<PAGE>   1




================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   -----------
                                    FORM 10-Q
(Mark One)

[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended March 31, 1997

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from                 to 
                                        ---------------    -----------------

                         Commission file number 0-17224

                      First Financial Caribbean Corporation
                      -------------------------------------
             (Exact name of registrant as specified in its charter)


            Puerto Rico                                 66-0312162
            -----------                                 ----------
  (State or other jurisdiction of                    (I.R.S. employer
   incorporation or organization)                   identification number)

    1159 F.D. Roosevelt Avenue,
            Puerto Nuevo
       San Juan, Puerto Rico                            00920-2998
       ---------------------                            ----------
       (Address of principal                            (Zip Code)
         executive offices)

 Registrant's telephone number,                       (787) 749-7100
         including area code                           -------------

  Former name, former address and                     Not Applicable
   former fiscal year, if changed                     --------------
         since last report


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                  Yes  X   No
                                      ---      ---

Number of shares of Common Stock outstanding at May 12, 1997 -  9,198,730

================================================================================


<PAGE>   2



                      FIRST FINANCIAL CARIBBEAN CORPORATION

                                      INDEX
<TABLE>
<CAPTION>

                                                                                                           PAGE

                                         PART I - FINANCIAL INFORMATION
<S>                                                                                                         <C>
Item 1   -    Financial Statements

              Consolidated Balance Sheet as of March 31, 1997 and December 31, 1996..........................3

              Consolidated Statement of Income and Retained Earnings - Three month period
              ended March 31, 1997 and March 31, 1996........................................................4

              Consolidated Statement of Cash Flows - Three-month period ended March 31, 1997
              and March 31, 1996.............................................................................5

              Notes to Consolidated Financial Statements.....................................................6

Item 2   -    Management's Discussion and Analysis of Financial Condition and Results of Operations..........7


                                            PART II - OTHER INFORMATION

Item 1   -    Legal Proceedings.............................................................................14

Item 2   -    Changes in Securities.........................................................................14

Item 3   -    Defaults Upon Senior Securities...............................................................14

Item 4   -    Submission of Matters to a Vote of Security Holders...........................................14

Item 5   -    Other Information.............................................................................15

Item 6   -    Exhibits and Reports on Form 8-K..............................................................15

SIGNATURES..................................................................................................17
</TABLE>


FORWARD LOOKING STATEMENTS

         When used in this Form 10-Q or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "would be",
"will allow", "intends to", "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "project", or similar expressions are
intended to identify "forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.

         The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made, and
to advise readers that various factors, including regional and national economic
conditions, substantial changes in levels of market interest rates, credit and
other risks of lending and investment activities, competitive and regulatory
factors and legislative changes, could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from those anticipated or projected.


         The Company does not undertake, and specifically disclaims any
obligation, to update any forward-looking statements to reflect occurrences or
unanticipated events or circumstances after the date of such statements.


                                       2
<PAGE>   3



                      FIRST FINANCIAL CARIBBEAN CORPORATION
                           CONSOLIDATED BALANCE SHEET
              (IN THOUSAND OF DOLLARS EXCEPT FOR SHARE INFORMATION)

<TABLE>
<CAPTION>

                                                                                March 31, 1997        December 31, 1996
                                                                                  (unaudited)             (audited)
                                                                                  -----------             ---------
ASSETS
------
<S>                                                                               <C>                      <C>         
Cash and cash equivalents                                                          $    42,598           $     81,213
Mortgage loans held for sale, net                                                      245,926                261,608
Securities held for trading, net                                                       431,930                436,125
Securities held to maturity                                                            174,509                109,055
Securities available for sale                                                            8,009                 12,007
Loans receivable, net                                                                  145,100                128,766
Accounts receivable and mortgage servicing advances, net                                20,948                 15,882
Accrued interest receivable                                                             11,733                 10,091
Servicing asset                                                                         22,586                 20,969
Property, leasehold improvements and equipment, net                                      9,870                  9,360
Cost in excess of fair value of net assets acquired                                      6,486                  6,562
Real estate held for sale, net                                                           2,979                  2,246
Prepaid expenses and other assets                                                        7,847                  8,071
                                                                                  ------------           ------------

                                                                                  $  1,130,521           $  1,101,955
                                                                                  ============           ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Loans payable                                                                     $    154,121           $    196,397
Securities sold under agreements to repurchase                                         424,732                387,651
Deposit accounts                                                                       186,795                158,902
Notes payable                                                                          145,753                147,893
Advances from Federal Home Loan Bank                                                    15,000                 15,000
Convertible Subordinated Debentures                                                     10,000                 10,000
Accounts payable and other liabilities                                                  28,217                 26,992
Income tax payable                                                                         585                    217
Deferred tax liability                                                                   9,115                  8,372
                                                                                  ------------           ------------

   Total liabilities                                                                   974,318                951,424
                                                                                  ------------           ------------

Commitments and contingencies
Stockholders' equity:                                                             ------------           ------------
   Serial Preferred Stock, $1 par value, 2,000,000 shares                         
     authorized; no shares outstanding                                                     ---                    ---
   Common stock, $1 par value, 20,000,000 shares authorized;
   9,124,730 shares issued; 9,111,730 shares outstanding                                 9,125                  9,125
   Paid-in capital                                                                      38,673                 38,673
   Retained earnings                                                                   108,497                102,925
                                                                                  ------------           ------------

                                                                                       156,295                150,723

   Unrealized (loss) gain on securities available for sale, net of
   deferred tax                                                                             (5)                   (81)
   Treasury stock at par value, 14,000 shares                                              (14)                   (14)
   Unearned compensation under employment contracts                                        (73)                   (97)
                                                                                  ------------           ------------

        Total stockholders' equity                                                     156,203                150,531
                                                                                  ------------           ------------

        Total liabilities and stockholders' equity                                $  1,130,521           $  1,101,955
                                                                                  ============           ============
</TABLE>



        The accompanying notes are an integral part of these statements.





