First BanCorp Announces Decision in Lehman Related Claim

  First BanCorp Announces Decision in Lehman Related Claim

Business Wire

SAN JUAN, Puerto Rico -- May 13, 2013

First BanCorp (the “Corporation”) (NYSE: FBP), the bank holding company for
FirstBank Puerto Rico (“FirstBank” or “the Bank”), today filed a Form 8-K that
disclosed that the United States Bankruptcy Court for the Southern District of
New York has denied the Bank’s Motion for Summary Judgment filed in connection
with its claim to recover certain assets posted as collateral with Lehman
Brothers, Inc. ("Lehman").

This matter relates to the claim that the Bank filed against Barclays Capital
(“Barclays”) in the Bank’s attempt to recover the securities (or the cash
equivalence thereof) that were posted as collateral in connection with certain
interest hedge agreements executed with a Lehman affiliate. Since the second
quarter of 2009, the Corporation classified the pledged securities as a
non-performing asset with a book value of $64.5 million. Because of the
bankruptcy court’s May 10, 2013 decision, the Corporation has determined that
it is probable that the asset has been impaired and will recognize a non-cash
charge associated with the impairment of approximately $64.5 million, plus
$2.1 million in accrued interest, during the second quarter of 2013 to
write-off the carrying value of the pledged securities. The Bank intends to
appeal the court’s decision denying its Motion for Summary Judgment.

In addition to this lawsuit, the Corporation continues to pursue its claim
filed in the bankruptcy court in January 2009 in the proceedings under the
Securities Investor Protection Act (“SIPA”) with regard to Lehman. The
Corporation’s claim was filed on the basis that under SIPA the Corporation was
a “customer” that “entrusted” the pledged securities to Lehman for safe
keeping, and, accordingly, should be afforded protection thereunder. The
Corporation’s claim has not yet been resolved by the court.

“Over the past three years we have been diligently working with counsel in
this litigation and have been reporting the status of the litigation in our
corporate filings. Based on Friday’s court decision, we have determined to
take the full impairment charge. We will continue our efforts through the
legal process to recover the value of the assets that we strongly believe
belong to the Corporation. Despite the impact of this charge in the second
quarter, our capital ratios will remain strong,” said First BanCorp.'s
President and CEO Aurelio Aleman.

About First BanCorp

First BanCorp. is the parent corporation of FirstBank Puerto Rico, a
state-chartered commercial bank with operations in Puerto Rico, the Virgin
Islands and Florida, and of FirstBank Insurance Agency. First BanCorp. and
FirstBank Puerto Rico operate within U.S. banking laws and regulations. The
Corporation operates a total of 153 branches, stand-alone offices, and
in-branch service centers throughout Puerto Rico, the U.S. and British Virgin
Islands, and Florida. Among the subsidiaries of FirstBank Puerto Rico are
First Federal Finance Corp., a small loan company; FirstBank Puerto Rico
Securities, a broker-dealer subsidiary; First Management of Puerto Rico; and
FirstMortgage, Inc., a mortgage origination company. In the U.S. Virgin
Islands, FirstBank operates First Express, a small loan company. First
BanCorp’s shares of common stock trade on the New York Stock Exchange under
the symbol FBP. Additional information about First BanCorp. may be found at


First BanCorp.
John B. Pelling III, 305-577-6000 Ext. 162
Investor Relations Officer
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