits.
See "Net Interest Income" below for additional information.

?The provision for credit losses on loans, finance leases, unfunded loan
commitments and debt securities for the second quarter of 2022 was an expense of
$10.0 million, compared to a net benefit of $26.2 million for the second quarter
of 2021. The provision for the commercial and construction loan portfolio for
the second quarter of 2022 includes consideration of increased uncertainties in
the forecasted economic outlook and the related qualitative reserves, partially
offset by reduced COVID-19 uncertainties.

Net charge-offs totaled $6.0 million for the second quarter of 2022, or 0.21% of
average loans on an annualized basis, compared to $7.7 million, or 0.27% of
average loans for the same period in 2021. The decrease consisted of a $4.6
million decline in net charge-offs taken on consumer loans, primarily reflected
in the auto loan and credit card portfolios, and a $1.2 million reduction in net
charge-offs taken on residential mortgage loans, partially offset by a $4.1
million decline in net recoveries on commercial and construction loans. See
"Provision for Credit Losses" and "Risk Management" below for analyses of the
ACL and non-performing assets and related ratios.

?The Corporation recorded non-interest income of $30.9 million for the second
quarter of 2022, compared to $29.9 million for the same period in 2021. The
increase was primarily driven by: (i) a $1.9 million increase in revenues from
other non-interest income, mainly driven by an increase in transactional fee
income and the $0.9 million gain on the sale of a banking facility; (ii) a $0.7
million increase in services charges and fees on deposit accounts, and (iii) a
$0.7 million increase in insurance commission income. These variances were
partially offset by a $2.3 million decrease in revenues from mortgage banking
activities, primarily related to a lower volume of sales. See "Non-Interest
Income" below for additional information.

?Non-interest expenses for the second quarter of 2022 were $108.3 million,
compared to $130.2 million for the same period in 2021. Non-interest expenses
for the second quarter of 2021 included $11.0 million of merger and
restructuring costs associated with the acquisition and integration of Banco
Santander Puerto Rico ("BSPR") and $1.1 million of COVID-19 pandemic-related
expenses, primarily related to cleaning and security protocols. Adjusted for the
above-mentioned costs, total non-interest expenses for the second quarter of
2022 decreased by $9.8 million, compared to the same period in 2021, reflecting,
among other things, decreases in professional services fees, occupancy and
equipment expenses, and an increase in net gains on OREO operations. See
"Non-Interest Expenses" and "Basis of Presentation" below for additional
information.

?For the second quarter of 2022, the Corporation recorded an income tax expense
of $34.1 million, compared to $40.1 million for the same period in 2021. The
variance was primarily related to a lower estimated effective tax rate as a
result of a higher proportion of exempt to taxable income when compared to the
same period in 2021. As of June 30, 2022, the Corporation's net deferred tax
asset amounted to $167.0 million (net of a valuation allowance of $166.4
million, including a valuation allowance of $127.7 million of the Corporation's
banking subsidiary, FirstBank), compared to a net deferred tax asset of $208.4
million as of December 31, 2021. See "Income Taxes" below and Note 17 - Income
Taxes above for additional information.


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?As of June 30, 2022, total assets were $19.5 billion, down $1.3 billion from
December 31, 2021. The decrease was primarily related to a $1.3 billion decrease
in cash and cash equivalents mainly attributable to the overall decrease in
total deposits, the repurchase of approximately 10.5 million shares of common
stock for a total purchase price of $150 million, and the repayment of a $100
million repurchase agreement during the first quarter of 2022. These variances
were partially offset by a $133.7 million increase in total loans. See
"Financial Condition and Operating Data Analysis" below for additional
information.

?As of June 30, 2022, total liabilities were $18.0 billion, down $709.8 million
from December 31, 2021. The decrease was mainly driven by a $644.8 million
decrease in total deposits and the repayment of a $100 million repurchase
agreement during the first quarter of 2022. See "Risk Management - Liquidity
Risk and Capital Adequacy" below for additional information about the
Corporation's funding sources.