                                       3
<PAGE>   4




                      FIRST FINANCIAL CARIBBEAN CORPORATION
             CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
                 (In thousand of dollars, except per share data)
                                    Unaudited

<TABLE>
<CAPTION>

                                                                     Quarter Ended
                                                            --------------------------------- 
                                                            March 31, 1997     March 31,1996
                                                            --------------     -------------
<S>                                                             <C>                 <C>     
Revenues:
   Mortgage loans sales and fees                                $    5,316          $  6,883
   Servicing income                                                  3,979             2,751
   Interest income                                                  20,386            16,247
   Rental and other income                                             392               154
                                                                ----------          --------
                                                                    30,073            26,035
                                                                ----------          --------
Expenses:
   Interest                                                         14,065            10,991
   Employee cost, net (See Note g)                                   2,388             2,586
   Taxes, other than payroll and income taxes                          317               246
   Maintenance                                                         211               127
   Advertising                                                         868               825
   Professional services                                               762               681
   Telephone                                                           458               471
   Rent                                                                586               531
   Other, net (See Note g)                                           1,964             2,026
                                                                ----------          --------
                                                                    21,619            18,484
                                                                ----------          --------

Income before income taxes and cumulative effect                     8,454             7,551
                                                                ----------          --------
Income taxes:
   Current                                                             590               437
   Deferred                                                            743               760
                                                                ----------          --------
                                                                     1,333             1,197
                                                                ----------          --------

Net income                                                           7,121             6,354
Retained earnings at beginning of period                           102,925            81,892
   Less cash dividends paid:
     Convertible preferred stock                                       ---                14
     Common stock                                                    1,549             1,347
                                                                ----------          --------
Retained earnings at the end of period                          $  108,497          $ 86,885
                                                                ==========          ========
Earnings per share:
Primary:
   Net Income                                                         0.78          $   0.71
                                                                ==========          ========

Fully Diluted:
   Net Income                                                   $       0.75        $   0.67
                                                                ============        ========
</TABLE>



        The accompanying notes are an integral part of these statements.




                                       4
<PAGE>   5




                      FIRST FINANCIAL CARIBBEAN CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (IN THOUSAND OF DOLLARS)
<TABLE>
<CAPTION>
                                                                                              Three-month Period Ended March 31,
                                                                                                    1997              1996
                                                                                                    ----              ----
                                                                                                          (unaudited)
<S>                                                                                                   <C>               <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................................................         $   7,121          $  6,354
                                                                                                     ---------          --------
   Adjustments to reconcile net income to net cash provided by (used in) operating activities:
     Amortization of interest-only strip receivable.........................................               892                304
     Amortization of cost in excess of fair value of net assets acquired....................                95                 94
     Amortization of servicing asset........................................................               578                224
     Depreciation and amortization..........................................................               498                433
     Allowances for losses..................................................................               213                138
     Origination and purchases of mortgage loans held for sale..............................          (152,209)          (181,503)
     Principal repayment and sales of loans held for sale ..................................            93,344            130,283
     Purchases of securities held for trading...............................................          (103,932)           (46,576)
     Principal repayments and sales of securities held for trading..........................           186,489            118,485
     Additions of interest-only strip receivable............................................            (4,707)            (2,536)
     Increase in accounts receivable and mortgage servicing advances........................            (5,279)            (2,750)
     Increase in servicing asset............................................................            (2,195)            (2,804)
     Principal repayments and sales of securities available for sale........................             4,074              6,598
     Increase in interest receivable........................................................            (1,642)              (575)
     Decrease in loans payable..............................................................           (42,276)           (41,147)
     Increase in interest payable...........................................................             1,337                472
     Increase in securities sold under agreements to repurchase.............................            37,081              4,271
     Decrease in payables and accrued liabilities...........................................              (113)            (1,661)
     Increase (decrease )in income tax payable..............................................               368               (361)
     Deferred tax provision.................................................................               743                760
     Amortization of unearned compensation under employment contracts.......................                24                 24
                                                                                                     ---------          ---------
        Total adjustments...................................................................            13,383            (17,827)
                                                                                                     ---------          ---------
     Net cash provided by (used in) operating activities....................................            20,504            (11,473)
                                                                                                     ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of mortgage-backed securities and investments held to maturity.................           (70,639)           (24,043)
   Principal repayments of investments held to maturity.....................................             5,185                186
   Origination of loans receivable .........................................................           (29,907)           (18,448)
   Principal repayments of loans receivable.................................................            13,572              2,107
   Purchase of property, leasehold improvements and equipment...............................            (1,008)              (455)
   Additions to cost in excess of fair value of net assets acquired.........................               (19)               ---
   Increase in real estate held for sale....................................................              (733)              (184)
   Decrease in other assets.................................................................               225                420
                                                                                                     ---------          ---------
     Net cash used by investing activities..................................................           (83,324)           (40,417)
                                                                                                     ---------          ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Issuance in common stock.................................................................               ---                480
   (Decrease) increase in notes payable.....................................................            (2,140)             5,373
   Increase in deposits.....................................................................            27,893             25,444
   Dividends declared and paid..............................................................            (1,549)            (1,361)
   Increase (decrease) in advances from FHLB................................................              ---               4,997
                                                                                                     ---------          ---------
     Net cash provided by financing activities..............................................            24,204             34,933
                                                                                                     ---------          ---------

   Net decrease in cash and cash equivalents................................................           (38,616)           (16,957)

   Cash and cash equivalents at beginning of period.........................................            81,213             59,872
                                                                                                     ---------          ---------

   Cash and cash equivalents at the end of period...........................................           $42,597          $  42,915
                                                                                                     =========          =========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   Noncash financing activities-conversion of preferred stock...............................         $     -            $     620
                                                                                                     =========          =========
SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash used to pay interest................................................................         $  12,728          $  10,519
                                                                                                     =========          =========
   Cash used to pay income taxes............................................................         $     222          $     798
                                                                                                     =========          =========
</TABLE>



       The accompanying notes are an integral part of these statements.




