8-K/A: First BanCorp Engages Former Executive as Consultant Following Retirement

First BanCorp subsidiary, FirstBank Puerto Rico, enters into a consulting agreement with former Executive Vice President Cassan Pancham to provide advisory services on mortgage, insurance, and Virgin Islands operations.

Summary

• First BanCorp has engaged its former Executive Vice President, Cassan Pancham, as a consultant following his retirement.
• Mr. Pancham will provide consulting and advisory services to FirstBank Puerto Rico, a subsidiary of First BanCorp, from May 16, 2025, through December 31, 2025.
• The agreement may be renewed upon mutual agreement.
• Mr. Pancham will be paid an hourly fee of $250 for his services.
• He will allocate a minimum of 20 hours per month and will not exceed 40 hours per month without prior approval.
• The consulting services will focus on FirstBank's mortgage and insurance businesses, as well as operations in the Virgin Islands region.
• The agreement includes customary confidentiality, non-solicitation, and non-competition provisions that apply for 12 months after termination.

Sentiment

Score: 7

Explanation: The document outlines a standard business arrangement with clear terms. The sentiment is neutral to positive as it ensures continuity and leverages existing expertise.

Positives

• First BanCorp retains the expertise of a former executive with extensive knowledge of key business areas.
• The consulting arrangement provides continuity and support during the transition to a new executive.
• The hourly fee structure allows for flexible engagement based on the company's needs.
• The non-solicitation and non-competition clauses protect First BanCorp's business interests.

Risks

• The consulting agreement's effectiveness depends on Mr. Pancham's continued availability and performance.
• There is a risk that the transition to a new executive may still face challenges despite the consulting support.
• The hourly fee could potentially lead to higher costs if the consulting services exceed the planned hours.

Future Outlook

The agreement may be renewed upon mutual agreement of the parties prior to the end of the Term.

Industry Context

Engaging former executives as consultants is a common practice in the financial industry to leverage their expertise and ensure a smooth transition during leadership changes.

Comparison to Industry Standards

• Consulting fees for former executives vary widely based on experience, expertise, and the scope of services provided.
• Non-solicitation and non-competition clauses are standard in consulting agreements to protect the company's interests.
• Hourly rates of $250 are within the normal range for senior consultants in the financial services industry, but can vary based on location, experience and specific expertise.

Management Changes

Stakeholder Impact

• Shareholders may benefit from the continued expertise and smooth transition provided by the consulting arrangement.
• Employees in the mortgage, insurance, and Virgin Islands operations may experience a more stable transition with Mr. Pancham's support.
• Customers may benefit from the continuity of service and expertise in these business areas.

Next Steps

• Mr. Pancham will begin providing consulting services to FirstBank Puerto Rico.
• FirstBank Puerto Rico will monitor Mr. Pancham's performance and the effectiveness of his consulting services.
• The parties will evaluate the potential renewal of the agreement prior to December 31, 2025.

Key Dates

Keywords

consulting agreement, Cassan Pancham, First BanCorp, FirstBank Puerto Rico, mortgage, insurance, Virgin Islands, executive, retirement