?As of June 30, 2022, the Corporation's stockholders' equity was $1.6 billion, a
decrease of $543.9 million from December 31, 2021. The decline was driven by a
$507.8 million decrease in the fair value of available-for-sale debt securities
recorded as part of accumulated other comprehensive loss in the consolidated
statements of financial condition, as a result of changes in market interest
rates. The decrease in total stockholders' equity also reflects the repurchase
of approximately 10.5 million shares of common stock for a total purchase price
of approximately $150 million and $43.3 million in dividends declared to common
stock shareholders in the first half of 2022. These variances were partially
offset by earnings generated in the first half of 2022. The Corporation's common
equity tier 1 capital, tier 1 capital, total capital and leverage ratios under
the Basel III rules were 16.95%, 16.95%, 19.67%, and 10.18%, respectively, as of
June 30, 2022, compared to common equity tier 1 capital, tier 1 capital, total
capital and leverage ratios of 17.80%, 17.80%, 20.50%, and 10.14%, respectively,
as of December 31, 2021. See "Risk Management - Capital" below for additional
information.

?Total loan production, including purchases, refinancings, renewals, and draws
from existing revolving and non-revolving commitments, but excluding the
utilization activity on outstanding credit cards, was $1.4 billion for the
quarter ended June 30, 2022, compared to $1.2 billion for the same period in
2021. During the second quarter of 2021, the Corporation originated $74.1
million of Small Business Administration Paycheck Protection Program ("SBA PPP")
loans. Excluding those loans, total loan originations increased by $254.8
million, as compared to the second quarter of 2021. The increase consisted of a
$83.1 million increase in consumer loan originations and a $202.4 million
increase in commercial and construction loan originations (excluding SBA PPP
loans originations in 2021), partially offset by a $30.7 million decrease in
residential mortgage loan originations.

?Total non-performing assets were $147.5 million as of June 30, 2022, a decrease
of $10.6 million from December 31, 2021. The decrease was driven by a $10.5
million reduction in nonaccrual residential mortgage loans, mostly driven by
collections, loans restored to accrual status, and foreclosures during the first
half of 2022; a $0.9 million decrease in nonaccrual commercial and construction
loans; and a $0.2 million decrease in nonaccrual consumer loans. These variances
were partially offset by an increase of $1.0 million in OREO and other
repossessed assets. See "Risk Management - Non-Accruing and Non-Performing
Assets" below for additional information.

?Adversely classified commercial and construction loans decreased by $ 6.6
million to $170.7 million as of June 30, 2022, compared to December 31, 2021.
The decrease was mostly driven by the payoff of a $5.2 million commercial and
industrial loan in the Puerto Rico region. The Corporation monitors its loan
portfolio to identify potential at-risk segments, payment performance, the need
for permanent modifications, and the performance of different sectors of the
economy in all the markets where the Corporation operates.
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The financial results for the second quarter and first six months of 2022 did
not include any significant special item that management believes is not
reflective of core operating performance, is not expected to reoccur with any
regularity or may reoccur at uncertain times and in uncertain amounts (the
"Special Items"). The Corporation's financial results for the second quarter and
first six months of 2021 included the following Special Items:

Quarter and six-month period ended June 30, 2021

?Merger and restructuring costs of $11.0 million ($6.9 million after-tax) and
$22.3 million ($13.9 million after-tax) for the second quarter and six-month
period ended June 30, 2021, respectively, in connection with the BSPR
acquisition integration process and related restructuring initiatives. Merger
and restructuring costs in the second quarter of 2021 included approximately
$1.7 million related to voluntary employee separation programs implemented in
the Puerto Rico region and approximately $2.1 million related to service
contracts cancellation penalties. For the first six months of 2021, charges
related to voluntary and involuntary separation programs implemented in the
Puerto Rico region amounted to $6.5 million. In addition, merger and
restructuring costs in the 2021 periods included expenses related to system
conversions and other integration related efforts, as well as accelerated
depreciation charges related to planned closures and consolidation of branches
in accordance with the Corporation's integration and restructuring plan.

?Costs of $1.1 million ($0.7 million after-tax) and $2.3 million ($1.4 million
after-tax) for the second quarter and six-month period ended June 30, 2021,
respectively, related to COVID-19 pandemic response efforts, primarily costs
related to additional cleaning, safety materials, and security measures.