                                       5
<PAGE>   6



                     FIRST FINANCIAL CARIBBEAN CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


a.    The Consolidated Financial Statements (unaudited) have been prepared in
      conformity with the accounting policies stated in the Company's Annual
      Audited Financial Statements included in the Company's 1996 Annual Report
      on Form 10-K, and should be read in conjunction with the Notes to the
      Consolidated Financial Statements appearing in that report. All
      adjustments (consisting only of normal recurring accruals) which are, in
      the opinion of management, necessary for a fair presentation of results
      for the interim periods have been reflected.

b.    The results of operations for the three-month period ended March 31, 1997
      are not necessarily indicative of the results to be expected for the full
      year.

c.    Cash dividends per share paid for the three-month period ended March 31, 
      1997 and 1996 were as follows:


<TABLE>
<CAPTION>
                                        Three-month period ended
                                               March 31,
                                     ------------------------------
<S>                                        <C>            <C> 
                                           1997           1996
                                           ----           ----
Series A Preferred Stock                    ---         $0.2625
Common Stock                              $0.17         $  0.15
</TABLE>

d.    At March 31, 1997, escrow funds include approximately $30.1 million
      deposited with Doral Federal Savings Bank ("Doral Federal"). These funds
      are included in the Company's financial statements. Escrow funds also
      include approximately $6.4 million deposited with other banks which are
      excluded from the Company's assets and liabilities.

e.    Certain reclassifications of prior year's data have been made to conform 
      to 1997 classifications.  In connection with the adoption by the
      Company, effective January 1, 1997, of SFAS No. 125 "Accounting for
      Transfers of Servicing Assets and Extinguishment of Liabilities" ("SFAS
      125"), the Company reclassified the asset previously shown on the
      Company's Consolidated Balance Sheet as "Mortgage Servicing Rights" to
      "Servicing Asset".  In addition, the asset previously shown as "Excess
      Servicing Fees Receivable" was reclassified as "Interest Only Strips"and
      is now reflected in the Company's Consolidated Balance Sheet as a 
      component of "Securities held for trading, net".  See Item 2 "Management's
      Discussion and Analysis of Financial Conditions and Results of
      Operations-Recent Developments-Accounting Changes".

f.    The number of average shares of common stock used for computing the
      primary and fully diluted net income per share was as follows:


<TABLE>
<CAPTION>
                                     Three-month Period Ended
                              ---------------------------------------
                                March 31, 1997       March 31, 1996
                              -----------------     -----------------

            <S>                    <C>                <C>      
            Primary                9,111,730          8,948,665
            Fully diluted          9,682,159          9,674,876
</TABLE>

g.    Employee costs and other expenses are shown in the Consolidated Statement
      of Income and Retained Earnings net of direct loan origination costs
      which, pursuant to SFAS 91, are capitalized as part of the carrying cost
      of mortgage loans and are offset against mortgage loan sales and fees when
      the loans are sold. Employee costs would have been $8.3 and $7.6 million,
      respectively, for the quarters ended March 31, 1997 and 1996, except for
      the application of SFAS 91. Other expenses would have been $3.4 and $3.5
      million, respectively, for the quarters ended March 31, 1997 and 1996,
      except for the application of SFAS 91.




                                       6
<PAGE>   7



      Set forth below is a breakdown of direct loan origination costs that were
deferred pursuant to SFAS-91.


<TABLE>
<CAPTION>
                                                    Three-month Period Ended
                                              ------------------------------------
                                                March 31, 1997     March 31, 1996
                                              -----------------  -----------------

            <S>                                     <C>               <C>   
            Employee Costs                          $5,916            $5,021
            Other Costs                              1,511             1,434
                                                    ------            ------

                                                    $7,427            $6,455
                                                    ======            ======
</TABLE>

h.    In June 1996, the Financial Accounting Standards Board ("FASB") issued
      SFAS 125. SFAS 125 provides accounting and reporting standards for
      transfers and servicing of financial assets and extinguishments of
      liabilities based on the application of a financial-components approach
      that focuses on control. That approach requires the recognition of
      financial assets and servicing assets controlled by the reporting entity,
      the derecognition of financial assets when control is surrendered, and the
      derecognition of liabilities when they are extinguished. Specific criteria
      are established for determining when control has been surrendered in the
      transfer of financial assets.

      This Statement requires that liabilities and derivatives incurred or
      obtained by transferors as part of a transfer of financial assets be
      initially measured at fair value, if practicable. It also requires that
      servicing assets and other retained interests in the transferred assets be
      measured by allocating the previous carrying amount between the assets
      sold, if any, and retained interest, if any, based on their relative fair
      values at the date of the transfer. Servicing assets and liabilities must
      be subsequently measured by (a) amortization in proportion to and over the
      period of estimated net servicing income and loss and (b) assessment for
      asset impairment or increased obligation based on their fair values.

      SFAS 125 modifies the accounting for interest-only strips or retained
      interests in securitizations, such as excess servicing fees receivable,
      that can be contractually prepaid or otherwise settled in such a way that
      the holder would not recover substantially all of its recorded investment.
      In this case, it requires that they be classified as available for sale or
      as trading securities. Interest-only strips and retained interests are to
      be recorded at market value in accordance with SFAS No. 115. Changes in
      market value of IOs are included in operations, if classified as trading
      securities, or in shareholders' equity as unrealized gains or losses, net
      of taxes, as if classified as available for sale.

      Under the provisions of SFAS 125, management has determined that excess
      servicing fees receivable retained by the Company as a result of
      securitization transactions or bulk sales will be held as trading
      securities as interest only strips ("IOs"). In addition, all residual
      interests and mortgage backed securities previously retained by the
      Company as part of its securitization transactions will also be held as
      trading securities.

      The provisions of this Statement, except as indicated below, are effective
      for transfers and servicing of financial assets and extinguishment of
      liabilities occurring after December 31, 1996, and must be applied
      prospectively. Earlier or retroactive application is not permitted. In
      December 1996, the FASB issued a statement that defers for one year the
      effective date applicable to the provisions of SFAS 125 that deal with
      secured borrowings and collateral. Additionally, the deferment provision
      would apply to transfers of financial assets for repurchase agreements,
      dollar rolls and securities lending.

