John Pelling – IR Aurelio Aleman – President and CEO Orlando Berges – EVP and CFO.

Brian Klock – Keefe Bruyette & Woods Alex Twerdahl – Sandler O’Neill Taylor Brodarick – Guggenheim Securities.

Good morning and welcome to the First BanCorp First Quarter 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.

Now, I would now like to turn the conference over to John Pelling, John Pelling, please go ahead..

Thank you, Keith. Good morning everyone and thank you for joining First BanCorp’s conference call and webcast to discuss the company’s financial results for the first quarter 2014. Joining me today are Aurelio Aleman, 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 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 by First BanCorp, you can access it at the company’s website at www.firstbankpr.com. At this time, I would like to turn the call over to our CEO, Aurelio Aleman.

Aurelio?.

Thank you, John, good morning everyone and thank you for joining us again to this – to our 2014 first quarter results. On the call with me today is our CFO, Orlando Berges. Orlando will provide details on the financial results but first I will walk through some of the key highlights of the quarter. Please turn to Slide number 5.

As we’ve stated in prior calls, we (inaudible) dual track. Dual track was improving more franchise profitability while really relating great quality de-risking balance sheet. We posted a $17 million of net income for the first quarter. And we are pleased, very pleased about it.

But more importantly, we posted a very strong pre-provision pretax income of $56.9 million. I have to say that this is our highest quarterly PBT since the fourth quarter of 2009.

Primarily, the improvement in PBT was driven by, as we have mentioned before, our focus in reduction credit cost and management initiatives to deal with our expense base which was unexpanded to-date.

During this quarter, we actually completed our branch rationalization activity in Puerto Rico if you recall in the last call we mentioned our Florida branch rationalization.

This quarter we completed Puerto Rico and as a result, we took a charge but we are also going to be consolidating four branches into our larger in-market branches during the year.

The core franchise continues to make excellent progress marking of two basis points, deposits up by about a $100 million, broker CDs down, originations, we consider them very healthy based on market conditions and if we compare to last quarter and to same quarter in 2013 and while all this metrics continue to improve.

We all know we are still addressing our remaining credit issues in this still challenging economic environment. And when we took our NPAs even though the ration remains flat, I have to say that, the increase in $5.4 million show a different trend this quarter than prior quarters. But we do not consider this to be a trend.

I think it’s important to mention that this was driven by a one very large commercial relationship. I think if you all remember during our two prior calls, Orlando took about a pool of adversely classified assets, seven large classifying assets that we monitor very closely.

At that point in time, we know they were about $240 million and we continue to monitor those closely and I have to say from this pool, we have some wins this quarter but we have some losses.

The losses obviously this long that came into NPA on the win side, we were able to negotiate discounted payoff from one of them and book value with an additional loss. Some of them are showing – some of the others are showing improving trends and obviously this one went to NPA.

The pool is now reduced of those loans that we are closely monitoring and are being adversely classified for some time but continue to be the risk to our NPA trend. While – also I think it’s important to mention during the quarter, there were no significant loan sales to offset those type of increases.

But I have to tell you that we remain very optimistic for the remainder of the year even they create investor interest that we feel the – especially from U.S.

investors, yesterday and today, this may be a summit for investors in Puerto Rico attended by about 350 investors and we see – we are very pleased by the attention that this is getting in our alignment.

Regarding capital, the DTA the version is now 19 and obviously with the earnings our capital position (Inaudible) if we go back, actually, we should mention that, the capital levels are back to the first quarter of 2003 which basically show recovery of some of the impact of the 2013 losses, which we are very happy about.

Next page, next slide, Slide 6, I want to touch base a little bit on the loan portfolio trends. Loan portfolio continues with what we consider healthy relations. There are also some seasonalities every quarter. The first quarter is usually slower than the remainder quarters.

As we say in prior calls, we continue to focus in our consumer and commercial book, the investing market continues to be challenging and it’s not only Puerto Rico but also in the U.S. when we look at relation volumes, it’s still similar to prior quarter levels in both the consumer and mortgage.

On the commercial side, when you look at the balance, commercial loans went down by about $57 million. Some of it is related to the de-risking of our classified asset book and obviously some of it related to the charge-offs.

