The rating on FirstBank Puerto Rico (FirstBank) reflects its strong market position in Puerto Rico and commercial franchise value. This in part is offset by weakening credit quality metrics and earnings growth pressure from material loan concentration in the battered Florida real estate market while residential mortgage NCOs in Puerto Rico remain very manageable. The rating also considers FirstBank's heavy reliance on wholesale funding sources, high exposure to construction lending, and its geographically concentrated business in Puerto Rico. With accounting and legal issues resolved, the bank has refocused on its corporate strategy and on building its strong presence in Puerto Rico; however, asset quality issues in the lending book, which is the main risk for FirstBank, will, we believe, continue