      Refer to Note e for certain reclassifications made by the Company as a
      result of the adoption of SFAS 125.


                                      7




<PAGE>   8



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

The Company's funding requirements arise from loan originations and purchases,
repayments of debt upon maturity, payments of operating and interest expenses
and servicing advances. The Company's primary sources of liquidity are sales in
the secondary mortgage market of the loans it originates and purchases, short
term borrowings under warehouse, gestation and repurchase agreement lines of    
credit (secured by pledges of its loans and mortgage-backed securities in most
cases until such loans are sold and the lenders repaid) and revenues from
operations. In the past, the Company has also relied on privately-placed and
publicly offered debt financings and public offerings of preferred and common
stock. Doral Federal, the Company's thrift subsidiary, also relies on retail
and wholesale deposits, borrowings from the Federal Home Loan Bank of New York
("FHLB-NY") as well as term notes backed by letters of credit of the FHLB-NY.

The interim Consolidated Statement of Cash Flows reflects the working capital
needs of the Company. The decrease in cash and cash equivalents of $38.6
million was due to the investment of a portion of cash and cash equivalents in
securities with longer maturities and higher yields.  Operating activities
provided approximately $20.5 million of net cash during the three-month period
ended March 31, 1997, versus uses of approximately $11.5 million in the
comparable period of 1996. Originations and purchases of mortgage loans held
for sale for the first quarter of 1997 decreased by $29.3 as compared to the
1996 first quarter resulting in a decrease in the use of cash in addition to
increased sales of mortgage loans and mortgage-backed securities.

Investing activities used cash of approximately $83.3 million in the first three
months of 1997 due primarily to purchases of securities held to maturity by
Doral Federal of $70.6 million and originations of loans receivable of
approximately $29.9 million, partially offset by $18.8 million of sales and
principal repayments of securities held to maturity and loans receivable.

During the first three-months of 1997, financing activities provided
approximately $24.2 million of net cash due mainly to additional deposits
amounting to approximately $27.9 million received by Doral Federal, the
Company's thrift subsidiary.

As of March 31, 1997, Doral Federal exceeded all its regulatory capital
requirements (i.e., tangible and core capital of at least 1.5% and 3.0%,
respectively, of adjusted assets and total risk-based capital of at least 8% of 
risk weighted assets). As of March 31, 1997, Doral Federal had tangible capital
and core capital of $24.2 million or approximately 8.28% of adjusted assets and
total risk-based capital of $25.1 million or 18.45% of risk weighted assets.

FFCC borrows money under warehousing lines of credit to fund its mortgage loan
commitments and repays the borrowings as the mortgages are sold. The warehousing
lines of credit then become available for additional borrowings. Included among
FFCC's warehousing lines of credit facilities are gestation or presale
facilities which permit the Company to obtain more favorable rates once mortgage
loans are in the process of securitization but prior to the actual issuance of
the mortgage-backed securities as well as to finance such mortgage-backed
securities upon their issuance. At March 31, 1997 and December 31, 1996, FFCC
had available warehousing lines of credit of $695 million and $595 million,
respectively. At March 31, 1997 and December 31, 1996, FFCC had used
approximately $154 million and $186 million, respectively, of credit available
under its warehousing lines of credit. FFCC's warehousing lines of credit are
generally subject to termination at the discretion of the lender.

FFCC also obtains short-term financing through repurchase agreement lines of
credit with financial institutions and investment banking firms. Under these
agreements, FFCC sells GNMA, FNMA or FHLMC-guaranteed mortgage-backed securities
or collateralized mortgage obligations and simultaneously agrees to repurchase
them at a future date at a fixed price. FFCC uses the proceeds of such sales to
repay borrowings under its warehousing lines of credit. The effective cost of
funds under repurchase agreements is typically lower than the cost of funds
borrowed under FFCC's warehousing lines of credit. At March 31, 1997, FFCC had
used approximately $424.7 million of credit under repurchase agreements. FFCC's
continued use of repurchase agreements will depend on the cost of repurchase
agreements relative to the cost of borrowing under its warehousing lines of
credit with banks.

Certain of the debt obligations of the Company contain various provisions that
may affect the ability of the Company to pay dividends and remain in compliance
with such obligations.  These provisions include requirements concerning net
worth, financial ratios, limitations on capital distributions and other
financial covenants.  These provisions have not had, and are not expected to
have, an adverse impact on the ability of the Company to pay dividends in the
future.

                                       8


<PAGE>   9



The monthly weighted average interest rates of FFCC's borrowings for warehousing
lines of credit and for repurchase agreement lines of credit was 6.8% and 5.6%
respectively, for the three-month period ended March 31, 1997 compared to 6.7%
for warehousing lines of credit and 5.5% for repurchase agreements in each case
for the year ended December 31, 1996.