That says we continue to achieve our targeted growth in Florida and our pipeline in both Puerto Rico and Florida on the commercial side is growing stronger, especially in Florida it was expected but in Puerto Rico, we see some incremental activity happening there. Moving to the next slide, just to highlight some of the deposit.

We did actually feel well in the quarter, we achieved some growth in the government mostly related to the government. We sold four 102 with our government which obviously says the result of our cross-selling activities, new products and very active sales effort on the street.

On the other hand, we – as we said before, we had planned for a reduction in government deposits which we have estimated to be around 250 for the first half of 2014. It hasn’t materialized, but we are seeing some of it happening already at the beginning of April, so we do expect some reduction in government deposits over the next three to six months.

We’ve been planning and we have a lot of excess liquidity to basically manage that actually, it will bring some cost efficiencies in the course. And again we continue to focus on our efforts in cross-selling our customer base with our new plans and services.

Now I am going to hand the call over to Orlando to discuss some of the detail and I will come back to talk about the government initiatives..

Thanks, Aurelio. Good morning everyone. Going through the result for the quarter, net income was $17million or $0.08 a share that compares to $14.7 million last quarter or $0.07 a share and it compares with a loss of $72 million in the first quarter of 2013 and were adjusted for the effect of the book sales of commercial loans we did that quarter.

That loss would have been a profit of $4.6 million. So it was a $12 million pick up from the same quarter. Also as Aurelio mentioned, pretax, pre-provision revenues were $56.9 million compared to 46.7 million last year.

This quarter, we show higher provision for total losses, almost 9 million additional provision which is mostly due to an increase of $4.7 million in provision on commercial loans as compared to the prior quarter. Mostly, 8.52 cases were the updated appraisals came in at lower amounts that the amounts we are concerned.

Also, there was an increase $3.9 million provision for consumer loans which was mostly general reserves and credit cards and auto loans.

Looking at specifically the auto portfolio, we have seen a slowdown on the sales of used cars in the Ireland and that builds our factors we consider in our valuation allowance because of the impact it has on the timing of when we repossess out of our losses.

Results for the quarter also show an impact of 6.6 million which is the loss in the equity of the earnings of the unconsolidated entity. You have heard me before call our debenture which we account following their hypothetical liquidation method which is – it’s the entity’s liquidated issuance.

So that has been lumpy results for this quarter, but if we were to mention that at this point, our remaining debt in this entity is approximately $700,000. So we should no longer see negative volatility in the future mostly as it covers only and if it happens with some sales.

On the other hand, expenses for the quarter show almost $14 million reduction that we will discuss a little bit further. Net interest income for the quarter was $131 million, which was $1.3 million less as compared to the $132.7 million we have in the prior quarter.

We are – to mention that net interest margin expanded to $427 from $425 as the last quarter point. The decline is mostly related to two fewer days in the quarter which accounts for $1.6 million of the variance. We also had a $700,000 decrease related to lower volumes of U.S. agency MBS investment portfolios.

And we had a pickup of $900,000 in interest income and commercial loans a little bit higher tiered yields and also we had a one basic point reduction in the average cost of funds.

Because of our interest-bearing four deposits declined two basis points for this quarter, as we – based on the pricing strategy and the broker CD cost decreased by 1 basis point as compared to the last quarter.

Our strategic funds remain to paying – non-broker deposits and improving the overall funding mix with a emphasis on non-interest bearing transaction accounts. Looking at non-interest income, excluding the $6.6 million negative impact of the losses on the unconsolidated entities, non-interest income declined $400,000 in the quarter.

It’s a combination of the last quarter, we had a net positive impact of $1.3 million which was related to a recovery, $1.8 million recovery on the cost of fair value adjustment on the commercial loan that was sales, which was offset by $500,000 charge on fixed assets that were no longer going to be used for the operation as part of the consolidation of the Florida branches.

This quarter, the results include a $1.4 million increase in revenues on insurance activities, part of it related to profit sharing revenues we see based on prior year reductions.

And – but also we had a $500,000 decrease in revenue from the mortgage banking business which is mainly a function of the lower volume of elections which leads to lower volume of securitization and sales on the secondary markets. On the expense side, expenses as I mentioned show a $13.7 million decreases.

