Good afternoon and welcome to the First Bancorp Fourth Quarter and Fiscal Year 2014 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to John Pelling, Investor Relations Officer. Please go ahead.

Thank you, Garry. Good afternoon everyone and thank you for joining First BanCorp's conference call and webcast to discuss the Company's financial results for the fourth quarter and fiscal year 2014. Joining me today are Aurelio Alemán, President and Chief Executive Officer; and Orlando Berges, Executive Vice President and Chief Financial Officer. Before we begin today’s call, it is my responsibility to inform you that this call may involve certain forward-looking statements, such as projections of revenue, earnings and capital structure as well as statements on the plans and objectives of the Company’s business. The Company’s actual results could differ materially from the forward-looking statements made due to the important factors described in the Company’s latest Securities and Exchange Commission filings. The Company assumes no obligation to update any forward-looking statements made during the call. If anyone does not already have a copy of the webcast presentation or press release issued today, you can access it at the Company’s Web site at firstbankpr.com. At this time, I would like to turn the call over to our CEO, Aurelio Alemán. Aurelio? Aurelio Alemán: Thank you, John. Good afternoon, everyone, and thank you for joining us to discuss the fiscal year 2014 and the fourth quarter. On the call with me today as usual is Orlando Berges, our CFO. I will walk through some highlights of the year in the quarter and then Orlando will go into more detail, as we always do. Let’s go into Slide 5. This is a busy slide and it was a busy year, but I have to tell you we’re really very pleased with the year results. 2014 marked a significant milestone in our retentive profitability and the results definitely reflect improvements in our franchise in several areas, as we continue in parallel executing our strategies…

Good afternoon, everyone. So Aurelio mentioned at the beginning the net income for the quarter was $26.3 million or $0.12 a shares that compares to 23.2 million last quarter or $0.11 a share. Looking at the specific component within income statement, let's start with provisioning. The provision for the quarter was down 3.1 million, that’s made up of 3.9 million decrease in the provision for commercial and construction loans net of recoveries. There we had improvement and risk classification as well as the reductions in charge-off level. On the residential side we also had a reduction of $2 million in provisioning needs, primarily related to the lower reserves allocated to loans and were evaluated for impairment purposes in our Florida operation. On the other hand, we did have an increase of 2.1 million in the provision for consumer loans primarily the order portfolio because of higher loss on very decent rates in the market. Net interest income significant component amounted to 129.2 million, an increase of 1.5 million when compared to the third quarter. And margin for the quarter on a GAAP basis was 418 as compared to 414. The increase for the quarter however includes the effect of 2.5 million prepayment penalty collected from a borrower to compensate for the fermentation of our interest rate swap agreement we had where it had been expense being in prior periods, as we exclude this 2.5 million prepayment penalty as well as the adjustment a fair body adjustments on derivatives of 300,000, margin was down to 409 and net interest income was 126.3 million, a decline of our 900,000 as compared to the third quarter. The margin decrease from 412 to 409 basically we had decrease in interest income, commercial loans about $2.5 million which is mostly related to a reduction in…

We will now begin the question-and-answer session. [Operator Instructions]. And the first question comes from Erik Najarian from Bank of America. Please go ahead.

This is Ibrahim here. Can you give us some clarification on your comments around DTA? Is it safe to assume then there as you go through this process through end of March, we should expect that there is a good likelihood that some of the DTA if not all will be recaptured as of year-end earnings?

Well, as we go to the process, but we’re going through as we have to determine exactly what you said, whether the fact support, the facts and circumstances as of December 31st support or not reversal, it must be -- is completed that is the case, we would definitely be required to include that because where events the status of the analyst as of the date of the financials, but that is the ongoing process as we speak.

I guess what I am trying to understand is what is the risk component is the fact that you have an elevated level of non-performing assets still creates an uncertainty in terms of forward earnings when you are sort of doing this analysis which could be one of the reasons, because as you said you’ve completed six quarters of GAAP profitability. So, I am just trying to understand what sort of the negative just the Puerto Rico macro riff or is it higher, still high level of NPAs that may cause you not to be able to recapture any of the DTA?