Doral Federal obtains funding for its lending activities through the receipt of
deposits, FHLB-NY advances and from other borrowings, such as term notes backed
by FHLB-NY letters of credit and repurchase agreements with brokerage houses. As
of March 31, 1997, Doral Federal held $197.8 million in deposits (including
$10.9 million in corporate accounts of the Company that are eliminated in the
preparation of the Company's Consolidated Financial Statements) at a weighted
average interest rate of 3.99%, approximately 28% of which consisted of
non-interest bearing deposits. Approximately $33.7 million of deposits consisted
of brokered certificates of deposit obtained through broker-dealers with
maturities ranging from three to five years. Doral Federal, as member of
FHLB-NY, has access to collateralized borrowings from the FHLB-NY up to a
maximum of 30% of all its total assets. Advances and reimbursement obligations
with respect to letters of credits must be secured by qualifying assets with a
market value equal to 120% of the advances. At March 31, 1997, Doral Federal had
$15 million in outstanding advances from the FHLB-NY at a weighted average
interest rate cost of 6.15%. In addition, as of March 31, 1997, Doral Federal
had $53.1 million outstanding in term notes secured by FHLB-NY letters of credit
at an average interest rate cost of 6.51%. Approximately $5 million principal
amount of such term notes bear interest at a fluctuating rate based on the
London Interbank bid rate for dollar deposits ("LIBID"). The interest rate of
such fluctuating note has effectively been fixed pursuant to an interest rate
swap agreement with a major brokerage house. The interest rate on all the
outstanding term notes are subject to a one-time upward adjustment to a rate
equal to 100% of LIBID for a term equal to the remaining term of the notes as a
result of the recent changes to Section 936 of the Internal Revenue Code. Of a
total of eight outstanding issues of term notes, investors have requested an
upward adjustment in four of such issues representing an aggregate principal
amount of $23.1 million of term notes. In all but one of such cases,
representing approximately $8.1 million principal amount of term notes, Doral
Federal was able to negotiate a rate adjustment below 100% of LIBID by agreeing
to waive its right to prepay the notes upon the occurrence of such an event.

Servicing agreements relating to the mortgage-backed securities programs of
FNMA, FHLMC and GNMA and certain other investors as well as mortgage loans sold
to certain other purchasers, require FFCC to advance funds to make scheduled
payments of principal, interest, taxes and insurance, if such payments have not
been received from the borrowers. Funds advanced by FFCC pursuant to these
agreements are generally recovered by FFCC within 30 days. During the
three-month period ended March 31, 1997, the monthly average amount of funds
advanced by the Company under such servicing agreements was approximately $3.7
million.

During the three-month period ended March 31, 1997, the Company collected an
average of approximately $1.3 million per month in net servicing fees, including
late charges. At March 31, 1997 and December 31, 1996, the servicing portfolio
amounted to approximately $3.2 billion and $3.1 billion, respectively. The
Company may, from time to time, determine to sell portions of its servicing
portfolio as well as to purchase servicing rights from third parties.

FFCC expects that it will continue to have adequate resources to finance its
operations. The Company will continue to explore alternative and supplementary
methods of financing its operations, including both debt and equity financing.
There can be no assurance, however, that the Company will be successful in
consummating any such transactions.

ASSETS AND LIABILITIES

At March 31, 1997, total assets were $1.130 billion compared to $1.102 billion
at December 31, 1996. This increase was due primarily to net increases in       
interest earning and servicing related assets in connection with the Company's
mortgage loan production and securitization activities. Total liabilities were
$974 million at March 31, 1997 compared to $951 million at December 31, 1996.
The increase in total liabilities was primarily related to increased deposit
accounts held at Doral Federal.

As of March 31, 1997, Doral Federal had $293.2 million in assets compared to
$280.7 million at December 31, 1996. This increase was due primarily to a net
increase of $16.3 million in loans receivable. At March 31, 1997, Doral
Federal's deposit accounts totaled $197.8 million compared to $187.2 million at
December 31, 1996. These amounts 



                                       9


<PAGE>   10

include $10.9 million and $28.3 million, respectively, in corporate accounts of
the Company which are eliminated in the preparation of the Company's
Consolidated Financial Statements. Deposit accounts include $30.1 million as of
March 31, 1997 in non-interest bearing demand deposits representing escrow
funds and other servicing accounts from First Financial's servicing operations.

Changes in interest rates can have a variety of effects on the Company's
business. In particular, changes in interest rates affect the volume of mortgage
loan originations and acquisitions, the interest rate spread on the Company's
portfolio of loans and mortgage-backed securities, the amount of gain on sale of
loans and the value of the Company's loan servicing portfolio and
mortgage-backed securities holdings.

The Company does not generally hedge conventional loans in the pipeline or in
the process of origination because the Company does not generally permit
customers to lock-in an interest rate prior to closing. Instead, the interest
rates on loans are generally fixed at closing based on a certain spread over a
prevailing rate that adjusts weekly. For FNMA and FHLMC conforming loans and
FNMA and FHLMC mortgage-backed securities, the Company seeks to sell or obtain
commitments for the sale of such loans or mortgage-backed securities following
the funding of such loans. These loans are normally sold to institutional
investors or to FNMA and FHLMC. To the extent the Company does engage in
offerings of mortgage products which lock-in the interest rate until the closing
date, it attempts to obtain forward commitments at the time it fixes the rates
for the loans. Non-conforming conventional loans are normally sold in bulk to
local financial institutions or packaged into collateralized mortgage
obligations. The sale of non-conforming conventional loans normally takes longer
than the sale of conforming mortgage loans. Accordingly, the Company attempts to
manage this interest rate risk through the purchase of listed options on U.S.
Treasury Securities, as well as through the purchase of option contracts in the
over-the-counter market on other interest rate sensitive instruments.

In the case of GNMA securities, the Company normally holds such securities for
longer periods prior to sale to maximize its net interest income and to take
advantage of the tax exempt status of the interest on such securities under
Puerto Rico law. Prices for GNMA certificates in Puerto Rico tend to be more
stable than on the mainland U.S. because the tax exempt status of interest paid
on these securities under Puerto Rico law makes them more attractive to retail
investors. This relative stability of prices for Puerto Rico GNMA securities
allows the Company to carry out a less aggressive hedging strategy to attempt to
protect the value of these assets than what might otherwise be required. The
Company seeks to protect itself from interest rate risk associated with its
inventory of GNMA securities by purchasing listed options on treasury bond
futures contracts and other interest rate sensitive instruments, as well as
purchasing options on U.S. GNMA securities in the over-the-counter market. As of
March 31, 1997, the Company had in place $70.2 million of long-term repurchase
agreements secured by collateralized mortgage obligations backed by GNMA
certificates with a principal amount of approximately $80 million. The Company
does not obtain forward commitments or otherwise hedge such securities because
they are financed pursuant to long-term repurchase agreements. The Company has
the right to substitute similar securities under the repurchase agreements.

Declines in interest rates can adversely affect the Company's revenues by
increasing prepayment rates and causing an increase of the amortization of
Mortgage Servicing Rights ("MSR's ") and interest-only strip receivables ("IOs")
(previously classified as excess servicing fees receivable) or causing an
impairment to be recognized with respect to such assets. See "Recent
Developments-Accounting Changes" herein. Moreover, increased prepayment rates
can reduce the Company's servicing income by decreasing the size of the
Company's servicing portfolio. To date, the Company has not used synthetic
instruments to protect the value of its MSRs and IOs from future interest rate
fluctuations. The primary means used by the Company to reduce the sensitivity of
the Company's servicing income to possible reduction of its servicing portfolio
has been the development of a strong retail origination network that has allowed
the Company to increase or maintain the size of its servicing portfolio even
during periods of high prepayments.

The net interest income of the Company is also subject to interest rate risk
because its interest earning assets and interest-bearing liabilities reprice at
different times and varying amounts. Most of the Company's interest earning
assets, including its mortgage-backed securities held for trading, are fixed
rate interest-earning assets that are not subject to repricing (except for
replacement of assets through repayments, sales and new originations) while the
short-term borrowings used to finance these positions normally reprice on a
periodic basis (e.g., daily, monthly or quarterly). To protect against major
fluctuations in short-term interest rates, the Company purchases listed put and
call options and sells call options on financial instruments, including
Eurodollar contracts. This policy attempts to ensure a relatively stable



                                      10


<PAGE>   11


short-term cost of funds. With respect to the loans receivable and securities
held to maturity of Doral Federal, Doral Federal attempts to obtain long-term
deposits and other long-term debt financing, including longer term brokered
certificates of deposit, advances from the FHLB-NY and term notes backed by 
FHLB-NY letters of credit.

In the future, FFCC may utilize alternative hedging techniques including
futures, options or other hedge vehicles to help mitigate interest rate and
market risk. However, there can be no assurance that any of the above hedging
techniques will be successful. To the extent they are not successful, the
Company's profitability may be adversely affected.

INFLATION

FFCC is affected by inflation in the areas of loan production and servicing
fees. General and administrative expenses increase with inflation. However, the
increase in real estate values in Puerto Rico in recent years has been a
positive factor for the Company's mortgage banking business. The average size of
loans originated tends to increase as home values appreciate, which serves to
increase loan origination fees and servicing income faster than the cost of
providing such services. Interest rates normally increase during periods of high
inflation and decrease during periods of low inflation. See "Assets and
Liabilities" for a discussion of the effects of changes of interest rates on the
Company's operations.


RESULTS OF OPERATIONS FOR QUARTERS ENDED MARCH 31, 1997 AND 1996

Net income for the quarter ended March 31, 1997 increased to $7.1 million from
$6.4 million for the comparable period of 1996. Doral Federal contributed
approximately $891,000 in net income for the first quarter of 1997 compared to
$526,000 for the first quarter of 1996. AAA Financial Services, a NASD licensed
broker dealer which commenced operations in the third quarter of 1996
experienced losses of $125,000 in the first quarter of 1997.

Revenues from mortgage loan sales and origination fees decreased to $5.3 million
for the quarter ended March 31, 1997 from $6.9 million for the comparable period
of 1996. This decrease was due primarily to lower gains on sale of mortgages.
The total volume of loans originated and purchased was $182 million for the
three-month period ended March 31, 1997 compared to $200 million for the
three-month period ended March 31, 1996. The decrease was largely the result of
a decrease in purchase of loans from third parties which, decreased by
approximately $16 million. The total volume of loans purchased was approximately
$5 million for the three-month period ended March 31, 1997, compared to $21
million for the three-month period ended March 31, 1996. The decrease was the
result of the Company's decision to selectively decrease its purchases of loans
originated by third parties and rely primarily on its internal origination
capacity.

Net interest income increased by $1.1 million for the three-month period ended
March 31, 1997 versus the comparable period of 1996. Interest earning assets for
the first quarter of 1997 amounted to approximately $1.005 billion compared to
$810 million a year ago.

The weighted average interest rate spread was 220 basis points during the first
quarter of 1997 compared to 327 basis points for the comparable period of 1996.
The decrease is principally attributable to the interest expense related to the
issuance of the Company's 7.84% Senior Notes due 2006 issued in October 1996.

When FFCC sells the mortgage loans it has originated or purchased, it generally
retains the rights to service such loans and receives the related servicing
fees. Mortgage loan servicing fees are based on a percentage of the principal
balances of the mortgages serviced and are credited to income as mortgage
payments are collected. Loan servicing income increased 45% to $4 million for
the quarter ended March 31, 1997 compared to $2.8 million for the same period
in 1996. The increase in servicing income reflects the increase in the size of 
the servicing portfolio together with an increase in other servicing related
fees.  The Company's servicing portfolio at March 31, 1997 increased $97
million over the December 31, 1996 level and $355 million over the March 31,
1996 level.

The Company capitalized approximately $2.2 million in servicing assets during
the first quarter of 1997 related to loans originated and purchased as compared
to $2.8 million for the quarter end of March 31, 1996. At March 31, 1997, the
unamortized balance of the servicing asset (previously classified as MSRs)
approximates its fair value. The amortization




                                      11
<PAGE>   12



of the servicing asset for the quarters ended March 31, 1997 and 1996 was
$578,000 and $224,000, respectively, and is recorded in the accompanying
Consolidated Statement of Income and Retained Earnings under "Other Expenses."

The Company creates IOs (previously classified as excess servicing fees
receivable) as a result of the sale of loans in bulk or securitization
transactions. IOs are created on the sale of loans by computing the present
value of the excess of the weighted average coupon on the loans sold over the
sum of: (i) the pass-through interest paid to the investor and (ii) a base
servicing fee, and adjusting such amount for expected losses and prepayment
assumptions. Amortization of IOs (previously classified as excess servicing fees
receivable) for each of the quarters ended March 31, 1997 and 1996 was
approximately $892,000 and $304,000, respectively. This amortization is recorded
as a reduction of interest income. SFAS No. 125 requires that effective January
1, 1997, assets previously classified as excess servicing fee receivable be
classified as IOs. Such IOs are reflected in the Company's Consolidated Balance
Sheet as part of Securities Held for Trading. See "Recent Developments-New
Accounting Standards".

Aggregate expenses for the quarter ended March 31, 1997, increased by
approximately $3.2 million compared to the first quarter of 1996, primarily as a
result of higher interest expense associated with the financing of the Company's
mortgage loans and mortgage-backed securities portfolios. Loan origination,
general and administrative expenses increased marginally to $7.6 million in the
first quarter of 1997 from $7.5 million a year ago.


                                      12
<PAGE>   13



RECENT DEVELOPMENTS

New Accounting Standards

In June 1996, the Financial Accounting Standards Board ("FASB") issued SFAS No.
125 "Accounting for Transfers of Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 125"). SFAS 125 provides accounting and
reporting standards for transfer and servicing of financial assets and
extinguishments of liabilities based on the application of a financial component
approach that focuses on control.

Under SFAS 125, an entity recognizes only assets it controls and liabilities it
has incurred, discontinues recognition of assets only when control has been
surrendered, and discontinues recognition of liabilities only when they have
been extinguished. SFAS 125 requires that the selling entity continue to carry
retained interests, including servicing assets, relating to assets it no longer
recognizes. Such retained interests are based on the relative fair values of the
retained interests of the subject assets at the date of transfer. Transfers not
meeting the criteria for sale recognition are accounted for as a secured
borrowing with a pledge of collateral.

SFAS 125 requires an entity to recognize its obligation to service financial
assets that are retained in a transfer of assets in the form of a servicing
asset or liability. The servicing asset or liability is to be amortized in
proportion to, and over the period of, net servicing income or loss. Servicing
assets and liabilities are to be assessed for impairment based on their fair
value.

The provisions of SFAS 125 became effective on January 1, 1997. Management has
determined that the implementation of SFAS 125 will not have a material impact
on the Company's financial condition or results of operations.

In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings per share" ("SFAS 128"). SFAS 128 requires presentation of
earnings per share ("EPS") by all entities that have issued common stock or 
potential common stock (that is, securities such as options, warrants,
convertible securities, or contingent stock agreements) if those securities
trade in a public market on either a stock exchange (domestic or foreign) or in
the over-the-counter market, including securities quoted only locally or
regionally. SFAS 128 also requires presentation of earnings per share by an
entity that has made a filing or is in the process of filing with a regulatory
agency in preparation for the sale of those securities in a public market. SFAS
128 does not require presentation of earnings per share for investment
companies or in statements of wholly-owned subsidiaries.

SFAS 128 shall be effective for financial statements for both interim and annual
periods ending after December 15, 1997. Earlier application is not permitted.
However, an entity is permitted to disclose pro forma EPS amounts computed using
this Statement in the notes to the financial statements in periods prior to
required adoption. After the effective date, all prior-period EPS data presented
shall be restated (including interim financial statements, summaries of
earnings, and selected financial data) to conform with the provisions of this
Statement.

The adoption of this statement did not have any effect in the Company's
financial statements presentation because the Company did not have any
outstanding common stock equivalents.

Proposed Repeal of Tax Exemption for GNMA Securities

The Company currently benefits from Puerto Rico tax laws that exempt from Puerto
Rico income taxes the interest received on mortgage loans secured by real
property in Puerto Rico and insured by the Federal Housing Administration or
guaranteed by the Veteran's Administration ("FHA-VA loans") and on GNMA
mortgage-backed securities backed by FHA-VA loans. This favorable tax treatment
has permitted the Company to sell tax-exempt Puerto Rico GNMA mortgage-backed
securities to local investors at higher prices than those at which comparable
instruments trade in the mainland United States and to reduce its effective tax
rate through the receipt of tax exempt interest. On April 10, 1997, a bill was
introduced into the legislature of Puerto Rico to repeal the exemption for
interest received on FHA-VA loans. Under the bill, interest on all FHA-VA loans
originated after June 30, 1997 would cease to be exempt. Individuals receiving
interest on FHA-VA loans originated after such date, however, would be taxed at
a preferential 17% rate that




                                      13
<PAGE>   14



would also apply to Puerto Rico corporate debt obligations. The bill would
grandfather the tax exempt status of FHA-VA loans and securities backed by 
such loans originated prior to July 1, 1997.

The bill is supported by the Governor of Puerto Rico and is part of a broader
initiative to reform the capital markets in Puerto Rico. The bill must be
approved by both houses of the Puerto Rico legislature and signed by the
Governor before becoming law. No assurance can be given whether the bill will
become law or what changes, if any, will be made to the bill before becoming
law. Management believes that the adoption of the bill, in its current form,
would not have a material adverse effect on the Company's financial condition or
results of operation.


                          PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

      In the opinion of the Company's management, the pending and threatened
legal proceedings of which management is aware will not have a material adverse
effect on the financial condition of the Company.

ITEM 2 - CHANGES IN SECURITIES

      Not Applicable.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

      Not Applicable.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      The Annual Stockholders Meeting of First Financial Caribbean Corporation
was held on April 16, 1997. A quorum was obtained with 5,863,816 votes
represented in person or by proxy, which represented approximately 64.4% of all
votes eligible to be cast at the meeting. Eight directors of the Company,
Salomon Levis, Zoila Levis, Richard F. Bonini, Edgar M. Cullman, Jr., Frederick
M. Danziger, John L. Ernst, A. Brean Murray and Victor M. Pons, Jr., were
reelected for additional one-year terms. The Corporation's 1997 Employee Stock
Option Plan was also approved at the Annual Meeting. The following proposals
were voted upon at the meeting with the following results:

Proposal 1:  Election of Directors

<TABLE>
<CAPTION>
NOMINEES FOR ONE-YEAR TERM            VOTES FOR        VOTES WITHHELD
--------------------------            ---------        --------------
<S>                                   <C>                  <C>   
Salomon Levis                         5,847,730            16,086

Richard F. Bonini                     5,847,730            16,086

Edgar M. Cullman, Jr.                 5,845,754            18,062

Frederick M. Danziger                 5,846,230            17,586

John L. Ernst                         5,846,230            17,586

Zoila Levis                           5,847,630            16,186

A. Brean Murray                       5,830,646            33,170

Victor M. Pons, Jr.                   5,837,186            26,630
</TABLE>





                                      14
<PAGE>   15

Proposal 2:   Approval of 1997 Employee Stock of Option Plan

<TABLE>
              <S>                  <C>      
              For:                 3,485,251
              Against:               716,111
              Abstain:                22,889
              Broker Non-Votes:    1,639,565
</TABLE>

Proposal 3: Ratification of the Appointment of Price Waterhouse as the Company's
Independent Accountants for 1997.