Here we had a few initial items last quarter that are the two large ones for us where a $2.5 million loss contingency related to operating fees that were granted by the court to Barclays in connection with the denial of our summary adjustment. That case – but the amounts were with last quarter.

And we also had in the last quarter $900,000 in expenses for branch consolidation and other restructuring efforts that – as Aurelio mentioned in both Florida and the VI markets. For this quarter, we do have a $700,000 hit related to branch rationalization efforts in Puerto Rico which will lead to some consolidations within the next two quarters.

So that’s also reflected on the results. Expenses also show a $7.5 million decrease in write-downs and losses on – total write-downs for the first quarter amounted to $5.2 million which compares to a $11.9 million in write-downs for the fourth quarter. We also had a decrease of $1.6 million in occupancy and equipment expenses.

Partly related to reductions in depreciation expenses as something – as the full depreciation. The other positive thing, last one we see in the quarter as we had mentioned, we had large credit card, credit and debit card processing expenses.

As you remember, we converted our credit card portfolio to a new processing platform at the end of September and that led to a significant increase in volumes of falls and other activities related to conversion which significantly increased the expenses.

So, those expenses came down by $1 million to $3.8 million, which is the lot of the expanses sort of a growing rate of expenses on this business. Moving to asset quality, Aurelio has mentioned that our non-performing increased to $731 million from $725 million in the fourth quarter, little less than 1%.

Non-performing loans increased $26 million to $576 million which were impacted by the migration of the $23 million impaired CRE loan.

Aurelio has mentioned to you, it was part of the – because it was an adversely classified asset, it’s been part of the pool that we have been monitoring as he said, by this September, I had indicated we had seven cases added to over 232 million relationships that are between $10 million and $60 million.

That number, this was one of those cases that number is now about to five cases at a $173 million. OREO however going down by $21.6 million or almost 14% in the quarter, which was a function of sales. We had $23 million in sales in the properties we had in sales.

So that was part of the strategy we have been telling you to the moving pace from non-performing into OREOs to be able to execute subsequent sales. (Inaudible) for the quarter were $15.3 million higher than last quarter amounting to $104 million total inflows which is significantly less by that case the same $23 million case that I just mentioned.

However, if you look at some of the other components inflows of non-performing residential mortgage loans went down by $12 million and inflows of consumer loans went down by $3.2 million. So we had an offset by the $23 million case on improvement on some of the other components.

It’s important to mention that it will – as classified assets – the total pool of classified assets we have, that whole number which $7 million – it’s $70 million than we had last quarter, which is typically the source of things getting into non-performing. So we focus a lot on working not only non-performing, but classified assets.

Charge-offs for the quarter were high, were $51 million, which is actually $24 million as compared to last quarter. That includes four case, not only commercial loans that added to $15.8 million and $7 million charge on the adversely classified loan that was paid off which made up a large chunk of this increase.

The allowance for the quarter which ended at 2.79% of loans compared to 2.97% at December. This reduction is primarily due to the fact that a large part of these charge-offs were in commercial and residential loans that had previously solid reserves. So it will not require any additional provision or increase in reserves as we get into those cases.

Including loans held for sale, our commercial non-performing are now carried on the book after charge-offs and reserves of 54.6% of unpaid principal balance. Looking at capital ratios, capital position continues to be strong.

As you can see in the chart there, 17.5% of total capital, 16.2% of Tier 1 and as Aurelio mentioned earlier in the call, we are back to levels of the first quarter of 2013, with our earnings generated through the last few quarters, we have been able to offset a large part of the impact of the both sales contractions that we executed in the first couple of quarters of 2013.

Also on our couple of subjects we have discussed before, we, in our last 10-K that went to file last month, we issued our pro forma capital ratio calculation from the Basel III and you can see there actually full effect in Basel III requirement, we would be in compliance with capital ratio.

Also important, we did some bid the stress testing results of the bank at the end of March that’s as required and the process under regulatory review at this point. I will now hand the call back to Aurelio and we will get back to you on questions you may have later on..