Well, remember that we just turned six quarters that’s not the only rule, it's also forward looking thing that you'll have to include a number of estimates on forecast, forecast of all the markets, forecast of the bank. So, as long as those different scenarios of sensitivity shows that you can recapture NOL then you can do it, if you don’t, you're unable to recapture NOLs then you would be limited. But it's a function of completion of those analysis and that include that sensitivity on the different scenarios.

And I guess this was a separate topic in terms of I guess coming into last year there was expectation that for of loan balances would begin to stabilize during this of -- middle of the year, I guess as we look into the first quarter and into '15, do you expect loan balances to remain stable and if you can give us some color on expectations around both originations and our net loan growth for fourth quarter and for 2015? Aurelio Alemán: Well, the goal is to stabilize the portfolio not only with the volume that we generated in Puerto Rico but as we continue to use the balance sheet of our enhanced franchise in Florida which is doing a contribution. As I mentioned, we don’t provide forward-looking statement but our goals is to originate enough loans in the three sectors commercial, mortgage or consumer and also look forward other non-organic opportunities to effectively grow the loan portfolio as we did in the last quarter. We had some objectives of de-risking and we compensated with buying a portfolio that was not in original plan. So, we’re open to look for alternatives to sustain the loan portfolio at the levels that we mentioned before, we'll like to see in our portfolio closer to 9.5 billion than lower than that.

The next question comes from Brian Klock from Keefe, Bruyette & Woods. Please go ahead.

So, I think what’s kind of interesting is a slide that kind of struck me, as you look at Slide 18 which shows your capital position. It is very strong but just the year-over-year growth in it and it just kind of feel like, you’ve got a lot of capital put to work. So I guess maybe you can kind of help me think about how are you guys prioritizing, you did mention some of the loan growth opportunities and maybe even inorganic. So maybe you can just help us prioritize how you're looking at capital appointment in 2015, as far as organic growth factors into that the inorganic opportunities and even the potential a buyback, if you could do such a thing getting into with your DFAST Submission this year?

Well, eventually important thing as we discussed before, I know you were going to ask me this question. We discussed before, an important step in the capital plan is the submission of DFAST and getting the final picture from the regulatory environment is much crucial they like to see. Obviously we feel comfortable with the exercise on the capital that we have. But again as we did in the last quarter we will continue to look for opportunities to grow our loan portfolio and organic or non-organic, because definitely we have some room of capital that we can use in any scenario to achieve that. So it's yes to both, but the finance planning on using the capital to dividends or to repurchase it's much further down the road. It's not in the immediate plan because for that one we need to complete, get through the middle of the year get the [credit] back on DFAST and then we can have a there plan in place.

So when you guys go through the DFAST process, you'll have I guess more feedback on what's there and where the stress levels are and you can then manage your excess capital at that point. Aurelio Alemán: Yes in the short-term we're looking.

So I guess you see opportunities in Puerto Rico that would inorganic opportunities or opportunities in Florida? Is there anything that from the regulatory orders that you have in place that would limit you from pursuing some of the inorganic opportunities? Aurelio Alemán: We've have been able to achieve certain things with the concerned order. As you can see we continue to make progress. It's a very private conversation with the regulators every time we want to do something. But definitely we feel that we have opportunities and we will continue to have conservation when we see those opportunities. So far we've been able to execute in the portfolios that are here in the few years including the credit card purchase and with the overall activities that we've been in last year, branch openings and expansion with the Florida business. So we have a good case to continue moving forward.

That’s good, you've actually been pretty active this past year. And I have one real follow up question really quickly; hate to do this to you Orlando but another DTA question. Can you just or I guess it's a two part one where is the NOL carry forward balance today and can you break it out how much is in the mainland versus in Puerto Rico?

Well let me start with the second part first. Remember that we are only one legal entity being the bank and the Florida operation it really branches of FirstBank. We're required to file worldwide income for FirstBank within Puerto Rico. So even though we could have NOLs in this place, specifically on that operation, the end results with the NOLs where we have in Puerto Rico. So in essence what you are seeing there are NOL in Puerto Rico and those NOL are basically following the limitations of the Puerto Rico type laws that you might recall it's basically 12 years up to 2012. And anything after that is 10 years. So even though we do some of the space the number you are seeing in our disclosure is really the Puerto Rico bank which at the end captures everything. So how much are NOLs? I don’t have exactly the amount with me Brain but it’s approximately $900 million in that we've had in NOLs between 2009 and 2013 which are the year we didn’t have any NOLs before 2009. So that was the first year, since first expiring NOL would be 2021, based on those losses. I can provide you that later, that’s something we disclose any way in our 10-K, so we can provide an exact NOL for it. It's in the range of 900 million.

