First BanCorp.> 2001 The Island of Puerto Rico is a U.S. Commonwealth with a pop- ulation of 3.8 million, located in the Caribbean approximately 1,600 miles southeast of New York. Puerto Rico enjoyed solid economic growth over most of the 1990’s. Real GNP grew by 3.1% in the 2000 fiscal year, according to the most recent offi- cial data available. Economists project a slowdown to less than 2% during fiscal 2001 and a small decline in fiscal 2002 due to the U.S. recession. Puerto Rico’s economic performance is a natural result of its increasing integration into the U.S. economy. Puerto Ricans are U.S. citizens and serve in the United States armed forces, and the Island has several large U.S. military bases.The Island uses U.S. currency and forms part of the U.S. financial system. Federal courts enforce U.S. laws here. Since Puerto Rico falls within the U.S. for purposes of customs and migration, there is full mobility of funds, people and goods between Puerto Rico and the U.S. mainland. Puerto Rico banks are subject to the same Federal laws, regulations and supervision as other financial institutions in the rest of the U.S.The Federal Deposit Insurance Corporation insures the deposits of Puerto Rico chartered commercial banks, including FirstBank, the banking subsidiary of First BanCorp. One Economy 1 0 15