v3.26.1
STOCK-BASED COMPENSATION
 3 Months Ended
Mar. 31, 2026
STOCK-BASED COMPENSATION [Abstract]  
STOCK-BASED COMPENSATION
NOTE 9 – STOCK-BASED
.
COMPENSATION
The First BanCorp.
2016 Omnibus Plan (the “2016
Omnibus Plan”), provided for
equity-based and non-equity-based
compensation
incentives (the
“awards”), and
authorized the
issuance of
up to
14,169,807
shares of
common stock,
subject to
adjustments for
stock
splits,
reorganizations
and
other
similar
events.
As
of
March
31,
2026,
there
were
1,336,410
authorized
shares
of
common
stock
available for issuance under the 2016 Omnibus Plan.
On
May 6,
2026,
the Corporation’s
stockholders
approved the
adoption
of the
First BanCorp.
2026 Omnibus
Incentive
Plan
(the
“2026
Omnibus
Plan”).
The 2026
Omnibus
Plan
is
the
successor
to
the
2016
Omnibus
Plan
(referred
together
herein
as
“Omnibus
Plan”) and
effective as
of May
6, 2026,
no awards
will be granted
under the
2016 Omnibus
Incentive Plan.
The 2026 Omnibus
Plan,
which is
effective until
May 6, 2036,
authorizes up
to
5,000,000
shares of
common stock,
subject to
certain adjustments.
In addition,
any shares of
common stock subject
to outstanding
awards granted under
the 2016 Omnibus
Incentive Plan
that are payable
in shares
and that are
forfeited or
otherwise terminate on
or after
May 6, 2026,
without the delivery
of shares of
common stock, may
be issued
with respect to
awards under
the 2026 Omnibus
Plan. The Corporation’s
Compensation and
Benefits Committee of
the Board has
the
power and
authority to
determine those
eligible to
receive awards
and to
establish the
terms and
conditions of
any awards,
subject to
various limits and vesting restrictions that apply to individual and aggregate
awards.
Restricted Stock
Under the
Omnibus Plan,
the Corporation
may grant
restricted stock
to plan
participants, subject
to forfeiture
upon the
occurrence
of certain
events until
the dates
specified in
the participant’s
award agreement.
While the
restricted stock
is subject
to forfeiture
and
does
not
contain
non-forfeitable
dividend
rights,
participants
may
exercise
full
voting
rights
with
respect
to
the
shares
of
restricted
stock
granted
to
them.
The
fair
value
of
the
shares
of
restricted
stock
granted
was
based
on
the
market
price
of
the
Corporation’s
common
stock on
the date
of the
respective grant.
The shares
of restricted
stocks granted
to employees
are subject
to the
following
vesting period:
fifty percent
(
50
%) of
those shares
vest on
the two-year
anniversary of
the grant
date and
the remaining
50
% vest
on
the three-year
anniversary of
the grant
date. The
shares of
restricted stock
granted to
directors are
generally subject
to vesting
on the
one-year anniversary of the grant date.
The following table summarizes the restricted stock activity under the 2016 Omnibus
Plan during the quarters ended March 31,
2026 and 2025:
Quarter ended
Quarter ended
March 31, 2026
March 31, 2025
Number of
Weighted-
Number of
Weighted-
shares of
Average
shares of
Average
restricted
Grant Date
restricted
Grant Date
stock
Fair Value
stock
Fair Value
Unvested shares outstanding at beginning of year
1,033,690
$
16.71
1,007,621
$
14.39
Granted
(1)
436,540
20.59
447,631
18.35
Forfeited
-
-
(2,180)
15.22
Vested
(404,613)
14.48
(364,677)
12.44
Unvested shares outstanding at end of period
1,065,617
$
19.14
1,088,395
$
16.67
(1)
For the quarter ended March 31, 2026, includes
1,872
shares of restricted stock awarded to independent directors and
434,668
shares of restricted stock awarded to employees, of which
87,895
shares were granted to retirement-eligible employees and thus
charged to earnings as of the grant date. For the
quarter ended March 31, 2025, includes
2,086
shares of restricted
stock awarded to independent directors and
445,545
shares of restricted stock awarded to employees, of which
103,560
shares were granted to retirement-eligible employees and thus
charged to earnings as of the grant date.
For the quarters
ended March 31,
2026 and 2025,
the Corporation recognized
$
3.2
million and $
3.1
million, respectively,
of stock-
based compensation
expense related
to restricted
stock awards.
As of
March 31,
2026, there
was $
10.8
million of
total unrecognized
compensation
cost
related
to
unvested
shares
of
restricted
stock
that
the
Corporation
expects
to
recognize
over
a
weighted-average
period of
2.0
years.
Performance Units
Under the Omnibus Plan, the Corporation may award
performance units to participants, with each unit representing
the value of one
share
of
the
Corporation’s
common
stock.
