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REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES | 3 Months Ended
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Mar. 31, 2025
REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES [Abstract] |
REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES | NOTE 19 – REGULATORY MATTERS, COMMITMENTS AND CONTINGENCIES Regulatory Matters The Corporation and FirstBank are each subject to various regulatory capital requirements imposed by the U.S. federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on the Corporation’s financial statements and activities. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s and FirstBank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgments and adjustment by the regulators with respect to minimum capital requirements, components, risk weightings, and other factors. As of March 31, 2025 and December 31, 2024, the Corporation and FirstBank exceeded the minimum regulatory capital ratios for capital adequacy purposes and FirstBank exceeded the minimum regulatory capital ratios to be considered a well- capitalized institution under the regulatory framework for prompt corrective action. As of March 31, 2025, management does not believe that any condition has changed or event has occurred that would have changed the institution’s status. The Corporation and FirstBank compute risk-weighted assets using the standardized approach required by the U.S. Basel III capital rules (“Basel III rules”). The Basel III rules require the Corporation to maintain an additional capital conservation buffer of 2.5 % on certain regulatory capital ratios to avoid limitations on both (i) capital distributions ( e.g. , repurchases of capital instruments, dividends and interest payments on capital instruments) and (ii) discretionary bonus payments to executive officers and heads of major business lines. The regulatory capital position of the Corporation and FirstBank as of March 31, 2025 and December 31, 2024 were as follows: Regulatory Requirements Actual For Capital Adequacy Purposes To be Well -Capitalized Thresholds Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of March 31, 2025 Total Capital (to Risk-Weighted Assets) First BanCorp. $ 2,366,470 17.96 % $ 1,054,347 8.0 % N/A N/A FirstBank $ 2,315,631 17.58 % $ 1,054,043 8.0 % $ 1,317,554 10.0 % CET1 Capital (to Risk-Weighted Assets) First BanCorp. $ 2,190,351 16.62 % $ 593,070 4.5 % N/A N/A FirstBank $ 2,050,369 15.56 % $ 592,899 4.5 % $ 856,410 6.5 % Tier I Capital (to Risk-Weighted Assets) First BanCorp. $ 2,190,351 16.62 % $ 790,760 6.0 % N/A N/A FirstBank $ 2,150,369 16.32 % $ 790,532 6.0 % $ 1,054,043 8.0 % Leverage ratio First BanCorp. $ 2,190,351 11.20 % $ 782,277 4.0 % N/A N/A FirstBank $ 2,150,369 11.00 % $ 782,027 4.0 % $ 977,533 5.0 % As of December 31, 2024 (1) Total Capital (to Risk-Weighted Assets) First BanCorp. $ 2,404,581 18.02 % $ 1,067,380 8.0 % N/A N/A FirstBank $ 2,369,441 17.76 % $ 1,067,033 8.0 % $ 1,333,791 10.0 % CET1 Capital (to Risk-Weighted Assets) First BanCorp. $ 2,177,748 16.32 % $ 600,401 4.5 % N/A N/A % FirstBank $ 2,102,512 15.76 % $ 600,206 4.5 % $ 866,964 6.5 % Tier I Capital (to Risk-Weighted Assets) First BanCorp. $ 2,177,748 16.32 % $ 800,535 6.0 % N/A N/A FirstBank $ 2,202,512 16.51 % $ 800,275 6.0 % $ 1,067,033 8.0 % Leverage ratio First BanCorp. $ 2,177,748 11.07 % $ 786,937 4.0 % N/A N/A FirstBank $ 2,202,512 11.20 % $ 786,712 4.0 % $ 983,390 5.0 % (1) As of December 31, 2024, capital ratios reflect the delay in the full effect of CECL. The Corporation elected the option provided by the interim final rule issued by the federal banking agencies on March 31, 2020, in response to the impact of COVID-19, to temporarily delay the effects of CECL on regulatory capital during a five-year transition period which ended on January 1, 2025. Commitments The Corporation enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments may include commitments to extend credit and standby letters of credit. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Since certain commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. For most of the commercial lines of credit, the Corporation has the option to reevaluate the agreement prior to additional disbursements. In the case of credit cards and personal lines of credit, the Corporation can cancel the unused credit facility at any time and without cause. As of March 31, 2025, commitments to extend credit amounted to approximately $ 2.1 billion, of which $ 0.8 billion relates to retail credit card loans. In addition, commercial and financial standby letters of credit as of March 31, 2025 amounted to approximately $ 62.3 million. Contingencies As of March 31, 2025, First BanCorp. and its subsidiaries were defendants in various legal proceedings, claims and other loss contingencies arising in the ordinary course of business. On at least a quarterly basis, the Corporation assesses its liabilities and contingencies in connection with threatened and outstanding legal proceedings, claims and other loss contingencies utilizing the latest information available, advice from legal counsel, and available insurance coverage. For legal proceedings, claims and other loss contingencies where it is both probable that the Corporation will incur a loss and the amount can be reasonably estimated, the Corporation establishes an accrual for the loss. Once established, the accrual is adjusted as appropriate to reflect any relevant developments. For legal proceedings, claims and other loss contingencies where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established. Any estimate involves significant judgment, given the complexity of the facts, the novelty of the legal theories, the varying stages of the proceedings (including the fact that some of them are currently in preliminary stages), the existence in some of the current proceedings of multiple defendants whose share of liability has yet to be determined, the numerous unresolved issues in the proceedings, and the inherent uncertainty of the various potential outcomes of such proceedings. Accordingly, it may take months or years after the filing of a case or commencement of a proceeding or an investigation before an estimate of the reasonably possible loss can be made and the Corporation’s estimate will change from time to time, and actual losses may be more or less than the current estimate. While the final outcome of legal proceedings, claims, and other loss contingencies is inherently uncertain, based on information currently available, management believes that the final disposition of the Corporation’s legal proceedings, claims and other loss contingencies, to the extent not previously provided for, will not have a material adverse effect on the Corporation’s consolidated financial position as a whole. If management believes that, based on available information, it is at least reasonably possible that a material loss (or material loss in excess of any accrual) will be incurred in connection with any legal contingencies, including tax contingencies, the Corporation discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as appropriate, if such an estimate can be made, or discloses that an estimate cannot be made. Based on the Corporation’s assessment as of March 31, 2025, no such disclosures were necessary. In 2023, the FDIC issued a final rule to impose a special assessment to recover certain estimated losses to the Deposit Insurance Fund (“DIF”) arising from the closures of Silicon Valley Bank and Signature Bank. The estimated losses will be recovered through quarterly special assessments collected from certain insured depository institutions, including the Bank, and collection began during the quarter ended June 30, 2024. As of March 31, 2025, the Corporation’s total estimated FDIC special assessment amounted to $ 7.4 million, of which $ 3.2 million has been paid. The Corporation continues to monitor the FDIC’s estimated loss to the DIF, which could affect the amount of its accrued liability.

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