Thank you, Orlando. Moving to Slide 17, we show our Puerto Rico government disclosure. I have to say that, we continue to be optimistic of all the steps taken by the government toward their assistance and will be restarting to stabilize the economy.

Also we will increase the investor interest with view this as very positive where we are in the cycle and obviously we have to – that economy, the economy continues to extend and taking longer than we all expected.

We are comfortable with the exposure of the government on related entities, I think shown in this page, which you can see it remains flat too while we have been powerful.

Summarizing the quarter, definitely, we have with this strong PBT and revenue that we have strong relations and liquidity levels as we ended the quarter, obviously, we feel we are in good stand to continue dealing with reaching out legacy assets.

Florida continues to be an excellent opportunity and we continue to invest in the resources to make it better. We continue to monitor our cost structures and definitely, that remains the main loss in the dual strategy to improving profitability and credit quality to continuously strengthening our capital.

With that in mind, I will now open the call for questions..

Yes, thank you. We will now begin the question and answer session. (Operator Instructions) And the first question comes from Brian Klock from Keefe Bruyette & Woods..

Hey good morning gentlemen..

Good morning, Brian..

So, really I think the – your discussion about the dual track core profitability and de-risking, it seems like, it did another good job in this quarter. So before we talk about some of the credit moves.

Maybe if you could just talk about the NIM expanded two basis points and you do still have some high cost funding and you talked about maybe some more efficient funding with some of the inflows and outflows related to the government deposits.

So maybe, you can just kind of give us some idea that where you expect the margin to go going forward?.

Looking at the margin, if you look at funding – the funding side, we have done a little bit on reductions in some of the retail and commercial accounts, that reduction on the funding cost. Broker CD funding, we’ve been originating at close to net maturities. So there is a little bit on that too much probably now.

Clearly, market rates been at this level, you don’t see much pick up in terms of investment portfolio, its future improvement could come basically from being able to move some of the excess liquidity into some reasonable portfolio component that could still represent liquidity for us.

But also from financing from the funding mix, that as you know we have a lower percentage of non-interest bearing deposits that we expect to have and that should be a pick up burden. We don’t see that the level of margin is going to go up much at this point. We are seeing more at current levels than anything else for the next two or three quarters..

So, it seems like even with – so how competitive it is on the pricing side, so at least we can say our stability in the margins.

Is that fair?.

Brian, can you repeat the question?.

Yes, so just, with everything going on, and maybe there won’t be as many leverage on the funding side to help but, it’s so competitive in Puerto Rico.

It seems like you guys at least can stabilize the margin even in a sort of competitive pricing environment?.

Yes, it’s because that we compared it, but obviously opportunities to reduce cost of funds are being reduced. That’s really – that’s the reality, yes.

Some of that, we are actually, when you look at the liquidity that we have, if we have to make decisions, on that decisions are made – also like, that we will let go the cost obviously on that environment..

Okay and so maybe, one follow-up that’s related to the credit side, the adverse reclassified assets dropped by almost 70 million from the fourth quarter and obviously some of it migrated into the NPL bucket. But you did move out some more OREO properties as well.

So, maybe you can talk about what you are seeing in the real estate market in Puerto Rico? How are prices and what you are clearing and what you are seeing in there from the commercial real estate and market, thus far valuations that we are seeing coming in and clearing..

Before, – Brian, the criticized, the criticized assets includes non-performing, so anything that goes from criticized to non-performing would be part of the pool. The reduction, the overall reduction was – actual reduction long-term were either paid off or let the bank or some charts up in there.

So, it’s important as we think and that’s why I mentioned that even though we had some increase in non-performing part of its related to a – from a criticized – performing to criticized non-performing case which was at $23 million case..

Got you, very, very thanks. Yes, okay, I got you..

I am sorry..

I know, thanks for pointing out. Thank you..

Thank you..

Regarding the financing, if you think it by asset class, in the resi, we definitely continue to stabilization, obviously, the reduced inventories in housing it’s helping. The high-end market is moving better because of mostly foreign investors buying the mid-market continues to be slow and the entry-level it will be fairly good for some time.

On the – I think I mentioned this the last time, but on the asset classes, I think, operations continues to impact mostly specialized basis is what we are seeing. For example, one of the cases we have this quarter, it has to do with our mental issues one of the adjustments.

