Schiffrin & Barroway, LLP Announces That the Class Period in the Shareholder Action Filed Against First BanCorp Has Been Extended

29 November 2005

The following statement was issued today by the law firm of Schiffrin & Barroway, LLP: The Class Period for the class action lawsuit filed in the United States District Court for the Western District of Texas on behalf of all securities purchasers of First BanCorp (NYSE: FBP) ("First BanCorp" or the "Company") has been extended from October 20, 2003 to October 24, 2005, to March 31, 2003 to October 24, 2005. If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Darren J. Check, Esq. or Richard A. Maniskas, Esq.) toll-free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com. The complaint charges First BanCorp, Angel Alvarez-Perez ("Alvarez-Perez") and Annie Astor-Carbonell ("Astor-Carbonell") with violations of the Securities Exchange Act of 1934. First BanCorp operates as the holding company for FirstBank Puerto Rico, which provides various financial services in Puerto Rico, the U.S. Virgin Islands, and British Virgin Islands. The complaint alleges that defendants' Class Period representations regarding First BanCorp's financial statements, business, and prospects were materially false and misleading when made. Specifically, the defendants failed to disclose: (1) that First BanCorp improperly classified, for accounting purposes, mortgage transactions with other financial institutions (most notably Doral Financial Corp. and R&G Financial Corp.) as purchases rather than loans by the Company and its subsidiaries secured by the mortgages; (2) that the improper methodology used by the Company on these loans caused the Company to materially inflate its financial results; (3) that as a consequence of this, the Company's financial statements were presented in violation of Generally Accepted Accounting Principles ("GAAP"); (4) that the Company lacked the necessary personnel and controls to issue accurate financial reports and projections; and (5) that as a result of the above, the value of the Company's net income and financial results were materially overstated at all relevant times. During the Class Period, defendants embarked on a five-year scheme to inflate the financial results of First BanCorp by manipulating its accounting on mortgage transactions with other financial institutions (most notably Doral Financial Corp. and R&G Financial Corp.). The scheme began to unravel for defendants in 2005. On August 11, 2005, First BanCorp announced that it was delaying the filing of its Form 10-Q for the quarter ended June 30, 2005. According to First BanCorp, it indicated that on August 1, 2005, the Audit Committee (the "Committee") of First BanCorp determined that the Committee should review the background and accounting for certain purchases of mortgage loans made by the Company between 2000 and 2005. In reaction to this announcement, the price of First BanCorp stock fell dramatically, from $22.73 per share on August 10, 2005 to $21.00 per share on August 11, 2005, a one-day drop of $1.73 per share, or 7.61 percent, on unusually heavy trading volume. Following the above disclosure, First BanCorp, on August 25, 2005, after the market closed, announced that the SEC was conducting an informal inquiry into the Company's accounting. According to the Company, the inquiry pertained to, among other things, the accounting for mortgage loans purchased by the Company from two other financial institutions (Doral Financial Corp. and R&G Financial Corp.) during the calendar years 2000 through 2004. In reaction to this announcement, the price of First BanCorp stock fell dramatically, from $20.02 per share on August 25, 2005 to $18.23 per share on August 26, 2005, a one-day drop of $1.79 per share, or 8.94 percent, on unusually heavy trading volume. About one month later, on September 30, 2005, First BanCorp, after the market closed, announced a series of management changes. According to the Company, defendant Alvarez-Perez had stepped down as President and Chief Executive Officer and announced that he would retire effective December 31, 2005, as Chairman of the Board of Directors. In addition, defendant Astor- Carbonell had resigned from her position as Chief Financial Officer and as a member of the Board of Directors, and informed the Company that she would retire on October 31, 2005. In reaction to this announcement, the price of First BanCorp stock fell dramatically, from $16.92 per share on September 30, 2005 to $15.56 per share on October 3, 2005, a drop of $1.36 per share, or 8.04 percent, on unusually heavy trading volume. Then, on October 21, 2005, after the close of the market, First BanCorp announced that the SEC had issued a formal order of investigation in its investigation into the Company. According to First BanCorp, the investigation, which stemmed out of an informal inquiry announced by the Company in late August 2005, appeared to relate to, among other things, transactions in which FirstBank acquired a substantial number of mortgage loans from other Puerto Rican financial institutions (Doral Financial Corp. and R&G Financial Corp.). In reaction to this announcement, the price of First BanCorp stock fell dramatically, from $15.25 per share on October 21, 2005 to $14.03 per share on October 24, 2005, a one-day drop of $1.22 per share, or 8 percent, on unusually heavy trading volume. Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com. If you are a member of the class described above, you may, not later than January 2, 2006 move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Schiffrin & Barroway, or other counsel of your choice, to serve as your counsel in this action. CONTACT: Schiffrin & Barroway, LLP Darren J. Check, Esq. Richard A. Maniskas, Esq. 280 King of Prussia Road Radnor, PA 19087 1-888-299-7706 (toll-free) or 1-610-667-7706 Or by e-mail at info@sbclasslaw.com

Source: PR Newswire

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