In 2010 banks put substantial resources into mitigating risk and getting rid of toxic assets in order to reverse the declining profitability trend and start 2011 on a stronger footing. 2010 was also the year of consolidation, with the FDIC assisting in the acquisition process of three failed institutions: Westernbank, RG and Eurobank. Based on banks’ participation in this acquisition process and the prospect of a second wave of consolidations in 2011, we have categorized the local institutions in three groups: 1) The Winners, Popular, Scotiabank, and Oriental, acquired the troubled banks under favorable terms growing their share of total assets from 34% to 44%; 2) The Targets, FirstBank and Doral, became the likely targets for a second round of consolidations; 3) The Spectators, Santander and BBVA, did not place winning bids during the consolidation process, and did not expand or reduce their operations in the Island. The three groups of banks will face separate challenges in 2011. The Winners will need to balance loss mitigation with business generation to offset the natural decline in the FDIC covered loan portfolio balances. The Targets will need to continue improving their capital levels and asset quality while entertaining or fending acquisition offers. And The Spectators will struggle to capture the attention of their parent companies if they want to expand their operations in the Island.