So, the other case I think was related to NOI, so, it always continues to be challenging, but you cannot generalize. Right now, when you look at – we have to remain on the – what we have on the portfolio, it’s lowered in place. We still concentrate on any specific assets. Obviously, we can tell you that appraisers are more conservative.

Hopefully, more activity – they will get more optimistic and what they – what we are seeing on the appraisals, some of things are adjusting are any cap rates and viable are completely the judgment of the appraisal..

Got you, so do you think that, with the economic activity index has been pretty stable the last three months, obviously the government getting its TO issuance done, maybe it seems more investor interest as it gets to the feel like there is more activity going on in that commercial real estate category in Puerto Rico?.

Definitely we have to tell you that it slow down on the last quarter and prior to Puerto Rico, completing the bond issuance, after the bond issuance which the negative headlines are definitely slow down significantly.

We have seen a lot of it currently we are meeting a lot of people, hopefully and I said that at the beginning, we feel we are optimistic about what could happen in the remainder of the year in moving assets out of the balance sheet.

We think, we feel lot of good trust is out there and in the end we have some cases that are large and you will know that we will be working out on the legal side for some time.

So hopefully, we can resolve those negatives too to make those assets more attractive to buyers, legal cases have taken long time, some those like the scrub and being lot of rules and some of the others..

Okay, okay. I appreciate your time and I’ll get back in the queue. Thanks guys..

Thank you, Brian..

Thank you. And the next question comes from Alex Twerdahl from Sandler O’Neill..

Hey, good morning..

Good morning, Alex..

I just wanted to – going back to Aurelio to your prepared remarks in the beginning of the call, we talked about the economic forum and the interest down there and actually kind of maybe explaining on some of Brian’s questions. It sounds a little bit like you might have been alluding to the possibility of bulk loan sales.

Again, I mean, is the pricing for some of these assets gone to the point where, especially if you are holding of $0.55 on the $1 that maybe you actually be able to instead of resolving them and selling on that way that there could be some bulk loans sales that are pre-closed to the pricing where you are holding today?.

Well, I am not alluding that, Alex and that you ask, but I am not alluding to that. We continue to be focused on our large NPAs, which are some of the part of the OREO that I did mentioned which was also a priority.

But the focus continues to be that OREO book and that NPA book that we have and in this quarter we actually are looking also in one opportunities we could have in some of this classifieds are the potential NPAs. So that’s really the focus that we have today. It continues to be that focus.

I am not saying we will never do a loss filling in, but in the focus of today it’s not that..

Okay, that's helpful.

And then, just maybe getting a little bit more into the details of what’s holding some of these NPLs on your balance sheet, is it’s primarily the court system? Or is it that the borrowers can find some of the refinance with or is this that there is just because of all the negative headlines in Puerto Rico, there is not buyers for some of these properties or maybe give us a little bit more detail?.

When you look at the migration, remember it’s not that things are not moving out and we still have high volumes coming in too. When you look at the migration in, it was close to $100 million.

So, when you look at the – and the charges, so since that clearly things are moving out in for selling, most importantly we are losing the overall pool of potential it’s really the focus. So, it’s a mix of things.

It’s a mix of things of investor on the sidelines for some months that will say beginning in all those September when the headlines were picking, the negative headlines – and that was a period that you saw a lot of people, I can have to tell you most of the investors were really on the sidelines.

Now, we achieved some large OREO sales in the quarter non-large NPLs but large OREOs. So you have to continue on an one-by-one, some of these assets are specialized and looking for the right buyer which will cause the deal actually.

On the legal side, the legal system is complex and is a process of either one court to the other, most of them get to bankruptcy and then you finally resolve it..

In one specific case the residential mortgage portfolio it goes a bit to your question. If you remember, we did sell a large chunk of late stage foreclosure process on the residential side back in the second quarter of 2013 and that bodes in.

So, it takes a while to grant notification through and even though – there will with the reduction of the eight loans as compared to last quarter. The overall non-performing still through because of the amount of cases we are able to move out are still at a slower process because of needing to those cases through the legal process.

We have mentioned before that we expect that portfolio, to grow the non-performing and leads to the first half of 2014..

