ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES	3 Months Ended
Mar. 31, 2026
ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES [Abstract]
ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES	NOTE 4 – ALLOWANCE FOR CREDIT LOSSES FOR LOANS AND FINANCE LEASES The following tables present the activity in the ACL on loans and finance leases by portfolio segment for the indicated periods: Residential Mortgage Loans Commercial Mortgage Loans Consumer Loans and Finance Leases Construction Loans C&I Loans Total Quarter Ended March 31, 2026 (In thousands) ACL: Beginning balance $ 41,071 $ 5,672 $ 23,832 $ 41,416 $ 137,046 $ 249,037 Provision for credit losses - expense (benefit) 239 (2,361) 360 1,017 17,915 17,170 Charge-offs (130) - (562) (390) (26,119) (27,201) Recoveries 354 13 40 81 5,566 6,054 Ending balance $ 41,534 $ 3,324 $ 23,670 $ 42,124 $ 134,408 $ 245,060 Residential Mortgage Loans Construction Loans Commercial Mortgage Loans C&I Loans Consumer Loans and Finance Leases Total Quarter Ended March 31, 2025 (In thousands) ACL: Beginning balance $ 40,654 $ 3,824 $ 22,447 $ 33,034 $ 143,983 $ 243,942 Provision for credit losses - expense (benefit) 1,004 (421) 1,656 3,353 19,245 24,837 Charge-offs (235) - - (77) (27,898) (28,210) Recoveries 217 14 40 154 6,275 (1) 6,700 Ending balance $ 41,640 $ 3,417 $ 24,143 $ 36,464 $ 141,605 $ 247,269 (1) Includes recoveries totaling $ 2.4 million associated with the bulk sale of fully charged-off consumer loans and finance leases. The Corporation estimates the ACL following the methodologies described in Note 1 – “Nature of Business and Summary of Significant Accounting Policies” to the audited consolidated financial statements included in the 2025 Annual Report on Form 10-K, as updated by the information contained in this report, for each portfolio segment. The Corporation generally applies probability weights to the baseline and alternative downside economic scenarios to estimate the ACL with the baseline scenario carrying the highest weight. The scenarios that are chosen each quarter and the weighting given to each scenario for the different loan portfolio categories depend on a variety of factors including recent economic events, leading national and regional economic indicators, and industry trends. As of March 31, 2026 and December 31, 2025, the Corporation applied 100% probability to the baseline scenario for the commercial mortgage and construction loan portfolios since certain macroeconomic variables associated with commercial real estate property performance and the commercial real estate (“CRE”) price index, particularly in the Puerto Rico region, are expected to continue to perform in a more favorable manner than the alternative downside economic scenario. As of March 31, 2026, the ACL for loans and finance leases was $ 245.1 million, a decrease of $ 3.9 million, from $ 249.0 million as of December 31, 2025. The decrease was mainly related to the ACL for consumer loans, which decreased by $ 2.6 million, driven by improvements in macroeconomic variables, mainly in the projection of the unemployment rate, and lower delinquency levels, partially offset by higher qualitative reserves associated with geopolitical uncertainty driven by, among other things, higher oil prices as a result of the conflict in the Middle East. In addition, the ACL for commercial and construction loans decreased by $ 1.8 million, mainly due to improvements in the projections of the unemployment rate and the CRE price index, net of aforementioned qualitative reserves, partially offset by renewals and refinancings. Meanwhile, the ACL for residential mortgage loans increased by $ 0.5 million, driven by loan growth and the aforementioned geopolitical uncertainty, partially offset by an improvement in the projection of the unemployment rate. Net charge-offs were $ 21.1 million for the quarter ended March 31, 2026, compared to $ 21.4 million for the same period in 2025. The $ 0.3 million decrease was driven by a $ 1.1 million reduction in consumer loans and finance leases net charge-offs, mainly in the unsecured loan portfolios, after considering the impact of $ 2.4 million in recoveries related to the aforementioned bulk sale recognized during the first quarter of 2025. This improvement was partially offset by a $ 0.9 million increase in commercial and construction loans net charge-offs, driven by a $ 0.6 million charge-off on a nonaccrual commercial mortgage loan in the Virgin Islands region during the first quarter of 2026. The tables below present the ACL related to loans and finance leases and the carrying values of loans by portfolio segment as of March 31, 2026 and December 31, 2025: As of March 31, 2026 Residential Mortgage Loans Construction Loans Commercial Mortgage Loans C&I Loans Consumer Loans and Finance Leases Total (Dollars in thousands) Total loans held for investment: Amortized cost of loans $ 2,914,898 $ 195,267 $ 2,627,113 $ 3,694,843 $ 3,658,956 $ 13,091,077 Allowance for credit losses 41,534 3,324 23,670 42,124 134,408 245,060 Allowance for credit losses to amortized cost 1.42 % 1.70 % 0.90 % 1.14 % 3.67 % 1.87 % As of December 31, 2025 Residential Mortgage Loans Construction Loans Commercial Mortgage Loans C&I Loans Consumer Loans and Finance Leases Total (Dollars in thousands) Total loans held for investment: Amortized cost of loans $ 2,908,302 $ 265,568 $ 2,554,252 $ 3,688,358 $ 3,708,876 $ 13,125,356 Allowance for credit losses 41,071 5,672 23,832 41,416 137,046 249,037 Allowance for credit losses to amortized cost 1.41 % 2.14 % 0.93 % 1.12 % 3.70 % 1.90 % In addition, the Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, such as unfunded loan commitments and standby letters of credit for commercial and construction loans, unless the obligation is unconditionally cancellable by the Corporation. See Note 18 – “Regulatory Matters, Commitments and Contingencies” for information on off-balance sheet exposures as of March 31, 2026 and December 31, 2025. The Corporation estimates the ACL for these off-balance sheet exposures following the methodology described in Note 1 – “Nature of Business and Summary of Significant Accounting Policies” to the audited consolidated financial statements included in the 2025 Annual Report on Form 10-K. As of March 31, 2026, the ACL for off-balance sheet credit exposures amounted to $ 3.1 million, compared to $ 3.0 million as of December 31, 2025. The following table presents the activity in the ACL for unfunded loan commitments and standby letters of credit for the quarters ended March 31, 2026 and 2025: Quarter Ended March 31, 2026 2025 (In thousands) Beginning balance $ 3,013 $ 3,143 Provision for credit losses - expense (benefit) 107 (63) Ending balance $ 3,120 $ 3,080

Residential

Mortgage

Loans

Construction

Loans

Commercial

Mortgage

Loans

C&I

Loans

Consumer Loans

and Finance

Leases

Total

Quarter Ended March 31, 2025

(In thousands)

ACL:

Beginning balance

40,654

3,824

22,447

33,034

143,983

243,942

Provision for credit losses - expense (benefit)

1,004

(421)

1,656

3,353

19,245

24,837

Charge-offs

(235)

(77)

(27,898)

(28,210)

Recoveries

217

154

6,275

(1)

6,700

Ending balance

41,640

3,417

24,143

36,464

141,605

247,269

(1) Includes recoveries totaling $

2.4

million associated with the bulk sale of fully charged-off

consumer loans and finance leases.

The

Corporation

estimates

the

ACL

following

the

methodologies

described

Note

–

“Nature

Business

and

Summary

Significant Accounting

Policies” to

the audited

consolidated financial

statements included

in the

2025 Annual

Report on

Form 10-K,

as updated by the information contained in this report, for each portfolio segment.

The Corporation

generally applies

probability weights

to the

baseline and

alternative downside

economic scenarios

to estimate

the

ACL with

the

baseline

scenario

carrying

the highest

weight.

The

scenarios

that are

chosen

each quarter

and

the

weighting

given

each

scenario

for

the

different

loan

portfolio

categories

depend

variety

factors

including

recent

economic

events,

leading

national

and

regional

economic

indicators,

and

industry

trends.