These awards, which are granted to executives, have the right to receive dividend
equivalents. Such dividend equivalents accrue during the performance cycle and are paid in cash on the vesting date based upon
achievement of the performance goals.
Performance units granted vest on the third anniversary of the effective date of the award based on actual achievement of two
performance metrics weighted equally: relative total shareholder return (“Relative TSR”), compared to companies that comprise the
KBW Nasdaq Regional Banking Index, and the achievement of a tangible book value per share (“TBVPS”) goal, which is measured
based upon the growth in the tangible book value during the performance cycle, adjusted for certain allowable non-recurring
transactions. The participant may earn 50% of their target opportunity for threshold level performance and up to 150% of their target
opportunity for maximum level performance, based on the individual achievement of each performance goal during a three-year
performance cycle. Amounts between threshold, target and maximum performance will vest in a proportional amount. During the
quarter ended March 31, 2026, 55,805 additional shares related to the 2023 performance share award, which vested in March 2026,
were awarded as a result of performance achieved in excess of target opportunity.
The following
table summarizes
the performance
units activity under
the 2016
Omnibus Plan
during the
quarters ended
March 31,
2026 and 2025:
Quarter ended
Quarter ended
March 31, 2026
March 31, 2025
Number
Weighted -
Number
Weighted -
of
Average
of
Average
Performance
Grant Date
Performance
Grant Date
Units
Fair Value
Units
Fair Value
Performance units at beginning of year
544,107
$
16.02
549,032
$
14.37
Additions
(1)
(3)
144,458
20.22
160,744
18.66
Vested
(2)
(3)
(216,876)
12.24
(166,669)
13.15
Performance units at end of period
471,689
$
19.04
543,107
$
16.01
(1)
Units granted during the quarters ended March 31, 2026 and 2025
are based on the achievement of the Relative TSR and TBVPS
performance goals during a three-year performance cycle
beginning January 1, 2026 and January 1, 2025, respectively,
and ending on December 31, 2028 and December 31, 2027,
respectively.
(2)
Units vested during the quarters ended March 31, 2026 and
2025 are related to performance units granted in
2023 and 2022, respectively,
that met the pre-established target and were
settled with shares of common stock reissued from treasury shares.
(3)
Excludes the aforementioned
55,805
additional shares awarded
in connection with the
2023 performance share award
which were also
settled with shares of
common stock reissued
from
treasury shares.
The
fair
value
of
the
performance
units
awarded,
that
was
based
on
the
TBVPS
goal
component,
was
calculated
based
on
the
market
price
of
the
Corporation’s
common
stock
on
the
respective
date
of
the
grant
and
assuming
attainment
of
100%
of
target
opportunity. As of March
31, 2026, there have been no changes in management’s
assessment of the probability that the pre-established
TBVPS goal will be
achieved;
as such, no
cumulative adjustment to
compensation expense has
been recognized.
The fair value of
the
performance units awarded, that
was based on the Relative
TSR component, was calculated
using a Monte Carlo simulation.
Since the
Relative
TSR component
is considered
a market
condition,
the
fair value
of the
portion
of
the award
based
on Relative
TSR is
not
revised subsequent to grant date based on actual performance.
The following table
summarizes the valuation
assumptions used to
calculate the fair
value as of
the grant date
of the Relative
TSR
component of the performance units granted under the 2016 Omnibus Plan during
the quarters March 31, 2026 and 2025:
Quarter ended March 31,
2026
2025
Risk-free interest rate
(1)
3.75
%
3.92
%
Correlation coefficient
77.54
74.96
Expected dividend yield
(2)
-
-
Expected volatility
(3)
29.07
31.94
Expected life (in years)
2.79
2.79
(1)
Based on the yield on zero-coupon U.S. Treasury
Separate Trading of Registered Interest and
Principal of Securities as of the grant date for a period equal to the
simulation term.
(2)
Assumes that dividends are reinvested at each ex-dividend date.
(3)
Calculated based on the historical volatility of the Corporation's
stock price with a look-back period equal to the simulation
term using daily stock prices.
For the quarters
ended March 31,
2026 and 2025,
the Corporation recognized
$
0.7
million and $
0.6
million, respectively,
of stock-
based
compensation
expense
related
to
performance
units.
As
of
March
31,
2026,
there
was
$
5.9
million
of
total
unrecognized
compensation cost
related to unvested
performance units that
the Corporation
expects to recognize
over a weighted
-average period of
2.3
years.
Shares withheld
During
the
first
quarter
of
2026,
the
Corporation
withheld
225,099
shares
(2025
–
182,249
shares)
of
the
restricted
stock
and
performance units that
vested during such period
to cover the participants’
payroll and income
tax withholding liabilities; these
shares
are held
as treasury
shares. The
Corporation paid
in cash
any fractional
share of
salary stock
to which
an officer
was entitled.
In the
consolidated financial statements, the Corporation presents shares
withheld for tax purposes as common stock repurchases.