Okay, and then just my final question as it relates to the pipeline that you talked about earlier in the call in Puerto Rico, is that the commercial pipelines in Puerto Rico, is that new businesses in the island or is it the customers that are looking to refinance the way from some of the competitors out there?.

There is consolidation business, there is Resi activity, there is obviously less space in the market which gives us opportunity to stay competitive was – we see activity with the new investments that are actually investing in business and re-capitalizing and expanding.

Obviously, I won’t mention the names confidential, but we see – we are seeing the activity as we are participating some of that..

Okay, great. Thank you for taking my questions. Thanks, Alex..

Thank you. And the next question comes from Matthew from Credit Suisse. Matthew – Credit Suisse Hey, good morning guys,.

Hi, Matthews. Matthew – Credit Suisse On the loan book, it sounded like things were – in terms of activity it was a little seasonally lighter this quarter, but there was some, I guess, de-risking as well within your class of high book.

Can you just give us a sense with pipelines, I guess commercial pipelines increasing both in Puerto Rico and as far, can you just give us a sense as to how much more kind of deliberate de-risking you plan to do in the classified book that might mask some of the some of the origination activity going forward?.

I think in the two prior calls, we have said that, the way we view it is, the loan book will stay around $9.5 billion and $10 billion in the range and it’s going to depend on how much NPA we get out, how much – or classified we get out and obviously the origination that was in the different buckets.

When – because we don’t sell anything, obviously it will grow, if we sell, it will not grow because the net 8.5 or some of that assets that will not show. So, think about close to where we’ve been on an average for the last quarters.

It remains stable, again, we continue to try to grow the years of those books based on the mix and obviously as we were NPA held and obviously that means also improve a bit. But, for the remainder of 2014 as a way still. Matthew – Credit Suisse Okay, so still somewhat of a stable outlook is what we are looking for.

Okay, and then on the appraisal front, just trying to get a sense for how lumpy these charge-offs might be going forward? It sounded like there was a couple of things that you can explain the way this quarter that might not, you wouldn’t expect going forward.

But just trying to get a sense for the appraisal process and with these four that were updated this quarter, just trying to get a sense of whether or not there was leg there, how much, and I guess, could there be another way of the sort of you have kind of another leg down in terms of valuation on some of these properties..

In reality, it’s very difficult to predict, I have to tell you which I could predict it very closely. Obviously we monitor the parameters of the cases but good growth in some the values up or down and we have made out what is good to for appraiser in every quarter and obviously it’s a very close lines of profit.

But, what the assumption, some of the appraisers are going to take strides could drive values in exchange that we cannot really predict. So, I have to tell you it’s a wild card that we always watch, but we have not a lot of control. Matthew – Credit Suisse Okay and then just….

Keep in mind that – I’m sorry, keep in mind that the main thing is not necessarily with the charge-off, but with the impact on that Island, because some of the charge-offs, you – I am just confirming things we are concerned.

So, those are on the negations – I mean, how this will move and lastly how that you charge, but the issue would be when there is a difference with whatever we have said. Matthew – Credit Suisse Okay, understood.

And then on expenses, I think, previously you’ve talked about a more normal range in the $95 million to $100 million range for run rate, you guys did better than that this quarter, obviously on the lower OREO cost, but just curious as to what you expect going forward? Whether as you kind of keep it here in the low 90s or not?.

Obviously, we have long-term goals and short-term realities. We have some opportunities in the quarter trading cost it’s a variable. When you look at that again it’s going to your appraisal question and sometimes come from the OREO side.

On the other hand, we continue to have a very formal rationalization process of our costs and different exercises in looking at the cost base and as we continue to chop out these assets, there is a lot of related costs, not only the adjusted appraisals in the OREO side, lot of the other support.

So, it’s something that we actively manage and monitor and, I think you should view it as a range. We still think it’s going to sit around that $92 million to $95 million probably. But, it’s going to come up, it could come up and down, there is some positive analysis each quarter then. But again, the OREO is a viable that could exceed that number..

The range has to be in that mid-90s that increase nearly the variable, the big one would be the OREO valuation expense. But other than that, the other ones we should be able to maintain within expected levels. Matthew – Credit Suisse Got it. Thanks guys..