The following table shows the net income reported for the quarter and six-month
period ended June 30, 2022 and reconciles for the quarter and six-month period
ended June 30, 2021 the reported net income to adjusted net income, a non-GAAP
financial measure that excludes the Special Items identified above:


                                                   Quarter Ended June 30,        Six-Month Period Ended June 30,
                                                    2022            2021             2022                2021
(In thousands)
Net income, as reported (GAAP)                   $    74,695    $     70,558   $        157,295    $        131,708
Adjustments:
         Merger and restructuring costs                    -          11,047                  -              22,314
         COVID-19 pandemic-related expenses                -           1,105                  -               2,314
         Income tax impact of adjustments (1)              -         (4,557)                  -             (9,236)
Adjusted net income (Non-GAAP)                   $    74,695    $     78,153   $        157,295    $        147,100

  (1)             See "Basis of Presentation" below for the
                  individual tax impact related to the above
                  adjustments.


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RESULTS OF OPERATIONS

Net interest income

Net interest income is the excess of interest earned by First BanCorp. on its
interest-earning assets over the interest incurred on its interest-bearing
liabilities. First BanCorp.'s net interest income is subject to interest rate
risk due to the repricing and maturity mismatch of the Corporation's assets and
liabilities. Net interest income for the quarter and six-month period ended June
30, 2022 was $196.2 million and $381.8 million, respectively, compared to $184.8
million and $361.0 million for the comparable periods in 2021. On a
tax-equivalent basis and excluding the changes in the fair value of derivative
instruments, net interest income for the quarter and six-month period ended June
30, 2022 was $205.6 million and $398.4 million, respectively, compared to $190.9
million and $371.7 million, respectively, for the comparable periods in 2021.

The following tables include a detailed analysis of net interest income for the
indicated periods. Part I presents average volumes (based on the average daily
balance) and rates on an adjusted tax-equivalent basis and Part II presents,
also on an adjusted tax-equivalent basis, the extent to which changes in
interest rates and changes in the volume of interest-related assets and
liabilities have affected the Corporation's net interest income. For each
category of interest-earning assets and interest-bearing liabilities, the tables
provide information on changes in (i) volume (changes in volume multiplied by
prior period rates), and (ii) rate (changes in rate multiplied by prior period
volumes). The Corporation has allocated rate-volume variances (changes in rate
multiplied by changes in volume) to either the changes in volume or the changes
in rate based upon the effect of each factor on the combined totals.

Net interest income on an adjusted tax-equivalent basis and excluding the change
in the fair value of derivative instruments is a non-GAAP financial measure. For
the definition of this non-GAAP financial measure, refer to the discussion in
"Basis of Presentation" below.



Part I
                                  Average Volume            Interest income (1) / expense        Average Rate (1)
  Quarter ended June 30,        2022           2021            2022               2021            2022       2021

(in thousands of dollars)

Interest-bearing assets:

Money market and others $1,530,353 $1,741,167 $2,873

  $           433      0.75 %     0.10 %

short term investments

  Government obligations       2,922,226      1,895,868            10,090              6,609      1.38 %     1.40 %
  (2)
  MBS                          4,081,573      4,222,478            22,804             14,352      2.24 %     1.36 %
  FHLB stock                      21,275         28,489               251                366      4.73 %     5.15 %
  Other investments               12,595         10,973                12                  6      0.38 %     0.22 %
     Total investments (3)     8,568,022      7,898,975            36,030  

21,766 1.69% 1.11%

  Residential mortgage         2,891,403      3,357,114            40,573   

45,627 5.63% 5.45%

loans

  Construction loans             124,070        177,688             1,768              5,108      5.72 %    11.53 %

Commercial and Industrial

(“THIS”)

     and Commercial            5,054,223      5,353,657            64,500  

67,027 5.12% 5.02%

Mortgages

  Finance leases                 617,399        501,734            11,410              9,322      7.41 %     7.45 %
  Consumer loans               2,415,215      2,170,538            63,724             58,745     10.58 %    10.86 %
     Total loans (4) (5)      11,102,310     11,560,731           181,975            185,829      6.57 %     6.45 %
     Total interest-earning $ 19,670,332   $ 19,459,706   $       218,005    $       207,595      4.45 %     4.28 %
     assets

Interest bearing

Passives:

