The ratings for FirstBank Puerto Rico (FirstBank) reflect strong profitability measures, an improving loan mix, weak capital ratios, low levels of retail funding, and FirstBank's geographically concentrated business in Puerto Rico. FirstBank's ROE and ROA stood at 26.62% and 1.41%, respectively, at the end of the second quarter. However, the business is heavily reliant on interest income, which represents 73.50% of revenues. This number was skewed by securities gains of $23.8 million taken this year, and historically, interest income represented roughly 86% of revenues. FirstBank continues to improve its loan credit risk profile. Consumer loans comprise 19% of the loan portfolio, down from 47% in 1998. Diversification into residential mortgages has greatly enhanced asset quality. Net charge-offs (NCOs) are at