Thank you..

Thank you and the next question comes from Taylor Brodarick from Guggenheim Securities..

Great, thank you. I really, just- you made your comments about Florida, one of your competitors exited Central Florida this week. Could you sort of give us your sense comparing South to Central Florida and the prospects you see for Central Florida..

Well, our focus is really that, it’s South Florida. Okay, and actually, if I recall correctly, our competitor decided to focus in South Florida. So, the – we had made a decision last year and we announced it.

We actually sold our branches, so, and we closed the other and we invested in our Miami day per hour strategy which is where our Florida focus resides. If it will minimum today, we go after in the local businesses and that our relationships that are been there for sometime and basically some of it is linked to Puerto Rico, most of it is not at all.

We have a commercial and middle market and corporate team and a mortgage business which has been performing fairly well with opportunities in the market. We are kind of in the middle of very large kinds and very small banks which is what dominates that territory..

Correct. Thanks, and on the branches, correct me if I missed this.

The Puerto Rico consolidation, did you state a number or geography of where those will it occur?.

They are, some of them are in the West Coast, some of them are in the metropolitan area. It’s really, we actually invested in larger branches during the last few years and we decided to accommodate some of the smaller ones that lost traffic or the demographic. The number is four, the ones that were consolidated in Puerto Rico, four branches..

It’s a minus two in USVI, minus two in Florida and four in Puerto Rico. Okay..

Yes, with the USVI last year, we announced two consolidations..

Right..

Which we did also Florida two consolidations and we are doing four in Puerto Rico. In Florida, we opened new branches, a new branch replacing the prior one, but we are also opening a new branch in the route replacing a prior one, a larger one. But we will go to Orlando..

Right, okay..

Puerto Rico, it is previously around our (inaudible) of the – of our Island..

Okay, great. Thank you.

And then, I guess, Orlando, parent cash at March 31?.

Have you asked me?.

Yes, do you have it or?.

I’ll give it to you. We had in cash and cash combined $825 million at the end of March..

Okay, all right. Gentlemen thank you. Appreciate it..

Thank you..

Thank you. And we have a follow-up question from Brian Klock with Keefe Bruyette & Woods.

Hey guys. I think the – I mean we are all thinking about it, so we probably forgot to ask you right away, but the deferred tax asset, you had another quarter of profitability.

So maybe you can kind of, Orlando, just kind of give us an update on what your thought process there and then what are the sort of the milestones we should be thinking about as part of the recapture that VI?.

We continue with the same plan, Brian, obviously, profitability quarters are key on the analysis. At this point, we feel – we still need to show the six to eight quarters of profitability and we continue to look at it as link to interest CD fund.

This order of profitability is in the front and was not something that we say it would significantly lower or significantly higher can change you a strategy on the targets. So it will move it in the same direction. I cannot give you anything different from what we have mentioned before..

Okay, but I guess, is there a thought of, I guess the ability to earn the mix, the size of that DTA and I guess in the thought process of outcome for out in the future, you will be able to generate the taxable income to earn that.

So is there any visibility we have to that or it just, if we kind of just focus on the consecutive quarters of profitability that’s a good indicator?.

Well, there are two things obviously. One thing the consecutive quarter that trigger them to be able to say, I can start reversing either all or part of it.

The amount will be a function of how much you get it, it may be in the future and how those – there are two main components in there which would be the NOLs, how we are using to realize the NOLs throughout the timeframe and you still have in our case in Puerto Rico, it’s, I mean first lost NOL was in 2009.

So we have 12 years from there for that NOL and the others would be found and other temporary differences that obviously they don’t have the timeframe. So it’s a function of what your future projections indicate and then that will determine how much you can reverse.

So it’s – consecutive quarters would be, whether you can make an assessment and you can start reversing on how much you can project would be, whether you can reverse the whole or part of it..

Okay, great, Thanks, that is very helpful. Thank you..

Thank you. And there are no more questions at the present time. So I would like to turn the call back over to management for any closing remarks..

No, we just want to thank the audience and we are looking forward to meet all of you after completing our progress. Thank you all for joining me..

Thank you..

Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines..