Summary of FIRST BANCORP /PR/

Item 2.02 Results of Operations and Financial Condition.
On July 30, 2009, First BanCorp. (the "Corporation") issued a press release announcing its unaudited results of operations for the second quarter ended June 30, 2009. A copy of the press release is attached hereto as Exhibit 99.1 and is hereby incorporated herein by reference.
The Corporation has included in this release the following non-GAAP financial measure: (i) the calculation of net interest income, interest rate spread and net interest margin rate on a tax equivalent basis and excluding the unrealized changes in the fair value of derivative instruments and certain financial liabilities, (ii) the calculation of the tangible common equity ratio and the tangible book value per common share, and (iii) the Tier 1 common equity to risk-weighted assets ratio. Investors should be aware that non-GAAP measures have inherent limitations and should be read only in conjunction with the Corporation's consolidated financial data prepared in accordance with GAAP. Net interest income, interest rate spread and net interest margin are reported on a tax equivalent basis and excluding the unrealized changes in the fair value of derivative instruments and financial liabilities elected to be measured at fair value under Statement of Financial Accounting Standard No. ("SFAS") 159 ("SFAS 159 liabilities"). The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a marginal income tax rate, as described in Exhibit A - Table 2 of the attached Press Release (included herein as Exhibit 99.1). Management believes that it is a standard practice in the banking industry to present net interest income, interest rate spread and net interest margin on a fully tax equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. The following table reconciles the non-GAAP financial measure "net interest income on a tax-equivalent basis and excluding fair value changes" with net interest income calculated and presented in accordance with GAAP. The table also reconciles the non-GAAP financial measures "net interest spread and margin on a tax-equivalent basis and excluding fair value changes" with net interest spread and margin calculated and presented in accordance with GAAP.

Reconciliation of GAAP Net Interest Margin and Spread to Non-GAAP Net Interest Margin and Spread on a Tax-Equivalent Basis and excluding fair value changes on derivative instruments and SFAS 159 liabilities ("valuations")

                                                                         Quarters Ended                                          Six-month period ended
(dollars in thousands)                           June 30, 2009           March 31, 2009           June 30, 2008           June 30, 2009           June 30, 2008
Interest Income                                 $       252,780         $        258,323         $       276,608         $       511,103         $       555,695
Unrealized gains on derivative
instruments                                              (3,465 )                   (775 )                (5,643 )                (4,240 )                  (920 )

Interest Income - excluding valuations                  249,315                  257,548                 270,965                 506,863                 554,775
Tax Equivalent Adjustment                                13,933                   14,448                  13,761                  28,381                  22,843

Interest Income - Tax Equivalent                        263,248                  271,996                 284,726                 535,244                 577,618

Interest Expense                                        121,766                  136,725                 142,002                 258,491                 296,631
Unrealized (losses) gains on derivative
instruments and SFAS 159 liabilities                     (1,069 )                  2,860                  (1,784 )                 1,791                   5,205

Interest Expense - excluding valuations                 120,697                  139,585                 140,218                 260,282                 301,836


Net Interest Income                             $       131,014         $        121,598         $       134,606         $       252,612         $       259,064


Net Interest Income - excluding
valuations                                      $       128,618         $        117,963         $       130,747         $       246,581         $       252,939


Net Interest Income - Tax Equivalent and
excluding valuations                            $       142,551         $        132,411         $       144,508         $       274,962         $       275,782


Average Interest-Earning Assets                 $    19,561,512         $     18,830,013         $    17,715,552         $    19,197,699         $    17,402,133

Average Interest-Bearing Liabilities            $    17,279,599         $     16,684,497         $    15,921,948         $    16,983,792         $    15,586,624

Average rate on interest-earning assets                    5.18 %                   5.56 %                  6.28 %                  5.37 %                  6.42 %
Average rate on interest-earning assets -
excluding valuations                                       5.11 %                   5.55 %                  6.15 %                  5.32 %                  6.41 %
Average rate on interest-earning assets -
Tax Equivalent and excluding valuations                    5.40 %                   5.86 %                  6.46 %                  5.62 %                  6.67 %

Average rate on interest-bearing
liabilities                                                2.83 %                   3.32 %                  3.59 %                  3.07 %                  3.83 %
Average rate on interest-bearing
liabilities - excluding valuations                         2.80 %                   3.39 %                  3.54 %                  3.09 %                  3.89 %

Net Interest Spread                                        2.35 %                   2.24 %                  2.69 %                  2.30 %                  2.59 %
Net Interest Spread - excluding
valuations                                                 2.31 %                   2.16 %                  2.61 %                  2.23 %                  2.52 %
Net Interest Spread - Tax Equivalent and
excluding valuations                                       2.60 %                   2.47 %                  2.92 %                  2.53 %                  2.78 %

Net Interest Margin                                        2.69 %                   2.62 %                  3.06 %                  2.65 %                  2.99 %
Net Interest Margin - excluding
valuations                                                 2.64 %                   2.54 %                  2.97 %                  2.59 %                  2.92 %
Net Interest Margin - Tax Equivalent and
excluding valuations                                       2.92 %                   2.85 %                  3.28 %                  2.89 %                  3.19 %

The tangible common equity ratio and the tangible book value per common share are non-GAAP measures generally used by financial analysts and investment bankers to evaluate capital adequacy. Tangible common equity is total equity less preferred equity, goodwill and core deposit intangibles. Tangible Assets are total assets less goodwill and core deposit intangibles. Management and many stock analysts use the tangible common equity ratio and the tangible book value per common share in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method accounting for mergers and acquisitions. Neither tangible common equity nor tangible assets or related measures should be considered in isolation or as a substitute for stockholders' equity, total assets or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Corporation calculates its tangible common equity, tangible assets and any other related measures may differ from that of other companies reporting measures with similar names. The following table is a reconciliation of the Corporation's tangible common equity and tangible assets for the periods ended June 30, 2009, March 31, 2009 and June 30, 2008, respectively.

                                                          June 30,           March 31,            June 30,
(In thousands)                                              2009                2009                2008

Total equity per consolidated financial statements      $  1,840,686        $  1,977,240        $  1,401,693
Preferred equity                                            (926,259 )          (925,162 )          (550,100 )
Goodwill                                                     (28,098 )           (28,098 )           (28,098 )
Core deposit intangible                                      (18,130 )           (19,273 )           (25,802 )


Tangible common equity                                  $    868,199        $  1,004,707        $    797,693

Total assets per consolidated financial statements      $ 20,012,887        $ 19,709,150        $ 18,828,786
Goodwill                                                     (28,098 )           (28,098 )           (28,098 )
Core deposit intangible                                      (18,130 )           (19,273 )           (25,802 )


Tangible assets                                         $ 19,966,659        $ 19,661,779        $ 18,774,886
Common shares outstanding                                     92,546              92,546              92,510

Tangible common equity ratio                                    4.35 %              5.11 %              4.25 %
Tangible book value per common share                    $       9.38        $      10.86        $       8.62

Tier 1 common equity to risk-weighted assets ratio is calculated by dividing
(a) tier 1 capital less non-common elements including qualifying perpetual preferred stock and qualifying trust preferred securities, by (b) risk-weighted assets, which assets are calculated in accordance with applicable bank regulatory requirements. The Tier 1 common equity ratio is not required by U.S. generally accepted accounting principles, or GAAP, or on a recurring basis by applicable bank regulatory requirements. However, this ratio was used by the Federal Reserve in connection with its stress test administered to the 19 largest U.S. bank holding companies under the Supervisory Capital Assessment Program ("SCAP"), the results of which were announced on May 7, 2009. Although we understand that the Federal Reserve does not intend to prospectively require calculation of the Tier 1 common equity ratio, due to the recent timing of the SCAP, management is currently monitoring this ratio, along with the other ratios set forth in the table above, in evaluating the Corporation's capital levels and believes that, at this time, the ratio may be of interest to investors. The following table reconciles stockholders' equity (GAAP) to Tier 1 common equity:

                                                          June 30,           March 31,            June 30,
(In thousands)                                              2009                2009                2008

Total equity per consolidated financial statements      $  1,840,686        $  1,977,240        $  1,401,693
Qualifying preferred stock                                  (926,259 )          (925,162 )          (550,100 )
Unrealized (gain) loss on available-for-sale
securities (1)                                               (46,382 )           (82,751 )            78,765
Disallowed deferred tax asset (2)                           (172,187 )           (83,302 )           (57,328 )
Goodwill                                                     (28,098 )           (28,098 )           (28,098 )
Core deposit intangible                                      (18,130 )           (19,272 )           (25,802 )
Cumulative change loss (gain) in fair value of
liabilities elected to be measured at fair value
under SFAS 159, net of tax                                     2,604              (3,555 )            (1,566 )
Other disallowed assets                                         (347 )              (625 )              (526 )

Tier 1 common equity                                    $    651,887        $    834,475        $    817,038

Total risk-weighted assets                              $ 13,785,093        $ 14,141,259        $ 13,049,833

Tier 1 common equity to risk-weighted assets ratio              4.73 %              5.90 %              6.26 %

(1) Tier 1 capital excludes net unrealized gains (losses) on available-for-sale debt securities and net unrealized gains on available-for-sale equity securities with readily determinable fair values, in accordance with regulatory risk-based capital guidelines. In arriving at Tier 1 capital, institutions are required to deduct net unrealized losses on available-for-sale equity securities with readily determinable fair values, net of tax.

(2) Approximately $49 million of the Corporation's $218 million of net deferred tax assets at June 30, 2009 (March 31, 2009 - $59 million of $141 million of net deferred tax assets; June 30, 2008 - $49 million of $106 million net deferred tax assets) were included without limitation in regulatory capital pursuant to the risk-based capital guidelines, while approximately $172 million of . . .