I guess I was thinking the portion of the NOL that the third quarter I thought it was somewhere around 374 million. So that I guess something of a different number.

Well that’s the fact component NOLs are the total losses but we have -- if you remind the tax rate which is marginal rate is 39 that would give you the number which is one the year phasing. What goes in the books would be a tax effect of the NOLs, that’s why the NOLs or the full DTA evaluation is about 490 million now in the bank, and out of that the two-thirds of it were sold will be the NOLs. Operator [Operator Instructions]. The next question comes from Alex Twerdahl with Sandler O'Neill. Please go ahead.

Just one final question on the DTA for you guys. When you're analyzing all these various scenarios for the potential recovery of the NOL carry forwards. Is the goal to make it so that whatever reversal whatever happens is just a one-time event? Or is it possible that based on your analysis today you come to one conclusion? And then is it possible that it could revisited say along with your 10-K, you said okay we're going to reverse 75% of the annual carry forwards along with the DTA. And then in other years time for example would it be possible them to reserve the remainder of that or is that something that you are trying to avoid?

Now the process effect as you described. You are supposed to run analysis, run sensitivities and reach a conclusion, whatever is the conclusion, if it’s not 100%, clearly you're supposed to revisit because the NOLs don’t go away, you can still continue to use those NOLs. So you can revisit your assumptions but you're required to revisit your assumptions anyway as part of your oral assessment most likely you need a number of events. So every year you would analyze and if your assumptions are the or the basis in which you base it change you can definitely view -- and they won’t decide it, we didn't do a 100%, so frequently you decide it can be done to 100% then you can change and reverse the remaining amount. So it’s not a one-time process, it’s an ongoing process.

And then I was wondering if you can give me a little bit more color on the $21 million commercial real-estate loan that you guys foreclosed upon during the quarter. I am just wondering how long it took from the time and once you decided to foreclose upon it to actually foreclose on it? Aurelio Alemán: Actually this one has a value, was difficult one, was actually less than six months, because we reached an agreement with the borrower, we have some other cases that have taken two years. And to tell you this one was not a difficult one.

If you have to put a projection on the timeframe to actually dispose to that foreclosed property or sell that foreclosed property. I mean do you think another six months another year? I mean what’s the realistic timeframe for the disposition of the actual properties once you have them, once you've foreclosed upon them? Aurelio Alemán: I will say this was to be a couple of quarters, estimated based on the attractiveness of the property. But sometimes the more we wait the more value we get. So again it’s the trade off that we apply to each of the deals that we negotiate.

I mean just to get a sense for what the market is like down there. I mean you can project there being processed last couple of quarters but the market is strong enough for $21 million property to trade hands at some point in time.

I think it’s not that valuable the size of the property or the loan. In some other property itself and the cash flows are behind and the type of investors that are specialty in the different type of property. So some of them sell very quickly some of them take years.

And then just one final question on a previous, when you were answering previous question you talked about use of capital, you said something about dividend or a buyback being something that could potentially happen after DFAST. Is that something that you plan on implementing DFAST this year?

I'd say that that is not in the short-term plan. When we go after DFAST then we will have all the information to put together our capital plans and decide how the capital will be used or returned or put to produce or return to shareholders. But nothing will happen in the short-term and nothing will happen before DFAST regarding usage of capital on that sense.

[Operator Instructions]. As we have no further questions this concludes our question-and-answer session. I would like to turn the conference back over to John Pelling for any closing remarks.

Thank you. We would like to thank you all for your time and continued interest in First Bancorp. We have several conferences in February; we'll be meeting with investors at the Credit Suisse Conference in Miami next week February 11. The Stern Agee conference in Boca Raton February 12th and the KBW Conference in Boston on February 25. Again thank you for time and interest in First Bankcorp and this will conclude the call. A - Aurelio Alemán: Thank you all.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.