  Brokered certificates of  $     76,790   $    146,912   $           404    $           768      2.11 %     2.10 %

deposit (“CD”)

  Other interest-bearing      10,906,676     11,131,583             7,290   

10,014 0.27% 0.36%

deposits

  Other borrowed funds           383,762        483,762             3,670              3,828      3.84 %     3.17 %
  FHLB advances                  200,000        356,374             1,075              2,066      2.16 %     2.33 %

Total interest bearing $11,567,228 $12,118,631 $12,439

$16,676 0.43% 0.55%

Passives

Net interest income on a

fiscal equivalent

     basis and excluding                                  $       205,566  

$190,919

valuations

  Interest rate spread                                                                            4.01 %     3.73 %
  Net interest margin                                                                             4.19 %     3.94 %


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                                     Average Volume           Interest 

income (1) / average rate (1)

costs

Six-Month Period Ended June        2022           2021          2022         2021       2022      2021
30,
(Dollars in thousands)

Interest-earning assets:
Money market and other         $  1,682,216   $  1,585,468   $    3,693   $      782    0.44 %    0.10 %
short-term investments
Government obligations (2)        2,829,675      1,669,130       18,322       12,583    1.31 %    1.52 %
MBS                               4,061,883      3,915,238       42,224       24,082    2.10 %    1.24 %
FHLB stock                           21,370         29,851          538          767    5.08 %    5.18 %
Other investments                    12,193          9,116           33           15    0.55 %    0.33 %

Total investments (3) 8,607,337 7,208,803 64,810

   38,229    1.52 %    1.07 %
Residential mortgage loans        2,926,236      3,425,090       81,260       91,213    5.60 %    5.37 %
Construction loans                  119,427        195,085        3,292        8,352    5.56 %    8.63 %
C&I and Commercial mortgage       5,078,910      5,392,420      126,504      133,296    5.02 %    4.98 %
loans
Finance leases                      602,880        491,919       22,322       18,192    7.47 %    7.46 %
Consumer loans                    2,377,118      2,159,410      124,875      117,482   10.59 %   10.97 %

Total loans (4)(5) 11,104,571 11,663,924 358,253

368,535 6.51% 6.37%

Total interest $19,711,908 $18,872,727 $423,063 $

406,764 4.33% 4.35%

assets

Interest-bearing liabilities:
Brokered CDs                   $     84,210   $    167,814   $      881   $    1,757    2.11 %    2.11 %
Other interest-bearing           10,702,072     10,918,211       14,465       21,367    0.27 %    0.39 %
deposits
Other borrowed funds                404,204        483,762        7,185        7,400    3.58 %    3.08 %
FHLB advances                       200,000        397,956        2,138        4,529    2.16 %    2.29 %

Total interest bearing $11,390,486 $11,967,743 $24,669 $

35,053 0.44% 0.59%

Passives

Net interest income on a tax
equivalent
      basis and excluding                                    $  398,394   $

371 711

valuations

Interest rate spread                                                                    3.89 %    3.76 %
Net interest margin                                                                     4.08 %    3.97 %

(1) On an adjusted tax equivalent basis. The Company has estimated the adjusted return in tax equivalent

by dividing the interest rate differential on exempt assets by 1 minus the Porto Rico statutory tax rate

37.5% and adding the cost of interest-bearing liabilities. The tax adjustment

accounts for income tax savings when comparing taxable and tax-exempt assets. Management

believes that it is common practice in the banking industry to report net interest income,

the interest rate differential and the net interest margin on a fully equivalent to tax basis. Therefore,

management believes that these measures provide useful information to investors by allowing them to

make peer comparisons. The Company excludes changes in the fair value of derivatives of

interest income and interest expense because valuation changes do not affect interest

      received or paid.
(2)   Government obligations include debt issued by government-sponsored agencies.
(3)   Unrealized gains and losses on available-for-sale debt securities are excluded from the average

volumes.

(4) Average loan balances include average outstanding loans.
(5) Interest income on loans includes $3.0 million and $2.5 million for completed quarters June 30th,

2022 and 2021, respectively, and $5.6 million and $5.2 million for the six-month periods ended

June 30, 2022 and 2021, respectively, from the proceeds of prepayment penalties and late payment penalties

      the Corporation's loan portfolio.



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