<TABLE>
              <S>                    <C>      
              For:                   5,845,150
              Against:                   6,240
              Abstain:                  12,426
</TABLE>

ITEM 5 - OTHER INFORMATION

      Dividend declaration

      On April 16, 1997, the Board of Directors authorized a quarterly $0.20 per
share cash dividend to be paid on June 6, 1997 to shareholders of record as of
May 16, 1997 of the Company's Common Stock. The Common Stock dividend reflected
a $0.03 per share increase over the prior quarterly dividend.

      Employment Agreements for Salomon Levis and Zoila Levis

      The Company, the Chairman of the Board and Chief Executive Officer of the
Company, entered into an employment agreement dated, as of May 1, 1997,
with Salomon Levis that expires on December 31, 1999. Under the terms of the
Agreement, Mr. Levis is entitled to receive an annual salary of $1.5 million
plus incentive compensation equal to 15% of the Company's annual consolidated
net income after taxes and after adding back incentive compensation payable to
executives of the Company ("Adjusted Net Income"), in excess of an amount
equal to a 15% return on stockholders' equity. At the discretion of the Board of
Directors, up to 50% of the incentive compensation may be paid in Common Stock
of the Company, subject to applicable requirements of the NASD or any stock
exchange on which the Common Stock of the Company may be listed. Mr. Levis'
annual salary and incentive compensation is subject to a maximum of $4.5 million
per year.

      The Company entered into an employment agreement, dated as of May 1, 1997,
with Zoila Levis, the President and Chief Operating Officer of the Company,  
which expires on December 31, 1999. Under the terms of the Agreement, Zoila
Levis is entitled to receive an annual salary of $500,000 plus incentive
compensation equal to the sum of the following: (i) $300,000 if the Company
earns $10.0 million of Adjusted Net Income; (ii) $300,000 if the Company earns
Adjusted Net Income up to $20 million; and (iii) 5% of Adjusted Net Income in
excess of $20 million to the extent such Adjusted Net Income exceeds an amount
equal to a 15% return on stockholders' equity. The amounts payable under
(i)-(iii) are cumulative and not exclusive of each other. At the discretion of
the Board of Directors, up to 50% of the incentive compensation could be paid
in Common Stock of the Company, subject to applicable requirements of the NASD
or any stock exchanges on which the Common Stock of the Company may be listed.
Ms. Levis' annual salary and incentive compensation is subject to a maximum of
$1.7 million per year.

      The Employment Agreements with Salomon Levis and Zoila Levis provide that
if such agreements are terminated following a change of control of the
Company, the named executive officer would be entitled to receive all
compensation due under the agreements for the calendar year in which such
termination occurs.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

            Exhibit 10.35 - Employment Agreement, dated May 1, 1997, between
            FFCC and Salomon Levis.

            Exhibit 10.36 - Employment Agreement, dated May 1, 1997, between
            FFCC and Zoila Levis




                                      15

<PAGE>   16



            Exhibit 10.71(a) - Amendment, dated March 1, 1997, to Employment
            Agreement, dated as of December 31, 1996, between Doral Mortgage and
            Edison Velez

            Exhibit 10.72 - Employment Agreement, dated May 1, 1997,
            between Doral Federal Savings Bank and Jose G. Vigoreaux

            Exhibit 27 - Financial Data Schedule (for SEC use only).

      (b)   Reports on Form 8-K

            Not Applicable.




                                      16

<PAGE>   17




                                   SIGNATURES


      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                       FIRST FINANCIAL CARIBBEAN CORPORATION
                                                  (Registrant)
                                    
                                    
                                    
Date:  May 13, 1997                      /s/ Salomon Levis
                                       ----------------------------------
                                                  Salomon Levis
                                              Chairman of the Board
                                           and Chief Executive Officer
                                    
                                    
                                    
Date:  May 13, 1997                      /s/ Richard F. Bonini
                                       ----------------------------------
                                               Richard F. Bonini
                                        Senior Executive Vice President
                                          and Chief Financial Officer
                                    
                                    
                                    
                                    
Date:  May 13, 1997                     /s/ Ricardo Melendez
                                       ----------------------------------
                                               Ricardo Melendez
                                                 Vice President
                                          Principal Accounting Officer




                                       17


<PAGE>   18




                               INDEX TO EXHIBITS



<TABLE>
<CAPTION>
                                                                                              SEQUENTIALLY
    EXHIBIT                                                                                     NUMBERED
    NUMBER                                       DESCRIPTION                                      PAGE
    ------                                       -----------                                      ----
   <S>           <C>      <C>                      
     10.35       -        Employment Agreement, dated May 1, 1997, between FFCC and
                          Salomon Levis
     10.36       -        Employment Agreement, dated May 1, 1997, between FFCC and Zoila
                          Levis
     10.71(a)    -        Amendment, dated March 1, 1997, to Employment Agreement, dated
                          as of December 31, 1996, between Doral Mortgage and Edison Velez
     10.72       -        Employment Agreement, dated May 1, 1997, between Doral Federal
                          Savings Bank and Jose  G. Vigoreaux
        27       -        Financial Data Schedule (for SEC use only)
</TABLE>