March

31,

2026

and

December

31,

2025,

the

Corporation

applied

100%

probability

the

baseline

scenario

for

the

commercial

mortgage

and

construction

loan

portfolios

since

certain

macroeconomic variables

associated with

commercial real

estate property

performance and

the commercial

real estate

(“CRE”) price

index,

particularly

the

Puerto

Rico

region,

are

expected

continue

perform

favorable

manner

than

the

alternative

downside economic scenario.

As of March 31,

2026, the ACL for loans

and finance leases was $

245.1

million, a decrease of

3.9

million, from $

249.0

million as

of December

31, 2025.

The decrease

was mainly

related to

the ACL

for consumer

loans, which

decreased by

2.6

million, driven

improvements in macroeconomic variables,

mainly in the projection of the unemployment

rate, and lower delinquency levels, partially

offset by higher qualitative reserves associated with geopolitical

uncertainty driven by,

among other things, higher oil prices as a result

of the conflict

in the Middle

East. In addition,

the ACL for

commercial and

construction loans decreased

by $

1.8

million, mainly due

improvements

the

projections

the

unemployment

rate

and

the

CRE

price

index,

net

aforementioned

qualitative

reserves,

partially offset by renewals and refinancings.

Meanwhile,

the

ACL

for

residential

mortgage

loans

increased

0.5

million,

driven

loan

growth

and

the

aforementioned

geopolitical uncertainty,

partially offset by an improvement in the projection of the unemployment

rate.

Net charge-offs

were $

21.1

million for

the quarter

ended March

31, 2026,

compared to

21.4

million for

the same

period in

2025.

The $

0.3

million decrease

was driven by

a $

1.1

million reduction

in consumer loans

and finance leases

net charge-offs,

mainly in

the

unsecured loan portfolios, after considering the

impact of $

2.4

million in recoveries related to the aforementioned bulk

sale recognized

during the first quarter of 2025. This improvement was partially offset

by a $

0.9

million increase in commercial and construction loans

net charge-offs,

driven by a $

0.6

million charge-off

on a nonaccrual commercial

mortgage loan in the Virgin

Islands region during the

first quarter of 2026.

The tables below present the

ACL related to loans and

finance leases and the carrying

values of loans by portfolio

segment as of

March 31, 2026 and December 31, 2025:

As of March 31, 2026

Residential

Mortgage

Loans

Construction

Loans

Commercial

Mortgage

Loans

C&I

Loans

Consumer Loans

and Finance

Leases

Total

(Dollars in thousands)

Total loans held for investment:

Amortized cost of loans

2,914,898

195,267

2,627,113

3,694,843

3,658,956

13,091,077

Allowance for credit losses

41,534

3,324

23,670

42,124

134,408

245,060

Allowance for credit losses to

amortized cost

1.42

1.70

0.90

1.14

3.67

1.87

addition,

the

Corporation

estimates

expected

credit

losses

over

the

contractual

period

which

the

Corporation

exposed

credit

risk

via

contractual

obligation

extend

credit,

such

unfunded

loan

commitments

and

standby

letters

credit

for

commercial

and

construction

loans,

unless

the

obligation

unconditionally

cancellable

the

Corporation.

See

Note

–

“Regulatory

Matters,

Commitments

and

Contingencies”

for

information

off-balance

sheet

exposures

March

31,

2026

and

December 31,

2025. The

Corporation estimates

the ACL

for these

off-balance

sheet exposures

following the

methodology described

Note

1 –

“Nature

of Business

and

Summary

of Significant

Accounting

Policies”

the audited

consolidated

financial statements

included in the

2025 Annual Report

on Form 10-K.

As of March

31, 2026, the

ACL for off-balance

sheet credit exposures

amounted

to $

3.1

million, compared to $

3.0

million as of December 31, 2025.

The following

table presents

the activity

in the

ACL for

unfunded loan

commitments and

standby letters

of credit

for the

quarters

ended March 31, 2026 and 2025: